Roasting AIG

[icarus]

Unhappy that AIG just paid $165 million in bonuses out of taxpayer money -- to the very guys who did the credit swaps that got us into this mess?

Me, too.

I tracked down their email and let them know exactly what I thought of them. You can, too. Yes, you can.

The idea that they were contractually bound to pay these bonuses ... you know what? They were contractually bound to pay these bonuses out of their money. Not our money. If they can't pay those bonuses out of their non-existent profits, then they need to borrow it like they would have without the bailout. They cannot use bailout funds for bonuses.

Rep. Barney Frank wants to see if we can recover these bonuses from AIG, while Rep. McConnell has gone ape shit. I agree with his assessment. "Did they (AIG) enter into these contracts knowing full well that ... the taxpayers of the United States were going to be reimbursing their employees? Particularly employees who got them into this mess," McConnell said.

I also call bullshit that they didn't know they were in trouble in early 2008 when they made these agreements. The housing crisis was well underway at the beginning of 2008. They knew they were leveraged 35-to-1. They may not have admitted how serious the problem was, but they knew.

Indictments.

Why have we seen no indictments?

During the S&L scandal, the culprits were led off to jail. Why are we seeing no prison time now?

Comments

[backinblack.livejournal.com]

I sent a nastyish letter to AIG. I hope they have the balls to get back to me. That would be epic fail.

[thatratorpheus.livejournal.com]

Well, I also sent an e-mail to the White House cuz they're the ones bleating about how their "hands are tied." I expect AIG to act like a blood sucking mega-corp, but I thought the whole point of hiring frauds like Larry Summers was that, having perpetrated excesses themselves, they understand how Wall Street works - they never give up their bonuses willingly.

[icarusancalion.livejournal.com]

I don't believe for one second that their hands are tied. They have the purse strings and the fate of the company in their hands.

It should be that when the White House says, "Dance," AIG should say, "Two step or the Mashed Potato?"

[icarusancalion.livejournal.com]

You know, the bailout funds should never have been given to these companies with no strings attached. Never.

[icarusancalion.livejournal.com]

It made me feel better at least.

[thatratorpheus.livejournal.com]

I don't believe it for a second, either. Something else is going on behind the scenes. I know the bailout had to happen because so many of the counterparties are foreign investors - that causes all sorts of political problems and we can't strongarm them. But somebody, somewhere has got to take a hit for this disasterous behavior and it's best if the White House controls who takes that hit - otherwise, public opinion will control it for them.

[sage-theory.livejournal.com]

I don't know that the form you used will actually get your letter to them or see that it's actually read by a human being. I imagine that they've got software to filter out complaints.

That said, RIGHT ON. I really object to bonuses being paid to people who a) DEMONSTRABLY did a bad job, screwed up our economy and thus don't deserve them and b) will be getting them from taxpayer money.

So, the taxes I paid on my lousy $10/hr job before I lost it goes to helping these executives stay in their mansions? Fuck that. I want my money back, so I can use to do such frivolous things as pay for food and meds.

I'd really like to punch some of these people in the face.

[icarusancalion.livejournal.com]

I don't know that the form you used will actually get your letter to them or see that it's actually read by a human being. I imagine that they've got software to filter out complaints.

A brick through their windows? I'm sure I can find a brick around here somewhere.

That said, RIGHT ON. I really object to bonuses being paid to people who a) DEMONSTRABLY did a bad job, screwed up our economy and thus don't deserve them and b) will be getting them from taxpayer money.

thatratorpheus suggests also sending a complaint to the White House (I would add your congressman). There's something hinky going on. The hand-wringing tone of "our hands are tied" smells wrong.

[icarusancalion.livejournal.com]

I don't believe it for a second, either. Something else is going on behind the scenes.

Yes. Beyond the sheer wrongness of paying those bonuses, I don't get why the Democrats are being so meek about it. They should have their spears in hand and use this as a reason to further tie the whole mess -- and the fact that these bailout funds were given with no strings attached -- to the Bush administration.

The meek hand-wringing tone... it's... off somehow. I'm catching a whiff of guilt and I'd like to know what it's about. The fact that Republicans and Democrats all voted for the bailout? The fact that Republicans were the loudest voices in opposing the bailout for three days? Are we going to see yet another AIG bailout?

Any theories?

[thatratorpheus.livejournal.com]

It doesn't help that the Treasury and the Fed won't tell anybody where this AIG money has gone. I suspect it's because the answer would be hugely unpopular. I'd say most of it has gone to large foreign counterparties whose failure would have caused a foreign policy nightmare. But just because we wouldn't want to be accused of letting our regulatory failures bring down a major German bank (just as an example) doesn't mean that this German bank wasn't wilfully speculating in our markets.

The fact is that for a long time there has been too much money chasing too few assets. Investment banks were happy to create new (and, ultimately, phoney) assets and to pocket big fees, but investors were also happy to buy those assets - the greed has been global, as has been the failure of regulation. It'll be a difficult thing to explain why we're bailing out foreign speculators.

I'm not a conspiracy theorist at all (I think most people are incapable of conspiring effectively) but I wonder at the tight lid on the AIG information - like maybe all those "essential" employees are looking at their bonuses as a reason to keep their mouths shut.

[icarusancalion.livejournal.com]

Hmm. I'm thinking China and Saudi Arabia. Giving our tax dollars to them would make people go absolutely bananas.

[thatratorpheus.livejournal.com]

Well, the list is out (the Business Week site has a breakdown) and the biggies are France, Germany and Goldman Sachs - but that doesn't tell us much because we don't know who's on the other side of those names. Goldman looks like a US name, but it's got many foreign investors. The same with Citi - again, looks like US, but that Saudi prince is a major investor.

We also don't know if these amounts were discounted from the original contractual obligations. Bailout may not be bankruptcy, but it's still financial distress and requires negotiation (at least, I think it should). The thing is that a major part of investing is managing one's counterparty risk - you can be right on a trade, but if you're overexposed to the party that has to pay you, you'll still get dinged and you should be dinged. Casinos know this; bookies know this.

Sorry to spam your journal with all this financial hoohaw - at least it's a change from Hesiod, who had financial problems of his own. :-)