Although I am not surprised that AIG came back to beg the government for additional taxpayer assistance, I am disturbed that it happened so soon -- particularly after CEO Edward Liddy told me on January 15th that he expected to re-pay the government early. To me, this means that Mr. Liddy was either once again being less than honest or that he has no idea what is happening with his company -- and both of these scenarios are unacceptable.
American taxpayers have already invested so much in keeping AIG afloat because of the risks to our financial system posed by the obligations the company is supporting, and it is important that we continue to do everything we can to keep it from going under. However, there are still too many unanswered questions about how AIG spent its first portion of TARP assistance. We cannot allow the pattern of deception by this company to continue. Transparency and accountability are more critical than ever.
AIG's 10-K filing this morning has raised even more questions about how the company is being managed. Spending $57 million on 'retention payments' for employees expected to be terminated is ludicrous, and it tells me that this company has no respect for the aid it is receiving or for the Americans whose hard-earned taxpayer dollars are keeping the company alive.
Equally disturbing in the 10-K filing are AIG's strong complaints against the limits on executive compensation that were established by the American Recovery and Reinvestment Act. If it were not for TARP assistance, these executives would not be making any money at all. It is audacious to reject the commonsense accountability measures put in place to protect taxpayer dollars, and it is time for Mr. Liddy to come back from whatever planet he is on and visit us here in reality. I am puzzled by AIG's statement that it has 'embraced a pay-for-performance philosophy.' Surely this cannot be in reference to the approximately $450 million in retention payments being given to employees of the Financial Products division whose performance brought the company down in the first place.
American taxpayers now essentially own AIG, and we are thus entitled to complete disclosure of how the business is being run and where these funds are being spent. This information must include a complete review of the company's compensation policies, with particular emphasis paid to the more than $1 billion in 'retention payments' that have been distributed even while the company is failing.
We also need to seriously re-evaluate the leadership at AIG and determine whether a change would be appropriate at this point. Each passing week brings to light more recklessness and disorganization by this company. As millions of taxpayers who are footing the bill for AIG's bonuses and parties are losing their jobs and homes, we continue to see examples of profligate spending and irresponsible decision-making by the company's leadership.
It was the birth of the mortgage-backed CDO that begat all of this and the selling of it under false pretenses to investors everywhere. This has killed the housing market and property tax revenues. If we unwind these CDO's and return the notes to the homeowners, we will start to grow out of this huge hole. Homeowners will be paying for their homes in the end because of the massive tax increases that will be needed to recoup all of the bailout money paid to date.
This is a homeowner bailout and this is needed.
Andrew C. Orr, CFP
President
ORRGROUP FIDUCIARY
www.orrgroup.com
Since banks were left holding the bag and own so many of these, our economy grounded to a halt. Housing sank even more, and a depression almost happened. Homeowners have been unable to sell their home for anything of any real equity value, or refinance, and the value of homes have been especially impacted negatively thanks to the foreclosure rate. Thankfully, the federal stimulus has averted the depression, yet the taxes that will be needed to pay this money back will, again, be borne on all of us, rich and poor, and for homeowners, this means that we will be paying twice for our homes, which are worth less that what we owe. We will pay the mortgage and we will pay the taxes to cut the deficit in later years.
These same hedge funds were the ones who were directly responsible for Lehman's failure due to the hedge funds shorting of Lehman stock. The hedge funds sent press releases out that were negative on Lehman's viability and since the Bush administration cancelled the uptick rule, the hedge funds and any other trader could short Lehman stock to their hearts content. The hedge funds would win as Lehman was going down and they could really win when they cashed in the AIG swap insurance.
Only super-wealthy people invest in hedge funds. Most have minimums of $1 million, some $5 million or more. Now taxes of all americans, rich and not so rich, must go up for generations to pay off all of these bailouts. And, essentially, the bailouts went to the super rich because that is who AIG owed so much money too. That is simply wrong.
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YOU THINK!!!
I have to laugh when I hear Rush go after Obama about him turning this country into a socialist country and all the so called spending. Does that mean he approves of what these guys are doing on Wall Street? Is this his idea of a CAPITALISM?
These guys destroyed AIG and don't want to pay a price for it. It's like business as usual. Except it's now on America's dime.
Yep, this must be the kind of entrepreneurial spirit Rush was talking about.
The scam was to use the Triple A rating of AIG to backstop losses. AIG did not evaluate the risk of a downturn. With no insurance regulator regulating this, inadequate reserving for loss throught its conglomerate hedge funds, inadequate premiums being charged, the entire system would go dowm with AIG, the largest insurance conglomerate in the world.
Yes, AIG will need more money for bail outs even though it isn't a bank.
Not that I do not agree, I think congress should go even farther than he suggests...
Is he not the congressman? Is he asking these questions? If not, why?
He is in a position to do something here, he has my full support!
Go do it!!! Kick and scream if you have to congressman! Just do something besides
blog on huffpost!
I have tried! my emails to AIG go unreturned!
A fraud of gargantuan proportions.
A sophisticated Ponzi scheme.
This is all new to me. I am learning as I go along.
Actually, this behooves the gov. politically, as nationalization would bring more public scorn on the administration. You can't get blood from a stone. Wait until the dismal end, then fake something.
The same goes for Sh*ttycorp and BofA.
Oh, children, what "surprises" are in store!
After the fact, Obama could have paid for all of his plans twice over with what these freak-show corporations will have sucked into the vacuum!!
Sinply stated, the purpose of the fraudulent scheme and artifice was to enrich the Racketeering Defendants by (1) attempting to realize extraordinary profitsby gambling Lincoln's assets.....(2) improperly diverting funds from Lincoln through EXORBITANT SALARIES, BONUSES, BENEFITS and the like... from the complaint filed September 15, 1989.... (20 years ago and what have we learned)
Graef Cristal has been addressing the unremittant GREED of these people for the last 30 years and NOBODY has listened to him. So it is time to restore the tax rates to those prior to the Reagan Cuts.
Trickle Down Economics was a ROB THE POOR scheme, where unions and family wage jobs were destroyed or sent offshore, pensions were converted for the slave wage to 401ks while the big boys pensions grew EXORBITANTLY, health care coverage has been removed, vacations and sick leave and holidays have all been cut.. We are spending more time working and more time commuting and the BIG PHONIES are trying to work us into our graves so they can steal the Social Security...
Reeks like MAFIA.
Of all of the rightfully angry but misguided rhetoric, you are starting to hit the nail on the head. We need less piñata play and more effective action.
Most do not understand that AIG is an insurer, not a bank. They took on financial insurance in the form of derivatives without collateral to pay out when mortgages defaulted, all over the world. They wrote annuities without proper reserves that could have bankrupted a system affecting almost every American from pensions to IRAs, etc. The insurance regulators did not regulate. Indeed the most bailout money went to Fannie May, Freddie Mac and AIG, none are banks and all were unregulated compared to the real Banks.
We are spending all of this rhetoric and political capital on an imaginary monolith named the banks. It slows us down in getting the TALP out to the people, $1 Trillion of low cost money for car loans, credit cards, student loans, etc. already approved!
We need to know the names of the counter parties that received our billions of dollars (the taxpayer in effect paying out the insurance claims) and which of them should take a loss because they were underinsured. Exactly the same way many Katrina victims were screwed by Insurance companies. I want to know we are not paying out to those that can afford to take the loss.
Please subpoena the Greenburgs, Mozilos, and Fulds, help guide those that are fixing it now, and more on the counter parties.
Thank You