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Richard (RJ) Eskow

Richard (RJ) Eskow

Posted: June 8, 2010 11:54 PM

Why This Ex-AIG Executive Is Protesting Treasury's Backdoor "AIG Bailout"

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Life can only be understood backward, said Kierkegaard, but it has to be lived forward. That's the only explanation I can offer for the strange turn of events that led to me becoming an AIG executive, then a progressive writer/blogger, and to my plans to speak today at a Treasury Department protest organized by my friend Cenk Uygur of The Young Turks. (Wednesday, 1:30 PM, 15th and Philadelphia, Washington.) What are we protesting? The government bailout of Goldman Sachs and other bankers that was orchestrated by Timothy Geithner's New York Federal Reserve and paid for by taxpayer money funneled through ... AIG.

Cenk and I are here in Washington for the America's Future Now conference organized by Campaign for America's Future (where I am a Fellow), and CAF is supporting and participating in the demonstration. As for that AIG career ... it was something I didn't plan for or anticipate after having been a rock musician, a freelance journalist, a computer guy (there was no word for it back then, exactly), a financial and data analyst, and then a health care technical expert. But AIG bought the health care company I worked for in 1986, and soon I was designing benefit plans, managing nurses and doctors, and then consulting in health policy in the US and a number of foreign countries.

I'd always been a good progressive, and I was a technical expert when I was hired by AIG. I had worked in the HMO industry before that but - hard as it is to believe now - the HMO industry was filled with liberals and social idealists back then. They had genuinely believed that health maintenance organizations could be designed with incentives to keep people healthy through preventive care. That was before the financial guys took over.

My career at AIG was an exciting and gratifying one in many ways. It allowed me to help the US Agency for International Development in over 20 countries, sharpen my analytical skills, or work on interesting projects which touched on artificial intelligence and other new ideas. Most of our work involved workers' compensation, health policy, or risk management. The Financial Products division which later brought down the economy was only just being formed when I left. Years later I struck out on my own as a consultant and writer.

Life is a series of trade-offs, and my AIG career was an example of that: Hey, I even played lead guitar and sang in an all-Wall Street rock and roll band eventually. We got flown to great corporate events and had a lot of fun. That's the upside. The worst part was having to sing "Suspicious Minds" (a great song, but not cover-worthy). At least I thought that was the worst part ... until we wound up backing an Elvis impersonator for what seemed like an endless evening.

"I'm caught in a trap/I can't walk out ..."

Eventually I left the corporate life to become a writer and consultant. I began blogging and became friendly with Cenk. Now I even cohost The Young Turks sometimes, which is always a great pleasure, despite the fact that I'm neither young nor Turkish. (Cenk and the TYT gang clearly believe in diversity.)

But why did I say yes when Cenk asked me to speak there tomorrow (along with Cenk and Sam Seder, among others)? Here's why: first and foremost because I'm an American citizen. Goldman Sachs screwed us: They received $12.9 billion in taxpayer money as a "counterparty" for monies allegedly owed to them by AIG (more about that "allegedly" shortly.) They reported $13.4 billion in profits last year. See any connection between those figures?

Then they paid themselves fat, fat bonuses for having a banner year. And why not? They did have a banner year ... by playing us for suckers. Cenk's right: Treasury must demand that they give the money back.

They didn't earn it anyway, from what we can tell. AIG was "insuring" Goldman's deals, but the $12.9 billion assumes that Goldman claims of monies owed were valid. But they were never independently verified. And why shouldn't Goldman lose money if it gambled? They drove AIG ... and the country ... into the ground. The 'moral hazard' in this case is allowing them to gamble without paying the price. We've quoted Nicky from Casino before:

The taxpayers deserve their money back. And AIG still has some solid companies, which the taxpayer now owns and which could use some financial help so they can turn a better profit. Here's one scenario: Those companies could use $13 billion to shore up their operations so that they can be sold profitably and make a solid return on the taxpayers' investment. Prudential recently backed out of a deal to buy an AIG subsidiary called AIA . Could $13 billion have made that deal possible? Could it now be invested in other areas of the company to make them more profitable and/or more saleable?

There are two choices, really: Get the money back so that we can turn AIG's good divisions around and sell them. Or, get the money back and give it back to the Federal treasury. Where are all those self-described "deficit hawks" when we need them? Tell Pete Peterson to stop tinkering with Social Security, which is far more financially stable than most government projects, and get himself down to our demonstration to ask for the taxpayers' money back.

Now that's what I call fiscal conservatism.

He won't, however, and neither will any other so-called deficit hawk. But that's our money, not Goldman Sachs'. We should either invest it so that we can sell off AIG, or use it to feed some hungry families, or put it to some other productive use. Lloyd Blankfein and his cronies don't need it. We do. Let's tell them to give it back.

I hate writing too much about myself (that's blogging, not journalism), but that AIG history's the reason I'm speaking tomorrow. So that's that. See you tomorrow - along with Cenk, the TYT team, Sam Seder, the CAF folks, and one ex-AIG guy who occasionally looks backward in order to use what was once lived forward - but only when it's for a good cause.

Richard (RJ) Eskow, a consultant and writer (and former insurance/finance executive), is a Senior Fellow with the Campaign for America's Future. This post was produced as part of the Curbing Wall Street project. Richard also blogs at A Night Light.

He can be reached at "rjeskow@ourfuture.org."

Website: Eskow and Associates

 

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