In our house it's known as the morning of the shriek. It was Sunday a year ago when my wife picked up the New York Times, hand shaking--and exploded. "They're what, they're what, they're giving them a bonus. A bonus for wrecking the world. Tell me this is wrong." But it wasn't.
The headline, "AIG Planning Huge Bonuses After $170 Billion Bailout" said the fix was in. And Erin, the world's least political spouse, was boiling.
It didn't matter that we had five AIG friends in our suburban Connecticut neighborhood -- that only one of them worked at AIG's Financial Planning Group, the shop in Wilton, Ct. that wrote all the high risk insurance, and that he hadn't even been in that group. In our small village there was outrage.
It didn't matter that as the days unfolded everyone in the Obama Administration "hated it," that Edward Liddy, who was running the company, wasn't taking a salary, that some congressmen demanded clawbacks and threatened to publish the names of those who took the money or that the President said he would ask Timothy Geithner's Treasury Department to get the money back. It was a coverup. It was too late. Washington wasn't going to protect the people. The bad guys would get rewarded. The damage was done.
You could pick other moments last year that depicted a Washington-Wall Street axis as hard to ignore. There was Matt Taibi's seminal Rolling Stone story in June that elevated Goldman Sachs into a shadowy fifth branch of the government. There was the disclosure that Goldman, as early as March 2009, was on track to pay near record bonuses, followed by later news that most of those bailed out would have close to record bonus years.
But I'd date the end of trust from March 14. That's because every key player in Washington involved with the bailouts knew the AIG bonuses were coming down the pike but none dared tell the public. Congressional hearings prompted by the national uproar soon revealed that the Treasury, the Fed, both New York and Washington, the White House and key members of Congress such as Barney Frank had known about and approved the payments. Senate Banking Committee Chairman Christopher Dodd had even jiggled some language in bailout legislation to insure they got done. New York Attorney General Andrew Cuomo, outraged enough to demand the names of the bonus recipients after the disclosures, knew about the deal in October.
Two days after the news, the White House disclosed that the President had known too. His statement on March 16 that, "I've asked Secretary Geithner to use that leverage and pursue every legal avenue to block these bonuses and make the American taxpayers whole" rang hollow. The White House affirmed that the President did know about the payments before they were made.
In the heat of an ongoing financial crisis, the bonus payments may have seemed like a sideshow to the Administration. But for millions of voters, it was the first real, tangible evidence of how removed government was from their concerns. For Washington, it was the first inkling that the people could get mad. But it was early. There wasn't a Tea Party, Sarah Palin was a defeated Alaskan and populist, pitchfork and militia just didn't make news.
After March 14, it all started to change. The impression left was that Wall Street didn't just get saved, it was back in control. Washington could do nothing but vent. As the year unfolded, the Street -- led by Goldman -- did rack up near record bonuses, took public heat, and paid them. Nobody at the top got indicted and the banking lobby went into full battle dress to defeat financial reform legislation. Trust kept declining. CNN poll on February 25 showed only 26% of Americans trust Washington, a near all time low.
So what if the President had confronted the AIG payments in advance? Instead of living with a weekend leak -- they were first reported by Bloomberg -- the President had given a speech on money like the one he'd given on race. Not a "fat cat banker" speech, but something with purpose. Suppose he'd said we have a very difficult situation. The law requires me to authorize payments of $170 million to the people that we bailed out even though the government now runs their company. It's a terrible situation but one I promise you I will rectify. That's why I'm personally leading a reform of Wall Street and here is my timetable for it. When you see the details, you'll know this is real and that it starts today.
Instead, he bet the ranch on health care. Maybe that will still turn out to be the right call. But I'd argue the price he paid for letting Wall Street off the hook wasn't banking reform, it was trust. The trust that flew out of our kitchen window a year ago likely started departing with shrieks from homes across Main Street America that Sunday. It's awfully hard to get back.
Mike Lux: The Problem With the Legislative Process
The insurance industry has argued for thirty years if the young and old were all in the pool the rates will go down. This is the idea of the health exchange. So now that 31 million Americans are going to enter the pool, the insurance industry are raising it rates. So the strategy has failed before we even pass the health care bill. Let’s first negotiate and lower the rates before we mandate or agree to subsidize the premiums. No private company would agree to pay for the premium without negotiating and knowing the price first. Its clear special interest is prevailing as it did in Wall Street.
The insurance industry has argued for thirty years if the young and old were all in the pool the rates will go down. This is the idea of the health exchange. So now that 31 million Americans are going to enter the pool, the insurance industry are raising it rates. So the strategy has failed before we even pass the health care bill. Let’s first negotiate and lower the rates before we mandate or agree to subsidize the premiums. No private company would agree to pay for the premium without negotiating and knowing the price first. Its clear special interest is prevailing as it did in Wall Street.
I shouldn't be bitter because my State Government does nothing nor should I be bitter because my Federal government denies SSDI because it is expected at my age of 46. He can go through the appeal process and wait 2 years.......Nice country we live in these days.......
Insurance is a scam............and the Governments allow them to get away with it.
I do count my blessing because of my family !
First off, there was no 'cover-up' involved in the disclosure of AIG bonuses. One must simply peruse the public record. And, congressional hearings did not reveal anything that hadn't already been available in public view, though few cared enough to look.
Then there is the baffling implication that Washington had no intention of protecting the public. How do you suppose the public would have fared if the administration had not acted as it did to prevent the complete collapse of the financial system? Or, do you not feel that the situation was anywhere near that dire? I would be interested in understanding what it is that you would have had the administration do to mitigate the fallout on Main Street from this financial crisis.
There has been an obvious failure by omission here to highlight anything that Secretary Geithner has done over the past year to protect American families and businesses. Now, there’s a coverup for you, speaking of irony-steeped essays. Of course, this information is not widely available because those involved in journalism seem incapable of uncovering the truth of any matter, particularly if it is the least bit complicated. It's just easier, apparently, to incite public outrage.
...continued...
Finally, and inexplicably, this essay has nothing to say about the muscular financial regulatory reforms that Secretary Geithner has been working tirelessly to get passed through Congress. If those who would incite more public outrage over AIG bonuses would instead spend their time and effort supporting the tough financial regulatory regime that Geithner has been advocating, then we might all be in a better place today when it comes to preventing another financial crisis like this from ever happening again.
That's quite an interesting concept in this context. Care to explain?
Great piece.
Trust for me was all but gone by the time Obama named his cabinet, especially the financial team. He literally hired the criminals to solve the crime. But after the TARP II sabotage it was gone. When he stabbed single payer in the back I wasn't even surprised.
I'm voting third party from now on. I won't win much but at least I'll stop participating in my own mugging.
Who's got your money? Not you.