The real scandal of AIG isn't just that American taxpayers have so far committed $170 billion to the giant insurer because it is thought to be too big to fail -- the most money ever funneled to a single company by a government since the dawn of capitalism -- nor even that AIG's notoriously failing executives, at the very unit responsible for the catastrophic credit-default swaps at the very center of the debacle -- are planning to give themselves $100 million in bonuses. It's that even at this late date, even in a new administration dedicated to doing it all differently, Americans still have so little say over what is happening with our money.
The administration is said to have been outraged when it heard of the bonus plan last week. Apparently Secretary of the Treasury Tim Geithner told AIG's chairman, Edward Liddy (who was installed at the insistence of the Treasury, in the first place) that the bonuses should not be paid. But most will be paid anyway, because, according to AIG, the firm is legally obligated to do so. The bonuses are part of employee contracts negotiated before the bailouts. And, in any event, Liddy explained, AIG needed to be able to retain talent.
AIG's arguments are absurd on their face. Had AIG gone into chapter 11 bankruptcy or been liquidated, as it would have without government aid, no bonuses would ever be paid; indeed, AIG's executives would have long ago been on the street. And any mention of the word "talent" in the same sentence as "AIG" or "credit default swaps" would be laughable if it weren't already so expensive.
Apart from AIG's sophistry is a much larger point. This sordid story of government helplessness in the face of massive taxpayer commitments illustrates better than anything to date why the government should take over any institution that's "too big to fail" and which has cost taxpayers dearly. Such institutions are no longer within the capitalist system because they are no longer accountable to the market. So to whom should they be accountable? When taxpayers have put up, and essentially own, a large portion of their assets, AIG and other behemoths should be accountable to taxpayers. When our very own Secretary of the Treasury cannot make stick his decision that AIG's bonuses should not be paid, only one conclusion can be drawn: AIG is accountable to no one. Our democracy is seriously broken.
The outrage resulting from the AIG bonus scandal is analogous to the "1 minute of hate" in George Orwell's "1984" when various enemies of the state were executed.
The bonuses pale in comparison to the corporate-
This, to me, is really sick.
Then, NOT ONE CENT should be paid to those hedge funds which bet agains these derivative
All the money should then be put back into the other divisions of AIG and try to stabilize it, or return it all to the government immediatel
The AIG Board has the capacity and the obligation of stewardshi
Looking for a legal solution, or a political solution -- abrogates these people from their obligation
And it is the responsibi
I am sure there are governance rules that they were contractua
too big to fail = monopoly. they should be allowed to fail for exactly that reason. as usual the american people are freaking out about something (the bonuses) that is actually irrelevant to the real issue. the real story should be that AIG was funneling their bailout money to goldman sachs (among others) and that Geitner was connected to them. I'm disappoint
My objection to Mr. Reich and others like him is that they lack the knowledge of facts relative to situtation
Monopoly =/= should be allowed to fail. What you do with monopolies is have an anti-trust action where there's a court order to split them up into a bunch of smaller companies. If you wait for them to fail, you'll often be waiting a long time.
This is a battle between the American people....
If they can succceed in makiing us fight each other instead of uniting and confrontin
The time for action is now.
One of the reasons the government cannt go after the financial system with a big stick is the absence of a national retirement system, like in Europe.
If 401s etc are dependent and related to Wall Street and companies like AIG, these can hold the economy at ransom. This is blackmail and extortion , what AIG is doing.
The bonuses issue is not important. What is important is to change the rules so that the U.S. citizens are not held captive by the AIGs - this begins with a public retirement system like in any other advanced society of the world.
Why in fact are we relying on the same "geniuses" that created this nightmare?
The main driving force of the election was Main St. vs. Wall St. That's why President Obama won, he was the furthest from Wall St.
I hope he takes corrective steps on this issue, that isn't going to go away.
Unfortunat
posted Dec 25, 2008 at 11:07:45
greta article!
http://tim