There must be a criminal investigation of the AIG debacle, and it looks as if New York's top lawman is on the case. The collusion to save this toxic company in order to salvage the rogue financiers who conspired to enrich themselves by impoverishing millions is being revealed as the greatest financial scandal in U.S. history. Instead of taking bonuses, the culprits should be taking perp walks.
I'm not just referring to the swindlers in the Financial Products Subsidiary of AIG who devised and sold those insurance policies on derivatives that brought the world economy to its knees. They do seem deserving of a special place in hell, and presumably the same divine power that according to Scripture labeled usury a high moral crime and threw the money-changers out of the temple will consider that outcome.
However, the enablers are the AIG leaders who, as New York Attorney General Andrew Cuomo revealed Tuesday, signed those bonus contracts a year ago to reward the very people "principally responsible for the firm's meltdown." That's a cool $44 million divided among the top 10 shysters, even though the depth of their chicanery was well known to top management.
As Cuomo noted in a letter to Rep. Barney Frank: "The contracts shockingly contain a provision that required most individuals' bonuses to be 100% of their 2007 bonuses. Thus, in the spring of last year, AIG chose to lock in bonuses for 2008 at 2007 levels despite obvious signs that 2008 performance would be disastrous in comparison to the year before."
The lame argument that those bonus-baby employees needed to be retained in order to sort out the mess they had created was also shot down by Cuomo, who revealed after his office's initial investigation had pierced AIG's veil of secrecy that "[e]leven of the individuals who received `retention' bonuses of $1 million or more are no longer working at AIG, including one who received $4.6 million."
But the $165 million in taxpayer funds used to reward them is but a sideshow in a far larger drama of moral decay swirling around the banking bailout. It should not distract from the many billions, not paltry millions, of our dollars being diverted to reward the very folks who brought us such misery. Consider the $12.8 billion of the $170 billion that taxpayers gave AIG in bailout funds that AIG then secretly diverted to Goldman Sachs, a company that evidently has a lock on both the Treasury Department and the Federal Reserve no matter which political party is in power. It was the biggest payoff among those that AIG made to a score of foreign and domestic financial giants.
The bailout is a response to a banking crisis that resulted from the radical deregulation pushed by former Goldman Sachs honcho Robert Rubin when he was President Clinton's treasury secretary. Another Goldman Sachs chairman-turned-treasury-secretary, Henry Paulson, in the Bush administration designed the trillion-dollar bank bailout that will go down as the greatest swindle in U.S. history.
It was because of Paulson that AIG was saved from bankruptcy hours after Goldman rival Lehman Brothers was allowed to go down the drain. Why that reversal of strategy in a top-secret meeting called by then New York Fed Chair Timothy Geithner, a Rubin protégé and now Barack Obama's treasury secretary? Why was Goldman's Lloyd Blankfein the only financial industry CEO in attendance? When that news leaked out, his role was defended as that of a noninvolved concerned citizen with expert knowledge, and whose firm had no direct monetary stake in the outcome.
That was a lie.
Goldman Sachs was into AIG insurance policies for at least $20 billion, which is why the firm got that $12.8 billion while Paulson was in charge. It took six months for the embarrassing facts to finally come out. The bailout program was administered by Neel Kashkari, a former Goldman Sachs VP; why are we not surprised at that?
Another pretend innocent in all this is AIG's CEO Edward M. Liddy, famed defender of the $440,000 AIG executive retreat in Monarch Beach, Calif., held on the heels of the taxpayer bailout. His actions now are defended as mistakes made by a well-intentioned outsider who decided to work for a dollar a year after Paulson appointed him head of AIG. That is just garbage.
Liddy was complicit in Goldman Sachs' role in creating this mess. As a director of Goldman Sachs, he was paid $685,770 in 2007 and would have come in for some questioning if the firm had gone down. Liddy even headed its audit committee during the five years before he resigned that seat to take over AIG in September 2008. As for his salary sacrifice, not to worry; in 2005, when he was still CEO of Allstate Insurance, he received $26.7 million in compensation.
What we have here is a rare glimpse into the workings of the billionaires' club, that elite gang of perfectly legal loan sharks who, in only the most egregious cases, will be judged as criminals--Bernard Madoff, former chairman of NASDAQ, comes to mind. These other amoral sharks, who confiscated billions from shareholders and the 401(k) accounts of innocent victims, were rewarded handsomely, rarely needing to break the laws their lobbyists had purchased.
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What also concerns me me is that no one yet seems to know what the final total will be on the AIG bailout, as the company appears to still have many billions of CDS contracts outstandin
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Consider the Dow. Thirty stocks. That's it. Yet every one get uptight when the Dow dives. But how many other thousands of listed stocks, never mind companies that are privately held, go up that same day? It's nonsense that allows them to play us.
As for banks. There is no need for any bank to operate outside it's own state borders, and there is nothing a bank can (legally and in good faith) do that a Credit Union can't do better.
And the principal bad guy in this scenario is the FED. We don't need it, no matter what Hamilton may have thought. The notion of a middle man taking interest on money that our Treasury mints for us, is ludicrous, not to mention just plain bad business.
Without these underlying structures the Wall Street mess would not have been possible. End the FED. Return banks to their humble origins as a repository of deposits and facilitato
Monetary reform will never come from either major political party.
Fiat money and fractional reserve banking are not premitted by our constituti
The Fed legislatio
Eliot Spitzer (NY former AG) and William Lerach (San Diego securities class action lawyer) were lawyers who saw the disaster coming but who both were convenient
Many crusaders have debated Greenspan, for example, for decades about the dangers of the derivative
The idea that Greenspan was "taken by surprise" about the dangers his financial innovation
The meltdown was not unforeseen
Whisleblow
In San Diego, law firms are competing to assume the role of lead counsel in massive class actions lawsuits designed to redress fraud on Wall Sreet. There is not really that much competitio
The fact is that government regulation has almost always failed to regulate industries because the regulated inductries
Tort lawyers provide the most effective means of regulation where regulators are bougtht off and legislator
Reform legislatio
The biggest fraud in all of world history unfolded before your very eyes, yet most remain blind to the thieves and the process itself that robbed us.
Oh well, at least 4,300 plus US troops didn't die and countless tens of thousands wounded and maimed for life becuase of Bush/Chene
We can only wonder what the next "biggest scandel" will be.... but with the Prositutes and Pimps that make up Congress you can bet there will be many more.
I do not understand why Timothy Geithner is defending Libby, saying he is not the problem. AIG and Goldman were partners in this. AIG was more than happy to scrape out a few percentage points on the money made by Goldman when they securitize
Risk was minimized systematic
The Financial Products subdivisio
Derivative
The GSEs such as Freddie and Fanny were used to insinuate government backing so as to stimulate the credit bubble.
Go get 'em Andrew.
Don't hear you laughing so loudly now that america, and its unique brand of capiatlism
Maybe money isn't the great god you americans want it to be?
The bigger problem here is the coziness this administra