Wednesday, March 18, 2009

Gingrich Calls on Obama to End Bailouts
"Outrage" is the word on everyone’s lips to describe the fat bonuses being paid with taxpayer funds to the failed executives at AIG -- and it is an outrage.

It’s an outrage that the American people are being asked to pay for the bad behavior of people who should have known better, be they reckless traders on Wall Street or reckless borrowers on Main Street.

But the cure for our outrage is not merely, as President Obama is demanding, that AIG be prevented from paying its executives. The $165 million in planned bonuses -- as manifestly undeserved as it is -- is chicken feed compared to the $170 billion in taxpayer funds AIG has received so far.

Nor is it acceptable to ask Americans to keep throwing their tax dollars at failed companies and their leaders.

The answer is an old fashioned one: AIG should choose between receivership or bankruptcy. It should not be allowed to choose more bailouts from the taxpayer.

Restore the Rule of Law: Allow Failing Corporations to go Bankrupt

Under U.S. law, Chapter 11 bankruptcy allows a company to reorganize. Chapter 7 allows a company to dissolve itself.

The choices for AIG, as both an insurance and non-insurance company, are more complicated, but ultimately boil down to the same options. And for other companies either receiving or looking to receive a bailout from the taxpayers, the option should instead be bankruptcy.

Bankruptcy would send a needed message to U.S. investors: Don’t assume the government will bail you out when you do something stupid.

And most importantly, bankruptcy would replace the rule of politicians over U.S. financial institutions with the rule of law. 

Geithner Didn’t Inherit the Policy of Throwing Billions at Failing Companies -- He Helped Create It


Because when it comes to Washington’s handling of the financial crisis, so far we’ve had the rule of politicians, not the rule of law. 

Most prominent among the politicians in question is Treasury Secretary Timothy Geithner.

As Americans’ level of outraged has risen, so has the level of finger pointing by Geithner and others for the mess we’re in.

But Treasury Secretary Geithner is disingenuous at best and untruthful at worst when he says that he “inherited the worst fiscal situation in American history.”

The truth is that Secretary Geithner didn’t inherit the policy of throwing billions of taxpayer dollars at failing companies -- he helped create it.

Even before he was Treasury Secretary -- when he was still head of the New York Federal Reserve -- Geithner was so deeply involved in the government’s bail out of Bear Stearns, its take over of Fannie Mae and Freddie Mac, and its bailout of AIG that this was the Washington Post’s headline from September 19, 2008:

“In the Crucible of Crisis, Paulson, Bernanke and Geithner Forge a Committee of Three” 

The first meeting of the first bailout -- of Bear Sterns -- was held in Geithner’s office. And the first meeting of what has become a $170 billion bailout of AIG was held -- where else? In Geithner’s New York Fed office.

Why Not Bankruptcy for AIG? Because Wall Street Wouldn’t Have Done As Well


From the outset, Geithner was central to the developing policy of having the taxpayers bail out ailing financial institutions like AIG rather then allow them to go bankrupt. And for months now, we’ve been told that these bailouts were necessary to avoid a wider, cataclysmic, financial meltdown.

But now it’s clear that other, less noble, considerations were at play.

As the Wall Street Journal editorialized yesterday, the real outrage over the AIG bailout isn’t executive bonuses, it’s that billions in taxpayer funds intended for AIG have been passed through to benefit foreign banks and Wall Street behemoths like Goldman Sachs.

And as former AIG CEO Hank Greenburg testified last October, these financial institutions wouldn’t have faired as well if AIG had filed for bankruptcy protection rather than do what it did, which was to negotiate a bailout with Timothy Geithner’s New York Federal Reserve. 

Here’s how Greenburg put it:

“Although AIG stockholders could have fared better if the company had filed for bankruptcy protection, other stakeholders -- like AIG’s Wall Street counterparties in swaps and other transactions -- would have fared worse.” 

For the Cost of Bailing Out AIG, Every American Household Could Have Free Electricity For a Year

So now everyone is outraged, and rightly so. But the lavish executive bonuses being paid with taxpayer funds are just the beginning of the story.

So far, the American taxpayers are on the hook for $170 billion to AIG -- that’s an astounding $1,224 per taxpayer.

What else could we have done with all this money?

$170 billion would pay for more than doubling the Navy’s fleet of aircraft carriers.

$170 billion would pay for a four-year education at a public university for more then two million Americans.

$170 billion would cover the electricity bill of every household in America for an entire year.

When You Reward Failure, All You Get is More Failure

What Washington should learn from all this outrage is to return to the common sense that should have guided it all along: When you reward failure, all you get it more failure.

A company that needs a $170 billion taxpayer bailout is a failed company. The executives that led that company are failed executives. But instead of having to face the consequences of their failure responsibly through bankruptcy or receivership, AIG and its Wall Street “counterparties” are being rewarded for their recklessness -- with our money.

Thanks to the Bush-Obama-Geithner policy of bailing out failing companies, we now have the worst of all possible scenarios: A taxpayer subsidized, government supervised private company; an unsustainable public/private hybrid that is too public to make its own decisions and too private to be responsible to the taxpayers that are keeping it alive.

Outrages like the fat cat bonuses currently dominating the headlines will only continue as long as the rule of politicians supplants the rule of law on Wall Street.

Congress should rethink this entire process. The dangers of a domino-like financial meltdown are real. But so, too, is the danger that the outrage of the American people will reach the point that we no longer trust the dire warnings -- or the righteous indignation -- coming from Washington.

Your friend,

guess i missed this memo.... sorry....

Madison's Dance Recital

Thrsday May 21 @ 7pm at the Stillwater Community Center

Senator Barack Obama received a $101,332 bonus from American International Group

Senator Barack Obama received a $101,332 bonus from American International Group in the form of political contributions according to Opensecrets.org. The two biggest Congressional recipients of bonuses from the A.I.G. are - Senators Chris Dodd and Senator Barack Obama

surprised???  

Chris Dowd, Barney Frank and Bill Clinton allowed credit swaps to be created, and opened up the housing market so anyone could by a home regardless of ability to pay... and the chief tax cheat... Gietner was head of the NY Fed after working on wall street for some of the very companys that have failed or been bailed out....   

and Obama was where.....    doing what....   and we expected him to be a LEADER...  with new faces, oh my America.. the jokes on us...  

the very folks who caused this mess are trying to fix it.. oh my oh my...  on the farm, that would be like asking the fox to please guard the hen house....  and the least of this is 4 years.....  4 long years.....  or 8 if all of America does not wake up and realize this cat does not have a clue what to do....  and he is keeping one promise.. he promised change... and he certainly has given us that...  from a prosperous nation to one in utter chaos....  and broke.... and dependent on our Friends and Enemys to get us thru this mess...   Is this the change you wanted??? and wait till things start getting better and interest goes to 30% and there is NO more money to fund all the new stuff and then there will be massive layoffs again...  and the cycle continues, instead of fixing things...  

AIG, why not fire everyone there, hire competent folks to run it, and only pay off cents on the dollars to those idiots with credit swaps... instead at 100%...

ok... off soap box.. have a great day... enjoy the change in your pocket, if you have any, cause the gov. will have it soon... 
March 18, 2009
OP-ED COLUMNIST

No Boiled Carrots

WASHINGTON

Barack Obama even needs a teleprompter to get mad.

On St. Patrick’s Day, the president spoke a bit of Gaelic, dyed the White House fountains green and talked about his distant relatives in the tiny Irish town of Moneygall, aptly named since money and gall are the two topics now consuming him.

But Mr. Obama is still having trouble summoning a suitable flash of Irish temper at the gall of the corrupt money magicians who continue to make our greenbacks disappear into their bottomless well. He’s got to lop off some heads.

As he watches the fury of ordinary Americans bubble up at those who continue to plunder our economy, he should keep in mind one of my dad’s favorite Gaelic sayings: “Never bolt the door with a boiled carrot.”

His lofty team of economic rivals is looking more like a team of small forwards and shooting guards. At the White House on Monday, the president read reporters some tough talk from the teleprompter about the chuckleheads at A.I.G., accusing them of “recklessness and greed.”

But it was his own boiled carrots who acted shocked at bonuses that they should have known were coming, and should have dismantled before handing A.I.G. another $30 billion two weeks ago. It is bad enough that the billions are being laundered through A.I.G. to the likes of bailout double-dippers Goldman Sachs, Citigroup and Bank of America, not to mention foreign banks.

Mr. Obama belatedly tried to stop the tumbrels that began rolling toward the Potomac after Larry Summers went on Sunday talk shows to assert that there was nothing the administration could do about the blood-sucking insurance monstrosity’s venal payout.

Summers, who inspires lusty dreams of A.I.G. tormentor Eliot Spitzer, asserted that the government “cannot just abrogate” contracts with financial vampires. It seems as though it would be pretty easy to upend a bonus contract that must read something like: “If you ruin the world economy, we’ll pay you an extra million.”

As Andrew Cuomo pointed out on Tuesday, 11 of the A.I.G. executives who received retention bonuses of $1 million or more — including one who received $4.6 million — were not even retained. They’re no longer working at A.I.G. Bonuses were paid to 52 people who have left the company.

At first, on the nutty bonuses, Team Obama thought it could get away with the same absurd argument used to justify the nearly $8 billion in unnecessary earmarks it allowed Congress to jam into this year’s overdue spending bill: It was written last year; we’re just signing off on it; we’ll do better in the future.

What President Obama should have said to the blood-sucking bums at A.I.G., many of them foreigners who were working at the louche London unit, was quite simple: “We stopped the checks. They’re immoral. If you want Americans’ hard-earned cash as a reward for burning up their jobs, homes and savings, sue me.”

He also should have saved a dollar a year and fired Ed Liddy. There must have been ways to avoid rewarding the perpetrators of our financial crisis and Liddy seems to have seriously explored none of them.

Barney Frank told reporters: “I think the time has come to exercise our ownership rights ... and then say as owner, ‘No, I’m not paying you the bonus. You didn’t perform. You didn’t live up to this contract.’ ”

Cuomo, who seems far more intent on transparency than Mr. Obama, and Tim Geithner, the Treasury secretary who reluctantly signed off on the bonuses, issued subpoenas for the names of the bonus babies. Cuomo started an investigation of whether the payments were fraudulent because the company knew it did not have the funds to cover them.

The president needs to brush back the arrogant, greedy creeps who kneecapped capitalism, rather than cosseting Wall Street for fear of looking like an avatar of socialism.

Geithner, who comes from the cozy Wall Street club, and Liddy believe it’s best to stabilize the company and keep on board the same people who invented the risky financial tactics so they can unwind their own rotten spool.

Isn’t that like giving bonuses to the arsonists who started a fire because they alone know what kind of accelerants they used to start it?

“Their mythology starts with the false premise that these are irreplaceable geniuses,” says Cuomo.

Boiling mad that A.I.G. made more than 73 millionaires in the unit that felled the firm, Cuomo called the company’s counsel on Monday to demand that she stop payment on the checks. Cuomo was informed that the money had already been direct-deposited in the accounts of the derivative scoundrels with the push of a button.