How is this different from the mob?

They risked OTHER people’s money knowing that if it worked (even temporarily) they would get rich and if it didn’t or when it crashed, they would walk away with millions.

Other people (in this case, taxpayers) are stuck holding the bag.

How is this different from the mob taking over a restaurant, running up huge debts and torching the place when there is no more credit?

Nicer suits and fancy degrees are about the only difference I see.

Particularly the “He and David Axelrod were probably blindsided by the public furor that this news kicked up, even though the Administration was well aware that the bonuses would be paid, so they decided to jump in front of the parade.” part.
It is my completely inexpert opinion that this whole AIG thing is nothing but a smoke screen.
A “play to the gallery” as you noted, but intended to make as many people as possible focus on the right hand, while the left hand slips yet another knife in our collective backs.
When “earmarks” are inserted in all manner of other bills, it can be next to impossible to figure out who did it.
But this Dodd inserted language that exempts, very specifically, AIG contracts from bonus payments? THIS we know all about without even a little bit of waffling?
Kind of stinks to me.
There is some other agenda at work here and, yes, it might even be called a plan, agenda or conspiracy.
And, so far, it’s working.

AIG was headed by a Republican by the name of Hank Greenberg until 2005.

Democrat Elliott Spitzer who was NY Attorney General at that time went on a withhunt at AIG, Greenberg was sacrificed to back Spitzer off and the AIG financial statements were restated.

Then AIG began writing these credit default swaps for much of Wall Street that enabled them to do sub-prime mortgages.

Do you get it? Something smells around Senators Schumer, Clinton and Chris Dodd and AIG! And Spitzer was the hatchet man!

The thought that since AIG was in the insurance business, CDS was natural line for them is mind boggling. I doubt, and believe history shows that very few people including their so-called legendary financial risk staff understood the risks. Early on, the Street knew AIG was holding a huge amount of the CDS risk; my only question is why the regulators didn’t? I guess everyone has also forgotten that Chris Dodd and Barack Obama were AIG’s to biggest political recipients. Plus he voted “present” on the original AIG bailout and is knee deep in the whole mess;
http://www.weeklystandard.com/weblogs/TWSFP/2008/09/required_reading_obama_and_aig.asp

I guess he is counting on short memories, long winded rhetoric and shoe shining acolytes.

By the way, I won’t defend bonuses for anyone involved in creating this mess. But most other units of AIG actually make money and until we get more specifics, I will hold my fire.

That said, contractual commitments which are not recent epiphanies should be blamed on the ridiculous people in Congress that approved this nonsense (including Mr. “Present”). In a bankruptcy court, they would have been one of the first items cross off the list.

This is not a rhetorical question but a serious one from someone who is still trying to learn the basics of the situation.

Could you point me in the direction of an article or two going into more detail, perhaps one of your own RedState articles?

Thanks.

Why was Robert Gibbs, Press Secretary to the White House, just doing the Obama two-step when asked when Geitner and the White House knew about the bonuses? Is it possible that he’s lying?

If the whtie House knew before the bonuses were paid out – - and I’m guessing they did, they are lying to the American public in order to cover their own a__. . It would certainly seem unlikely that Geitner was unaware of the bonuses long ago, since he helped put together this ‘bail-out’ package.

I think the people who were given contractual agreements for bonuses are not the criminals here. The government allowed that any contracts before a certain date would be honored (via Chris Dodd). It would defy credibility to imagine that this was a surprise to the Obama administration. Yet Obama gets up and rants and raves about how incensed he is … now.

A better man would have come out and said that these bonuses were a mistake – - something that would not happen again with any other ‘government take over’. He might have said that the contracts were legal agreements and that the US government would honor those since there were no limitations in this area. Obama is not a man of character and would not understand this concept.

Obama is not the first ‘leader’ to use a strawman to blame for his own mistakes.

The worst thing I’ve heard today is Barney Frank’s suggestion that he wants to change the tax code on thse bonuses so there is nothing left. When someone as dishonorable as this man suggests using tax codes to punish, we have to be deeply concerned about all our freedoms. If they can do it to these people, they can do it to you.

I thought that one of the main points of the US Govt becoming the majority shareholder in AIG was to eventually liquidate the assests of the Financial Products division. I would also hope part of this plan would be to put in place regulations that would not allow one company to amass so large of a pool of assests/swaps/whatever that its failure wouldn’t bring the whole thing tumbling down, unless that company could withstand a complete collapse.

My question is, since we can’t seem to liquidate the assests quick enough why doesn’t the US Govt swallow up the whole of the FP division convert the swaps to Treasury bonds and sell those to recoup the money and end the Financial Products division outright. There goes all of the bonuses, payroll and other associated costs that are causing this division to hemorrage even more money than it currently is by putting up additional collateral on its swaps. (I understand that those are a mere drop in the bucket compared to their collateral positions) I’m by no means an expert in things financial but since the US Govt is techincally on the hook for the whole thing this would seem to be a much tidier solution. And who doesn’t want to buy Treasury debt from the US Govt?

The tactics are the same. Obama and the Democrats have staged an incendiary event to justify further expansion of dictatorial powers. Here they are planning to take a controlling governmental interest in the financial realm; if the plan goes smoothly, then next time it will be the Justice Department and Republican politicians.

We are very rapidly approaching the event horizon, and our Republican leaders are rearranging the deck chairs.

Bankers (and not even derivative traders) cause systematic risk, period. The people who set up the faulty regulatory system caused this. Bankers live in the world regulators make for them. Short sighted and/or incompatent bureaucrats and politicians caused this.

Save a banker, eat a politician. Vent over.

A lot of us depend on you for a dispassionate analysis of these events.

They make it a lot easier for us to make our rants and raves more logical.

Treasury knew who AIG’s counterparties where at the beginning of this event. More importantly, so did the politicians. They (the polticians) knew it would be politically unpopular to directly “bail out” the counterparties, many of whom were foreign institutions (plus a few high profile domestic firms- GS comes to mind). Anyone that read initial Treasury guidance was aware that “global” institutions were not excluded from this or TARP for that matter.

Structuring a bankruptcy where the US ensured counterparties were paid as “secured creditors” (full faith and credit of our tax money), AIGFS was put out of business and the profitable parts of AIG’s Insurance business were either packaged (in whole) or sold (in parts) was the best option. As you may know, bankruptcy provides inummerable options related to creditors and debts-one of which would have been to take the bonuses off the table- end of issue. I don’t buy the argument AIG’s CDS portfolio was too complex for anyones else but current staff to manage.

Instead, we have rushed into gratuitous bailout after bailout based mostly on the so-called “confidence risk” to the market (this is Bernanke’s familiar refrain lately, as he wrings his hands and says there was no choice). Forgive me if based on the aforementioned this tact appears to be a strawman, merely constructed to give politicians cover for their incompetency and slight- of- hand trickery.

Overall, I would posit most politicians knew exactly what was happening and why (especially the Financial Services Committee and NY Senators lke Schumer). The big lie is their feigned outrage over bonuses which probably represent less than 1% of total bailout money.

Treasury knew who AIG’s counterparties where at the beginning of this event. More importantly, so did the politicians. They (the polticians) knew it would be politically unpopular to directly “bail out” the counterparties, many of whom were foreign institutions (plus a few high profile domestic firms- GS comes to mind). Anyone that read initial Treasury guidance was aware that “global” institutions were not excluded from this or TARP for that matter.

Structuring a bankruptcy where the US ensured counterparties were paid as “secured creditors” (full faith and credit of our tax money), AIGFS was put out of business and the profitable parts of AIG’s Insurance business were either packaged (in whole) or sold (in parts) was the best option. As you may know, bankruptcy provides inummerable options related to creditors and debts-one of which would have been to take the bonuses off the table- end of issue. I don’t buy the argument AIG’s CDS portfolio was too complex for anyones else but current staff to manage.

Instead, we have rushed into gratuitous bailout after bailout based mostly on the so-called “confidence risk” to the market (this is Bernanke’s familiar refrain lately, as he wrings his hands and says there was no choice). Forgive me if based on the aforementioned this tact appears to be a strawman, merely constructed to give politicians cover for their incompetency and slight- of- hand trickery.

Overall, I would posit most politicians knew exactly what was happening and why (especially the Financial Services Committee and NY Senators lke Schumer). The big lie is their feigned outrage over bonuses which probably represent less than 1% of total bailout money.