Observations from the Cheap Seats
- Amateur Hour at the White House continues – Unbelievable!!
- The AIG Mess – ahhh!! Let me do something that may tick my conservative brethren off – I don’t think it’s that big a deal. Maybe, I should rephrase that – we are all focused on the wrong part of the issue and all by design. Let me explain.
- What is the real problem with the AIG situation? Is it that $167 million were paid in bonuses? I submit no. I know that it smells to high heaven, but this is one time when the source of the stench isn’t easy to detect. These AIG bonus payments were actually not “bonus” payments in the purest sense of the word – they were not incentive based payments, but rather contractually “guaranteed” retention payments contracted by AIG in 2007 to make sure that it kept highly compensated personnel from conducting a mass exodus at a point in time when the breadth of AIG’s financial difficulties were not totally clear. These payments did not come about by virtue of the bailout – they came about by contract and they were owed to the people who received them. Plain and simple.
- Now, did that AIG contract make sense? Monday morning quarterbacking would tell you – no, probably not. But in a terribly fast-paced and evolving, or devolving, financial mess, AIG execs gambled that that they needed to retain their talent in order to stay afloat. At the time, it seemed like a gamble worth taking – in retrospect, it was a gamble destined to lose. That, however, does not make the contractual payments to the employees, who pressed on with AIG’s business “any less guaranteed.” And, it was on that basis that these employees either had to be paid what had been contracted or AIG would have been sued – and, with little to no doubt, AIG would have lost.
- The shame in all of this is the duplicity with which the Administration claims it wasn’t aware of these prospective “bonus” payments, when it structured the most recent $30 billion bailout payment. Of course, they were aware. Geithner’s deputy at his prior Fed post was intimately involved with the AIG compensation committee. Are we to believe that she didn’t communicate with Geithner about what went on? Further, it was and remains Geithner’s responsibility to KNOW these things, prior to extending more taxpayer money. Of course, he knew AND, if he knew, then HE knew. You get what I’m saying? And, that’s the real story here – this is the stinking pile of refuse from which the stench flows. The Administration knew and did nothing about it and probably encouraged the Senate write-out of the provision – now faced with taxpayer disgust, the Administration AGREES and then points fingers at those BAD, BAD AIG people. What a crock!!
- And, of course, Chris Dodd knew and this is the even greater duplicity in this matter – Dodd writes out a provision designed to prevent this from happening with bailout money and then plays a shell game with his descriptions of what exactly occurred – first, it was this; then, it was that; then, it was this, and, now we know that Mrs. Dodd has a link to AIG – well, well, well. Different day, different story.
- Remember this as well, each day the AIG story dominates the front pages, then we are being sold the Administration platform that limits on executive pay are worthy of broad public support, while we are simultaneously being diverted from the bigger story which is the economy’s gradual slide to socialism. This Administration’s slight of hand would and should make illusionists David Copperfield or Franz Harary envious and the American taxpayer nauseous.
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