This Week in Scandals: AIG Pay and Bailout Dismay
Every week, we take stock of how the week unfolded for the stories we’re tracking in Scandal Watch (see the right sidebar). Here is how we do it. And, as always, feel free to suggest new scandals.
1. AIG
An interesting fact: The $165 million awarded to executives at AIG’s financial products division two weeks ago represents just 0.0014 percent of the $11.6 trillion that the government has committed to combat the credit crisis so far, according to Bloomberg News. Nevertheless, those bonuses caused an uproar last week that ultimately succeeded in wrangling $50 million back from the unit’s top-paid employees. Others aren’t so ready to give in to the “bonus assault”: One exec’s very public resignation in the New York Times, in which he defends the bonuses, earned him a standing ovation from fellow employees. And Congress’ efforts to obliterate those bonuses with taxes seem to have stalled.
Meanwhile, the ringleader of the financial products division, Joseph Cassano, may soon find himself in the crosshairs of a congressional investigation, reports TPMMuckraker. (Rolling Stone offers a very unflattering portrait of his reign over AIGFP.) And New York Attorney General Andrew Cuomo has widened his probe of the bonuses to include the unit’s efforts to unwind its complicated credit default swaps. (Several banks, and their employees, are now reaping a taxpayer-funded windfall from those deals.) Connecticut’s attorney general has also set his sights set on AIG, after discovering that AIGFP’s bonuses actually totaled $50 million more than previously thought.
Finally, the Wall Street Journal reported this morning that the AIG’s Credit Risk Committee, which oversaw the company’s credit default swap debacle, “remains largely unchanged.”
If the bailout was supposed to induce good behavior from banks, the bloom may be off the rose. Following news of Citigroup’s new $10 million executive suite was an ABC News report that JPMorgan Chase plans to spend $138 million on new corporate jets and a luxury hangar. And even though retention-pay rage has been targeted mainly at AIG, the New York Times reports that at least 19 bailed-out firms plan to dole it out as well.
Meanwhile, some banks are pricing their toxic assets “ridiculously high,” and Citigroup and Bank of America are using bailout money to “aggressively” buy even more risky mortgage-backed securities, reports the New York Post. Banks are also scrutinizing the Treasury’s latest plan to sell those toxic assets to see how they can reap the most profit, even as some experts say the plan will probably fail.
The Treasury finally released its contract with Bank of New York Mellon, but meanwhile, two law firms that that also have contracts with the Treasury to advise it on TARP-related matters have “offered their services to private clients interested in capitalizing on the bailout,” reports BailoutSleuth. And lastly, Portfolio reports that $2.5 billion in bailout money went to banks that cater to the rich and actually “had little or no exposure to subprime mortgages or other toxic assets.”
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2 comments
Purple Girl
March 29, 2009, 7:19 a.m.
My hair get Re set on fire everytime I watch the hearing over this economic treason. Nearly every SOB on those committees should be the ones answering questions, instead of the Corps who they aided and abetted. Frank, Shelby,Shummer…get how do you think the financial district got so many Liberties..You SOB’s gave them the pass!
Instead of just putting their names, party and state ID under their names - the Media should be giving a list of legislation they penned or voted for which allowed this wellforeseen catastrophe.
And yet they are still whining about giving back or installing new powers of Oversight to OUR Treasury Dept. It is an outrage that the Treasury dept ahs been relegated to merely printing money, while the Bankers Bank, the Fed. Reserve, has been able to Manipulate this country’s Free Market for the benefit of it’s Cronies. Congress Gutted OUR Treasury Dept and handed the contents of Our National ‘Vault’ over to the Thieves ‘GodFathers’.
Every person in Congress, every Fed Chair and Treas. Sec for the last 30 yrs should be prosecuted for Economic Treason. Start with the reinstituion of Feudalism via ‘Trickle Down’ and move forward. this was no ‘Flawed’ logic- it was well foreseen and well thought out act of malice.Our Declaration of Independence was not merely against a Family Crest- it was against any enities which attempted to undermine and control our economic sovereignty, which also includes Logos.
Of course Co conspirators like Bachmann (MN) think they are operating behind enemy lines- they are the ‘Red Coats’ our ancestors ran out over 230 yrs ago. What part of ‘We the People’ and ‘For and By the People’ do they not understand. A pledge by our founders made more in the spirit of Socialistic ideals, then those of any other. We the People do not bow down to any family Crest, insignia, upper class or Logo. don’t like that idea Bachman? Move to Saudi Arabia- I’m sure theres a sheik there who’ll take you as another wife. “Constitutionality’? Try Reading it- or get the person who wrote the question you had to read verbatium (because you couldn’t comprehend it well enough to paraphrase) to read it to you!
We need to begin IQ testing on those who run for Public office, along with a test on all our Founding Documents…In fact a breathalizer would also be in order- was Boenher Drunk when he presented that so called 19 pg ‘Budget Plan’?? Repugs apparently can only read documnets 2 1/2 pages long and it takes all of them to compose a 19 page paper- badly.
some Dems may be complicit in this economic meltdown- but they don’t seem to be suffering from self inflicted retardation like their RED COAT cohorts.
sweetpea
March 29, 2009, 5:30 p.m.
This whole AIG/bonus bailout stuff is a smoke screen. Those bastards have been skimming forever. This little pittance means nothing to them except they don’t like the principle of the thing. The few managers who gave back the bonus’s aren’t concerned. There’s a lot more stashed in offshore accounts that the IRS never got a piece of (and never will). Meanwhile we keep giving these not so clever criminals billions more to squander. I don’t know if socialism or communism is the right way to go (my gut feeling is that it isn’t) but something has to change. We will never get back to the heady days of the late eighties, nineties and first third of the two thousands. All of the losses were scratches on paper. That ‘wealth’ didn’t represent anything concrete. It was all just black (then red) ink on paper. Everyone (including myself) was riding the gravy train not paying any attention to the inevitable crash. I lost a bundle on my 401K all of which was in stocks. Many others lost much more in Hedge funds(whatever they are), real estate speculation, and who knows what all other scams. The ones on the inside no doubt came out OK. Even if they lost half of their fortune, I could probably live on half a billion as well as a billion if I really had to.
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