Who is to blame for the $165,000,000 bonuses at AIG? Now I know that before many of you read further, you have already formed an opinion, and have your torches lit and are prepared for the witch hunt. Sadly, most people have formed that opinion from sensationalist media reports, and are prepared to act while not in the best frame of mind to do so.
Do I believe that the bonuses for are warranted for those who are directly responsible for the failure of the company? No, I don’t. Let me go on record as saying that I do not understand how you can loose hundreds of billions of your company’s money, and take down many others in the financial services industry as a result, and still get a fat bonus. However, since the government has made the tax payers the primary owner of AIG, do you think that just maybe they should have set out some parameters before just handing over $170 billion? What did they know? When did they know it?
The answer may surprise many of you. If you saw the dog and pony show put on by Congressional idiots on Wednesday as they shamelessly grilled Edward Liddy, you would think our elected legislators are just as outraged as you. Guess again. The primary architect of the AIG bailout last fall was the president of the New York Federal Reserve Bank. Would you like to guess who that is? I’ll give you a hint, he is now Obama’s Treasury Secretary. That’s right, it is tax dodging Timothy Geithner!
Now if you are the lead in crafting a strategy for bailing out a troubled financial giant like AIG, you have to know where the trouble lies in the company. You have to know which divisions are causing the grief, and you should have a pretty good idea of the contracts and legal obligations currently in existence for that division and the entire company. If you are going to stop the bleeding, it is a good idea to place the bandage on the wound. You have to find the wound, and determine the depth of the cut, and the style of the cut before deciding which bandage or other medical attention is required. Before applying any medical help, you also have to ascertain if your actions will cause additional damage to other areas potentially in harms way. If there is anyone in the government who is the most familiar with the intricate problems at AIG, it is Timothy Geithner, but the problems don’t stop there. As it turns out, many others in our current government knew exactly what was going on with these bonuses at AIG long before they took place.
Two weeks ago, Senator Christopher Dodd, a Democrat, told CNN he had no knowledge of these bonuses when drafting the bailout. Yesterday he said he did know about them. Senate Banking committee Chairman Dodd acknowledged that he is responsible for language in the federal stimulus bill protecting already existing bonus contracts at companies receiving bailout money, seeing to it they were honored. The primary recipient of the bonuses in question is AIG’s derivatives branch, which is in Dodd’s home state. He said that the “grandfather clause language seemed like innocent modifications at the time.” However, he qualified his remarks by throwing the blame back onto the Obama administration, stating that administration officials pushed for the modification.
Yesterday Barack Obama defended Treasury Secretary Timothy Geithner by stating Geithner has been making “all the right moves” in dealing with AIG and the financial crisis. While at his Town Hall meeting in Costa Mesa, California, Obama said,”We didn’t draft these contracts.” He also said that no one in his administration is responsible for supervising AIG. What? Two weeks ago the president’s spokesman said they were confident that they knew how every dime was being spent by AIG! Back in February, Obama promised transparency and strict oversight of the spending of government money. By the way, is it just me or has anyone else noticed that Obama is now into this “town hall” format since he doesn’t have to openly debate John McCain during one?
While AIG has serious issues, Edward Liddy is not the man Congress should be blaming. Their shameful treatment of this man for the benefit of showing off for the cameras is deplorable. Edward Liddy came to AIG after this mess, and is doing his best to clean it up. I would like to also point out he is doing his job as CEO of AIG for only $1 a year. Congress is happy, however, to vote themselves a raise. Is Obama taking a pay cut to help America get through the crisis? Please! Liddy accurately pointed out that he has been in discussions with outside lawyers and his board for months over the “distasteful” payments of these bonuses that they knew were coming due in March. They have been informed by a battery of attorneys that non-payment of these bonuses would result in lawsuits that would eventually run a tab much larger than the $165 million.
With that said, Liddy himself has contacted many of the recipients, and has so far been successful in getting many of them to hand some or all of the money back, with no additional costs and no lawsuits. Still, that didn’t stop Congressmen like Barney Frank from threatening to up the taxpayer bill by issuing subpeonas for the names of those who wouldn’t hand the money back. Even as Liddy graciously let the Congressman know that he would do everything in his power to comply if it went that route, Barney and others seemed un deterred. Liddy asked for one small condition, that the names remain confidential, pointing out that the families of those involved had been issued death threats by blood thirsty vigilantes. Reading two threats in particular, we heard how one person said the “executives and their families should be killed and hung up with piano wire.” Another threat demanded to know where the children of these executives went to school! Yet, these Congressional grandstanders, who are supposed to uphold the law and protect American citizens seemed uncaring. Barney himself said, “I will not grant you that concession.” I suppose that getting re-elected and showboating for the cameras is more important than protecting innocent children from the crazed morons who voted these idiots into office.
Anyone who reads my blog on a regular basis should, by now, be well familiar with Barney Frank’s role in this financial fiasco. When republicans during the Bush administration pointed out that Fannie and Freddie needed tighter regulation, it was Barney Frank that stated they are the one bright spot in our economy and that “they don’t need regulation.” Oh, by the way, Frank’s lover was in charge of Fannie at the time. Remember Christopher Dodd? He echoed Frank’s sentiment, and when faced with voting on legislation to tighten restriction on Fannie and Freddie, chose instead to block the vote entirely. These two are Chairman of the House Banking Committee and the Senate Banking Committee respectively, and Democrats. Last month Republicans were getting bashed for trying to block these massive spending bills without restrictions, and now we have Democrats that want to act outraged at the result of their own complete incompetence!
In 2001, when George W. Bush took office as President, he did also at a time of a tough recession. Financial reports of the time were placing Sears and K-Mart as close to being on life support. The attacks on America nine months later only served to worsen an already bad recession, that now threatened many airlines with extinction! Yet, through that mess Bush’s response wasn’t the massive expansion of government and spending that we’ve seen from Obama. Instead Bush cut taxes and issued rebate checks to stimulate the economy, asking Congress to make the tax cuts permanent. No big corporate bailout. No massive spending bills. Our economy recovered just fine. However, the Obama administration in just his first couple of months in office has spent several generations of your decendents into massive debt, with the help of a now emboldened Democrat Congress.
So let’s review. Obama’s appointed Treasury Secretary, Geithner, was the architect of the AIG bailout. Christopher Dodd after trying to deny he knew anything about AIG bonuses, now admits that he is responsible for placing that wording in the legislation specifically allowing it, and did so with the Obama Administration’s blessing. The Democrats pushed hard to pass it quickly, while booing those mean Republicans for trying to block it. Is it possible that this AIG witch hunt and outrage perpetrated by the Democrats has only been drummed up to distract us from the fact that it is now the Democrats in power who have completely dropped the ball, knowing ahead of time what they were doing? Of course!
These Democrats specifically wrote the bailout to allow for the bonuses, and now want to blame AIG CEO Liddy for abiding by the legislation they wrote. Liddy wasn’t the CEO of AIG when these contracts were written, and made it known that if he were, they wouldn’t have existed. But if you just love the liberal socialist, I mean Democrat that you voted for, then feel free to completely ignore the facts while you happily sing about the “change you can believe in.” I can happily say I didn’t vote for a single one of them. I can sleep at night peacefully knowing that. I hope that those of you who did are happy with all of this wonderful change we are seeing. I can honestly say this isn’t only change we don’t need, it’s change no one should believe in!
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