Shades of Gray

AIG Outrage: The D.C. Magic Trick

Posted in Bailout, D.C., Washington by Wayland Abernathy III on March 18, 2009

Are you still wondering if Washington is lying to you about this bailout ‘crisis’ regarding AIG? You’ll get it eventually. I’m simply here to help you along on your ‘quest for the truth.’

Tagged with: , ,

Barney Frank – Crusader for Justice?

Posted in Bailout, Barney Frank by Wayland Abernathy III on March 17, 2009

I threw up in my mouth a little when I read this:

Representative Barney Frank, the Democratic chairman of the House Financial Services committee, kicked off what’s likely to be a loud refrain this week on Capitol Hill, when he aimed fire this morning at American International Group for the bonuses it doled out to employees at the same time it has been propped up by hundreds of billions of dollars in bailout money. Mr. Frank’s remarks followed a torrent of criticism this past weekend from Obama administration officials, who had demanded that A.I.G. should renegotiate the packages totaling hundreds of millions of dollars.

“Clearly not enough was done in the beginning to put conditions on A.I.G.,” Mr. Frank said in an interview on NBC’s “Today” show. While he said he wanted to review whether A.I.G. was contractually obligated to pay out the bonuses, as it contended, he also questioned whether the recipients of the money should remain employed.

See, after I washed out my mouth with some Dr. Pepper, I had to double check to make sure Mr. Frank was actually speaking and didn’t have someone’s hand up his butt doing the speaking for him. To my dismay, I did not see anyone from Jim Henson’s Muppet’s near the scene of this crime. He really did say this.

Amazing, isn’t it? Unfortunately, this is quickly turning into a case study of the arrogance of our Congress. Harsh words? Nope – read on:

“These people may have a right to their bonuses, they don’t have a right to their jobs forever,” Mr. Frank said, charging that the bonuses amounted to rewards for incompetence. And he added: “These bonuses are going to people who screwed this up enormously.”

Does he not see that the trail of breadcrumbs leads to his office door? I can dream that Mr. Frank was speaking about Congress, right? A perfect example of a Freudian slip? This is better described as a nightmare. I hope I wake up soon.

The rest of the article alludes to more ineffectual, time-wasting solutions that Captain Barney will provide. Oh, joy.

Mr. Frank was quick to point out that before Congress acted on a bailout package last fall, the Federal Reserve began helping to bail out A.I.G. Oversight by the Fed, he added, represented authority granted back in the 1930s and needed to be examined thoroughly.

A.I.G.’s actions are no doubt adding to what The Times’s Adam Nagourney analyzed today as a rising current of populist backlash that could complicate efforts by the administration and Congress to restore confidence in the economy.

According to The Times’s Ed Andrews and Peter Baker, the bonus schedule was established before A.I.G. received $170 billion in taxpayer bailout money:

The retention plan also calls for another $230 million in bonuses for 2009 that are due to be paid by March 2010. Combined with the 2008 bonuses, that would bring the total retention pay for financial products executives to $450 million. But in response to pressure from Treasury Secretary Timothy F. Geithner, A.I.G. agreed to reduce its 2009 bonuses for the financial products unit by 30 percent.

The bonus plan established for the financial products unit before the federal government stepped in called for $220 million in retention pay for 400 employees for 2008. About $55 million of that was paid in December and the remaining $165 million was paid on Friday.

See now, doesn’t that make you feel tingly all over? Captain Barney is here to protect us from the evil corporate thieves.

Who will protect us from Barney and the thieves sitting next to him?

White House concerned about backlash over bailout?

Posted in Bailout, White House by Wayland Abernathy III on March 17, 2009

It seems that folks in our White House are looking for ways to get out from under their bailout policies already; or at least explain away any direct involvement with those policies and their relation to the President’s agenda. It seems that people are actually complaining about what the President is doing. Can you believe that? What nerve…

The Obama administration is increasingly concerned about a populist backlash against banks and Wall Street, worried that anger at financial institutions could also end up being directed at Congress and the White House and could complicate President Barack Obama’s agenda.

Hhhmmm. What gave them that idea? I bet it didn’t come up in the 8:30am conference call with “The Lefty Gang.” And to add to the fun:

The administration’s sharp rebuke of the American International Group on Sunday for handing out $165 million in executive bonuses — Lawrence H. Summers, director of the president’s National Economic Council, described it as “outrageous” on “This Week” on ABC — marks the latest effort by the White House to distance itself from abuses that could feed potentially disruptive public anger.

Sorry, folks, but you cannot get far enough away from the abuses that have been piled up. Guess what? There’s more fun to be had:

“We’ve got enormous problems that need to be addressed,” David Axelrod, Mr. Obama’s senior adviser, said in an interview. “And it’s hard to address because there’s a lot of anger about the irresponsibility that led us to this point.”

“This has been welling up for a long time,” he said.

That would be hilarious if this wasn’t just another way to show the American people that Obama is “doing what’s best for the Country.” Is Axelrod saying that “a lot of anger”, in the form of a populist backlash, is keeping President Obama from moving forward with his agenda? So now, the American people are to blame for holding up the gravy spending train? Is he serious?

Mr. Obama’s aides said any surge of such a sentiment could complicate efforts to win congressional approval for the additional bailout packages that Mr. Obama has signaled will be necessary to stabilize the banking system.

As it is, there have already been moves in Congress to limit compensation to executives at banks and Wall Street firms that are receiving government help to survive.

Yes, he is serious. This just isn’t funny anymore.

Why can’t Congress limit compensation to themselves before they try to force any business to do so? Congress is receiving government help to survive, too. And why can’t they seem to get through the vetting process without missing the obvious stuff? Don’t they have staffers that know what they are doing – yet?

An Employee Retention Plan (PDF) was in place between AIG and many of their executives. Whether these contracts would hold up under scrutiny remains to be seen. To date, a copy of a contract has not been submitted for perusal. Check out the letter that AIG CEO Ed Liddy sent to Treasury Secretary Timothy Geithner (PDF).

Enjoy the hearing by the House Financial Services Committee tomorrow at 10:00 am EST. Seems to me that Barney Frank continues to direct his hollering at the wrong people. Someone should throw up a mirror in front of the dais so the comments reach the proper party.

To continue:

A New York Times/CBS News Poll in February found that 83 percent of respondents said the government should cap the amount of compensation earned by executives of companies that are getting federal assistance.

Mr. Obama’s advisers argued that to at least some extent, this was a sentiment they could tap to push through his measures in Congress, including raising taxes on the wealthy. They pointed out that in his speech to Congress, Mr. Obama denounced corporations that “use taxpayer money to pad their paychecks or buy fancy drapes or disappear on a private jet.”

Has Nancy Pelosi incorporated herself? She and many others in Congress, across party lines, “use taxpayer money to pad their paychecks or buy fancy drapes or disappear on a private jet.” I’m just sayin’….

Still, aides acknowledged the risks of a backlash as Mr. Obama tries to signal that he shares American anger but pushes for more bail-out money for banks and Wall Street.

For all his political skills and his capturing of the nation’s desire for change in the 2008 election, Mr. Obama, a product of Harvard Law School who calls upscale Hyde Park in Chicago home, has shown little inclination to strike a more populist tone. The danger, aides said, is that if he were to become identified as an advocate for the banks and Wall Street, people could take out their anger on him.

“The change now is you have a free-floating economic anxiety that has expressed itself in a kind of lashing out at those being bailed out and people who are bailing out,” said Michael Kazin, a professor at Georgetown University who has written on populism. “There’s not really a sense of what the solution is.”

“I do think there’s a potential for a ‘damn everybody in power’ kind of sentiment,” Mr. Kazin said.

Very insightful, don’t you think? Thanks for stating the obvious, Mr. Kazin. We appreciate that.