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Bailout IG: "Who Knew What, When, And Why" On AIG Bonuses?
Neil Barofsky, the special inspector general for the bailout, told Congress this morning that he'll probe the AIG bonuses -- including what role the Treasury Department played.
In words that may send a chill up Tim Geithner's spine with their invocation of Watergate, Barofsky, asked specifically by Republicans about the Treasury Secretary's role, said his probe would seek to find out "who knew what, when and why," in regard to the bonuses.
He continued:
Preliminary information we have seen indicates that the TARP contract between AIG and Treasury that was entered into back in November specifically contemplated the payment of bonuses and retention payments to AIG employees, including AIG's senior partners.
Barfosky added that he'd work with Justice Department, as well as the office of New York Attorney General Andrew Cuomo, who is probing the bonuses, to look at ways that the money can be returned to taxpayers.
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Josh
Zachary
Each person attending the meeting: You scratch my back. I'll scratch yours. Forget the taxpayer!
March 19, 2009 1:30 PM | Reply | Permalink
Look - I've been against Geithner ever since he was nominated for the position: he's too close to Wall Street and the wrong man for the job. Signing off on these bonuses (if that's what he did) is a reflection of that. But to suggest that he's committed a crime equivalent to Watergate is ludicrous.
This AIG bonus fiasco is being 'ginned up' in Washington by the right wing echo chamber because they see it as an opportunity to hurt Obama and to derail what he's trying to do. It's largely a reflection of their own powerlessness and political desperation.
Most people aren't surprised in the least by this - they already know how greedy corporations operate and they don't expect Obama to have changed everything in two months. If anything, it only adds to the argument that there needs to be drastic change in regulations and in how corporations operate. That's why Obama is playing political rope-a-dope on this and pointing out that this is only one symptom of a much broader and deeper problem that needs to be fixed.
March 19, 2009 1:33 PM | Reply | Permalink
Knowing about a company's contracts for payments and knowing about the Democratic headquarters being broken into--yeah I can see why TPM might put those two in the same category. Because they are both impeachable crimes? This is not Watergate, at the very most it is embarrassing and Obama will take the heat for it and move on.
The question I have, where is TPM's story on how the Republicans were crying it would no longer be America if the government tried to stop executive bonuses. Where's the story on their hypocrisy? Is TPM going to let the Republicans get away with railroading Geithner when they were the ones yelling it was socialism not that long ago?
March 19, 2009 1:34 PM | Reply | Permalink
Okay, so you're insinuating that Geithner knew something about it. As far as I can tell so far, it's a bit disingenuous to suggest that without any evidence showing that.
March 19, 2009 1:36 PM | Reply | Permalink
Any meaningful investigation needs to first concentrate on whether there was a conspiracy to defraud the people who bought those bad assets in good faith, in the first place.
There's the crime. Everything else is window dressing, including the bonuses.
If there was a conspiracy to write bad loans intentionally, then pawn them off on some unsuspecting foreign or domestic entities that were led to believe those mortgages were good, that is the crux of the issue, the fulcrum on which everything else teeters.
By the time Geithner got gamed by the finance icons he respected, the crime was so deep it threatened to collapse the world financial markets. To go after geithner is like going after the fly who ate some the droppings, and ignoring the real stinky mess.
March 19, 2009 1:43 PM | Reply | Permalink
Can we please start talking about GOLDMAN SACHS & PAULSON?!!
AIG is just their dimwitted bag man...
March 19, 2009 1:45 PM | Reply | Permalink
This just keeps getting more absurd! Just when you think it's jumped the shark, someone finds a way to ramp up "the crazy."
A secret Red Cross report documenting "torture" leaks, giving the strongest evidence yet of the CIA's violation of the Geneva Conventions under the Bush administration, and we're spending our time on a witchhunt to find out who had the audacity to not abrogate legally binding contracts? Contracts that if violated could have led to even larger losses in settlement fees (especially if suit was granted class-action status) and legal fees?
Something's severely wrong with this picture.
If people want to be upset about this, fine. But, when that anger starts to cloud judgment -- and we've reached that point... We have a problem.
March 19, 2009 1:46 PM | Reply | Permalink
I definitely agree with the "jump the shark" statement. After reading the AIG retention agreement, it was clear that this was set up back in Dec. 2007 and was a very "sweatheart" deal for the employees. Fast Forward to the Fall of 2008, and the TARP money comes in. . .any shareholder getting a large or controlling shareholding interest in a company like AIG should realy be doing its own due diligence before putting up the cash. It was at that time this stuff should have come up and when the Gov't had the most leverage, i.e., tell the employees "renogotiate or you go bankrupt and get nothing". This is all just a red herring our honorable congressmen and women are using to gain populist points. Remember, Schumer was the one who killed the tax reform for Hedge Fund managers (when management fees were going to be taxed as personal income at the 30%+ rate most of those guys pay instead of fees or capital gains). Now he's like the Police Chief in Casablanca "What, there's gambling in here?".
March 19, 2009 2:02 PM | Reply | Permalink
I hate to change the subject because this is important ... but the war in Pakistan is getting bigger by the day.
I do not see much coverage of the war in Pakistan, as we must now call it ... the place is imploding ... the Americans are plunging deeper into it ...
Sorry. Yes the bonuses are outrageous. Yes the war in Pakistan is alarming.
March 19, 2009 1:58 PM | Reply | Permalink
Obama's pose/posture is inexcusable in all of this. His economic gurus insistence that the auto union workers contracts be shredded while the AIG contracts remain sacrosanct fails the smell test.
Handwriting was on the wall on this one: Obama taught at the University of Chicago law school (Home of Tory, free-marketer economist Milton Friedman ), hired UChicago economist Austan Goolsbee as his advisor on things economic and globalizing. (Remember the Canada free-trade flap?) Further, hired members from Robert Rubin's unregulated free-marketeers found at Citibank/Citigroup/Harvard/Central Bank --like Summers, Geithner, etc.
They all drank the wild west, gambling casino, economic kool-aid and then their world went into melt-down and still, incredibly, they are running (ruining) the show.
As for AIG, sure, resign, suicide or jail. AIG'ers did at least 2 crimes: 1-they took in subprime junk mortgages and relabeled them as AAA or AA securities, (Selling junk as gold is fraud).
2- Its credit default operation in London was really a gambling casino. Bets (sometimes called insurance) were placed on anything—for example, would so and so's dog die in a fire on April 3, 2013? Hundreds of people could place this bet. And, here’s the crime, they never put in the money to support these bets in case someone won the bet. Instead, they relied on the government bailing them out. If they made money on the gambling casino it was theirs, if they lost they taxpayers would bail them out.
As I said, AIG'ers resign, commit suicide or go to jail. (don't pass go and don't collect $200.00)
Moreover, as bad as Madoff’s ponzi scheme was, he's small potatoes compared to the Wall Street banking giants.
The biggest scam ever was the subprime mortgage business. Credit was so easy that anyone with a pulse was given a junk mortgage, these, in turn, were shoveled through the doors of the banks and insurers like AIG. Next, our best and brightest bankers prevailed upon the rating agencies to label the junk as AAA securities. These “troubled assets” were then sliced and diced, collaterized, leveraged 30x and sold around the world as if they were gold. The business was such a money machine that it was impossible to say no to it. When the housing bubble burst, people lost their life savings, and countries went down. It seems to me that knowingly selling junk as if it were gold is fraud. Trillions of dollars were scammed and yet no one is busted?
Obama needs to discharge his team of Wall Street enablers and get Holder to prosecute the Wall Street malefactors.
March 19, 2009 2:40 PM | Reply | Permalink
This one hurts my head...It's the kind of small potatos issue that can snowball and ruin a good marriage. BO better get a grip on it!
March 19, 2009 5:31 PM | Reply | Permalink