24 Mar 09 The AIG Debacle and More

By: Ang Biondo

The past week has proved to be quite interesting. The American Insurance Group (AIG) multimillion dollar bonuses has the Nation in an uproar. Politico.com says “Sen. Chris Dodd (D-Conn.) could have prevented a media firestorm by giving a simple explanation about why Congress couldn’t stop AIG executives from receiving lavish bonuses — and about his role in the ongoing brouhaha.”

Senator Chris Dodd (D) is the senator from Connecticut who chairs the Senate Banking Committee. He is also the major recipient of both Fannie Mae and AIG funds, and deeply discounted 4.50% - 4.25% Mortgage loans from the now defunct Countrywide Savings Bank. Countrywide has since been taken over by Bank of America. The Wall street Journal on-line has a more detailed article on the subject.

It seems Senator Dodd (D, CT), is in trouble with his constituents at home as well. They are a might upset with news of his “Irish Cottage” deal as well as his double talk over AIG. It seems Senator Dodd partnered with a convicted felon H. John Moore , whom he asked President Clinton to pardon. President Clinton did so on his last day in office. He (Dodd) and his partner bought a parcel of land in Ireland that is referred to as his “Irish Cottage”.

The AIG bonuses were written into the executives contracts well over a year ago. Treasury Secretary Timothy Geithner, who’s tax evasion practices prior to being named Secretary of the Treasury, lacks the confidence of the American public to begin with. He is the main author of the AIG bailout. He drew up the terms of the bailout prior to his appointment to his current position, and has claimed he knew nothing about the bonuses until last week. The original bailout language supposedly contained a clause limiting executive bonuses to $100,000.00 dollars. That agreement was sent to Senator Dodd (D, CT) for approval and returned to Mr. Geithner minus that clause. Instead it included a clause that read bonuses included in the AIG executives contracts prior to Feb, 15, 2009 (or there about) would be permissible. Chris Dodd (D) has since acknowledged and denied having changed the legislative language of the AIG bailout agreement. According to Politico.com “Geithner admitted that he was the one who urged Dodd to make the changes.” So much for “transparency” in this administration.

The bottom line is Dodd and Geithner are responsible for the loophole that allowed AIG to pay the bonuses in the first place. As it is, the bonus pay out which was reported at $165 million dollars is believed to now be closer to $216 million dollars. Apparently just a slight miscalculation.

I would think the important questions that need to be answered are:

What happens when a nation declares bankruptcy?
Should retention bonuses be paid to executives who were responsible for the decisions that caused a company to fail? (I would think you would want to get rid of them, not retain them.)
Should bonuses of any kind be paid from bailout money backed by the tax payers who will be responsible for pay back of the 9.5 Trillion dollar deficit proposed by the Obama administration? This deficit will take not one but several generations to pay off, and that is providing future generations don’t encounter economic problems of their own.

Are we not ignoring our obligation to future generations by placing such a burden of immense proportions on those yet to be born? Does someone in this administration, or 111^th Congress have a crystal ball telling them we will have a thousand years of world peace and guarantee there will be no catastrophic phenomena forever more? Does not President Obama’s $9.5 Trillion dollar budget spell doom and economic gloom for generations of Americans?

One would have to be an idiot to believe that the people responsible for the legal language of the financial bailout contract for AIG were unaware of the bonuses. As a matter of fact they were quite cavalier about the bonuses. After all the bonuses were little more than 1% of the multi-billion dollar bailout why should anyone care. It is apparent the Congressional mind-set is used to the careless spending of billions of tax dollars as seen with the “Omnibus” bill with its 9000 earmarks and pork barrel spending. They seem to feel the American taxpayer is used to footing the bill and too stupid to know the difference.

AIG, is just the tip of the iceberg Politico.com reports the next battle and uprising over bonuses will be Fannie Mae and Freddie Mac who are planning large bonuses for their employees in the very near future. You know, — The same Fannie Mae and Freddie Mac that were at the root of the major economical crisis that caused this mess were in.

And still, it gets better – Greta Van Susteren of Fox News reports, AIG who would not have been able to pay the bonuses in the first place if the government would have let them go into receivership, is suing the government for $306 million dollars in over paid taxes. Since the American tax payers currently own 80% of AIG it would seem we, the taxpayers, are suing ourselves.

As always, if you don’t like what is going on - I strongly urge you to write to your Congressional representatives and/or even the President. Let them know how you feel. You can find your representatives through the following links:

The United States Senate

The U.S. House of Representatives (Congress)

The Whitehouse

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