The news that AIG executives were to receive hundreds of millions of dollars in bonuses (maybe as high as $450 million!), even after a $170 billion dollar bailout, has fueled a populist revolt not seen since
the initial shock of the economic crisis hit Americans last October. When Obama Treasury Secretary Timothy Geithner told AIG the government would American Insurance Group CEO, Edward M. Liddy, reported that government loans might be renegotiated as a result, Liddy responded with "grave concern" over the firm's ability to retain "talented staff."
Talented in rip-off, that is. But former New York governor and supposed scourge of Wall Street, Elliot Spitzer, is reporting over at Slate that the outrage in the media over the bonuses is a diversion. (H/T Inky99 at Daily Kos.) Not that they aren't an outrage, the scandal misses the larger crime: the siphoning off of billions of taxpayer dollars to a handful of companies, who insured their highly risky investments with AIG. These companies have received hundreds of billions of dollars in bailout money. Now they are to receive 100% on the dollar reimbursement for their losses from AIG. Spitzer comments:
The payments to AIG's counterparties are justified with an appeal to the sanctity of contract. If AIG's contracts turned out to be shaky, the theory goes, then the whole edifice of the financial system would collapse.No reason? No explanation? But there is always a reason. Always an explanation, though Spitzer may not want to go there.
But wait a moment, aren't we in the midst of reopening contracts all over the place to share the burden of this crisis? From raising taxes—income taxes to sales taxes—to properly reopening labor contracts, we are all being asked to pitch in and carry our share of the burden. Workers around the country are being asked to take pay cuts and accept shorter work weeks so that colleagues won't be laid off. Why can't Wall Street royalty shoulder some of the burden? Why did Goldman have to get back 100 cents on the dollar? Didn't we already give Goldman a $25 billion capital infusion, and aren't they sitting on more than $100 billion in cash?....
The appearance that this was all an inside job is overwhelming. AIG was nothing more than a conduit for huge capital flows to the same old suspects, with no reason or explanation.
Private ownership of the wealth and capital, freed of most regulatory restraints, is the distal cause, while the proprietors of this capital have gone on an orgy of thievery that may have never been seen in the history of civilization, outside of a world war.
Consider the new TALP plan ("Term Asset-Backed Securities Loan Facility"), which bobswern has dissected so well over at Daily Kos (bold in original).
1.) $2 trillion in taxpayer funds with no salary restrictions to recipients....Congress has responded to constituent anger, and hearings are being held even today (see liveblogging of those hearings by Emptywheel over at FDL). But while more details will leak out, it's unlikely we will see much more than the spectacle of what Chris Floyd describes as "faux shock in the Beltway over Wall Street fat cats paying themselves big bonuses with the free money that Washington knowingly gave them."
2.) Shadow Bankers get almost all of their investment money for free, from you. [Shadow bankers consist of "non-bank financial institutions that, like banks, borrow short, and in liquid forms, and lend or invest long in less liquid assets... via the use of credit derivative instruments which allow them to evade normal banking regulations," e.g., hedge funds, investment banks, "structured investment vehicles," etc.]
3.) Shadow bankers will skim administrative fees off the top of $2 trillion, first.
4.) Government has virtually no say in terms of regulating what these entities must do with the money once they give it to them. [And on and on...]
The following points will never be mentioned:
... the capitalist class is a definite concrete group composed of those who own and have a monopoly over the means of production (including loanable capital). The capitalist class is bound together by innumerable personal, familial and organizational filiations; the atomized non-capitalist entrepreneur -—the central figure of bourgeois economic theory -— is a fiction. The capacity to borrow is strictly limited by one's ownership of the capital assets required for security against loans. In reality, credit under capitalism is always rationed, on the basis of specific monopoly complexes involving financial, industrial and commercial capitalists.The ingrown nature of the capitalist class, who has united to unleash a frenzy of greed and stealing, is no better illustrated than by the biography of Obama's Treasury Secretary Geithner. Born to a scion of the capitalist class -- his father was a prominent leader of the Ford Foundation -- Geithner's early career (after attending the best Ivy League schools) was working for Kissinger and Associates in Washington, D.C. He began working for various divisions of the Treasury Department as early as 1988, when he was 27 years old. He was close to two former Treasury secretaries, Robert Rubin and Lawrence Summers. During the George W years he worked at the Council of Foreign Relations and the International Monetary Fund. In October 2003, he became president of the Federal Reserve Bank of New York, and a few years later joined the elite, Rockefeller Foundation organized "Group of Thirty."
In March 2008, he arranged the rescue and sale of Bear Stearns... in the same year, he is believed to have played a pivotal role in both the decision to bail out AIG as well as the government decision not to save Lehman Brothers from bankruptcy.Hmmm... the same guy who organized the AIG bailout, with its non-regulation of monies, including millions for "bonuses" to the same execs who helped manufacture the crisis... naw, that can't be true, can it? (It is.)
Oh, and he "forgot" to pay $35,000 in self-employment taxes over several years.
rest at http://www.pubrecord.org/commentary/774-aig-scandal-america-wakes-up-to-extent-of-capitalist-thievery.html
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