AIG bailout the worst of both worlds

posted at 8:16 am on March 18, 2009 by Ed Morrissey

Clowns to the left of me, jokers to the right, here I am …

Stealers Wheel sang that three decades ago, but they could just have well described the AIG bailout.  Two successive administrations, Republican and Democrat, have thrown over $150 billion at the failing insurer, soaking up an impressive 80% stake, but as discovered this week, holding almost no ownership power.  Now that retention bonuses amounting to less than 0.1% of the government investment have embarrassed Congress and the White House, the two political parties have finally diverged on the lesson learned — a bit late:

Though the outrage is bipartisan on Capitol Hill over the $165 million bonus payout by American International Group, the solutions are not.

Republicans are touting the incident as proof that the government should get out of the bailout business, while Democrats are using the public outcry to push more government regulation and intervention, including a plan to take over AIG.

When House Financial Services Committee Chairman Barney Frank, D-Mass., walked out of his hearing room Tuesday afternoon, he told reporters “it’s time for us to take over the company.” …

Republicans on Tuesday morning lambasted the administration for poor handling of the bailout money, pointing to a March 2 transcript in which White House press secretary Robert Gibbs asserted that Obama knew where the bailout money given to AIG and other financial institutions had been spent.

House Minority Whip Eric Cantor, R-Va., said the bonus flap puts a spotlight on excessive government spending and involvement in rescuing private companies.

In truth, either solution would have been better than the one pursued since last September.  We chose, in essence, the worst of both worlds.  We spent all of the money it took to nationalize a company without gaining any authority to direct its actions.  If the government allowed AIG to declare bankruptcy while making itself the receiver, all of those contractual obligations would have been ended, and the government would have not had to pay any more than it already has while gaining actual control of the company.

Or we could have simply allowed AIG to sink on its own.  Both Henry Paulson and Tim Geithner insist that AIG’s failure would have crashed the world’s economy.  It certainly would have been painful, but it would have been a one-time shock from which other opportunities flow, just as any private failure is.  Instead, we have a slow-motion crash, one that continues to occur.  No one seems to know where the actual money goes, which is the point belatedly made by Republicans who see a political opening in the failure of a policy most of them supported last fall.

Either nationalize or leave private industry to fail privately.  I prefer the latter, as it keeps government from becoming fascistically powerful in dictating economic choices and limiting individual freedom in the marketplace — but choose one or the other.

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Allot of confusion could be avoided if Congress wouldn’t wait until after passing legislation to begin reading what it was they voted on.

repvoter on March 18, 2009 at 8:47 AM
+1
But even if they had, do you think any of them would have understood it?

scalleywag on March 18, 2009 at 9:12 AM

No I don’t and if any of them were fortunate enough to have graduated from the California public school system then they don’t know how to read it….

repvoter on March 18, 2009 at 9:43 AM

The Beltway crowd has been selling the story that AIG failed because it operated in a shadowy unregulated world and cleverly exploited gaps among Washington overseers

Truth.

sethstorm on March 18, 2009 at 9:22 AM

How can that statement be “truth” when right below it is listed all the regulations that were in place:

Scott Polakoff, acting director of the Office of Thrift Supervision, told the Senate Banking Committee this month that, contrary to media myth, AIG’s infamous Financial Products unit did not slip through the regulatory cracks. Mr. Polakoff said that the whole of AIG, including this unit, was regulated by his agency and by a “college” of global bureaucrats.

But what about that supposedly rogue AIG operation in London? Wasn’t that outside the reach of federal regulators? Mr. Polakoff called it “a false statement” to say that his agency couldn’t regulate the London office.

And his agency wasn’t the only federal regulator. AIG’s Financial Products unit has been overseen for years by an SEC-approved monitor. And AIG didn’t just make disastrous bets on housing using those infamous credit default swaps. AIG made the same stupid bets on housing using money in its securities lending program, which was heavily regulated at the state level.

The truth is that regulations don’t mean a thing when wall street and their friends in government like Geithner and Dodd rewrite them or poke holes in them behind the scenes.

Just like Barney’s,Dodd’s,Water’s and other democrats constant defense of Fannie/Freddie that they were strong and needed no regulations that were put forth by Republicans,their pathetic outrage and playing dumb while they wrote and allowed these types of policies can only be believed by the most devoted ignorant Obama apologist.

Baxter Greene on March 18, 2009 at 9:45 AM

kelley in virginia on March 18, 2009 at 9:35 AM

I find it interesting that Liam Neeson’s wife takes a spill on the slopes the other day in the Great White North. His wife’s from the UK. Do they proceed to keep her in Canada or rush her back to the UK for their terrific nationalized medical facilities. No, she gets rushed to the U.S.

Neo-con Artist on March 18, 2009 at 9:45 AM

Obama’s administration is making fools of itself dealing with Russia,Britain,and Columbia so far.
Obama is breaking promises left and right.
Baxter Greene on March 18, 2009 at 9:34 AM

Syria’s Assad praises Obama, wants meeting

ROME (Reuters) – Syrian President Bashar al-Assad said he hoped to meet U.S. President Barack Obama and expressed his willingness to help mediate between the West and Iran.

Assad, in an interview with Italian newspaper La Repubblica published on Wednesday, also confirmed he was ready to resume peace negotiations with Israel but expressed concern about the political climate there.

“With the pullout in Iraq, the will for peace, the closing of Guantanamo, (Obama) has shown himself to be a man of his word,” he said, referring to the U.S. naval base in Cuba where hundreds of suspected Islamist militants have been held, most for years without trial.

Here comes the WAG THE DOG!!!

Rovin on March 18, 2009 at 9:47 AM

Baxter Greene on March 18, 2009 at 9:34 AM

Well done Baxter, as usual. The MSM is starting to back away from Obama and the WH. In my humble opinion, the MSM has as much to do with Obama having been elected potus as any other element. I sure hope we don’t let them off the hook for this historical blunder, as they will surely try to separate themselves from Obama.

Keemo on March 18, 2009 at 9:39 AM

Great point Keemo.

I have been wondering if in the process of jumping ship,the media does not go all out in exposing this Paparazzi President for the amateur he is or do they go all in and do everything they can to spin,deceive, and lie to protect his
a$$.
They have let him ride on so much already,it will be interesting to see if they go back to being “watch dogs of the government” or stay being the “lap dogs of the government”.

Baxter Greene on March 18, 2009 at 9:50 AM

Neo-con Artist on March 18, 2009 at 9:33 AM

Sounds like you know more about this than anyone who’s in charge. Maybe you should go on Jay Leno!

scalleywag on March 18, 2009 at 9:54 AM

“With the pullout in Iraq, the will for peace, the closing of Guantanamo, (Obama) has shown himself to be a man of his word,” he said, referring to the U.S. naval base in Cuba where hundreds of suspected Islamist militants have been held, most for years without trial.

Here comes the WAG THE DOG!!!

Rovin on March 18, 2009 at 9:47 AM

Asaad sees nothing but appeasement and capitulation in dealing with Obama.The same things N.Korea,Russia,Iran,and the rest of the international community sees.
They want to jump into the “international spanking of America” the same way everybody is jumping in on Obama’s Bailout festivus here.

Gitmo is getting harder and harder to close by the day.
Nation after Nation is balking on taking these terrorist and bringing them to the mainland opens up a Pandora’s box of problems that will make the Obama administration look weak and appeasing to the needs of terrorist over the safety and rights of American Citizens.

That “supposed” troop withdrawal is nothing more than following Bush’s/Petreaus’s withdrawal time line and honoring Bush’s status agreement with Maliki.
But even that has come under question as to whether what Obama is doing should be considered a “rotation” instead of a withdrawal:


THE MUDVILLE GAZETTE: An Iraq drawdown scam?

Diversions (III)
Greyhawk
http://rpc.blogrolling.com/redirect.php?r=503d6378b0e7bbf4f5488ec58d1fd50d&url=http%3A%2F%2Finstapundit.com%2F

Remember the Iraq drawdown you heard about last month? The one where a Brigade originally scheduled for Iraq was going to Afghanistan instead? Well, a funny thing about that..

And a few days later no one would notice the bombshell reported by ABC: “Gen. Odierno will receive a Stryker Brigade to replace the incoming replacement brigade diverted to Afghanistan just a week ago”

Let’s recap the salient points here:
1. In September, 2008, the 5th Stryker Brigade Combat Team (SBCT) – after months of preparation – is ordered to Iraq. (One of two SBCTs that were then scheduled to replace the two currently in Iraq)
2. In February, 2009, President Obama announces his Iraq drawdown/Afghanistan surge – the 5th SBCT will be diverted to Afghanistan instead of Iraq.
3. March, 2009, the DoD announces the 4th SBCT will deploy to Iraq this fall, several months ahead of the original schedule replacing the 5th SBCT in the rotation in order to maintain two Stryker Brigades in Iraq.
For the record, I’m in favor of commanders on the ground getting the forces they need to get the job done. I have no doubt that two Stryker Brigades are needed in Iraq, and others in Afghanistan.
I’m deeply concerned when I see troop rotations “adjusted” in what appears to be an effort to fool the American public.

As is common with Obama,what he says is usually never what he really does.

Baxter Greene on March 18, 2009 at 10:04 AM

I’ll say this one more time:

The Jay Leno show is a hollywood entertainment program that relys on comedy to produce viewers.

While this nation faces the worst financial crisis since the 30′s depression—-people are hurting. And while the nation is showing outrage over executive bonuses at AIG, our President is choosing to appear on Jay Leno. Who’s the comedian? Who’s the joke? Seriously, who’s leading this nation?

Rovin on March 18, 2009 at 10:08 AM

scalleywag on March 18, 2009 at 9:54 AM

LOL. My profession keeps my around “troubled” companies.

I think, like many of the people here, I would like to have an opportunity to ask some pointed questions to this administration. Part of me hopes that the head of AIG fires back at Congress with both barrels blazing, but the realistic side of me understands that’s not reasonable. AIG will be back asking for more cash, and you can’t bite the hand that feeds you.

Neo-con Artist on March 18, 2009 at 10:08 AM

Rovin on March 18, 2009 at 10:08 AM

George Soros

red131 on March 18, 2009 at 10:09 AM


Obama In St Patrick’s Day Teleprompt Blunder

12:26pm UK, Wednesday March 18, 2009
http://news.sky.com/skynews/Home/World-News/Barack-Obama-Thanks-Himself-In-Teleprompt-Blunder-During-Address-With-Irish-PM-On-St-Patricks-Day/Article/200903315243932?lpos=World_News_First_World_News_Article_Teaser_Region_1&lid=ARTICLE_15243932_Barack_Obama_Thanks_Himself_In_Teleprompt_Blunder_During_Address_With_Irish_PM_On_St_Patricks_Day

A teleprompt blunder has led to Barack Obama thanking himself in a speech at the White House in a St Patrick’s Day celebration.

Barack Obama(R) and Irish Prime Minister Brian Cowen

Obama and the Irish PM share the joke during their joint address

Irish Prime Minister Brian Cowen was just a few paragraphs into an address in Washington when he realised it all sounded a bit too familiar.

It was. He was repeating the speech President Barack Obama had just read from the same teleprompter.

Mr Cowen stopped, turned to the president and said: “That’s your speech.”

A laughing Mr Obama returned to the podium to take over but it seems the script had finally been switched and the US president ended up thanking himself for inviting everyone to the party.

Mr Obama is an accomplished orator but is becoming known in America as the “teleprompt president” over his reliance on the machine when he gives a speech.

This is the man that liberals told us was going to “Change the World”.

Baxter Greene on March 18, 2009 at 10:18 AM

.

My profession keeps my around “troubled” companies.

And “troubled” companies who are trying to stay afloat don’t go around giving employees millions of dollars to employees unless they know the sky is falling. This administration left them an opening and they took it and ran. And I don’t think they’re smart enough to know how they let that happen, or who let it happen, or even what can be done about it. And even if they did get all this bonus money back, what are they going to do with it?

scalleywag on March 18, 2009 at 10:20 AM


Look who else got a bonus from AIG
Surprise Surprise!
Something really needs to be done about this crap.

Brat4life on March 18, 2009 at 10:21 AM

Look who else got a bonus from AIG
Surprise Surprise!
Something really needs to be done about this crap.

Brat4life on March 18, 2009 at 10:21 AM

Save it, Bush got $160k from AIG Financial Products in 2004 and was actually in charge when this terrible bailout for no equity deal was put in place. I don’t understand partisan outrage, this isn’t a zero sum game.

jonknee on March 18, 2009 at 10:37 AM

Brat4life on March 18, 2009 at 10:21 AM

Yo Ho Ho! Looks like they got some ‘splainin to do. What do you want to be they know nothing about it.

scalleywag on March 18, 2009 at 10:37 AM

bet, that is

scalleywag on March 18, 2009 at 10:38 AM

Save it, Bush got $160k from AIG Financial Products in 2004 and was actually in charge when this terrible bailout for no equity deal was put in place. I don’t understand partisan outrage, this isn’t a zero sum game.

If Bush was in office I would be saying the same thing. I think He should give this money back to the taxpayers. I think they all should. Everyone who took the money from them should give it back. Starting with THE ONE he is supposed to be in charge here.

Brat4life on March 18, 2009 at 10:46 AM

scalleywag on March 18, 2009 at 10:20 AM

Typically, no. However, we are talking about a massive organization that had more than 116,000 employees worldwide at one time. So the bonus, to me, is a relative figure given the amount of funds inserted into the organization to keep it running. With this enterprise as with most service organizations, their assets walk out the door each day. If the goal is to truly keep the organization afloat, then you need to ensure your assets return. I find it interesting, and others have made this point more concisely than I, but the government seems intent on running this organization in the worst manner possible. They install a new CEO, who’s being paid $1 per year. Then they berate the company for fulfilling it’s contractual obligations with its employees, despite the fact that government was knowledgeable as to the use of funds – by the government’s own admission. The government seems to want to create the worst working environment possible with as much interference as possible. These people need to figure out how to save AIG, not expend energy defending itself against these contrived “evils”. Since the taxpayers are effectively 80% owners in this enterprise, I want some opportunity for recovery out of this transaction. Apparently, the government sees otherwise, and would prefer “heads roll”.

Neo-con Artist on March 18, 2009 at 10:47 AM

Not to worry, Barney Frank is on the case.

HAhahahahahahahahahaha!!!!!

GarandFan on March 18, 2009 at 11:04 AM

Jon Stewart admits Tucker Carlson was right.

http://youhavetobethistalltogoonthisride.blogspot.com/2009/03/jon-stewart-tucker-carlson-was-right.html

Jon Stewart weighs in on Tea Bagging the White House.

Dr Evil on March 18, 2009 at 11:10 AM

This is dead on concerning Obama and his “Hope and Change” bullsh!t:

http://rpc.blogrolling.com/redirect.php?r=503d6378b0e7bbf4f5488ec58d1fd50d&url=http%3A%2F%2Finstapundit.com%2F

(via Instapundit)

Baxter Greene on March 18, 2009 at 11:21 AM

This is dead on concerning Obama and his “Hope and Change” bullsh!t:

(via Instapundit)

Baxter Greene on March 18, 2009 at 11:21 AM

Wrong link,this is it.

http://www.daybydaycartoon.com/2009/03/18/#005094

Baxter Greene on March 18, 2009 at 11:25 AM

What a bunch of CACA.
Team barry and congress KNEW of the bonus’s .
They wrote the language in the bill.
And now they are going to act all indignant, it’s the dog and pony show.
They got caught with their fingers in the cookie jar and now are blaming the jar!
This jerk obama is the worse thing that has happened to this country since 911.
Start looking around the corner people , I think this is the SHINEY object to keep us distracted .

ColdWarrior57 on March 18, 2009 at 11:30 AM

Both Henry Paulson and Tim Geithner insist that AIG’s failure would have crashed the world’s economy.

And they have even less, and yes it is possible although just barely, credibility (where were these “geniuses” when all this was building over the last few years?) on such matters as Al Gore does on Gloooobal Waaaarming.

MB4 on March 18, 2009 at 12:08 PM

The “bailout” was a setup for nationalization all along.

They knew it would fail. They knew about the bonuses. They knew they would demonize it publicly. They knew they would attempt to nationalize it. They knew that this would “prove” that free markets are a failure.

Republicans are always one step behind the Marxists.

Of course, most people here (and the silent RINO cowards in office) think that Obama and the Left are idiots and all of this is by accident.

nottakingsides on March 18, 2009 at 12:19 PM

Of course, most people here (and the silent RINO cowards in office) think that Obama and the Left are idiots and all of this is by accident.

nottakingsides on March 18, 2009 at 12:19 PM

I agree. I’ve been saying that til I’m tired of saying it. I suppose its hard for people to focus on the forest when the trees are so interesting.

genso on March 18, 2009 at 12:34 PM

I’m glad that Obama has suceeded.

Da Bama has sucessfully proven, beyond any reasonable doubt, that the Democrat Party stands as the symbol of greed and corruption. Try as many may, they cannot blame the AIG, Freddie/Fannie, or the porkulus bills on anyone except for themselves. All they can do is scream, Bush! Rush Limbaugh!

Hey! You democrat socialist America haters. Do you know what the $101,332 dollars which Obama Received from AIG is really worth today? It is worth TRILLIONS to the GOP as they just cannot buy advertising like this for any price.

Tea Parties through 2010, here we come!!!

DannoJyd on March 18, 2009 at 12:41 PM

And the Boy King is now making a statement before he takes off for his gig in Hollywood about how wrong these bonuses are yada yada yada. What a gasbag.

Boy King speaks, stock market tanks.

Knucklehead on March 18, 2009 at 12:42 PM

Boy King speaks, stock market tanks.

Knucklehead on March 18, 2009 at 12:42 PM

A reporter just asked a two-part question. 1. about the $100,000+ contributions from AIG and 2. about firing Geithner. He answered the Beithner question and said nothing about the contributions.

genso on March 18, 2009 at 12:50 PM

The Real AIG Scandal:

http://www.slate.com/id/2213942/

Told ya it was a distraction.

getalife on March 18, 2009 at 12:56 PM

we should have let the entire system collapse..
thern shot all of the CEOS
Congress
and the house of representatives..

then fired Obama the communist ..
and sent him to russia

jcila on March 18, 2009 at 1:02 PM

Except that Bush and Republicans made repeated attempts to deal with the Fannie / Freddie problem, only to be thwarted by DemoRATS threatening a filibuster. That would be Dodd, Obama, Schumer, et al, the BIGGEST recipients of Wall Street donations. Look it up if you dare.

SDN on March 18, 2009 at 1:17 PM

AIG is an insurance company. Why don’t we make AIG pay back the taxpayers by setting up a swanky insurance department for all our veterans? No claims denied.

Do we have enough veterans who need medical treatment to even reach the obscene amount of money AIG is partying on?

ace tomato on March 18, 2009 at 1:54 PM

I agree. I’ve been saying that til I’m tired of saying it. I suppose its hard for people to focus on the forest when the trees are so interesting.

genso on March 18, 2009 at 12:34 PM

It’s easier for them to be in denial since their leadership and recent Presidential nominee have all been saying Obama has good intentions and is a good man and other such BS.

In a few months they’ll abort and jump on the “Obama has carried out his intentions and punked the GOP” bandwagon. Kind of like the Leftists that go back and forth on the Bush is a moron and sometimes a neo-con fascist Bushitler genius.

nottakingsides on March 18, 2009 at 4:58 PM

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