Wanted by Tent City Homeless: AIG Senior Employees

bushville-images

by Thom Hartmann

AIG's taxpayer-bailout was not because of it's insurance division, but its investment division, which came up with the idea of selling credit-default swaps – financial instruments premised on the idea that home values would never decline.

According to Time Magazine coming Monday....

The CDS market exploded over the past decade to more than $45 trillion in mid-2007, according to the International Swaps and Derivatives Association. This is roughly twice the size of the U.S. stock market (which is valued at about $22 trillion and falling) and far exceeds the $7.1 trillion mortgage market and $4.4 trillion U.S. treasuries market, notes Harvey Miller, senior partner at Weil, Gotshal & Manges. "It could be another — I hate to use the expression — nail in the coffin," said Miller, when referring to how this troubled CDS market could impact the country's credit crisis.

From the Wonk Room http://wonkroom.thinkprogress.org/2009/03/02/aig-learn

That said, what have we learned from the AIG debacle? AIG’s downfall was hastened by its inability to honor $40 billion in credit default swaps (CDS), after taking advantage of a CDS market that went “from zero” in 2005 to a peak of $62 trillion. So maybe the place to begin is by figuring out which regulator should watch CDS.

No less a culprit of the economic crisis than former SEC Chairman Christopher Cox acknowledged as much when testifying before Congress:

The $58 trillion national market in credit default swaps — double the amount outstanding in 2006 — is regulated by no one. Neither the SEC nor any regulator has authority over the CDS market, even to require minimal disclosure to the market…As the Congress considers fundamental reform of the financial system, I urge you to provide in statute the authority to regulate these products to enhance investor protection and ensure the operation of fair and orderly markets.

Shouldn't the taxpayers of America who are now investors in AIG, be demanding not only that senior AIG employees voluntarily give up their bonuses but also shouldn't also the people who perpetrated this economic nightmare that has caused "main street" America to lose their jobs, their 401Ks to fall, the values of their houses to plummet and the very fabric of this nation to unravel - be hunted down and prosecuted?

As unemployment rises and people lose their homes in a worsening economy - there are reports of tent cities (Bushvilles) popping up across America.

The AIG senior employees should not only give up their bonuses willingly with apologies to the American public - or perhaps they should personally deliver their bonus' to the new Bushvilles of today where in Sacramento alone the official count of homeless people is 1,226 people. The homeless are spilling out to the tent city because the housing shelters are full. One of the shelters is turning away more than 200 women and children a day.

In other news former VP Dick Cheney emerged from his den to give an interview to CNN’s John King to slam President Obama and his team….

CHENEY: “I worry a lot that they’re using the current set of economic difficulties to try to justify a massive expansion in the government, and much more authority for the government over the private sector, I don’t think that’s good. I don’t think that’s going to solve the problem.”

And this exchange…

KING: Since taking office, President Obama has done these things to change the policies you helped put in place. He has announced he will close the Guantanamo Bay detention facility. He has announced he will close CIA black sites around the world, where they interrogate terror suspects. Says he will make CIA interrogators abide by the Army Field Manual, defined waterboarding as torture and ban it, suspend trials for terrorists by military commission, and now eliminate the label of enemy combatants. I'd like to just simply ask you, yes or no, by taking those steps, do you believe the president of the United States has made Americans less safe?

CHENEY: I do. I think those programs were absolutely essential to the success we enjoyed of being able to collect the intelligence that let us defeat all further attempts to launch attacks against the United States since 9/11. I think that's a great success story. It was done legally. It was done in accordance with our constitutional practices and principles. President Obama campaigned against it all across the country. And now he is making some choices that, in my mind, will, in fact, raise the risk to the American people of another attack.

This from the Bush/Cheney administration that….

--Blundered into Iraq, a war of choice, in the greatest military disaster ever - 5 Million Iraq War Casualties, 1 Million Killed, 4 Million Refugees plus 5 million orphans.

--Presided over raising the national debt by more than $4 trillion - the biggest increase under any president in U.S history. The national debt now stands at more than $9.849 trillion. - a 72 percent increase.

--Delivered to us a dangerous recession that threatens to turn into the next Great Republican Depression with over 3.8 million homes in foreclosure (from 2007 - Jan. 2009), and the loss of over 4 million jobs and counting.

--Stood by while 47 million individuals lacked health insurance coverage of any kind plus 25 million Americans who can't afford to cover the gap between what their insurance covers and their medical bills demand.

--Watched as millions of good factory jobs disappeared—2.7 million since 2001 alone—largely from corporations moving operations offshore in a race for the cheapest labor costs. This doesn't include the 1.7 million private sector jobs over the past three years and 750,000 high tech jobs in 2002-03. The University of California-Berkeley estimates that 14 million jobs are vulnerable to moving overseas in the next few years.

Perhaps Vice President Dick Cheney should join the senior AIG employees in tent city for a glimpse of post Bush/Cheney world. Conditions are a bit primitive, with no water supply or proper sanitation so they should be careful when they visit. Tammy Day, a homeless woman and resident, who cooks potatoes on an open campfire can help them out with lunch. While they are there they could say hello to former car salesman Corvin and his wife Tena, some the newest residents of the tent city. Could they offer advice to Tena who says "I have a 35-year-old son, and he doesn’t know. I call him, about once a month and on holidays, to let him know that I’m well and healthy. He would love me anyway, but I don’t want to worry him." Many of those living in the tent city are pinning their hopes on President Obama’s new stimulus package which is aimed at rescuing the economy and creating jobs. The one that Cheney just dissed claiming it's an "expansion of Government."

Call your members of Congress today and demand investigations into the Bush/Cheney era tasked with discovering and revealing past wrongdoings. Then there will be hope of resolving the conflict that many American’s feel. Only then can we move forward to develop an economy that serves main street America and abolish the Bush/Cheney meme that we were just here to serve the economy. They had it backwards.

Comments

David Claiborne (not verified) 12 years 27 weeks ago
#1

Thanks Thom, great stuff as always.

It's amazing to me how, even after having been voted out of power, Cheney & co. still try to run a shadow government and control our policies through fear and misdirection. What's unbelievable to me is now they're trying to claim the Bush administration inherited a recession, and that the Obama administration didn't... in they same breath as they claim credit for this week's economic uptick and blame Obama for the downturn from November to March...

Keep up the good work, if we can keep the facts at the forefront we may be able to outlast people's short attention span into another election cycle or two...

mstaggerlee (not verified) 12 years 27 weeks ago
#2

As I listened to the Sunday TV talk shows this weekend, my rage just grew and grew.

"Yes," all the pundits agreed, "the AIG bonuses are absolutely unfair, but they are contractually obligated to pay them, so we have no choice in the matter."

What a crock! Why is is that contracts with executives seem to be written in stone, but contracts with labor collectives seem to be written on much flimsier stuff? How many unions over the past decade or so have seen the pension plans that were created BY CONTRACT, to which they contributed their own money, earned with their daily labor, simply taken over by the company to cover bad executive decisions, simply negotiated into oblivion? What about those CONTRACTUAL OBLIGATIONS? Are they less important, because one of the parties to that contract is less worthy? I think not.

These AIG execs may indeed have fulfilled the conditions under which they were supposed to collect a bonus. BIG DEAL - the company I work for used to give annual bonuses, too - but only if the company was PROFITABLE! AIG was NOT - in fact, they were so far from profitable that they damn near pulled the entire system down with them. If these men feel that their efforts are deserving of some reward, how about this - they get to KEEP THEIR JOBS, when MILLIONS of others lose theirs. AIG worrys that they will be unable to retain or recruit "the best and the brightest" if they reneg? If "the best and the brightest" brought us to this day, maybe they just ain't so freakin' bright! Maybe there are better, brighter people who are now living in tents, who'd like those jobs!

peace,

mstaggerlee

"Of course, the New Right is WRONG! - that doesn't make wrong the new right!"

intruder (not verified) 12 years 27 weeks ago
#3

What if Congress made a Tax on people who received a bonus from a company that was part of the taxpayer-bailout. I think a tax of 99.99% on all bonuses sounds fair.

intruder

mstaggerlee (not verified) 12 years 27 weeks ago
#4

With apologies to Bill Maher, I have a "New Rule" I'd like to propose -

A company that's "too big to fail" is too big to EXIST!

peace,

mstaggerlee

“Of course, the New Right is WRONG! - that doesn’t make wrong the new right!”

kim (not verified) 12 years 27 weeks ago
#5

They seem unclear on the concept of bonuses: a bonus is extra money as a reward for doing well. If they have a "contract" to get bonuses even when they do poorly, it isn't a bonus, it's a salary.
These people have done so poorly, they shouldn't be getting bonuses, they should be getting blacklisted.

mstaggerlee (not verified) 12 years 27 weeks ago
#6

With reference to the picture at the top of this page - if Drugs and Alcohol are disallowed, how can we call it "Bushville?" ;-D

LeedaMarie (not verified) 12 years 27 weeks ago
#7

If taxpayer money was given to "bail-out" AIG, by the Congress, then Congress should and can demand it back!

LeedaMarie (not verified) 12 years 27 weeks ago
#8

mstaggerlee, I agree with you. I find it very hard to swallow that being so big, exempts anyone from failure!

LeedaMarie (not verified) 12 years 27 weeks ago
#9

AIG shouldn't get anymore benefit from this bailout

LeedaMarie (not verified) 12 years 27 weeks ago
#10

My member of Congress is now a GOPer, and he is also the worst kind of GOPer, a freshman GOPer, who can't think for himself as yet........He is worthless to write to about anything.

sunrise (not verified) 12 years 26 weeks ago
#11

the use of the phrase "talented" is a bit specious. (meaning talent would have resulted in a set of reasoned, practical non greedy practices). If by talent you mean self aggrandizing people then great, i would recommend an official addition to the definition of talent so that future generations will benefit from our contemporary understanding of how we apply the term "talented". I'm more of a word smith, and perhaps if we were more forthcoming about our real and genuine abilities, if we didn't creat a situation where "the location of our dwelling, the sorts of clothes on our back defined character, we wouldn't have these anomolies in our economy. These hyper extension. While I'm soap boxing let me continue: Why is it a person can attend a public institution of learning where the faculty salaries are subsidized by the general public, the buildings are subsidized by the general public and the library materials are subsidized by the general public and then the graduating students find their "talents" are uniquely private to themselves, to be used for themselves and their material acquisition.

ronnie2x (not verified) 12 years 26 weeks ago
#12

Concerning the AIG fiasco: Congress is finally on the right track--a cute-sounding one time tax--"Gidget" (GIGT) , the Gains Ill Gotten Tax, 99% on not just the executive bonuses but on any money made off derivatives (commissions or profits); also there should be a 1% tax on all stock transactions--call it the Patriot Tax.

Tom D. (not verified) 12 years 26 weeks ago
#13

I have a thought about the use of "retention awards". For AIG (or any company) to rationalize spending millions of our tax dollars to retain the employees who are in large part responsible for creating this mess, by asserting that they're the most qualified people to solve problems they created, is absolutely ludicrous. By that rationale, the U.S. government should contract Al Qaeda to run our anti-terrorism efforts in Afghanistan and Iraq. This is an absolute scam and I say the U.S. government should seize those bonuses and fire those employees, or even better charge them with fraud, seize their assets and let them stand trial before a jury of 12 Americans who will decide their fates!

Robert Alton (not verified) 12 years 26 weeks ago
#14

My solution to get AIG to change their mind about paying out any retention bonuses is to have President Obama threaten to change their name to PIG which he should be able to do if the government owns 80% of the company, right? Maybe the muckety mucks would think twice about having everyone refer to their company by that name.

David Claiborne (not verified) 12 years 26 weeks ago
#15

I think it's about time for these laissez-faire capitalists to "Go John Galt" -- http://luxamericana.com/2009/03/17/going-john-galt/

Servicemonkey (not verified) 12 years 26 weeks ago
#16

Any individual whose gross income was more than $1,000,000 in any of the past 4 years will be subject to a tax rate of 99% on any compensation from designated companies that have received TARP funding from the US government.
All other individuals will be subject to a tax rate of 99% on any compensation above $180,000 per year from designated companies that have received TARP funding from the US government. All compensation subject to this tax rate are subject to backup withholding. Problem solved.

elderm (not verified) 12 years 26 weeks ago
#17

Let’s go after the REAL money given to AIG – the $183 billion! I realize that this has already been paid out, and we can’t get it back from the counterparties who knew that Alan Greenspan and George Bush and Hank Paulson were steering the U.S. economy off a real estate cliff, a derivatives cliff and a balance-of-payments cliff all wrapped up into one by betting against collateralized debt obligations (CDOs) and insuring these casino bets with AIG. That money has been siphoned off from the Treasury fair and square, by putting their own proxies in the key government slots, the better to serve them.
So let’s go after them altogether. Sen. Schumer said to the AIG bonus recipients that the I.R.S. can go after them and get the money back one way or another. And it can indeed go after the $183-billion bailout recipients. All it has to do is re-instate the estate tax and raise the marginal income and wealth-tax rates to the (already reduced) Clinton-era levels.
The money can be recovered. And that’s just what Mr. Schumer, Mr. Frank and others don’t want to see the public discussing. That’s why they’ve diverted attention onto this trivia. It’s the time-honored way to get people not to talk about the big picture and what’s really important

Jesse (not verified) 12 years 26 weeks ago
#18

Thom,
Great show, thanks for everything you offer-up. The other day I was listening to your show, I heard either you or your guest mention how Chris Dodd was equally responsible for the bonuses of AIG. According to Glen Greenwald of Salon.com, the information is incorrect. I'm pasting the link straight to the article should you have time to read his side of the story. You've opened up my eyes so much more, thanks again.
Jesse A.
http://www.salon.com/opinion/greenwald/2009/03/17/dodd/index.html

Dan Cassidy (not verified) 12 years 26 weeks ago
#19

Thom
Here is the bonus solution. Give them their bonuses, all they have to do is pick up the check in person from The GM plant that have been laying people off, or maybe downtown Fallujah or Afghanistan. They have a month to pick them up or they lose them. A simple solution.

Shyela (not verified) 12 years 26 weeks ago
#20

Hi Thom and all,

I was listening to your show today and your comment about Carter begin the first to deregulate reminded me that actually Gerald Ford started that ball rolling. Here's a clip from UTexas:

"Beside abolishing many controls on petroleum prices, Ford proposed economic deregulation of the railroad, aviation, and trucking industries, and created a regulatory reform task force to identify other areas in which deregulation would be economically and socially desirable. Only railroad deregulation had been achieved by the time Ford left office, but the groundwork had been laid for other regulatory reforms later carried out under Carter."

http://www.ford.utexas.edu/library/education/Reichley.htm

I have read other references to Ford being the "deregulation president".

It's good to put this back onto Republican shoulders.

Servicemonkey (not verified) 12 years 26 weeks ago
#21

Medved vs. Reality

Here are some thoughts from The Great Debate last night.

Blame the recession on Obama. / The recession started earlier than it was supposed to .

Corporate media has a liberal bias. / Reality has a liberal bias. Corporate media often reports on reality.

Bush/Cheney kept us safe since 9/11. / Bush/Cheney did a lousy job keeping us safe since 9/10.

We would not have gone to war with Iraq if not for 9/11. / The only connection between Iraq and 9/11 is you can start a war with Iraq if you lie about a connection with 9/11.

Decent union wages are bad for business and economic recovery. / Decent wages will empower you the audience to become customers and customers of customers. The only way to economic recovery is to empower your customers.

A large proportion of the audience is happy with their healthcare. / The audience consists of people with enough disposable income to go see a political debate. The growing population of desperate struggling Americans is not represented here.

No able bodied person should be paid by the government for sitting around doing nothing if they’re poor. / So we should create an environment to get that person employed and not poor. And we should undo the conservative shift of the tax burden onto working Americans and off of investment income. Lost tax revenues on the upper percent of income is the worst way for the government to pay able bodied people for sitting around doing.

Why is progressive talk such a failure? I thought it was fat-cat corporate sponsors and station owners with an anti-American worker agenda.

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