Remember Who ELSE got paid by AIG?
[Posted by Karl]
As Pres. Obama tries to lead the “outrage” over bonuses paid to execs at troubled insurance giant AIG — and AIG’s payments to foreign banks, etc. — with the taxpayers’ money, let’s take a moment to remember which taxpayer employees got paid by AIG:
Over time, AIG hasn’t shown an especially partisan streak, splitting evenly the $9.3 million it has contributed since 1989. In the last election cycle, though, 68 percent of contributions associated with the company went to Democrats. Two senators who chair committees charged with overseeing AIG and the insurance industry, Sen. Chris Dodd (D-Conn.) and Sen. Max Baucus (D-Mont.), are among the top recipients of AIG contributions. Baucus chairs the Senate Finance Committee and has collected more money from AIG in his congressional career than from any other company–$91,000. And with more than $280,000, AIG has been the fourth largest contributor to Dodd, who chairs the Senate’s banking committee. President Obama and his rival in last year’s election, Sen. John McCain (R-Ariz.), are also high on the list of top recipients.
AIG has been a personal investment for lawmakers, too. Twenty-eight current members of Congress reported owning stock in AIG last year, worth between $2.5 million and $3.3 million. Sen. John Kerry (D-Mass.), one of the richest members of Congress, was by far the biggest investor in AIG, with stock valued around $2 million.
The list also includes Sen. Chuck Schumer (D-NY). All of which is undoubtedly coincidental to strings not being attached to the AIG bailout in the first instance.
Granted, the populist “outrage” over the AIG bonuses may be misplaced, as populism so often is. At least we can enjoy the prospect of those pols who fanned the populist flame looking impotent, hypocritical, disingenuous, or like the tools of their donors, instead of their constituents.
–Karl
Don’t forget that Eliot Spitzer, darling of the Democrat party (pre-dick dipping), publicly demagogued the prior Chairman of AIG, Hank Greenberg, out of his job upon pain of substantial penalty to the company. It’s been all downhill for AIG ever since. Greenberg’s never been formally been charged with any crimes since his departure, which is also par for the course for Spitzer’s modus operandi. My personal opinion is that he was cooking the books and the company did record a $3.5 billion accounting restatement upon his departure.
daleyrocks (5d22c0) — 3/16/2009 @ 2:06 pmThe time for outrage was last fall, when all these bailouts were being scared up. Since Obama signed off on them, along with the majority of Democrats in Congress, they have no one to blame but themselves.
Brother Bradley J. Fikes, C.O.R., (f34d89) — 3/16/2009 @ 2:13 pmYou expected him to read all those? He was tired from campaigning!
Machinist (c5fc28) — 3/16/2009 @ 2:21 pm“He was tired from campaigning!” Especially the part that REQUIRED running down the economy (before he built it up again.) I suspect that he’ll run it down again in the 2012 election cycle and state that the Republican doesn’t have the “experience” to solve the problem and cut the financial Gordian Knot (of course, neither did he in THIS LAST election cycle, but that is only for cynics like myself to point out.)
GM Roper (85dcd7) — 3/16/2009 @ 2:28 pm“He was tired from campaigning!” Especially the part that REQUIRED running down the economy (before he built it up again.) I suspect that he’ll run it down again in the 2012 election cycle and state that the Republican doesn’t have the “experience” to solve the problem and cut the financial Gordian Knot (of course, neither did he in THIS LAST election cycle, but that is only for cynics like myself to point out.)
GM Roper (85dcd7) — 3/16/2009 @ 2:29 pmIt was impossible for The One to read all of those documents,
AD - RtR/OS (e2c6d2) — 3/16/2009 @ 2:30 pmthey were never delivered to the ‘prompter tech.
It’s hard to fit all the relevant information regarding any bill into the 140 characters allowed by The One’s favored form of communication.
Christian (abaa8f) — 3/16/2009 @ 2:34 pmAccording to OpenSecets.org, Obama led McCain in AIG contributions by 3 to 1.
furious (dc6e4c) — 3/16/2009 @ 2:50 pm“Rep. Brad Sherman (CA), a senior Democrat on the House Financial Services Committee, told TPMDC today that the Obama administration could have prevented excessive bonuses from being paid out at AIG — but it missed the chance.” — Talking Points Memo
Brother Bradley J. Fikes, C.O.R., (f34d89) — 3/16/2009 @ 4:14 pmIt is like they cannot function, if you want to call it that, without a Demon of the Week.
JD (00684b) — 3/16/2009 @ 4:20 pmGlad you posted on this topic. This morning I saw a NY Times blurb that Barney Frank was among those condemning the AIG bonuses.
Well don’t that beat all!
Barney, here is a clue:
When you give away government money, unless you put strings on it, the recipient will spend it any way he/she/it likes. The time to think of how the recipient is going to spend the dough is BEFORE you hand out the goodies, not after.
The AIG bonuses may or may not be outrageous — that can be debated. Let’s assume they are. Ought we not hold our public officials, who failed in their duty to watch the public purse, responsible for the outrage? How about starting with the Chairmen of the House and Senate Banking Committees. (Senator Dodd, phone your office)
Bored Lawyer (44ef84) — 3/16/2009 @ 4:32 pmI denounce myself for double posting! Bad commenter, no treat!
GM Roper (85dcd7) — 3/16/2009 @ 4:34 pmGeithner said he had government lawyers examine a bunch of the contracts relating to the bonuses and guess what, you can’t break them without exposing the compant/government to a lot of litigation. Now in bankruptcy court, a judge may have substantial leeway in deciding whether to honor certain kinds of contracts, which I believe includes this type of contract. Obama et. al. can keep demagoguing the hell out the situation, but since they’ve decided the company is too big to fail, it doesn’t sound like there’s too much they can do about it.
Plus Geithner doesn’t want to piss off all his Wall Street buddies ’cause he knows he’s going to need a place to land after his time in Washington is done.
daleyrocks (5d22c0) — 3/16/2009 @ 5:12 pmHere we go with the nightmare economy as foretold by Hayek (and Rand, et al.).
Government picks their winners and losers. Every once in a while when a wrong is exposed they put on a dog and pony show like Obama did today.
Can you imagine the billions, trillions that are now being wasted or funneled on to campaign contributors?
Patricia (2183bb) — 3/16/2009 @ 5:18 pmAnd any person, family, etc. currently receiving or having to reimburse the government in full for Welfare, AFDC, etc. shall not buy more than hamburger, rice, potatoes, or grains. None shall go to Disney Land, 6 Flags, movies, or any other leisure time activities.
Since the “government” now owns 80% of AIG–It is Pres. Obama’s fault the bonuses were paid.
Seriously–another reason that AIG and the rest should have gone through (or be forced into today) structured bankruptcy to relieve themselves of debt obligations that they can no longer afford in an orderly manner. That is what bankruptcy is for.
-Bill
BfC (7f7501) — 3/16/2009 @ 5:43 pmTwo comments on AIG. One from the Corner.
A community banker writes in:
It’s quite apparent that AIG has become the sink hole—the toxic waste disposal site—the Yucca mountain of the banking industry. The taxpayer will never see a red cent from that investment. I guarantee it.
The other, Tom Maguire.
Impressive and somewhat justified outrage about the AIG bonuses swirled through the news and blogs this weekend. The story that no one is noticing is that Federal support for the AIG security lending business is much greater than the Federal support for the credit derivatives business. Who broke AIG? Regulators and those who love them will prefer to tell a story about mysterious, unchecked credit derivatives, but the truth seems to be a bit more complicated and prosaic.
Read the rest. I’ve read a lot about this and still don’t understand it. I do think it is clear that bankruptcy should have been chosen last fall. It may well be, if the truth is ever known (and it might not be), the Republicans were right to vote no on it all.
Mike K (90939b) — 3/16/2009 @ 5:58 pmHow many right-wing noisemakers even recall that last week’s talking point was that Obama was causing stock prices to tank?
Since March 10, the day “Karl” posted here his aggrieved, inflamed assertion that Obama is causing stock prices to fall, the Dow has risen 4 percent, gaining in four of the five trading sessions since that day.
Like I said, every time the noise machine furiously lowers the bar to the ground, Obama effortlessly steps over it. Hilarious…
Hax Vobiscum (23258e) — 3/16/2009 @ 6:07 pmHax, unable to refute the points in the main post, copies one of his comments from an unrelated thread.
Did you just learn what Ctrl-C does?
Steverino (b12c49) — 3/16/2009 @ 6:19 pmFollow the money! That what Deep Throat said.
Maybe Jeff G. is on to something with his favorite insult!
Joe (dcebbd) — 3/16/2009 @ 6:22 pmThe AIG bonuses add up to about 1/1000 of the money they got. What about the 90 Billion that went to foreign fricking banks! That adds up to 10-12%!!!!! Holy crap the Dinosaur Media is asleep at the switch again.
We are so fing screwed.
J. Raymond Wright (e8d0ca) — 3/16/2009 @ 6:27 pm“Like I said, every time the noise machine furiously lowers the bar to the ground, Obama effortlessly steps over it. Hilarious…”
Hilarious, because Obama stopped talking down the economy and fearmongering and started saying the economy was sound, something he ruthlessly mocked McCain for last fall.
Hax, you’re doing great. Keep making those point for my side. You’re a big help.
daleyrocks (5d22c0) — 3/16/2009 @ 6:29 pmCall it a “Bailout” or whatever you want — but the bottom line is that all the government provided was operating capital so AIG could meet its obligations on the credit default swaps as they arose.
Because the entire mortgage market went bad at one time, AIG was on the hook for billions more in liability in the CDS than it ever imagined when it began writing the insurance policies.
The problem is that the “insured” parties were banks across the world. Had AIG not made good on the instruments it wrote, the hundreds of billions in losses would have been transferred from the books of one company — AIG — to the books of dozens or hundreds of international banks who had purchased policies from AIG.
A simple analogy would be to having State Farm go out of business the day after a hurricane blows through Florida. All those homeowners who thought they had State Farm policies would be met with unanswered calls if State Farm went out of business, and suddenly they would have had to go into their own pockets to rebuild. Some people might have the money, others won’t. Those that didn’t would go bankrupt.
Same for the banks that took out policies with AIG. If the gov’t hadn’t given AIG money to make good on the claims made by the banks, the banks would have gone out of business.
So, all this kevetching over AIG’s bailout money going to foreign banks only signifies a basic ignorance on the part of the critics about the nature of AIG’s business, and risks it had underwritten that put it in the position to go under — taking a substantial amount of the underlying banking community with it.
WLS (26b1e5) — 3/16/2009 @ 6:35 pmWLS (22): your State Farm analogy breaks down in that AIG’s customers didn’t suffer actual losses for which they weren’t being reimbursed, they were suffering paper losses (on the value of their debt securities) which they could avoid recognizing to the extent they received collateral from AIG.
MikeK (16): There is a disconnect between actual losses (expenses exceeding revenue) and liquidity problems triggered by paper losses which in turn are triggered by the requirement of mark-to-market. To the extent that AIG’s customers do collect on the underlying debt (with the above caveat, I believe they are), then they would return the collateral to AIG and AIG could in theory repay the taxpayer.
And it is interesting that AIG was bailed out in order to avoid having the government bail out AIG’s customers themselves (in other words, we bailed out the middleman)… and probably for political purposes (Paulson got to avoid officially bailing out Goldman, one of AIG’s customers). Had the government not bailed out AIG and instead dealt with AIG’s customers on a one-to-one basis, none of this bonus kerfuffle would have ever been an issue.
steve sturm (3811cf) — 3/16/2009 @ 6:51 pmYeah, Hab, today was a real “up” day. 7 points, right? I’m still measuring the market from November, and it ain’t looking all that healthy.
XBradTC (871447) — 3/16/2009 @ 7:10 pmSimple solution: pay them their “legally contracted” bonuses in AIG stock (you could substitute in some CITI stock etc. too if desired) valued at the stock price at which time these contracts were executed (i.e. about a year ago). That should give them, as well as other stock holders, the haircut they so richly deserve.
Bonus points for legally requiring them to hold on to it for a further 1-2 years. What could be a better incentive for them to finally work in the company’s (i.e. public) interest?
Bob Loblaw (6d485c) — 3/16/2009 @ 7:15 pmUh…guys, companies are prohibited from donating to political candidates (at least at the federal level).
Employees may have given money to certain candidates, but that is a far cry from the actual company contributing money.
Timothy Watson (4b0c7b) — 3/16/2009 @ 7:19 pmActually I understand that it was the French government that asked the Bush administration to bail out AIG because several French banks were counterparts on the CDS’ and would fail if AIG defaulted.
SPQR (26be8b) — 3/16/2009 @ 7:20 pmBob – Are you suggesting that their contracts be re-written with new terms that do not offend your sensibilities?
JD (40d677) — 3/16/2009 @ 7:53 pmand if so, why in the world would you expect the employees to agree to give up their contractual rights? Because Barney Frank is ticked off they’re supposed to give up millions of dollars?
steve sturm (3811cf) — 3/16/2009 @ 8:25 pmWhy doesn’t the government give the money directly to the people who need it (the working middle class) instead of the wall street execs, the banking CEOs, and the Auto CEOs with their private jets?
JC (af7738) — 3/16/2009 @ 8:35 pmJD, Yes!
But it’s not just my sensibilities. If it wasn’t for the risk of systemic failure (as WLS notes above), we both know AIG would be bankrupt now – and no bonus payable (I assume performance bonuses would be fairly low on the list of creditors; as for “retention pay” – HA!).
I suppose “legally” we would have to get them to agree to the re-write, but they might prefer something over the nothing they should be owed. My proposal would at least have everyone working towards a mutually beneficial aim.
Bob Loblaw (6d485c) — 3/16/2009 @ 8:40 pmSteve,
Bob Loblaw (6d485c) — 3/16/2009 @ 8:42 pmI don’t know, lets ask the UAW workers?
Bob – Your abject disdain for contracts, and the rule of law, is duly noted.
JD (40d677) — 3/16/2009 @ 8:53 pmIn the last couple weeks we heard the Leftists, and Barcky Tredundant) making the case that billions of dollars in earmarks was really no big deal because it was a tiny percentage of the overall glut of spending. In the instant case, these millions of dollars in contractual bonus payemnts are also a tiny fraction of the overall spending, yet Barcky and the Left want to make them their Demon of the Week. This can only be a distraction so people will not look at how painfully inept the Barcky admin has been to date.
JD (40d677) — 3/16/2009 @ 8:58 pmBest comment of the Year:
On the corporate bonuses and apologies:
“I suggest, you know, obviously, maybe they ought to be removed,” Grassley said. “But I would suggest the first thing that would make me feel a little bit better toward them if they’d follow the Japanese example and come before the American people and take that deep bow and say, I’m sorry, and then either do one of two things: resign or go COMMIT SUICIDE.”
I agree ! Along with every single congressman who caused, helped to cause, benefited, or otherwise disregarded warnings of the financial collapse, bailouts and/or stimulus.
Barney or Chris for starters……
DaveinPhoenix (6d9e1d) — 3/16/2009 @ 9:56 pmNormally, a response to Hax is like spitting into the wind, but here goes.
Hax, today the DOW closed at 7216 If that is “up four percent” than it is up from 7000 or a little less. Not a spectacular rise given how far it fell since the One won. To put a little finer point on that… the day after election day it fell 400+ points to 9,139. On January 1 that slide continued to 8,775, then, on Inauguration day it fell to 8,279 and by March 5 to 6,547. So, even up from March 5 to 7216 is nothing to brag about as an indicator of recovery.
You remind me of the foot race between a Russian and an American. The American beat the Russian in the one mile race by 575 yards or over a quarter of a mile. Pravda reports: “Russian Track Star Comes In 2nd Place. Lousy American Runner Comes In Next To Last.”
Or the Democrat who increased his tally to two votes compared to the last election where he got one vote. He bragged about a 100% increase in his vote getting capability.
Again, I wouldn’t be bragging about the uptick if I were you!
GM Roper (d53336) — 3/16/2009 @ 10:24 pm[…] And even more meanwhile, Patterico reminds us just which Noble Government Servants received lots o’ money from AIG. […]
Tuesday afternoon . . . | And Still I Persist (13e666) — 3/17/2009 @ 6:35 am“… Grassley said….”I’m sorry, …either do one of two things: resign or go COMMIT SUICIDE.”
Methinks the good Senator has been standing too near the ethanol vat.
AD - RtR/OS (cf92f2) — 3/17/2009 @ 11:35 am[…] more Patterico’s Pontifications » Remember Who ELSE got paid by AIG? __________________ MOΛΩN ΛABÉ I’d Rather Die Than Be Your Slave ‘Those who […]
Say it Ain't So!!!! - Obama Received a $101,332 Bonus from AIG - XDTalk Forums - Your HS2000/SA-XD Information Source! (165f39) — 3/17/2009 @ 2:47 pmThose contributions are from AIG employees. It would be illegal for AIG funds to go to campaigns.
“Bob – Are you suggesting that their contracts be re-written with new terms that do not offend your sensibilities?”
Are these union contracts? If so, we can rewrite away.
imdw (4e8db6) — 3/17/2009 @ 8:05 pmI couldn’t believe my eyes. News 10 (ABC) showed a graphic with the pictures, names,and amounts that the top 20 or so pols received from AIG. Dodd was first, The Won was second. It didn’t matter who came in third.
TimothyJ (8fb937) — 3/17/2009 @ 10:51 pmI would be surprised if there was, in the vast AIG enterprise, one shop that had a union contract.
AD - RtR/OS (55ae64) — 3/18/2009 @ 2:15 amI am not surprised that a Lib/Dem Congress would not know enough about the Constitution they have sworn to uphold and protect, to attempt to, or threaten to pass a Bill of Attainder, which is specifically proscribed by that Constitution.
Morons!
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Clanie Waley (473c98) — 3/24/2009 @ 12:08 pm[…] Karl at Patterico’s Pontifications speaks more directly at the congressional beneficiaries of AIG’s largesse, linking to Massie […]
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