In this case, I think both sides are pandering because the issues are a bit more complicated than anyone cares to explain. And that's a sad statement about democracy.

A big distraction? I hope Obama has more political sense than that.

Most people (and media outlets) don't really understand credit-default-swaps portfolios but they do understand the unfairness of taxpayer-funded bonuses for overpaid executives whose companies failed on a grand scale as a result of their greed and risky decisions.

The bonuses are symbolic of the corruption of Wall Street. The media like symbols so the administration has to deal with them. But the far greater problem is the illiquidity of the economy. Let Congress rake Liddy over the coals so Obama can stay focused on the big picture.

Now beginning to appear on the failure radar: the commercial real estate sector. If you don't want to see your malls shuttered in the next six months, take notice & do something.

No Danp, the issue is not that complicated. The American people are being ripped off and to justify yet another transfer of wealth to the very affluent we are told that the issue is "complicated".

Simon Johnson, who was chief economist at the IMF and has experience in banking meltdowns, points out that cleaning up these messes is fairly straightforward but the bankers say it's complicated in order to justify their continued involvement and compensation. He says these messes can't be solved unless you get rid of the people who got us there. Makes sense to me.

Just nationalize the insitutions and get on it with. Obama has been a huge disappointment in this regard. On this issue, he is no better than Bush.

Someone needs to remind Herr Rush that the "peasants" PAID for those bonuses. I suspect this issue may even divide dittoheads, with some divided white-collar listeners jealous of undeserving payouts, and dissenting blue-collar listeners wishing Herr Rush would go back to questioning Obama's birth certificate or Pelosi's loyalties, black-nd-white issues where who they're told to hate coincides with who they want to hate anyway.

I have a feeling that the administration think that there's only so much they can do about this, and that they might have to make some deals with AIG in order to save them. Of course, being democrats, they have the affliction of always believing that they're negotiating from a position of weakness, and that they'll have to compromise 90% of their goals to get the 10% they really want. As a result, they're trying to pave the way to allow paying the bonuses to be a chip they can play to get that 10%.

I'd love the be proven wrong.

The GOPers are ahead in the messaging department because Rush has spoken; they'll fall in line now, or face the wrath of The Rush.

When did all the Republicans suddenly become "socialists"?

Isn't this all just a distraction from the fact that AIG laundered even more money to a series of institutions, including those that had already received TARP money and foreign institutions?

I think the issue for the Republicans is that the "market" should determine how much executives get paid. So they can't rally against these bonuses as government waste or some such if they were legal contracts made by the invisible hand...

You seem to be ignoring the fact that Dodd wrote the amendment that guaranteed the bonuses. Now he is claiming that his amendment was changed secretly in the conference committee. Too bad nobody was allowed to read the bill.

This is a real simple deal. Tim Geithner's friends in the banking and insurance industry don't want to be held responsible for their obvious failures. They don't want to lose their wonderful but undeserved compensation. Because he is their friend, Tim doesn't want to hold them responsible. He wants them to be paid. They are all members of the same social set after all. If he is tough they might not invite him and his wife to the next swell cocktail party.

In short, we have Obama's appointee,like the hapless Hank Paulson before him, scrambling hard to protect his friends from any responsibility. The administration's economic team sure doesn't want us to look too hard at who was complicit in melting down the world's economy. Turn over enough rocks and we might find that Summers, Rubin and even Geithner were as deeply involved as any of the Republicans.

Just remember that this isn't political. The Masters of the Universe will steal from anybody regardless of party.

in fact, all of this "outrage" is just theatrics. In fact, Congress SECRETLY STRIPPED OUT BONUS LIMITATIONS FROM THE STIMULUS PACKAGE.
http://rawstory.com/news/2008/Senate_quietly_stripped_measure_restricting_bonuses_0318.html

So much for that dickless wimp Harry Reid and the rest of the handy corporate tools in Congress.
In fact, Obama knew all about it.

Wake up and smell the fucking coffee folks. We don't have single payer universal health care because CONGRESS WONT do it and neither will Obama. Why? They are too beholden to the private insurance industry.

We won't have mortgage relief because CONGRESS WONT do it and neither will OBAMA. Why? They are too beholden to the banksters.

We won't have prosecutions or even meaningful investigation of the WAR CRIMES of the BUSH administration because CONGRESS WONT do it and neither will OBAMA. Why? Because they AGREE WITH EVERY GODDAMN THING THAT WAS DONE AND THEY AREN"T INTERESTED IN JUSTICE or even THE RULE OF LAW.

The banks need capital? Then give every one of the 360 million American citizens a MILLION DOLLARS EACH. Almost all of us could pay our mortgages OFF and still have plenty of "stimulus" money left AND it would ONLY COST 360 MILLION.

But CONGRESS WONT and neither will OBAMA. Why? Because they love the debt slavery system and will never ever do a fucking GODDAMN thing to help the average American. Why? Because we are all FOOLS and have the government we deserve.

Meet the same boss, same as the old boss.

I think the bonuses are a bad idea, and the hooplah over laws and taxes for getting the relatively tiny amount of money is a distraction.

This would be an excellent time to push for fraud investigations. A couple fraud judgements against the players could net far more than the bonuses cost, and wouldn't need any special legislation.

Nothing will be meaningfully investigated because every goddamn fucking member of Congress is as crooked as a dog's hind leg.

This country is run by Murder, Inc. and financed by you and me.

Time to tear it down.

Wrong as usual Mike K. See Jane and Greenwald for some details. (via Digby)

Summary - the Senate version of the stimulus bill included a Dodd-written amendment that included limits on executive compensation. That was nuetered in negotiations with Geithner and Summers.

@getaclue: 360 million times one million is 360 TRILLION.

360 million is enough to pay 360 people each a 1 million dollar bonus -- on the order of this bonus issue.

the issue is not that complicated. - g. powell

You're right. It's not that complicated. People signed bonuses in early 2008, before the government got involved, but knowing the company was in dire straits. These people (mostly in England) were promised a bonus for not quitting before 3/15/09. When the gov't and treasury stepped in 9/08, they knew about these contracts, and declded to let them stand. Now is the wrong time to claim they can be cancelled.

danp,

Please, give me a break. Unions are asked, or rather ordered, to renegotiate contracts all the time. Now is the right time to say they can be cancelled.

O good god. Disregard Mike K altogether. He's just some flaccid old fart from Orange County who thinks he's still in the game. Danp what was his blog addy again? I encourage you to read it cover to cover. Masturbatory nonsense at its finest.

g. powell - This isn't breaking a contract. This is refusing to pay after the contract has been fulfilled, though there are some that expire later this year. I don't have any problem with cancelling those, but that doesn't seem to be the discussion.

staplefood - You mean this one?

Fortunately the meme from Broder etal. that will doubtless appear in today's Post will be severely undercut by Jon Stewart's clip montage last night, dominated by noted Obamamaniac Glenn Beck.

(Poor Rush--he looks and sounds more and more like the creepy guy your dad knows from work.)

I got this tidbit, Danp, from the blog link that you provided. The Feds own about 80% of AIG, so
tell me again why these contracts are so sacred. People are asked to renegotiate contracts every day.

In the first ruling of its kind, a bankruptcy judge held the city of Vallejo, Calif. has the authority to void its existing union contracts in its effort to reorganize, holding public workers do not enjoy the same protections Congress gave union workers at private companies.

AIG's $165 million in bonus payments is $225 a day since Jesus was born!

That's enough for a roomfull of Starbucks lattes at the AIG board meeting every day for 2000 years! That's greens fees, a cart and lunch at Westchester Country Club every day for two millennia, that's . . .

g. powell - Once again, I don't have a problem cancelling the contracts going forward. But you can't cancel them after they've been fulfilled. And your quote is completely irrelevant - AIG is not in bankruptcy. It' s employees are not unionized. Nor are they public workers.

And for those who think this bonus fracas is a sideshow, it's not. It's the main event. It reveals that Obama, like Bush, does not have a coherent financial strategy. And that he does not intend to clean house of these people.

It's very simple. Tim Geithner and Obama's Treasury Department are out to protect their banking friends. End of story.

danp,

AIG is not bankrupt because taxpayers kept it alive. AIG workers are employed at a government-owned company. They may not be public employees, but they are pretty darn close.

If you want to continue to argue on purely technical grounds, fine. But the contracts will not be honored, that much is clear.

pj in jesusland: AIG's 170B$ in bailouts is $225,000 a day since Jesus was born. AIG already paid the relatively piddly poison-pill bonuses, and we should go after these shyster masters-of-the-universe for fraud. Fines and jailtime under current fraud law will be better law than some new trumped up political grandstanding law.

Dave X,

Agreed. As I said earlier in the thread the bonuses are symbolic of the bigger problems we face.

It sounds like the memos starting to surface indicate AIG management blocked internal audits of the financial products division as the company started to swirl down the shitter.

The Justice Department is going to start playing a more active role now.

I think it is the NY Fed, and the Fed which should get most of the blame. But also keep in mind that the NY Fed uncovered the contract, one among 117,000 contracts.

By the time it was uncovered, Geithner has isolated himself wrt AIG, during the confirmation process.

But the contract for the bonuses was written after the CDSs had started to go bad, almost six months later. And the contracts were based upon bonuses for 2007. It turns out that those 2007 bonuses didn't take into consideration some of these losses on CDSs. So the whole contract seems to be based upon a pack of lies. They knew they were going down the tubes, and the retention bonuses were prime proof that everyone knew no profits were possible in 2008.

Can anyone give me a single example where Obama/Geithner has been an improvement on Bush/Paulson? Please, just one?

On the other hand, if we're going to make new law and re-write contracts, could we convert AIG into some kind of UN-limited liability corporation, like Lloyds of London, and suck all the money back out of the voting shareholders?

If a company is "too big to fail", its liability shouldn't be bankruptcy-limited to the price you pay for it.

Real capitalists should be more outraged at the AIG mess than anyone. Rush isn't, because he isn't a real capitalist. He's a feudalist. I know it looks silly when you put it like that, but Rush would support any political or economic system that benefits the people on top at everyone else's expense because that's the way he thinks the world should work. And I should point out, that's not just because Rush is on top. There are plenty of middle and working class feudalists who think exactly like Dark Ages serfs.

Mike

And your quote is completely irrelevant - AIG is not in bankruptcy.

AIG is only not in bankruptcy because the US taxpayer is artificially propping it up. Effectively, AIG is insolvent.

It' s [sic] employees are not unionized.

Right, so they should have have even less protection.

Nor are they public workers.

Really? Because all the money being paid to them is effectively taxpayer money.

I think you're exactly right, MBunge, there are a lot of feudalists out there, and they vote GOP. They get outraged by welfare payments, but say nothing about absurd exec compensation.

That's why I like this populist outrage, we can finally see a counter attack in the class war that has been waged the last 30 years against regular people.

At the same time, White House chief of staff Rahm Emanuel believes the administration's "main priority is getting the financial system stabilized, and he believes this is a big distraction in that effort."

Good to see Emmanuel reminding us all what a Corporate Tool this Israeli agent-of-influence really is.

Now that America is waking up to the fact that we have Wealthcare, a government program that protects the wealth of the few at the expense of the many, worrying about bonuses is the least of our worries.

The monied folk who are geniuses, have managed to extract untold 100s of billions out of the US taxpayers.

Face it guys, we've been had.

Hurts doesn't it.

g. powell gave the union argument...

Here's a wrinkle.

What if the bonuses had been 165 TRILLION?

Thank heaven the bailout money was enough to cover!

If management of a company produces an absurd compensation package for its favored elite, then goes bankrupt, why is it the taxpayers' duty to fulfill the role of Santa Claus?

The amounts dished out to these people are supposed to be based in some way on what the company earns.

This reality check is due on many companies. Perhaps it's already occurring. Many companies are struggling with interest rates shooting upward, in part due to extravagant compensation bestowed on their employees (mostly management).

They are essentially forcing their company to pay them with other people's money. They are living off others' money. AIG feels entitled to continue compensating employees with money they don't have? The billions they lost are all owed by someone else, not THEM?

Everybody shout out when this starts to sound like a recipe for further fiscal abuse just prior to future bailouts.

"How much is the fed giving us? Well, by golly, guess what my "bonus" is?!!!"

What if the bonuses had been 165 TRILLION? - toowearyforoutrage

Andrew Cuomo made them cut out 600 million in "deferred compensation" last fall. I would guess anything above that would have been cancelled as well. If he knew the details of these contracts, we should assume Paulson and Bernanke did as well. So the real question is why didn't they do something then, as opposed to waiting until the contracts were fulfilled.

Something doesn't add up here. Either the White House is taking this seriously or the White House sees the story as a "big distraction." Can it be both? Probably not.

It can quite easily be both. An issue which is very serious on its own terms can also be a distraction in terms of dealing with a broader issue with more far reaching consequences.

Did that fat drug-addict just call me a peasant?

Screw you, Limbaugh.

When the Revolution comes, you're going to be among the first up against the wall!

Poor Tim Geithner, my heart really bleeds for him.

His predicament is rather akin to the case of the hunter being hunted.

In fact, he committed a grave error of judgment in exchanging his cushy job at the New York Federal Reserve (that was his former perch, if I am not mistaken) where he could hobnob and chum with the denizens in the den of thieves, aka the Wall Street for the dubious distinction of a cabinet post in another similar den , aka washington, D.C. He ought to have anticipated that he would be damned if he did, damned if he didn't as the Treasury Secretary under the present precarious circumstances. Any success he manages to score, if at all, will automatically go to the score card of his boss, the Prez and, for any failure (a scenario much more likely), he will be hauled over coals by every passer-by in the street. Of course, there will be the customary "vote of complete confidence" from the Prez every now and then relayed through the White House spokesperson until he is eased out eventually in the wake of the gathering storm demanding his resignation.

I am sure that Geithner is regretting now, every minute of his waking hours, his fateful mistake in taking that call from Obama on that wintry night asking whether he would be keen on joining his team!