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So why is AIG spending tens of thousands of dollars every month on four big p.r. firms? Spokesman Nick Ashooh said his in-house communications team needs additional mouthpieces to respond to the "tsunami" of bad news from its collapse last September, including a lavish executive junket and hefty bonuses covered by the $180 billion taxpayer transfusion.
...It's not unusual for private companies to deploy outside p.r. flacks when they get into trouble. The biggest firms can charge as much as $40,000 a month to deal with fallout. AIG is now 80% owned by the government, which has pumped in public funds to allow the company to cover its claims and not bring down the world banking system with it. But some of that money appears to be financing damage control. Just how much, is the kind of question that publicly financed bodies are obligated to answer. When he was asked for AIG's p.r. tab, Ashooh gave a stock corporate response: "Contracts are proprietary."
"That's the whole culture of concealment that's helped some of our bigger financial enterprises get away with murder," Representative Peter Welch, a Vermont Democrat, told TIME. He said taxpayers are majority shareholders who are "entitled to know how company money is being spent" without the data's being "dressed up with the benefit of high-priced media folks."
Rich Ashooh, 5/10:
"AIG, Citibank, Chrysler, GM and now Greece?" asked Ashooh. "The current mentality of rushing to bail out failing institutions that have rung up massive debt instead of cutting spending and demanding accountability must end.
and:
Ashooh also said he was opposed to both the most recent bailout of GM and companies like AIG.
"There is a difference between trying to prevent a disaster (using taxpayer money) and managing it," he said. "There are things the government could have done without bailouts."
Also, and because some have a hard time understanding it: Carol Shea-Porter voted AGAINST the outrageous AIG and other bankster bailouts. Republican Judd Gregg voted for it, however.
Yesterday, SEIU's Change That Works program organized more than 10,000 people across the nation to hit the streets and protest outside major banks. New Hampshire's team involved more than 100 New Hampshire residents in "It's GREED, Not Luck" protests at Bank of America locations across the state. There is a great WMUR clip about it here.
This is important stuff. As I listened to a story on NHPR this morning about Republican members of Congress bloodthirsty to pin all the blame on recently-appointed Treasury Secretary Tim Geithner, it reminded me how quickly the conservative press team points the partisan finger.
And yet, this group was out in force yesterday rallying people community by community to protest corporate abuses and call on Congress to enact real change.
Judging by how many people turned out to participate, New Hampshire agrees. According to the press release, they selected Bank of America because:
Since last fall, Bank of America has taken $45 billion in taxpayer bailout funds, but plans to layoff 30,000 to 35,000 workers, has awarded $5.2 million in corporate bonuses, and continues to charge consumers some of the highest fees in the industry. The bank's CEO, Ken Lewis, makes $4,800 an hour while paying his workers $10.50 an hour, and leaving taxpayers with a $50 million a year tab for employee health care costs.
In addition to WMUR, the events were picked up in the Portsmouth Herald, Fosters and the Valley News.
They said more protests and rallies are planned for the spring and summer. The group is focusing on passing the Employee Free Choice Act, supporting President Obama's budget to make quality, affordable health care for all a reality, and enacting strong banking reforms.
Bailout King AIG Still to Pay Millions In Bonuses
Geithner Gets Firm To Make Revisions
By David Cho and Brady Dennis
Washington Post Staff Writers
Sunday, March 15, 2009; Page A01
Insurance giant American International Group will award hundreds of millions of dollars in employee bonuses and retention pay despite a confrontation Wednesday between the chief executive and Treasury Secretary Timothy F. Geithner.
This may not be as bad as it looks. In the financial industry, bonuses are a big part of the culture. So for non-management employees, who (one assumes) just came off a pretty rough year, I'd say they deserve a little something. A financial employee could reasonably have their annual budget include a 5% bonus. Of course they would have been a fool to expect that this year, but sometimes it's hard to adjust your budget in midstream.
So if this part is true:
In a letter to Geithner yesterday, Liddy agreed to restructure some of the payments. But Liddy said he had "grave concerns" about the impact on the firm's ability to retain talented staff "if employees believe that their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury."
And this:
AIG's top seven executives, including Liddy, already agreed in November to forgo their bonuses through this year. Last week, AIG agreed to restructure bonuses for the next 43 highest ranking officers at the company, who are to receive half of their bonuses -- which total $9.6 million -- immediately, the administration official said. Another quarter of that would be disbursed on July 15 and the rest on Sept. 15. But these last two payments would depend on whether the company makes progress in restructuring its business and paying back taxpayers.
Well, it's messy and awkward, but progress can be messy and awkward sometimes.
"Bailout King" -- not the marketing department's idea, I'll wager.
We have GOT to get control of the $700 billion TARP financial "bailout". The financial industry is abusing the taxpayers, and the current regulatory system is not stopping them. We need to understand that the guys running our nation's big financial companies are by-and-large simply not to be trusted. They are not interested in helping our country. Hell, they are not particularly interested in helping their own shareholders. They are concerned with their own interests, pure and simple. We need to treat these folks as the miscreants they are. Don't trust them to do the right thing. They won't. Don't expect them to act honestly and with integrity. It is foreign to their nature. Financial regulators should accept these simple facts and redesign our regulatory system accordingly.
A case in point: Merrill Lynch's CEO John Thain. Merrill just got absorbed by the Bank of America, in large part through the efforts of you and I, who gave B of A $20 billion to make this happen. Merrill needed the money after they announced an "unanticipated" $15 billion losses in the 4th quarter, and this was going to kill the deal. Did I mention that "we" also agreed to share in any losses that Bank of America has on $118 billion in Merrill debt?
So what does this have to do with John Thain? He has been the CEO of Merrill for about one year, during which time the company lost $30 billion and was saved from well-deserved bankruptcy only because the Feds arranged the company's takeover at our expense. That didn't stop Mr. Thain from spending $1.2 million redecorating his office. Nor did it stop him from secretly accelerating an end-of-year bonus to a few senior executives, including himself. His share of the loot is $15 million. For losing $30 billion. Who knows how big a bonus he would have arranged for himself if he made a profit- is there enough money in the world? Oh, and he resigned from his company today, as soon as the bonus check cleared the bank.
Mr. Thain is only the most recent example of self-dealing and double-dealing in the executive suites of our financial sector. These people have literally made hundreds of millions while losing hundreds of billions. They have misled their shareholders and debtors. They have led this country into its worst economic crisis in our lifetime. And they walk off with millions while we get stuck with the bill.
President Obama and Congress need to change the rules before another dollar is given to these companies.
This is probably the most interesting tea-leaf moment I've seen since the election. On two counts.
Jeanne Shaheen, criticized as candidate in the fall for being against the bailout for political purposes, today as senator voted against releasing the second half of the TARP money.
Judd Gregg, lavished with praise in the fall for his role in the crafting bailout, but seeing the execution, transparency, and accountability of it crumble all around him, voted in favor of releasing the second half of the TARP money.
Both voted this way despite President-Elect Obama's support for releasing the funds.
Remember when Judd Gregg went to the Wall St. Journal Op-Ed pages and falsely claimed that the Bush years brought us the bestest tax revenues evah? When in reality the growth in revenues was zero percent?
Turns out that not the only place in the WSJ pages our Senior Senator had trouble with teh math. First, Gregg in the WSJ:
The TARP, for all its warts, has involved using tax dollars to invest in assets that will have a return to the taxpayer. In fact, the estimate to-date is that the TARP has actually had a gain of about $8 billion, while recapitalizing the financial system. With this type of stimulus, there will be little, if any, long-term increase in the debt.
Did that seem a little magical to you too? Well, you're not alone. The AP tracked down the truth:
"It's laughable - I can't imagine anyone takes that seriously," said Ritholtz, who is chief executive officer and director of equity research for the investment firm Fusion IQ. "You can't take one slice of what the government did out of the trillions invested and say, 'Look, we're up billions of dollars!'"
To say the Treasury has made money, he said, "you have to say all the other spending came back," including guarantees on assets from the now-defunct investment bank Bear Stearns and insurance giant American International Group Inc.
Even the Treasury - even the Treasury - won't stand by Judd's Funny Numbers:
"It's not our estimate," said Treasury spokeswoman Brookly McLaughlin in an e-mail response to questions. "I'm not sure what they're basing it on."
It appears from the fact-checking piece that Gregg relied on an accountant who has subsequently walked away from his own research, saying "It was a horrible project," ... "I'm sorry I did it. It was very difficult to do."
But read the whole piece, especially the final graf.
"These funds were not authorized by Congress for non-financial companies in distress, but were to be used to restore liquidity and stability in the overall financial system of the country and to help prevent fundamental systemic risks in the global marketplace," says Sen. Gregg.
...But now that the Administration has acted on its own, it is critical that Congress re-double its oversight efforts to help protect the taxpayer who is being called to bail out companies, their investors, and labor unions from their own mistakes," Gregg says.
There's really no reason to listen to him. He fed the banks a whole lot of our money, no strings attached, and then bailed himself out.
Him getting the vapors because a fraction of that coin is going to companies with union workers is so transparent it's laughable.
Bailout champion Judd Gregg was too busy to stay on the bailout oversight board he was appointed to.
And now he's too busy to read their report as well. But that won't stop him from telling you what you should think of it:
Gregg said he hadn't read the report but dismissed the questions as "Monday morning quarterbacking" that put a "political spin" on the program. As for the questions about whether bailout recipients have stepped up to lend more, Gregg said, those are misplaced because the goal of the program was simple: to keep financial institutions from failing.
Indeed, the Great Gregg Bailout Plan has succeeded marvelously in keeping financial institutions afloat. Why, look at what Goldman Sachs was able to do with the money - change their tax rate from 34.1% to 1% in only one year!
So glad more of our tax dollars are going to bail out Goldman so that they can keep more of their tax dollars.
It's like I'm watching the biggest heist in the history of the country unfold in front of my eyes in slow motion. I didn't think Bush and his enablers could top Iraq and torture and Katrina, but they sure are trying, and with just barely a little over a month left. Bravi, signori, bravi!
How dare you want some of your tax dollars to go anywhere other than in the unaccounted for coffers of banks specializing in bad loans?
In a prepared statement on Friday, Gregg ripped the idea of using the TARP to catch Detroit. "These funds are to be used to stabilize the financial system of the country - they are not for specific businesses experiencing stress," Gregg said. "This is especially true when one considers that these auto companies have deep cost structure and product quality issues which have little to do with the present economic slowdown."
Yes, by all means, let's only give my tax dollars to those banks that have product quality issues (junk loans) which have had everything to do with the current economic meltdown.
With every passing day, the idea that Judd was going to be on the TARP oversight board gets more and more preposterous.
It's one of the truisms of capitalism that economic competition brings out the best in the competitors. I won't argue there is no truth to that (though I'm tempted to), but I just don't see that the GM of Chrysler wants to "win" over the GMs of Ford and Honda in quite the same way that Usain Bolt and Michael Phelps wanted to win their gold medals.
Sitting in my little cube, I certainly have no desire to out-compete my fellow cubicle people at other companies. Instead, what motivates me, and largely most of my co-workers, is the basic desire to do a good job. That's not the whole picture, of course, there's salaries, and bosses, and so on. But excellence as a fundamental human motivation is often lost in the discussions of people, or companies, as economic creatures. I think it's a way bigger driving factor than "competition."
What competition does do, though, is it provides variety. Variety creates choice, and, perhaps more interesting in these times, it creates stability. If you have 100 companies, and they have all structured there supply chains in different ways, then a supply disruption is unlikely to put all 100 out of business. Or if they make lots variations on a product, and demand changes, then some will be in a position to supply the new demand.
"Yes, and I don't think [TARP]'s really received the credit that it should have received"...
...He also said he had no problem with the TARP shift from buying bad assets to injecting bucks into banks. "This was never supposed to be a straightjacket," he said.
It's pretty comical watching Judd Gregg try to excuse away why he bailed on the bailout oversight board in territory not as cozy as Granite Status. More from Dorgan's Capital Beat:
The only area of TARP news that seemed to rub Gregg the wrong way: the comments from the chairwoman of the TARP oversight board, Elizabeth Warren, who told the New York Times that the government response had been lurching and didn't seem to be targeted enough to ailing households. "You can't just say, 'Credit isn't moving through the system,' " she told the Times. "You have to ask why."
Asked about Warren's comments, Gregg said: "I'm not going to get into a debate with her," he said. "My view has been that (Fed Chairman Ben) Bernanke and (Treasury Secretary Hank) Paulson have done a really good job. . . . These issues that they're having to deal with are coming at them from all sorts of directions."
Of course you're not going to get into a debate with her, Senator. That might involve getting into actual oversight of the bailout, something you never had any intention of doing after you gave away my tax dollars to the banks with no strings attached. Instead we'll all have to suffer hearing you huff and puff about the big bad scary unions that ruined the auto industry.
And this ends another chapter of The Party of Fiscal & Personal Responsibility (No, Really!)
Finally! Some bailout accountability from the party of fiscal responsibility. If we're going to reward failure with our tax dollars, we ought to have some kind of stake in how they're used:
"Unless the ... companies restructure significantly, and I haven't heard any long-term proposals yet that are long-term restructuring, they are basically putting lipstick on a pig, in my opinion," Gregg said.
...U.S. Sen. John Sununu, R-N.H., took a stronger tone, saying that subsidizing bad business decisions "poses a moral hazard."
Oh, wait. My bad. Those words are meant for Detroit, not Wall St.
Adding: [stoopid election season] And I demand that Senator Gregg apologize for that outrageous remark about Governor Palin. [/stoopid election season]
So I was thinking today about the complaint that the auto industry hadn't planned for the long term, and how I wrote that at least part of the blame for that might rest with stock owners, who want returns on their investment RIGHT NOW. And since I have absolutely no expertise in this area, I wondered if maybe we could change the game so they would be less desirous of returns RIGHT NOW.
And I don't see, offhand, why you couldn't do that. The government could, let's say, change the nature of stock so that half the stock of any company has to be held for more than 5 years. Or do it at the other end, regulate stock sales so that half of any stock purchase has to be held for a long term. Or regulate it at the level of mutual fund and large pension fund purchases.
Even Bush-era Congressional Republicans are getting nervous over the unaccounted for giveaway:
In a sharper confrontation with the Bush administration, House Republicans on Wednesday warned Paulson and Federal Reserve Chairman Ben Bernanke that without greater accountability Congress will be in no mood to release to the Treasury the second half of the $700 billion.
"The government has burned through nearly $350 billion of (bailout) funds and is pledging trillions of dollars more through other programs, yet little is understood about how these investments are contributing to the nation's economic recovery," 12 House Republicans, led by Minority Leader John Boehner, wrote to Paulson and Bernanke.
But not Judd Gregg. The bailout's biggest cheerleader, he's just too busy to work on oversight now that his true constituency, Wall St., got its endless, unchecked feedbag.
As usual, in Open Secrets one picture of Gregg's source of campaign money is worth a thousand PACs:
These guys have really bad PR people, don't they? First it was the private jets, since rectified. But we still call it the "bailout." The bankers got the media to start saying "rescue plan."
After we finish snickering at the CEOs we can start thinking about whether a bailout might be in our own selfish interest anyway. Thoughts below the fold.
Just as super-cool bailout oversight head Elizabeth Warren starts to make some noise about the lack of accountability for TARP, Judd drops out from the same oversight group, citing a need to focus on the upcoming stimulus package. He plans on being the Last Honest Man to stand in the way of San Francisco Pelosi giving away your tax dollars to dirty hippie groups:
"I don't want it to end up being walk-around money for liberal constituency groups," Gregg said. "I want to make sure it's used effectively. But it's going to involve things like mortgage relief. It's going to involve infrastructure. It may involve the automobile industry and it may involve tax cuts, hopefully."
Now, Gregg pretty much openly mocked the previous stimulus bill. So why the sudden interest in this one, so great that he's dropped the ball on the bailout oversight? Especially since he has quickly become known as a leading proponent of the bailout bill?
Sounds like The Juddy Collins Show might turn into a two-year long gig. Maybe he is running again after all. Curiouser and curiouser.
I've long felt that unseating Powerball Gregg would be a tougher, more complex project than Bass or Bradley or Sununu, and so far he has not disabused me of that expectation.
Adding: I'm not trying to be purposely cryptic, so let me tease out some more of what might be going on here below the surface. If I've learned one thing since following politics, it's to take nothing at face value at first:
* Gregg is champion of bailout bill, and a True Believer in it. Many mentions in the press.
* Bailout bill is massively unpopular among voters.
* '08 election cycle comes and goes.
* Daily reports of lack of bailout accountability.
* Oversight panel led by person willing to criticize the Administration, report due out on the 10th.
* New stimulus package on the way in January that, unlike the other one, will be massive, multi-dimensional and a real sustainable benefit to ordinary people.
* Gregg's up for re-election in 2010.
It makes perfect political sense why he would want to be more distant from the toxicity of the bailout and closer to some reflected glory of the upcoming stimulus, a concept he once scorned. At a minimum, this tells me he's keeping the door open to running again. Other ideas:
* Face value: he really is on too many subcommittees and can't spare the workload.
* Personality conflict with the oversight panel. Could you really imagine Gregg in a group headed by someone who blogs on TPM?
I know this was co-written by a guy once appointed by W., but if we're going to blow through seven trillion and change on banks that can't give up their sports fetishes, maybe this much less expensive option would be a whole lot more stimulating to the economy, as it would actually reduce significantly a monthly structural payment for a lot of people (me included), and give us more money in our pockets to spend?
We propose that the Bush administration and Congress allow all residential mortgages on primary residences to be refinanced into 30-year fixed-rate mortgages at 5.25% (matching the lowest mortgage rate in the past 30 years), and place those mortgages with Fannie Mae and Freddie Mac. Investors and speculators should not be allowed to qualify.
A way of deflating the bubble retroactively? A further bonus is that it helps homeowners across the board, including those of us first home-buyers who resisted temptation and took on healthy mortgages with fixed rates, but who are suffering under mortgage payments burdened by the astronomical home price increases of the past decade.
Tell me why this is a bad idea, because my empty wallet is addling my judgment on it (and you should really read the whole piece to do it justice).
When it's a traditional Democratic constituency (in this case Detroit), suddenly the Bailout Sprinter returns to his radical free marketeer roots:
It is simply not the role or the responsibility of government to provide subsidies, support or special benefits to specific businesses. Using government funds for such purposes is unfair to taxpayers, especially those working for businesses that are left out.
Yeah, he didn't get it. He'll be running for something. But Senate or Governor?
Nota Bene: I'm not saying I'm for the auto bailout. Simply that John E.'s principles are only as long as an elephant's shadow.
