Dear Friend and Reader:
What an interesting turn of events. Late last week,В corporate interests using a financial news network to influence the market was exposed through the take down of CNBC’s chief cheerleader Jim CramerВ by Jon Stewart of The Daily Show. On that same day, itВ was revealed to the White HouseВ that $165 million in taxpayer money from the Paulson-Bernanke bailout under Bush went to bonusesВ paid to AIG executives in charge of the financial products division — the same division that brought about the company’s failure through bad lending instruments like interest-only mortgages.
This week the outrage over this revelation is reverberating from the Oval Office to Congress. Edward Liddy, the new CEO of AIG testified WednesdayВ before Congress that heВ found the payment of the bonuses to AIG’s executives “distasteful” but there is no way around it, and that the government (the taxpayers) has no recourse butВ to honor the commitment.
Liddy’s performance defines not just the way these mega-financial firms have taken taxpayer money andВ ran. The way theВ entire cultural phenomenon of unregulated markets and the greed that spawned themВ makes thatВ a given. Its how these firms are putting one (AIG) В in frontВ to cover the tracks ofВ the other firms who had already received bailout money from the Federal Government.В Eliot Spitzer, former governor of New York and “Sheriff of Wall Street”,В explains:
[W]e need to go back to the very first decision to bail out AIG, made, we are told, by then-Treasury Secretary Henry Paulson, then-New York Fed official Timothy Geithner, Goldman Sachs CEO Lloyd Blankfein, and Fed Chairman Ben Bernanke last fall. Post-Lehman’s collapse, they feared a systemic failure could be triggered by AIG’s inability to pay the counterparties to all the sophisticated instruments AIG had sold. And who were AIG’s trading partners? No shock here: Goldman, Bank of America, Merrill Lynch, UBS, JPMorgan Chase, Morgan Stanley, Deutsche Bank, Barclays, and on it goes. So now we know for sure what we already surmised: The AIG bailout has been a way to hide an enormous second round of cash to the same group that had received TARP money already.
It all appears, once again, to be the same insiders protecting themselves against sharing the pain and risk of their own bad adventure. The payments to AIG’s counterparties are justified with an appeal to the sanctity of contract. If AIG’s contracts turned out to be shaky, the theory goes, then the whole edifice of the financial system would collapse.
…The appearance that this was all an inside job is overwhelming. AIG was nothing more than a conduit for huge capital flows to the same old suspects, with no reason or explanation.
In other words, the shit isn’t running knee deep. Its neck deep. These big firms we’ve been bailing out have been double dipping from the till,В going directly to the Fed and then through their fund “insurer”, AIG. Like Iraq, they privatized the profits and socialized the risks. In both cases,В its We The PeopleВ paying the bill.