Here is White House press flack Robert Gibbs explaining Obama's belated posturing on the AIG bonuses:
Right. This is from the Administration that appointed tax cheat Tim Geithner to head the Treasury, inspired no doubt by his marvelous success at the NY Fed, where he had regulatory responsibility for Citigroup. Not only did Geithner cash his paychecks, he cheated on the taxes (in his IMF days) - maybe they should think long and hard about that before lecturing anyone else.
And do keep in mind - this is not an "incentive" bonus pool, it is a "retention" bonus pool. In the spring of 2008, after AIG eased Joe Cassano to one side and realized he had presided over a train wreck, they had a serious question about whether they should remain in the derivatives business and how they might keep a derivatives team together. Rather than watch as everyone drifted to other firms they guaranteed a bonus pool (it was generally obvious that earnings wold not justify bonuses in 2008).
Furthermore, the Feds are providing more support to the AIG securities lending business than to the credit derivatives business, so the AIG-FP people can make the case that they are being used as a scapegoat by insurance regulators who would rather point the finger elsewhere [the WSJ notes this as well]. In this gambit the insurance commissioners will be aided and abetted by everyone who believes that the answer to any problem is more regulation.
Well. Maybe the decision in March 2008 to keep this unit together was a mistake; maybe the people who chose to stay should have been urged to leave. But most of the people at AIG-FP were not involved in credit default swaps and do engage in other profitable activities. And here we are.
LET"S HEAR IT FROM THE MAN: Here is Obama himself:
WASHINGTON – Joining a wave of public anger, Presidentblistered insurance giant AIG for "recklessness and greed" Monday and pledged to try to block it from handing its executives $165 million in bonuses after taking billions in federal bailout money. "How do they justify this outrage to the taxpayers who are keeping the company afloat?" Obama asked. "This isn't just a matter of dollars and cents. It's about our fundamental values."
It's about our fundamental values? Which ones? Surely not "a deal is a deal." These bonuses have been quietly kicked around for a while ($55 million was paid on this plan in December - did everyone at Treasury forget?), so I guess the fundamental value in play with Obama is "When the crowd stands up and boos its time to stand up and boo." Yeah, that's leadership.
IF WE'RE STUPID ENOUGH TO TAKE OBAMA SERIOUSLY WE ARE STUPID ENOUGH TO TAKE THIS SERIOUSLY:
Marc Ambinder reports on an elegant "solution" to the AIG bonus debacle:
I'm hearing that....The Department of the Treasury is looking at ways to simply reduce the amount of money it's lending to AIG; they'd start with the latest $30 billion line of credit and subtract the value of the bonuses paid.
I don't want to stand in the way of the mighty PR machine that will be explaining why this move by Geithner and Obama saves the day, so let me just applaud and urge them to think even bigger. Since the premise of this proposed solution is that are just tossing money at AIG without regard to their actual payment obligations, maybe Obama and Geithner would like to save us weary taxpayers a couple of billion by reducing the loans to AIG by even more. Or hey, cancel the full $30 billion credit line and save us the whole installment! That was easy!
If skeptics grumble that eventually we will need to lend AIG the money so they can meet their payments, well - maybe we can claim $30 billion saved this week, then quietly lend them $30 billion next week when the public's attention is elsewhere. There you go.
But either Treasury needs to explain why they are lending money to AIG which they don't need, or they will eventually have to lend that money to AIG, regardless of their current PR problem.
WHO BROKE AIG: The WSJ picks up the story: