A decent, laudable effort by the White House last Friday to instill some perk and cheer after a good market week--things are looking up!--was utterly immolated by the hissing missile of news Saturday night that AIG was going to pay out $160 million in berated-by-Treasury bonuses, sparking outrage and condemnation all day Sunday.
Thus far Federal Reserve and Treasury have frantically pushed at market edges and cash infusions to busted financial firms to keep the system from collapsing. They just don’t have the statutory authority to take over an insurance company or hedge fund, as they do with regulated banks; we could nationalize the old-time banking element of Citigroup but the company would still go up in flames, brought down by fraud and lying in other divisions.
After AIG bonuses yet again I’m positive Bernanke and Geithner would desperately like the authority to terminate all the crooked management of the felons who got us into this incredible mess and directly manage the frantic efforts to clean it up. Given their restraints and market conditions Federal Reserve and Treasury dearly needed some faith and confidence that it all really could work, yet this enraging bonus AIG news instantly blasted apart all mental conclusions to the plan save one: this isn’t working.
I am a liberal, loyal Democrat. Perfection is a dangerous fantasy and I was more than willing to put with any number of heinous elements in a financial rescue with the necessary faith and good cheer to keep the freaking system from collapsing in front of us, but I can’t sign up for this current sickening approach of propping up the bonus idiots who got us into this conflagration, no minimally politically astute person could.
The answer, of course, is yet another legislation cycle where Congress does in fact give Federal Reserve and Treasury the authority to take over hedge funds or whatever lying looting market these crooks fashion, that does give them the authority to deem a company is too big and break it up, that does give them the ability to reign in the nauseating compensation systems and ethos these lying crooks enrich themselves with.
Forget it. Congress, as we’ve all painfully learned the last 50 days, is not a particularly bright or nimble institution, the entire Obama election army is being put on alert today just to help get the budget for next year passed, yet there is healthcare and climate change/energy to get done too, plus those two little trillion dollar wars to end. Sauron-like banking lobbying forces of incredible power would oppose a banking reform bill in a normal year, it’s never happening with the urgently stuffed agenda we have now.
As Atrios noted plain bankruptcy would immediately be very reformative, but these barons of greed at mammoths like AIG and others are deemed too big to fail, letting one crash will crash the system, it has been irrevocably deemed, so that isn’t an answer either.
Our magneto is broken, goes the old refrain. Federal Reserve Chairman Bernanke was absolutely right last night on 60 Minutes, America is a country of immense talents and resources, full of bright, hard-working honest citizens more than willing to do their share so all may prosper, there is still so very much good and right with us, our society and system just can’t work as it should without the critical financial system functioning properly.
The very best citizens can now hope for in this bonus plan fantasy fix is a muddle, a clanking, half-assed performance from a part that needs total replacement but for reasons of overload can’t be. If we’re lucky the stinking mess will let us more or less limp along, sliding in a flat-line of mediocrity, if we’re screwed Finance will crash us into a Depression, taking ten years to get back to normal instead of two.
Many patient, wise, doctorate-educated sets of Economics eyes have been watching the news with fervent alertness for months for one element, yet so far as I know only Krugman has dared to utter the word publicly: panic. Panic froze the money markets last year and rightfully freaked out Paulson and Bernanke, another one could break out in a number of markets at any time, and if one does citizens can know magneto failure is finally starting a total systemic crash, hold on tight and hope for the best.
I do not wish for that in any sense, even if it does mean paying the salary of grossly greedy crooks for now. All Americans would feel a lot better, would be sure things are looking up, if another Finance crook on the US Government dole never, ever got a bonus again, doing whatever it takes to make sure that’s in the news today would certainly help with that.