A Troubling Fumble
This whole AIG mess makes my stomach turn, but not for the reasons you may expect. Sure, I'm outraged at the firm's chutzpah in taking federal bailout money after letting the Financial Products area run the company into the ground, and then days later use that money to start shoveling out bonuses to the same folks who killed the company.
Sure, I'm pissed that AIG used that initial round of bailout money last fall under former Goldman Sachs CEO Hank Paulson's direct gaze to funnel billions to Goldman Sachs so that they never shared any pain from the credit default swaps they willingly purchased from AIG. And of course I'm pissed that Republican senators and representatives act as if the Bush administration has no blame in this mess. But that's the usual politics.
No, what really gets me mad is how badly the Obama administration has handled this mess. After trying to spin the mess over the weekend as a contractual matter that cannot be broken (a bogus claim that the tone-deaf Larry Summers should never have made), the administration was forced to lamely backtrack and take on a populist tone over the last two days to stay ahead of the pitchforks. It harms the administration's whole agenda and reputation for competence.
Who the f*ck cares if AIG bonus-babies sue over a broken contract for ill-gotten gains. Let them go public and sue. Geithner and Summers have proven themselves once again to be inadequate for their jobs, and indifferent to Main Street.
And to make matters worse, now the administration wants us to believe that Obama was only told about the AIG bonus payments last week. Either the administration is flat-out lying, or Tim Geithner is incompetent and should be fired. First, the administration cannot say with a straight face that Obama just heard about these bonus payment problems last week, because Democratic representative Elijah Cummings has been all over this story since last November, and again several times since then. Obama cannot claim he knew nothing about a problem that has been in Google since last year. And if the issue is a particular type of bonus payment, namely contractually-required bonus payments, then why did his own Treasury Department, led by the same Tim Geithner, insist in the economic recovery bill that such payments be exempt from federal limitations?
I don't buy the story that Obama just found out about these problems last week. If he really did just find out about them on Thursday, why did he let Summers and Geithner say over the weekend they can't do much about them because of contract law, when it was his own Treasury Department that made sure of that in the recovery bill?
Much difficult work lies ahead to get the economy righted, including forcing Congress and Main Street to swallow some unpalatable additional bailouts, all of which has been undermined by this duplicity.