So do I, and you can’t be a partisan to unravel this one, because there is plenty of blame for both sides, including the Obama administration, who has decided to throw Sen. Chris Dodd under a bus. Part of all this is due to the fact that I’m not sure Congress is smart enough to sort this out, which should be obvious to everyone by now. But also that Geithner and Summers are too invested with their friends to do their jobs, with the Obama administration covering for both of these guys.
So anyone interested in the A.I.G. bonus debacle needs to watch the clip of Maria Bartiromo on “Morning Joe” yesterday morning. (I know, she gets things wrong, but trust me on this one.) Do yourself a favor and watch it all. Bartiromo starts with “a contract is a contract,” then goes to strings should have been attached and “some kind of a deadline in place,” and ends with saying the people in the financial products division should be “paying for the mess that they got (A.I.G.) into,” and that their bonuses “should not be paid out.”
Ms. Bartiromo also talks about the “counter parties,” like Goldman Sachs who got the largest amount of the latest A.I.G. money paid out. Do some homework and answer this question: What group came from GS? It got a lot of coverage when it was all going down.
The systemic risk is how we got into this, allowing A.I.G. to get “too big to fail,” as the talking point goes, because too many counter parties would be taken down with them, which would in turn take everything else down as well. Sounds like an anti-trust issue to me, but no one has the spine for it.
But the other issue is that this notion that nobody knew what was going on is a lie being passed along because no one wants to be held accountable or hold anyone accountable. But more importantly because few people, especially in Congress, understand it all. That’s what the people at Treasury are counting on. If this sounds familiar it should. Financial ignorance is how Madoff got away with his fraud for so long.
Oh, and by the way, the lie that it’s all Chris Dodd’s fault is a product of the wingnuts finding a vulnerable politician and going after him. See Jane Hamsher’s post, as well as Glenn Greenwald’s on this issue, because right-wing radio is going to go nuts over Dodd, who has become the sacrificial pol, because the Obama administration is hanging Dodd out to dry to cover for Treasury.
And again, the other reality is that Congress doesn’t know what they’re doing now and doesn’t understand what happened, partly because the financial whizzes that came up with these schemes are smarter than the people regulating them, as well as the people crafting the laws they have to live by. Not so Geithner, who is really in trouble at this point, which is going to make things very sticky for President Obama.
… But Geithner’s indulgence of bankers’ indulgences is fast becoming the Obama administration’s Achilles’ heel. The AIG debacle is the latest in a series of bewildering Geithner decisions that threaten to undermine the administration’s efforts to restart the economy. So long as it’s Be Kind to Bankers Week at Treasury — and we’ve had eight straight such weeks since the president was inaugurated — American banking, and the economy it is supposed to serve, will remain paralyzed. The Geithner plan to restart the banks provides huge taxpayer subsidies to hedge funds, investment banks and private equity companies to buy the banks’ toxic assets without really having to assume the risk. That’s right — the same Wall Street wizards who got us into this mess, using the same securitization techniques that built mountains of debt within a shadow financial system that remains unregulated, are the saviors whom Geithner has anointed to extricate us — with our capital, not theirs — from the mess that they created. [...]
The Obama administration better get up to speed on this and do a much better job at figuring a way through it, because as this whole story unfolds further they’re going to have no cover at all.











