Mar 23, 2009
Top officials in the Obama administration, leaders of Congress, Democrats and Republicans alike – all these people said they were shocked that AIG had paid 165 million dollars in bonuses to some of its top executives.
Last November, AIG got the okay for the bonuses from Timothy Geithner, who was then the head of the New York Federal Reserve and is now Obama’s Treasury Secretary. AIG also got approval from Bush’s Treasury Department, from people on Obama’s economic transition team and from Andrew Cuomo, the New York State Attorney General.
Every single one of them signed off on the bonuses back in November.
When the Obama administration took over from Bush, it moved to protect those bonuses. In February, it ordered Democratic Senator Christopher Dodd not to insert legislation restricting bonuses at companies getting bailout money. So Dodd backed loopholes allowing the bonuses, not just at AIG but at every other company that had gotten U.S. bailout money.
When the AIG bonuses were made public, it triggered enormous public outrage.
What could the Obama administration do? It did what politicians always do, it lied over and over again, pretending it didn’t know, or pretending it couldn’t do anything to stop the bonuses.
Public outrage grew. Obama took to the podium, while the Democrats in the House of Representatives demanded that the AIG executives give back 90% of the money in taxes.
This may have been a cynical maneuver by politicians to save their own political skins. But they were also trying to divert public attention from a much bigger scandal than the bonuses.
Much of the 200 billion dollars in bailout money that AIG got from the government had already gone straight to the biggest banks in the world: Goldman Sachs got 13 billion dollars, Merrill Lynch got seven billion dollars, Bank of America got five billion dollars and Citigroup got 2.3 billion dollars.
This came out too. Government officials pretended they were just trying to repay these banks for losses claimed on highly risky mortgage-backed securities and other exotic financial instruments that AIG had insured.
There was only one problem. No one knows how big the losses are or how much of the securities are still good or bad. But the government paid 100% of the face value for every one of these securities – something that no banker in his right mind would ever do with the banks’ own money.
The government was using AIG to launder the money that it showered on the banks.
It was all done in secret, behind closed doors – just like the rest of the bailout, of which AIG is only a small part. Using every excuse and avenue – the Federal Reserve, the FDIC, the U.S. Treasury, Fannie Mae, Freddie Mac – the government is handing trillions of dollars over to banks, insurance companies, auto companies, auto suppliers – and through them, to the richest people in the world.
Now these same people pretend to be shocked? Scandalized? No, they’re only surprised because for once they got caught.
At AIG, a little light was shone on these operations. It showed the politicians – Obama-Bush, Geithner-Paulson, Cuomo, Democrats-Republicans – for what they are: the servants of capitalism working together to make sure that the richest people in the world get even richer.
Don’t let them dare expect working people to pay for it!