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DaddyTorgo 03-18-2009 09:36 AM
additional info

Quote:

Bankrupt AIG Underwrote McCain’s ‘Reform Institute’
Mark Ames, The Nation, Sep 19 2008
John McCain is making a big show of criticizing the government “bailout” of insurance giant AIG. But it turns out that AIG, which received $85b in US tax dollars earlier this week, is one of the largest donors to McCain’s pet think tank, the comically named “Reform Institute,” which he co-founded in 2001 “in direct response to the millions of Americans who, during the 2000 presidential campaign, expressed profound disillusionment with corrupt fundraising activities.” Apparently, AIG was so troubled over the issue of corrupt fundraising activities that they loaded in as one of the top VIP donors in McCain’s nonprofit think-tank, whose website lists AIG in the “over $50k” donor category — although exactly how much over that $50k is still unclear. Nor is it clear why AIG had any business donating so much money to a think tank whose work in no way overlapped with the insurance company’s — unless, of course, that money was just meant to gain access to McCain. The “Reform Institute” has taken a lot of heat as a front organization designed to funnel money to McCain’s political career. As Ari Berman wrote, McCain’s campaign co-chair, Rick Davis, served as the president of the nonprofit Reform Institute for three years, earning $395k in salary. Davis also headquartered his lobbying firm, Davis Manafort, in the Reform Institute’s offices at that time. He is just one of several McCain people who passed through the Reform Institute’s revolving door while McCain prepared for the 2008 campaign. McCain formally stepped down from his own institute in 2005, but he remains deeply linked to the Reform Institute to this day.

So when McCain declared this week that “The government was forced to commit $85b” to his mega-donor AIG, the question becomes, “What forced you to do it?” The American taxpayers never got a red cent in donations from AIG — but now, they’re being forced by people like McCain, whose career profited from AIG donations, to buy his backer’s massively indebted trash heap in what can only be described as the worst business deal in this nation’s history, or the worst example of crony nationalization.

AIG isn’t just funding McCain’s policy think tank, it’s also quite literally thinking for the presidential hopeful. Martin Feldstein, who serves on the board of AIG, is one of McCain’s top economic advisers. Earlier this month, Feldstein gushed in the Wall Street Journal over McCain’s plans to cut taxes even further, and to shift healthcare costs from employers to employees in a “tax credit” scheme that many believe will solely benefit insurance companies, at the expense of workers. Since AIG is — or was — the world’s largest insurance company, it stood to gain from McCain’s policies. The one thing Feldstein does understand is insurance. Feldstein and his cronies at AIG essentially bought themselves an insurance policy — you might call this type of insurance “in case our insanely corrupt, hyper-leveraged operation should ever go bankrupt” insurance — with donations like the “over $50k” given to McCain’s Reform Institute. That insurance paid off handsomely and like clockwork with the government’s $85b nationalization. It’s exactly the kind of insurance policy deal that every American has dreamed about, but never known. And never will know. Now that Feldstein and McCain have successfully worked the American public in the AIG scheme, they have a plan for the entire American economy. They’re calling it “reform.” And the first thing they want to get their hands on is your health insurance, or what’s left of it. So if you’ve been asking yourself lately, “Can it get any worse?” the answer was put best in a horrible ’70s classic rock song by Bachman-Turner Overdrive: “B-b-b-baby you just ain’t seen nuthin’ yet!”



Mizzou B-ball fan 03-18-2009 09:36 AM
Quote:
Originally Posted by DaddyTorgo (Post 1971567)
Whoops I edited my post with the data you were looking for as you were posting. check up above.

Yeah, I got it. You and I need to stop editing. :D

DaddyTorgo 03-18-2009 09:40 AM
haha but i'm such a stream-of-consciousness poster. feel like i'd be spamming the thread otherwise. course it'd be good for my post-count

DaddyTorgo 03-18-2009 09:40 AM
woohoo - just noticed i'm up to 15k posts and now i'm a head coach!

DaddyTorgo 03-18-2009 09:41 AM
that puts me in 18th place on the post-count list - just FYI. means my internet-penis is HUGE

Mizzou B-ball fan 03-18-2009 09:43 AM
Quote:
Originally Posted by DaddyTorgo (Post 1971572)
additional info

See, that's just a load of crap. The reports back and forth ratting out the politicians also illustrate another partisan state amongst each side. People seem to be more interested in saying "see, the other side does it" rather than saying "the other side does it, but I'd prefer if my representative did not" as I have prevoiusly advocated. Granted, some politicians pay that notion some lip service, but never actually follow through with their promise.

Both sides of partisan supporters are in the wrong IMO. The longer you blame the other side for the ills of the nation, the longer it takes for politicians to straighten up and fly right. Partisan supporters lay cover fire that allows them to continue to screw the general public behind closed doors.

Mizzou B-ball fan 03-18-2009 09:49 AM
How many times this week have we seen this phrase.....

"An AIG spokeswoman declined to comment."

Where is this spokeswoman and how do I get her job?

http://www.reuters.com/article/ousiv...52H11Y20090318

Quote:
Hedge funds may benefit from government cash to AIG: report
Wed Mar 18, 2009 9:31am EDT

(Reuters) - Some of the billions of dollars the U.S. government paid to bail out American International Group Inc stand to benefit hedge funds that bet on a falling housing market, the Wall Street Journal said, citing people familiar with the matter and reviewed documents.

The documents showed how Wall Street banks were middlemen in trades with hedge funds and AIG that left the insurer holding the bag on billions of dollars of assets tied to souring mortgages, the paper said.

AIG has put in escrow some money for at least one major bank, Deutsche Bank AG, whose hedge fund clients bet against the housing market, the paper said, citing a person familiar with the matter.

The money will be released to the bank if mortgage defaults rise above a certain level, it said.

Investment banks such as Goldman Sachs Group Inc and Deutsche Bank sold financial instruments to hedge funds letting them bet that mortgage defaults would rise, the paper said, adding that the instruments were credit default swaps -- a form of insurance that pays out in the event of a debt default.

From mid-September to the end of last year, AIG and the government paid $5.4 billion to Deutsche and $8.1 billion to Goldman under credit default swap contracts the insurer had written, the paper said.

It is not known which hedge funds made those bets with specific banks, the paper said, adding several large funds made big, ultimately profitable, wagers that mortgage defaults would increase.

An AIG spokeswoman declined to comment to the paper.

A spokesman for Deutsche Bank told the paper that the bank's "exposure to AIG was well-collateralized and hedged."

A Goldman spokesman also told the paper that the firm's exposure was collateralized and hedged.

AIG, Deutsche Bank and Goldman Sachs could not be immediately reached for comment by Reuters.

AIG, an embattled insurance giant that has received federal bailouts totaling $173 billion and is now paying $165 million in employee bonuses, is at the heart of a global financial crisis that U.S. President Barack Obama is trying to address with plans for trillions of dollars in spending.

DaddyTorgo 03-18-2009 09:51 AM
Quote:
Originally Posted by Mizzou B-ball fan (Post 1971581)
See, that's just a load of crap. The reports back and forth ratting out the politicians also illustrate another partisan state amongst each side. People seem to be more interested in saying "see, the other side does it" rather than saying "the other side does it, but I'd prefer if my representative did not" as I have prevoiusly advocated. Granted, some politicians pay that notion some lip service, but never actually follow through with their promise.

Both sides of partisan supporters are in the wrong IMO. The longer you blame the other side for the ills of the nation, the longer it takes for politicians to straighten up and fly right. Partisan supporters lay cover fire that allows them to continue to screw the general public behind closed doors.

i'd prefer if my reps did not. i was just presenting the additional evidence for you. i wasn't about to go through and cull out the specific lines from the story in The Nation, figured it'd be more intellectually honest and less cherry-picking to post the whole thing.

Mizzou B-ball fan 03-18-2009 09:55 AM
Here's another terribly annoying hindsight article. Rep. Wyden is saying that he had a stipulation in the bailout that would have kept this from happening without taxation, but it was stripped from the bill during negotiations........

Wyden: My Bill Could Have Prevented AIG Mess

DaddyTorgo 03-18-2009 10:14 AM
Quote:
Originally Posted by Mizzou B-ball fan (Post 1971592)
Here's another terribly annoying hindsight article. Rep. Wyden is saying that he had a stipulation in the bailout that would have kept this from happening without taxation, but it was stripped from the bill during negotiations........

Wyden: My Bill Could Have Prevented AIG Mess

gah!! damnit!!!

question though - why tax those bonuses above the level at 35%? If you want to eliminate them why not tax them at say 85%? Then again if it's taxpayer money going to pay the bonuses does AIG really care? if the bonus is going to be taxed at 85% they'll just increase the amount of the bonus so the person gets the same amount after-taxes.

SportsDino 03-18-2009 01:00 PM
Quote:
Originally Posted by digamma (Post 1971207)
Nobody is arguing with you on whether there should be winners or losers or whether there are in fact winners and losers in all of this. Nobody is saying everyone should be squeaky clean in all of this. Is this a good wake up call to the old risk vs. reward charts? Sure. But that's not a new concept. It's easy to preach to the choir from that bully pulpit.

Informational barriers are always going to be an issue. There are insiders, plain and simple. Access to information has improved a great deal over the last decade. Hopefully, these events will continue to improve disclosure. What goes along with that is regulation and regulators with teeth. We've seen in Madoff that the access to the information was there. The guy in Boston figured it out through FOIA requests and the like. But it fell on deaf ears.

On your final point about Lehman being a symptom. There is of course some truth to that, and by saying "Lehman going under" I was, in a sense, referring to the larger problem. It's not exclusive to Lehman, but they get to be the posterchild. And most of the debate around changes have focused on the more macro and systemic issues.

But rest assured, your capital letters aside, Lehman filing for bankruptcy changed and the Lehman bankruptcy process has changed and is continuing to change many things on the micro level.

To name a few, I think we'll see a reexamination of the government's role in a bankruptcy and in bankruptcy proceedings. From the first hearing in Lehman, it was obvious that the fix was in--debtor motions were being ramrodded through over vociferous creditor protest. This resulted in Barclays getting one hell of a sweetheart deal on the Lehman asset sale. And of course not ring fencing and obtaining the best value on assets hangs creditors out to dry. (And, I'm not sure I've ever seen "the government may anally probe you and leave you with nothing in a haphazard asset sale resulting from a bankruptcy" listed as a risk factor in a prospectus.) We're already seeing the effects of this treatment in a number of other bankruptcies since Lehman. Creditors have taken a more hardline approach from the beginning (refusing to negotiate DIP loans, for instance) of a bankruptcy rather than hemming and hawing and taking a few small victories while generally taking what the court gives you. It will be interesting to see how the creditor/debtor dynamic plays out over the long haul. This is probably the biggest effect and one that is really too soon to tell whether changes are good, bad or immaterial to the market. But to downplay the changing landscape is shortsighted.

A second thing I think we might see is a reevalution of some government policies and laws that Lehman was able to take advantage of in their bankruptcy. The easiest example in the Lehman case is the ability to choose which executory contracts you want to assume and which ones you want to reject. The idea is that the debtor can reject its worst contracts and let its best ones live on in order to maximize the value of the estate for the benefit of creditors. The problem is that by rejecting contracts, you end up with more creditors. Lehman has played this beautifully, most notably in their bank loan trading entity. Bank loans took a nose dive last fall and Lehman easily rejected all trades which they were long on and assumed the bank loans they were short on. Nice work for the estate. I think folks have questioned since then whether this is too broad a sword for a debtor to yield.

Third, we will likely see the prime brokerage business dry up, specifically due to Lehman's bankruptcy filing. The prime brokerage business was always sold as a way to reduce counterparty risk. Trade with a prime broker and they face the market. Your margin is in a segregated account and is safe. Wrong. It was generally commingled, and those who used Lehman as a prime broker are likely going to be general creditors for any collateral they had posted there as margin. Not such a great risk mitigator, huh?

The last one I'll mention is the changes we're likely to see on the counterparty front. CDS clearinghouse? Participation by the buy side in a mortgage securities clearinghouse? These are more systemic, but were brought to a head by the Lehman failure.

So, thanks for indulging me--if you're still reading Dino. It's just not as simple as this is another company that went bad in a poorly run industry. We should all appreciate that.


Responding to a specific post right after I read it, apologize if any of this is repeating (this thread grows fast).

I mistook your statements, the larger problem is a very historical one... I just want to distance history from sympathy for individual firms. You can save economies without rewarding gross incompetence (or at the very least negligence) in overly greedy and foolish firms.

Do we need corporate bankruptcy reform (they sure pushed in plenty of restrictions on the rest of us recently), certainly. Do we need to learn a half dozen lessons that Lehman makes a great example of, of course. But to say letting Lehman collapse is a failure in my opinion is wrong, it is a critical force in capitalism that bad decisions lead to failure. The cost of sustaining a bad company is always more expensive then allowing new entrants or other players divvy up the market share.

Now on to a few specifics:
- Information access and paying attention to it are my big themes, I'm all for an information revolution, especially in PUBLIC companies (sorry I like capitals). Give a bunch of software dudes like me jobs, and investor dudes like me critical info for making decisions. Its a double bonus for me!

- Barclay's was a sweetheart deal involving slimy executives scratching each others back for individual profit. Its nice to get a huge chunk of assets for a few million dollars direct to one slimeball executive, yay fuedalism economy! I personally think people should be in jail for that one.

- Your three major themes of reform, I agree with wholeheartedly.

- credit default swaps scare the bejeesus out of me. They are not being created properly to perform their hedging purposes, I think the whole process should be marketized and put out in broad daylight, its so backroom and easy to exploit.

- In general (not on your post) I think we need a reform of the entire stock system from bottom up. Start at insuring that shares are air-tight being transferred as needed and accounted for at all times so that any time you say "I am buying physical shares" you get physical shares. We need to cut out anything that allows crap like phantom shares to get into the system. Also there needs to be an info stream on how companies financial divisions are loaded. Even a simple high-level, ya we have X% in derivatives with total loss exposure at Y billions... something to serve as a giant red flag that if all shit hits the fan this company is flat out broke. Of course most companies would have a Y at several times their net worth based on how loss exposure is calculated... so it could be a mess.

Anyhoo, I'm for orderly destruction of firms, I don't think you just pull the rug out and expect capitalism to place everything neatly out the other side. But I am for the destruction of firms that misbehave, there is no reason not to give an opportunity for hungry small companies to get into the brokerage business falling nice conservative strategies.... especially if these big companies keep drifting into the exotic profit seeking that we have been seeing. Big is not always better, economies of scale applies to assembly lines and bulk negotations, not to pools of electronic magic money.

SportsDino 03-18-2009 01:16 PM
I get nervous of the use of taxes or ex post facto laws... I think there is plenty of guilt on existing laws in the books that they can go after some of the worst of this crowd, but unfortunately at some point we are going to have to let some of the jerks get away and pass laws so it does not happen again. I'd rather we get serious about enforcing law, and following the rule of law the way it was meant to... then going all postal and trying to find tricks after crap hits the fan.

We don't need reactionary law-makers, we need constant vigilance! (helps against dark wizards too)

That may mean that some things were not illegal at the time and a bunch of people that did slimy stuff, are indeed innocent. That said, if there is a sliver of a fraud case I'd say go after it full-steam and beat the poo out of any that can be beaten.

Also I would mention that the government doesn't need to fund anything, at this very moment they can say "you know what, fuck you AIG, not one more dollar"... the company would collapse overnight. I think they need to threaten how they are going to exercise their funding power and that supposed 80% stake in the business (I'd say the government should actually go in and use the corporate system to vote in reforms, a novel precedent might result and we could see it ripple across other companies with fed up shareholders).

Flasch186 03-18-2009 01:37 PM
major moves into the credit markets by the Fed today. should see mortgages shoot downwards towards 4% this week and maybe stay there for a while. With the incentives for first time homebuyers we could see housing be through all this crap by Q1 of '10.

That being said I still see a retest of the lows within the next month in equities.

I'd love to go buy a new (used) car right now.

sabotai 03-18-2009 01:44 PM
Quote:
Originally Posted by larrymcg421 (Post 1971488)
Ex post facto only refers to criminal penalties. So no they can't pass a law banning these bonuses and then arrest AIG for it, but they can certainly pass a tax bill to cover bonuses that have already been paid out.

Is there legal precedent for this? Has the government ever done anything like that before? Seems odd that ex post facto laws are prohibited, but ex post facto taxes are perfectly fine and acceptable.

Quote:
Originally Posted by Marc Vaughan (Post 1971518)
Someone might want to remind the president and several senators of that as they appear to have forgotten ;)

Quick intro to American politics: Most politicians do not care what the Constitution says, and some probably really don't know what it says either. :)

JonInMiddleGA 03-18-2009 01:46 PM
Quote:
Originally Posted by Glengoyne (Post 1971435)
I figured that the AIG news would be a hot topic here today. A couple of points that may have been brought up earlier.

The AIG bonuses aren't performance bonuses. These were retention or "stay" bonuses, arranged a year ago to make sure that these employees stayed with a sinking ship to help manage the "unwinding" of these complex contracts and financial instruments. If these folks walk away, then the company could experience even a greater losses.

I'm not buying the outrage that the President expressed today. He knew what was going on, he knew that this has been planned and discussed with both administrations for months. He waits until it is too late to actually stop the payments and then grandstands.

Good post segment right here, pretty easy to miss with the 1am timestamp though.

Damned if I see all the handwringing over these "bonuses" as much of anything other than jealousy. I've opposed virtually all of the various bailout packages & components from the get-go but if you're going to do them then this seems as valid as anything else that's being done with the money.

albionmoonlight 03-18-2009 01:49 PM
Government: "How dare you pay out those bonuses with taxpayer money after we gave you the money without making sure that you didn't have such pre-existing obligations nor did we condition the acceptance of the money on your not paying such bonuses!"

Me: "sigh."

And all of these post-hoc ways of trying to invalidate these contracts sucks. They are shitty contracts. OK. So what? The rule of law honors shitty contracts, too. Don't buy AIG in the first place if you don't like the pre-existing obligations it has on its books.

If the default is now that America is a nation of laws unless and until it hits a crisis (9/11, financial meltdown, etc.), then we might as well just admit that we are no longer respect the rule of law's primacy.

cartman 03-18-2009 02:02 PM
Quote:
Originally Posted by sabotai (Post 1971832)
Is there legal precedent for this? Has the government ever done anything like that before? Seems odd that ex post facto laws are prohibited, but ex post facto taxes are perfectly fine and acceptable.

An example of this in the past was the oil windfall profit tax passed back during the Carter/Reagan years.

larrymcg421 03-18-2009 02:16 PM
Quote:
Originally Posted by sabotai (Post 1971832)
Is there legal precedent for this? Has the government ever done anything like that before? Seems odd that ex post facto laws are prohibited, but ex post facto taxes are perfectly fine and acceptable.

Calder v. Bull is the seminal case that defines ex post facto as pertaining only to criminal punishments. Where this case might possibly apply is with the Bill of Attainder clause, which prohibits singling someone out for a punishment. Therefore, if Congress passed a law only taxing AIG bonuses, then that very would could be struck down. There are exceptions though, such as a case vs. Richard Nixon when Congress passed a law directing himn to preserve evidence. The Supreme Court allowed that one to stand.

sabotai 03-18-2009 02:27 PM
Gotcha. Danke cartman and larry.

Flasch186 03-18-2009 07:08 PM
looks like I was right about the market in the short term based on the plethora of good news coming in although I didnt expect the Fed's bomb dropping today so it would seem that I pulled out of GE at a smaller profit than I couldve but on my other holdings they should go up to hopefully make up some of the losses (again in the short term) that Ive suffered along with everyone else over the last 2 years.

I still think we come back down from an eventual bear market bounce ceiling but it sure feels good for now. I'll wait to continue my purchases on the eventual pull back I see.

One thing people aren't paying attention to is this:

The FED dropping the bomb today was not a GIFT, they did it because they see internals that do not look good so on one hand it may feel good that theyre helping us move the truck out of the rut but they are admitting that the rut may actually be a monstrous ditch.

SFL Cat 03-18-2009 07:19 PM
Has anyone heard any AIG-style rage about the Fannie bonuses?

Fannie plans bonuses of up to $611K for 4 execs - Yahoo! Finance

SportsDino 03-18-2009 07:46 PM
I'm expecting all sorts of random movement around the first quarter reports, but I still think on a long term horizon some sectors are due for a lift. I might prepare some looting on companies I know will have bad first quarter numbers, but a lot of my movement has been locking up various longs (or preparing to load up long after the reports do their damage). Likely thing to happen is my short term shorts will end up funding a whole bunch of long buys, my hope is an overall up in the second quarter in my chosen areas.

Flasch186 03-18-2009 08:07 PM
i think that there is more upside risk surprise on the first qtr reports than downside. Underperforming is the new norm so a big beat (like Oracle tonight) will see big ups.

Again, I do see retests of the lows over the next few months. Ill look to load up some more at some point just to help the averaging out since at some point over the past 8 months I said screw it to averaging in when I kept getting killed so while I am averaged in Im not averaged in as well as possible because I just was so confused by the oversold conditions (i mean at some point oversold is the new norm too :) )

Marc Vaughan 03-18-2009 08:31 PM
Quote:
i think that there is more upside risk surprise on the first qtr reports than downside. Underperforming is the new norm so a big beat (like Oracle tonight) will see big ups.

I agree with this - a lot of companies imho have been unfairly hammered by the panic and will now spend time steadily recovering as people realise that the sky might not actually have fallen and indeed the current situation might lead to advantages for some companies.

For instance Microsoft (MSFT) have dropped around 50% during the crash - but are still hugely profitable and cash heavy so able to make acquisitions nice and cheaply at present (Yahoo for instance?).

I think a lot of the doom and gloom has been hugely overdone for companies which are largely debt free, time will tell if I'm right or not ...

Flasch186 03-18-2009 08:35 PM
hence almost 100% of the reason why I hid cash in Goog and Cisco

Mizzou B-ball fan 03-19-2009 07:21 AM
Quote:
Originally Posted by Mizzou B-ball fan (Post 1971592)
Here's another terribly annoying hindsight article. Rep. Wyden is saying that he had a stipulation in the bailout that would have kept this from happening without taxation, but it was stripped from the bill during negotiations........

Wyden: My Bill Could Have Prevented AIG Mess

Looks like I got my answer to this question about who would make the mistake of removing bonus limitations from the bill. It was Christopher Dodd.

Dodd: Administration pushed for language protecting bonuses - CNN.com

sterlingice 03-19-2009 07:29 AM
I saw that last night. Someone has some explaining to do

SI

JPhillips 03-19-2009 07:34 AM
Quote:
Originally Posted by Mizzou B-ball fan (Post 1972360)
Looks like I got my answer to this question about who would make the mistake of removing bonus limitations from the bill. It was Christopher Dodd.

Dodd: Administration pushed for language protecting bonuses - CNN.com

Not really Dodd's problem as far as I'm concerned. If his story is correct he agreed to change the amendment at the behest of the White House. IMO the White House is where the 'splaining needs to happen.

larrymcg421 03-19-2009 07:43 AM
Well, it sounds like the administration did that because they felt it wouldn't hold up in court, because it would be cancelling a provision of a prior contract. Sounds like that would be just as unfair as the retroactrive taxation that people have opposed. It sounds like bonuses are forbidden moving forward, though.

larrymcg421 03-19-2009 07:50 AM
dola

Did the author do this on purpose? Heh.

Quote:
AIG, an ailing insurance giant, has received more than $170 billion in federal assistance.

Mizzou B-ball fan 03-19-2009 07:58 AM
Quote:
Originally Posted by JPhillips (Post 1972367)
Not really Dodd's problem as far as I'm concerned. If his story is correct he agreed to change the amendment at the behest of the White House. IMO the White House is where the 'splaining needs to happen.

Dodd could have said no. Instead, he changed the bill.

I have a big problem with the idea that we need to cater to the company we're bailing out in that case. If AIG or any other company says they don't want that stipulation with the bailout money, we should pick up the money, turn around, and walk away. They'll come back a few weeks later when they have no other alternatives. How many times have we been told that there are tight restrictions on how this money is to be used? It's nothing but lip service thus far.

JPhillips 03-19-2009 08:00 AM
Sure, but it's very different to do it on his own and do it on the behest of the WH. As far as the WH jst wanting to avoid legal issues, then come out and say what happened instead of grandstanding. If this came from the WH, don't hide behind an outrage that maybe could have done some good if applied earlier.

IMO, Dodd's getting hung out to dry by the WH.

Flasch186 03-19-2009 08:09 AM
unless of course the WH counsel tells everyone involved that this would cost 3 times as much to defend in court...HOWEVER

It's basically FREE if you can create an outrage that, due to public crying, gets the company's bonus recipients to return the money on their own. Just saying, sometimes popularism is just stupid ignorance.

Mizzou B-ball fan 03-19-2009 08:13 AM
Quote:
Originally Posted by JPhillips (Post 1972381)
IMO, Dodd's getting hung out to dry by the WH.

I agree. And I'm certainly not naive in regards to the goodwill that Dodd loses by going against the President. With that said, the right thing to do would have been to stick to the original restrictions.

JPhillips 03-19-2009 08:16 AM
I don't think it's so much the goodwill Dodd loses as the problems it may cause Obama down the line. Senators have enormous power to singlehandedly slow or change legislation. Fucking a guy with that much seniority may cost them later.

larrymcg421 03-19-2009 08:18 AM
Quote:
Originally Posted by Mizzou B-ball fan (Post 1972387)
I agree. And I'm certainly not naive in regards to the goodwill that Dodd loses by going against the President. With that said, the right thing to do would have been to stick to the original restrictions.

Again, it doesn't sound like the original restrictions are legal. It sounds great from a populist perspective, but if people signed contracts that entitle them to x dollars, I'm not sure that AIG or anyone else could really agree to violate that contract.

In retrospect, it sounds like forbidding bonuses moving forward and taxing previous bonuses actually is the best way to go.

Mizzou B-ball fan 03-19-2009 08:21 AM
Quote:
Originally Posted by Flasch186 (Post 1972385)
unless of course the WH counsel tells everyone involved that this would cost 3 times as much to defend in court...HOWEVER

It's basically FREE if you can create an outrage that, due to public crying, gets the company's bonus recipients to return the money on their own. Just saying, sometimes popularism is just stupid ignorance.

There's no court case if you hold to that restriction. You put in the bailout bill wording that AIG is agreeing to these restrictions if they accept the bailout money. If they choose not to accept it at that point, no big deal. They're the ones that have to figure out how to make it work without the bailout money.

I think the idea that these people should return the bonus money is equally ridiculous. These people were idiots for giving the bonuses, but creating a culture of shame to get them to fix what the execs f'd up in the first place is just as stupid.

Mizzou B-ball fan 03-19-2009 08:24 AM
Quote:
Originally Posted by larrymcg421 (Post 1972392)
Again, it doesn't sound like the original restrictions are legal. It sounds great from a populist perspective, but if people signed contracts that entitle them to x dollars, I'm not sure that AIG or anyone else could really agree to violate that contract.

In retrospect, it sounds like forbidding bonuses moving forward and taxing previous bonuses actually is the best way to go.

That's normally true, but we're not dealing with a normal situation here. As Andrew Cuomo correctly stated, without the bailout money, AIG goes bankrupt and the bonuses are likely gone regardless of what their contract states. That's one of the first things that would be negotiated out as part of the bankruptcy proceedings.

larrymcg421 03-19-2009 08:26 AM
Quote:
Originally Posted by Mizzou B-ball fan (Post 1972394)
There's no court case if you hold to that restriction. You put in the bailout bill wording that AIG is agreeing to these restrictions if they accept the bailout money. If they choose not to accept it at that point, no big deal. They're the ones that have to figure out how to make it work without the bailout money.

It's not AIG that would be suing. It's the AIG executives who have a signed contract guaranteeing them that money. AIG can't come in and say, we'll violate the law if you give us bailout money.

Flasch186 03-19-2009 08:32 AM
Quote:
Originally Posted by Mizzou B-ball fan (Post 1972394)
There's no court case if you hold to that restriction. You put in the bailout bill wording that AIG is agreeing to these restrictions if they accept the bailout money. If they choose not to accept it at that point, no big deal. They're the ones that have to figure out how to make it work without the bailout money.


And again this is where we might as well just stop the back and forth because not letting them fail saved OUR asses. Most of the people their probably wouldve found work elsewhere because as stupid as the outcome of the derivative play is, the ramifications of the world's financial intertwinings wouldve been cataclysmic, but execs on wall street see the creators of the derivatives as making a LOT of $ for a long long time. You, and others, are willing to see what it looks like when billions of dollars in counterparty collateral disappears overnight (and has to be written down massively)....I am not.

Quote:
I think the idea that these people should return the bonus money is equally ridiculous. These people were idiots for giving the bonuses, but creating a culture of shame to get them to fix what the execs f'd up in the first place is just as stupid.

but it works, for the most part, gets to the goalline, and is free. I'll put my pride and ideology aside to get to the best results for the country as a whole. And what Larry said.

Mizzou B-ball fan 03-19-2009 08:32 AM
Quote:
Originally Posted by larrymcg421 (Post 1972397)
It's not AIG that would be suing. It's the AIG executives who have a signed contract guaranteeing them that money. AIG can't come in and say, we'll violate the law if you give us bailout money.

When presented with the option of no job and no bonus due to bankruptcy or a job with no bonus, I think they'd take the job. As you correctly stated, there would have to be a sign-off at multiple levels of AIG to do that.

miked 03-19-2009 08:35 AM
Quote:
Originally Posted by Mizzou B-ball fan (Post 1972402)
When presented with the option of no job and no bonus due to bankruptcy or a job with no bonus, I think they'd take the job. As you correctly stated, there would have to be a sign-off at multiple levels of AIG to do that.

You oversimplify and underestimate the greed of these people.

Flasch186 03-19-2009 08:35 AM
wrong. they would most get work....they created a ton of wealth for a lot of people who see them as valuable. Sure it imploded now, but for a long long time, a lot of people who have avoided this destruction see them as assets. What Mike said....they would likely get their money because the Gov't couldnt let AIG fail...the optioni wasn't really on the table as much as you would like it to be.

Mizzou B-ball fan 03-19-2009 08:35 AM
Quote:
Originally Posted by Flasch186 (Post 1972401)
And again this is where we might as well just stop the back and forth because not letting them fail saved OUR asses. Most of the people their probably wouldve found work elsewhere because as stupid as the outcome of the derivative play is, the ramifications of the world's financial intertwinings wouldve been cataclysmic. You, and others, are willing to see what it looks like when billions of dollars in counterparty collateral disappears overnight (and has to be written down massively)....I am not.

But I don't totally disagree with you. I agree that there might be due cause to save them. I just don't agree that we should jump right in without weighing our options. From what we've seen thus far, the bailout seems to be favoring AIG by a pretty wide margin. Someone needs to look out for the taxpayers, which was not done in this case despite assurances when the bailout was passed that restrictions were in place to keep this exact scenario from happening.

Mizzou B-ball fan 03-19-2009 08:37 AM
Quote:
Originally Posted by miked (Post 1972403)
You oversimplify and underestimate the greed of these people.

Which is the reason that the bailout in its current form should have never been passed. If they aren't trustworthy, you have to find a better bill to CYA and keep those people from misusing the money.

Flasch186 03-19-2009 08:37 AM
oh wow, we definitely disagree...

by ALL of the counterparties getting their trades paid off allows liquidity to flow to you and I. The taxpayer will likely see some if not most of their money back in the next 4 years when the AIG assets are sold off in an economic environment that commands a better price than a bankruptcy firesale today.

your last post, right above this one is you blending two different events together. They are seperate:

TARP was rushed through
IMO it was successful til Paulson Torpedoed it but luckily we were through the ditch
Saving AIG (after learning from Lehman) was the only option so negotiating former contracts under the guise of, "We'll let you fail." is bunk.

JonInMiddleGA 03-19-2009 08:47 AM
Quote:
Originally Posted by Flasch186 (Post 1972385)
It's basically FREE if you can create an outrage that, due to public crying, gets the company's bonus recipients to return the money on their own.

And those who fell for that are so incredibly damned stupid that I'm not sure why anybody wanted to keep them around anyway. I have to say these folks who "volunteered" quite possibly are the dumbest bastards I've heard of since ... hell, I don't know when I've heard anything I thought was dumber. Equally dumb perhaps, but not dumber.

JonInMiddleGA 03-19-2009 08:48 AM
Quote:
Originally Posted by Flasch186 (Post 1972409)
... when the AIG assets are sold off in an economic environment that commands a better price than a bankruptcy firesale today.

For me, that's one hell of a leap of faith you're taking (and with other peoples money to boot).

Flasch186 03-19-2009 09:11 AM
I have absolutely no doubts about it.

JonInMiddleGA 03-19-2009 09:13 AM
Quote:
Originally Posted by Flasch186 (Post 1972440)
I have absolutely no doubts about it.

So that makes one of us.


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