The Real Bush Legacy: A Marriage Of Greed And Stupidity

Finally... an excuse to run some photos of Christiano Ronaldo

In the new issue of Rolling Stone Matt Taibbi put together an 8-page look at the crisis 8 years of Bush has left us to face: the marriage of greed and stupidity. The problems our society has to face up to go much deeper than AIG taxpayer-subsidized bonuses in the midst of the "largest quarterly loss in American corporate history-- some $61.7 billion." This morning's NY Times published an editorial by former IMF chief economist Sam Johnson in sync not just with what Taibbi found but what most Americans have also concluded: that "AIG can hardly claim that its generous bonuses attract the best and the brightest. So instead, it defends the payments by arguing they’re needed to retain employees who are crucial for winding down transactions that are 'difficult to understand and manage.' In other words, only the people who stuck the knife into the American International Group can neatly extract it for a decent burial. There is no reason to believe this."

Taibbi, of course, goes much further than Johnson. He sees the AIG mess as part of a culture by, for and of "the group of psychopaths on Wall Street whom we allowed to gang-rape the American Dream." In Yesterday's Times a timeline made it clear that the Bush Regime was still running the show when the AIG bonuses were agreed to. "In November, when the bailout of A.I.G. was restructured, Treasury and Fed officials negotiated the terms under which A.I.G. could make the retention payments." Even after the irresponsible Grand Obstructionist Party's footdragging in the Senate that held up Geithner's ability to get to work at Treasury, the course of action set by the political elite to save the asses of the Wall Street elite doesn't seem to have changed much-- if at all. Taibbi:

When Geithner announced the new $30 billion bailout, the party line was that poor AIG was just a victim of a lot of shitty luck-- bad year for business, you know, what with the financial crisis and all. Edward Liddy, the company's CEO, actually compared it to catching a cold: "The marketplace is a pretty crummy place to be right now," he said. "When the world catches pneumonia, we get it too."

Before you start feeling sorry for poor AIG, keep in mind that Liddy, a slick, predatory corporate career criminal from way back "conveniently forgot to mention that AIG had spent more than a decade systematically scheming to evade U.S. and international regulators, or that one of the causes of its 'pneumonia' was making colossal, world-sinking $500 billion bets with money it didn't have, in a toxic and completely unregulated derivatives market."

Taibbi's main point, though, ventures into territory the Times will never go: the Wall Street meltdown and ensuing bailout amounted to a coup d'état by a dying regime, not just Bush but of the elite that gave legitimacy to the structures that hold up that conservative vision of the new American plutocracy.

The crisis was the coup de grâce: Given virtually free rein over the economy, these same insiders first wrecked the financial world, then cunningly granted themselves nearly unlimited emergency powers to clean up their own mess. And so the gambling-addict leaders of companies like AIG end up not penniless and in jail, but with an Alien-style death grip on the Treasury and the Federal Reserve-- "our partners in the government," as Liddy put it with a shockingly casual matter-of-factness after the most recent bailout.

The mistake most people make in looking at the financial crisis is thinking of it in terms of money, a habit that might lead you to look at the unfolding mess as a huge bonus-killing downer for the Wall Street class. But if you look at it in purely Machiavellian terms, what you see is a colossal power grab that threatens to turn the federal government into a kind of giant Enron-- a huge, impenetrable black box filled with self-dealing insiders whose scheme is the securing of individual profits at the expense of an ocean of unwitting involuntary shareholders, previously known as taxpayers.

I linked to Taibbi's story above because I want to recommend that you read the whole thing. Here, let me do it again. He's eloquent and if you weren't paying attention when the AIG crisis started dominating the headlines you may have missed some crucial moments, moments Taibbi recounts with precision and insight. We all heard Orlando Congressman Alan Grayson grilling Liddy to find out who some of the people responsible for the mess AIG's Financial Products division were. Liddy refused to give up the names of any of the crooks-- claiming angry peasants with pitchforks and piano wire would kill their children (which is how the elites think about the rest of us)-- except for one guy: Joseph Cassano. If you've been following this mess closely, you already know who Cassano is. If you haven't... we have Matt Taibbi analytical and poetic prose to describe him-- and the rest of this unfolding tragedy.

The best way to understand the financial crisis is to understand the meltdown at AIG. AIG is what happens when short, bald managers of otherwise boring financial bureaucracies start seeing Brad Pitt in the mirror. This is a company that built a giant fortune across more than a century by betting on safety-conscious policyholders-- people who wear seat belts and build houses on high ground-- and then blew it all in a year or two by turning their entire balance sheet over to a guy who acted like making huge bets with other people's money would make his dick bigger.

That guy-- the Patient Zero of the global economic meltdown-- was one Joseph Cassano, the head of a tiny, 400-person unit within the company called AIG Financial Products, or AIGFP. Cassano, a pudgy, balding Brooklyn College grad with beady eyes and way too much forehead, cut his teeth in the Eighties working for Mike Milken, the granddaddy of modern Wall Street debt alchemists.

Milken, who pioneered the creative use of junk bonds, relied on messianic genius and a whole array of insider schemes to evade detection while wreaking financial disaster. Cassano, by contrast, was just a greedy little turd with a knack for selective accounting who ran his scam right out in the open, thanks to Washington's deregulation of the Wall Street casino. "It's all about the regulatory environment," says a government source involved with the AIG bailout. "These guys look for holes in the system, for ways they can do trades without government interference. Whatever is unregulated, all the action is going to pile into that."

The mess Cassano created had its roots in an investment boom fueled in part by a relatively new type of financial instrument called a collateralized-debt obligation. A CDO is like a box full of diced-up assets. They can be anything: mortgages, corporate loans, aircraft loans, credit-card loans, even other CDOs. So as X mortgage holder pays his bill, and Y corporate debtor pays his bill, and Z credit-card debtor pays his bill, money flows into the box.

The key idea behind a CDO is that there will always be at least some money in the box, regardless of how dicey the individual assets inside it are. No matter how you look at a single unemployed ex-con trying to pay the note on a six-bedroom house, he looks like a bad investment. But dump his loan in a box with a smorgasbord of auto loans, credit-card debt, corporate bonds and other crap, and you can be reasonably sure that somebody is going to pay up. Say $100 is supposed to come into the box every month. Even in an apocalypse, when $90 in payments might default, you'll still get $10. What the inventors of the CDO did is divide up the box into groups of investors and put that $10 into its own level, or "tranche." They then convinced ratings agencies like Moody's and S&P to give that top tranche the highest AAA rating-- meaning it has close to zero credit risk.

Suddenly, thanks to this financial seal of approval, banks had a way to turn their shittiest mortgages and other financial waste into investment-grade paper and sell them to institutional investors like pensions and insurance companies, which were forced by regulators to keep their portfolios as safe as possible. Because CDOs offered higher rates of return than truly safe products like Treasury bills, it was a win-win: Banks made a fortune selling CDOs, and big investors made much more holding them.

The problem was, none of this was based on reality. "The banks knew they were selling crap," says a London-based trader from one of the bailed-out companies. To get AAA ratings, the CDOs relied not on their actual underlying assets but on crazy mathematical formulas that the banks cooked up to make the investments look safer than they really were. "They had some back room somewhere where a bunch of Indian guys who'd been doing nothing but math for God knows how many years would come up with some kind of model saying that this or that combination of debtors would only default once every 10,000 years," says one young trader who sold CDOs for a major investment bank. "It was nuts."

Now that even the crappiest mortgages could be sold to conservative investors, the CDOs spurred a massive explosion of irresponsible and predatory lending. In fact, there was such a crush to underwrite CDOs that it became hard to find enough subprime mortgages-- read: enough unemployed meth dealers willing to buy million-dollar homes for no money down-- to fill them all. As banks and investors of all kinds took on more and more in CDOs and similar instruments, they needed some way to hedge their massive bets -- some kind of insurance policy, in case the housing bubble burst and all that debt went south at the same time. This was particularly true for investment banks, many of which got stuck holding or "warehousing" CDOs when they wrote more than they could sell. And that's were Joe Cassano came in.

Known for his boldness and arrogance, Cassano took over as chief of AIGFP in 2001. He was the favorite of Maurice "Hank" Greenberg, the head of AIG, who admired the younger man's hard-driving ways, even if neither he nor his successors fully understood exactly what it was that Cassano did. According to a source familiar with AIG's internal operations, Cassano basically told senior management, "You know insurance, I know investments, so you do what you do, and I'll do what I do-- leave me alone." Given a free hand within the company, Cassano set out from his offices in London to sell a lucrative form of "insurance" to all those investors holding lots of CDOs. His tool of choice was another new financial instrument known as a credit-default swap, or CDS.

Sounds complicated, right? It does to me. But that's why we have a government. It's supposed to protect us from predators-- not just the Osama bin-Ladens and Kim Jong-il, but also from the Ken Lays, Edward Liddys and Joseph Cassano (who, by the way retired from AIG this month with $315 million, $34 million of it in a sweet bye-bye bonus). The incompetent and self-serving Bush Regime protected us from none of them. In fact, almost our entire political elite let us down. Wednesday, when President Obama compared AIG and the banksters to suicide bombers, he came closer than he may have realized to assessing the greatest threat to our society--a threat that sums up the Bush legacy in its entirety. And he was getting advice about the dangers of AIG even before the election. Still sounds like a good idea half a year later: "Extradite Cassano. Subpoena Greenberg. Prosecute Willumstaad and Allen." He should discuss that advice his grassroots supporters gave him with that Geithner fella he brought in from Wall Street to save us... from Wall Street.

Meet The Well-Paid Apologist: Spencer Bachus Eschews Pitchforks For Slick Corporate Doubletalk

The rankest member of the Financial Services Committee

The political elite knows where it's bread is buttered-- and at the same time, for a change-- fears the suddenly awakened voters. The Republicans were not stupid to give Alabama reactionary Spencer Bachus the role of defending Liddy today. Bachus has taken more legalized bribes ($914,725) from the finance/insurance/real estate sector than any other Republican in the House other than Ron Paul, Eric Cantor and Mark Kirk. Bachus' central Alabama district-- carefully gerrymandered to exclude Africa-Americans-- is so deeply red (PVI is R+25) that Democrats haven't even run a candidate against him in anyone's memory. Independents ran against him in 2004 and 2002 and Bachus got 99% and 90% of the vote. Since then, no one ran against him. Earlier today CQPolitics did a cute story-- similar to the one DWT ran on March 1st about the district that gave Obama the least amount of support in November. It was the all white, very backward Texas panhandle hellhole (TX-13) represented by Mac Thornberry. Turns out Bachus' district actually tied TX-13... at 23%. He can do anything, short of saying he disagrees with Rush Limbaugh about something, and never worry about losing an election. Let's take a look at how he helped open today's House Financial Services Committee hearing:

For several weeks now and even today, we continue to play kind of a game that children used to play, pin the tail on the donkey, trying to put the blame somewhere else. [He leaves that for his wingnut colleague from Georgia, Tom Price, who followed him today.]

And in truth, there's plenty of blame to go around. AIG, the company, engaged in very reckless, risky behavior, and I think we all have the right to be angered that such a fine company at one time has been-- is in the mess that it's in and the effect that it's had on our economy.

That's justified anger. So we could certainly pin the donkey on AIG and those within that company, most all of them long gone who caused that.

Washington, the regulators, they failed to do their job. We ought to blame them. That's justified.

This Congress, some of our policies have contributed to some of that behavior, the failure to regulate, the failure of oversight by this Congress. We're to blame.

The one people who probably aren't to blame, but seem to be paying the tab is the American people. They're paying for all this bad behavior by the company, all this bad behavior by our failure to regulate, all the failure of us to take action in numerous different areas.

We all should bear the blame. But I think, at this point, that anger shouldn't distract us from really the true issue and our goal today, and that's to try to recover as much of the taxpayers' money as we possibly can. That ought to be our motive and the blame game needs to be secondary, because we're all to blame.

Now, the only possible successful outcome to this is to manage our way out of the current problems.

Now, how do we do that? Do you think Congress can manage AIG? I don't think so. Take a walk through the visitor center; three times over budget, five years late. We can't manage AIG.

How about the regulators? There are a lot of empty desks at Treasury. I don't think that the Fed or the Treasury has done a very good job.

How about a poll on TV? Should we just take some poll results and act from there? I don't think so.

As unpopular as it may be, I think the best opportunity that we have is to let that new team at AIG-- and we're all upset over the bonuses. The bonuses were awarded and signed as contracts in 2007, long before Mr. Liddy and the new team was in play, and we're justifiably angry at him for maybe not doing a better job of getting out of it.

But he came in after the collapse of AIG, with a $1 salary, and you can vilify this new management team if it makes you feel better, but resolving a company as large and as complex as AIG is no easy task.

It was in a mess and it will require a lot of good fortunate.. It will require an economic recovery. And that's what they're doing now. They're unraveling the deals. They're shutting down this financial products division that has caused all of us heartbreak and harm, and that's going to take time.

The people who set the policies that brought AIG to the brink of total collapse are gone. We need to give this new management team the time it needs to get the job done.

They were assigned that job in September and when we did it and when the Fed did it, they said it would take two years or three years to do it.

The government trying to get more involved than it is is just going to be a sad experience. We need to let-- as I say, we need to-- and I close by, again, saying the solution here is not government running this company. It's a private team and they're going to need all the help they can get.

What makes it a "fine" company? All the campaign contributions it's given to the political elite? The "very reckless, risky behavior" Bachus mentioned about AIG in passing? Is it a fine company in the same sense that Enron was the finest company George Bush had ever dealt with-- before their chairman-- and his campaign financial director-- went from "Kenny-boy" to "Ken who?"

Bachus says anger towards "Washington, the regulators" is justified; Congress too... "the failure to regulate, the failure of oversight by this Congress." If I recall correctly, Bachus has not only supported every single anti-regulatory initiative that's ever been brought before Congress since he was elected in 1992, he led the way on many of the worst of them! His party (+ the Blue Dog Democrats) led the anti-regulatory mania that is more at fault for this catastrophe than any other single factor other, perhaps, than the unmitigated avarice (the reason we need regulatory agencies) of the predatory parasites at the heart of outlaw companies like AIG. Bachus talks about how the American people are stuck with the tab-- the gargantuan tab-- because of "all this bad behavior by our failure to regulate." That's correct. Why didn't he stand up before the camera and take Chuck Grassley's advice? Why don't all the Republicans and all the Blue Dogs commit mass ritual suicide as a way of atoning for this disaster? Who would argue-- other than Bill O'Reilly-- that the country wouldn't be a far better place for it?

And then that charade about who's going to run it-- the government or Congress? No, Rep. Bachus; but how about some honest executives-- ones, unlike Liddy, who aren't career criminals and congenital liars? Liddy has a reputation, a much-admired one, in the corporate world for his relentless cost cutting prowess. That means he fires employees with great ruthlessness. And it wasn't just the 60% of the workforce at Searle that he and Don Rumsfeld axed prior to selling the company to Monsanto. Today's Chicago Tribune brings up an incident from his days running Allstate, another bandit corporation, where he didn't care quite so much about the "sanctity" of contracts:

The last time Edward Liddy faced a vexing compensation issue, as chief executive of Northbrook-based Allstate Corp., he cut costs with all the finesse of a blunderbuss: He axed 6,000 of Allstate's highest-paid agents.

That was then, this is now. As head of insurance giant AIG, which is 80 percent owned by taxpayers, Liddy seems to be going all wobbly on compensation issues.

In rural Alabama, where they seem perfectly happy to re-elect a crustacean as their congressman 8 times, they'll buy into the revelation that we better not run a big complicated company like AIG through public polling or by a much-disliked and inept Congress. He thinks the "new team" at AIG needs to be given a chance. New team? "The people who set the policies that brought AIG to the brink of total collapse are gone," fibbed Bachus. "We need to give this new management team the time it needs to get the job done." Who got the $165 million in retention bonuses if this is the new team? One guy got $6.5 million. Had they just hired him the week before? He must be good. Watch Bachus sing for his supper-- and earn every cent of the $914,725 in corporate bribes from finance/insurance/real estate he's been given:




UPDATE: BARNEY IS SO DIPLOMATIC

I'm sure Chairman Frank and ranking member Bachus make herculean efforts to get along, even if Barney seems a little macho for an ankle-grabber like Bachus. Today at Huffington Post, Barney addresses the question of selective/collective Republican amnesia. Gentleman that he is, he never mentions Rep. Bachus' name.

In March 2007, just two months after I became the Chairman of the Financial Services Committee for the first time, I moved quickly to forge a bill which would regulate Fannie Mae and Freddie Mac. The bill passed the House in May, with all 223 Democrats voting for it, and 103 Republicans voting against it. President Bush later signed that legislation into law.

Later in 2007, I introduced legislation to restrict subprime mortgages. The bill passed the Financial Services Committee and the House, but it did not pass the Senate, where because of the filibuster rule, the Republican minority actually does have the power to hobble the majority. The bill passed the full House with all 227 Democrats and 64 Republicans voting for it, and 127 Republicans voting against.

Ironically, those Republicans who now attack me most viciously and whose memories are the most impaired were among those who voted against both bills.

Republicans also forget-- or do not understand-- that the present financial crisis has many fathers. The failure to pass any meaningful legislation before 2007 allowed unscrupulous actors to gorge themselves at the public's expense. Unregulated mortgage brokers sold subprime loans including the now infamous NINA (No Income No Assets). Major financial institutions packaged bad mortgages into securities and sold them as low-risk investments. Rating agencies gave stellar grades to toxic assets while being paid by the companies who stood to benefit from their actions. Insurance companies like AIG issued Credit Default Swaps which magically turned toxic assets into gold.

The executives of some of those institutions now seek bonuses for their fine work. Perhaps my Republican colleagues should ask for bonuses too.

Edward Liddy-- Longtime Corporate Criminal Spins One In Today's Post

Edward Liddy-- best & the brightest? Or a vicious, dangerous predator?

I know President Obama's Stimulus Package favors "shovel ready" construction jobs but he would be doing the capital, and anyone interested in politics anywhere in the country, a great service if he offered the Washington Post a small stipend to hire a fact checker since, apparently, they can no longer afford one on their own. Either that or they just don't care. This morning many of us woke up to find a column penned by Satan himself-- or, more likely, by one of his p.r. firms, Our Mission at AIG: Repairs, and Repayment.

Edward M. Liddy is a contemptible career corporate criminal and we should all, collectively, hold President Obama to his campaign promise to fire him (following the exposure of the $440,000 corporate executive retreat at the St. Regis Resort in Monarch Beach, California, a celebration of the first AIG bailout-- 84 billion taxpayer dollars which included $23,000 in spa treatments and $150,000 worth of chow. Then Senator Obama: "The Treasury should demand that money back and those executives should be fired.")

In today's Post Liddy, a maxed out donor to John McCain, says he understands our "palpable wave of anger." His company has beefed up its security forces with armed guards in case the palpable becomes the bloody. "The anger," he writes, "is understandable, and I share it. I have been fortunate in more than three decades in business to see firsthand the wealth creation that well-managed American companies bring to their employees and their communities. I have seen the good side of capitalism."

Yes, the good side of capitalism! For Liddy the good old days were when he, as CFO, and his pal Don Rumsfeld-- yes that Don Rumsfeld-- took pharmaceutical company G.D. Searle-- maker of Metamucil, NutraSweet and Celebrex into the bigtime by engineering a sale of the company to Monsanto. Following the standard predatory capitalist script Liddy and Rummy fired 60% of the company's employees-- the people, unlike themselves, who had build Searle's value over decades-- to make it a more attractive purchase to cost-conscious Monsanto. In return Liddy and Rummy became very, very wealthy men. Rummy moved on to opening torture chambers all over the world and Liddy went to work as president, CEO and Chairman of Allstate where his best known accomplishment was denying homeowners in Katrina-struck New Orleans insurance coverage. In the eyes of the Bush Regime that made him the perfect candidate to take over the job that had been held Hank Greenberg (from 1968 'til 2005 when he was fired in a complex financial scandal). An RNC donor, Liddy was just what the Bush Regime thought would be perfect in June of 2008 as the financial world was collapsing.

Yesterday Tim Geithner-- forever the Wall Street shill-- sent a letter to the congressional leaders defending Liddy. “I know," he wrote, "that much of the public ire has fallen on Mr. Liddy, which is understandable, since it is his name on the door. But it also is unjustified. Mr. Liddy was put in place as the CEO of AIG last year at the request of the U.S. government to help rehabilitate the company and repay taxpayer funds. He inherited a difficult situation, including these AIGFP retention contracts, which were entered prior to his or the government’s involvement in AIG. As long as he is there, we will work with him on measures to wind down AIG in an orderly way and protect the American taxpayer.”

One of Liddy's first acts after Bush got him his current job, was to give Goldman Sachs a fat cut of the bailout money the Treasury gave AIG-- in fact, the fattest cut of all. And why not? Liddy was of the Goldman Sachs Board of Directors. He needs to be fact-checked, not just by the Washington Post but by the U.S. Department of Justice. Today he's been hauled before the House Financial Services Committee. You think we'll be covering that? Paul Hodes (D-NH) summed up AIG right from the beginning pointing out that to American taxpayers AIG "stands for arrogance, incompetence and greed."

Meanwhile, watch Edward Liddy wrapping the always credulous Larry King around his finger last November:




UPDATE 1: LIDDY TESTIFIES

Liddy is the most deceitful hack I've ever heard read a prepared statement. He started by saying he took the job at AIG out of a sense of patriotism. His 4 p.r. firms (+ the in-house p.r. department) wrote it for him and it was sickening. He offered Congress a compromise on the bonus money he stole; they'll voluntarily give up half of the stolen loot. I wish they could lock him up directly after the hearing. Shameful GOP hack, Scott Garrett (R-NJ), the ranking Repug member on the subcommittee started his "questioning" by commiserating about how poor Liddy and his family have had to put up with the indignities of public anger and threats.

UPDATE 2: JUDGE ORDERS MERRILL LYNCH TO COUGH UP THE BONUS INFO

Bank of America was ordered to stop obstructing Andrew Cuomo's investigation of improper use of taxpayer money for Merrill Lynch bonuses for top executives. Does Liddy keep threatening that the losers working at AIG are going to resign? Do they plan to collect unemployment insurance? Move to Shanghai? Do these losers think they're going to be hired by anyone? Of course, they are so rich now-- thanks to their pals in the GOP-- that they don't need to work anyway. Bill Posey (R-FL) just hit the nail on the head, saying AIG employees aren't going to get hired anywhere and should consider tehmselves lucky they're not in prison yet.

AIG Update De Jour

Senate Finance Committee hotshots Max Baucus & Chuck Grassley have taken over $6.8 million from the finance/insurance/real estate sector

We looked and we can't find any direct campaign donations from Edward Liddy to Iowa Republican Senator Chuck Grassley. Liddy maxed out to McCain and was certainly generous enough to the RNC to get the OK from the Bush Regime to take over from the government financed A.I.G. in June, 2008. But while President Obama was ordering Tim Geithner to block any AIG bonuses, Grassley had a more primal instinct, one, I feel certain, that is more in line with how most Americans are feeling towards Wall Street and the banksters today: death. A conservative Republican, Chuck Grassley isn't advocating the kind of mob violence that a number of DWT hothead readers have been demanding. Instead he demanded that Liddy and his team either resign peacefully or commit seppuku, ritual Japanese suicide. AIG has hired extra security guards to protect its Financial Products Division world headquarters in a tony Connecticut suburb.

Grassley on Iowa radio station WMT: "The first thing that would make me feel a little bit better towards them if they’d follow the Japanese model and come before the American people and take that deep bow and say I’m sorry, and then either do one of two things-- resign, or go commit suicide.” Through a spokesperson, he quickly-- and foolishly-- backed away from his comments.

“[C]learly he was speaking rhetorically-- he meant there’s no culture of shame and acceptance of responsibility for driving a company into the dirt in this country. If you asked him whether he really wants AIG executives to commit suicide, he’d say of course not... Point being, U.S. corporate executives are unapologetic about running their companies adrift, accepting billions of tax dollars to help, and then spending those tax dollars on travel, huge bonuses, etc."

Even one of the Senate's worst Wall Street shills, Chuck Schumer (D-NY- $12,817,946), did some saber-rattling this morning towards AIG, telling them to either give back the bonuses or be prepared to be taxed to the tune of 100% on them. He's such a populist!

Talk is cheap. Even corporate shills like Miss McConnell are castigating AIG now that the public has caught on. When we asked a McCain staffer if the Senator would return the hefty donation Liddy made towards his failed run for the presidency, he said "Fu*k you, asshole." New York Attorney General Andrew Cuomo, on the other hand, isn't just talking. He's subpoena-ing-- after AIG refused to cooperate voluntarily. Cuomo seems to be working in tandem with the Obama Justice Department on this. This morning's NY Times reports that Cuomo is claiming that 73 AIG employees were paid more than $1 million in the newly minted bonuses.

New York Congresswoman Carolyn Maloney, a member of the House Financial Services Committee that will be grilling Liddy this week seems to have come up with an interesting idea-- at least for the AIG bonus crooks who live in America: tax the bonuses at a special rate-- 100%.

“This will allow AIG to continue to meet their ‘contractual obligation’ to pay these bonuses, but will ensure that the recipients are not allowed to keep this money,” Maloney explained in a Dear Colleague letter sent out today asking for co-sponsors... Rep. Gary Peters (D-Mich.) introduced a similar bill late Monday that would create a 60 percent surtax on bonuses over $10,000 to any employee of a company in which the U.S. government has a 79 percent or greater equity stake in the company (AIG is the only firm meeting that test at the moment).

This year's first nonpartisan poll on the issues facing the country shows the Democrats blowing the obstructionists out of the water on the economic debate.

On both energy and health care the Democratic message wins by 53 to 42 percent, a margin nearly twice the Democrats’ 6-point partisan advantage. A majority of voters also side with the Democratic argument on taxes (52 to 43 percent) and the deficit (51 to 45 percent).

...Despite voters’ gloom about the economy, they remain confident in President Obama and support his economic policies. A solid majority of 56 percent approve of the way President Obama is handling the economy, while just 39 percent disapprove. Indeed, by a near two-to-one margin, voters think that Obama’s economic recovery package will help rather than hurt the economy (40 to 21 percent with 34 percent believing it will have little impact on the economy) and a strong majority favor the recovery package passed by Congress and signed into law by the President (55 percent favor to 42 percent oppose).

Former Secretary of Labor Bob Reich was Keith Olbermann's guest on Countdown last night and he was trying to explain why AIG seems so out of control.




UPDATE: REPUBLICANS TRY TO RE-WRITE HISTORY

Although Limbaugh and his junior GOP propagandist Glenn Beck, insist the executives at AIG must get their bonuses, Republican House whip, Eric Cantor (R-VA), has directed two of his most obedient minions, Erik Paulsen (R-MN) and Leonard Lance (R-NJ), to introduce a GOP talking points resolution demanding the Treasury Department recoup the bonuses. Didn't Obama already tell them to do that yesterday? Did Cantor miss it because he was busy taking pay-offs from banksters? I mean it might be small potatoes compared to the $32,212,409 the finance/insurance/real estate sector gave John McCain or what they gave other crooked politicians like Joe Lieberman ($9,978,024), Rick Santorum ($5,753,194), Mitch McConnell ($5,001,478), Max Baucus ($4,630,243) and Spencer Baucus ($3,789,474)... but Cantor hauled in $3,119,188, the 4th most loot of any current member of the House of Representatives. And if you would like to know what these generous industries got in return for all the bribes they shoved Cantor's way, look no further than his voting record. Eric Cantor has enthusiastically supported every single bill that has ever come up to tear down the regulatory protections meant to shield society from criminal behavior from the very predators he is now whining about. Of course, Cantor is hardly the only Republican hypocrite screeching about banksters now. McConnell and Shelby-- two Repugs who have scooped up even more loot from the banksters than Cantor-- are agin 'em now-- but when Congress was debating limiting executive pay to bailed out firms, McConnell and Shelby were claiming that would be communism.

Much Needed: A Strong Dose Of Populist Outrage

Career criminal Edward Liddy has had way more than 3 strikes

Yesterday we started the day in AIG hell, discussing the $100 million in "contractually obligated" bonuses for some the very losers who have wrecked the country's economy; by midday the $100 million had climbed in news reports to $165 million. One executive alone is due $6.5 million. By the end of the day Russ Feingold, Barney Frank, Nancy Pelosi and untold others in Congress were pressuring Geithner-- loudly-- to get those taxpayer-financed bonuses back... pronto.

Most Americans are feeling a long overdue streak of populist rage over this-- and by late last night it was getting worse. I mean the AIG hell was getting worse: they finally succumbed to pressure to start unraveling where the first $160 billion bailout in taxpayer dollars they got went-- other than to the bonuses. We'll get to the populist rage in a moment. First let's look at where the money went.

Turns out that Goldman Sachs, which received billions in direct U.S. government aid, also got $12.9 billion form AIG. (Edward Liddy, the new head of AIG had been on the Goldman Sachs board moments before taking over AIG from the crook who ran it before him.) It gets worse:

Three European banks-- France’s Société Générale, Germany’s Deutsche Bank and the UK’s Barclays-- were paid the next-largest amounts. SocGen received $11.9bn; Deutsche $11.8bn; and Barclays $7.9bn.

Many European banks used AIG’s credit insurance to keep from having to hold capital against their long-term securities holdings. Wall Street banks also used swaps to hedge their subprime mortgage-backed securities portfolios.

A spokeswoman for the US Federal Reserve said Sunday that AIG’s collateral payments were based on “contracts that don’t differentiate domestic versus international companies.” She said the Fed’s aid to AIG helped all of its counterparties, which range from global banks to individual insurance policyholders.

Other American banksters who had already got TARP funds who subsequently got substantial amounts from AIG included the crooks at Merrill Lynch ($5.8 billion) and Wachovia ($1.5 billion). The uber-corrupt Swiss bank, UBS, a center for cutthroat criminality unsurpassed in the Western banking world, scooped up $5 billion.

In total, A.I.G. named nearly 80 companies and municipalities that benefited most from the Fed rescue, though many more that received smaller payments were left out.

The list, long sought by lawmakers, was released a day after the disclosure that A.I.G. was paying out hundreds of millions of dollars in bonuses to executives at the A.I.G. division where the company’s crisis originated. That drew anger from Democratic and Republican lawmakers alike on Sunday and left the Obama administration scrambling to distance itself from A.I.G.

“There are a lot of terrible things that have happened in the last 18 months, but what’s happened at A.I.G. is the most outrageous,” Lawrence H. Summers, an economic adviser to President Obama who was Treasury secretary in the Clinton administration, said Sunday on This Week on ABC. He said the administration had determined that it could not stop the bonuses.

But some members of Congress expressed outrage over the bonuses. Representative Elijah E. Cummings, a Democrat of Maryland who had demanded more information about the bonuses last December, accused the company’s chief executive, Edward M. Liddy, of rewarding reckless business practices.

“A.I.G. has been trying to play the American people for fools by giving nearly $1 billion in bonuses by the name of retention payments,” Mr. Cummings said on Sunday. “These payments are nothing but a reward for obvious failure, and it is an egregious offense to have the American taxpayers foot the bill.”

...The Fed chairman, Ben S. Bernanke, appearing on 60 Minutes on CBS on Sunday night, said: “Of all the events and all of the things we’ve done in the last 18 months, the single one that makes me the angriest, that gives me the most angst, is the intervention with A.I.G.”

He went on: “Here was a company that made all kinds of unconscionable bets. Then, when those bets went wrong, they had a-- we had a situation where the failure of that company would have brought down the financial system.”

In deciding to rescue A.I.G., the government worried that if it did not bail out the company, its collapse could lead to a cascading chain reaction of losses, jeopardizing the stability of the worldwide financial system.

Now to the populism. I must have deleted a dozen comments yesterday screaming about executing banksters and bureaucrats and Bush Regime criminals. And I only deleted the ones that used dirty words. People are furious. And Obama better not make himself the face of it; God knows the GOP will try doing that as is. This morning's NY Times says the administration is "increasingly concerned about a populist backlash against banks and Wall Street." I wonder if Rahm Emanuel is hiding under his desk.

As it is, there have already been moves in Congress to limit compensation to executives at banks and Wall Street firms that are receiving government help to survive.

Beyond that, a shifting political mood challenges Mr. Obama’s political skills, as he seeks to acknowledge the anger without becoming a target of it. A central question for Mr. Obama is whether his cool style-- “in a time of crisis, we cannot afford to govern out of anger,” he said in his address to Congress last month-- will prove effective when the country may be feeling more emotional.

Even as Mr. Summers was denouncing A.I.G. for the bonuses, he suggested that there was little if anything the government could do to stop them, seconding the conclusion of Treasury Secretary Timothy F. Geithner. But even if their reasoning was legally sound, they also risked having the administration look ineffectual in the face of what Mr. Summers said was the worst financial abuse of the last 18 months, since the economy began turning down in earnest.

“Never underestimate the capacity of angry populism in times of economic stress,” said Robert Reich, a professor of public policy at the University of California, Berkeley, and labor secretary under President Bill Clinton. “A big challenge for President Obama will be to maintain a rational and tactical public discussion in the midst of this severe downturn. The desire for culprits at times like this is strong.”

In fact, speaking of Bob Reich, he penned quite the expose on this mess at HuffPo yesterday. "The real scandal of AIG," he wrote, "isn't just that American taxpayers have so far committed $170 billion to the giant insurer because it is thought to be too big to fail-- the most money ever funneled to a single company by a government since the dawn of capitalism-- nor even that AIG's notoriously failing executives, at the very unit responsible for the catastrophic credit-default swaps at the very center of the debacle-- are planning to give themselves $100 million in bonuses. It's that even at this late date, even in a new administration dedicated to doing it all differently, Americans still have so little say over what is happening with our money."

I can't understand why a big Republican donor-- obviously a crook-- like Liddy was put in charge of a company the government basically owns. And it isn't just because he was a maxed-out McCain donor, as well as a contributor to the RNC, that should disqualify him from employment. He was the chairman of Allstate when they were cheating Hurricane Katrina victims out of their insurance coverage. Before that Liddy was the CFO at a pharmaceutical company where Don Rumsfeld was the CEO. Together they axed most of the employees in order to make it an attractive property for Monsanto, which bought it in 1985 making Rumsfeld and Liddy immensely wealthy (although neither had contributed anything to the value of the company aside from firing 60% of the employees who had built it up.) See Liddy's swell digs on the right. I wonder who vetted Liddy for Bush when he wound up-- including himself, no doubt, among the losers he terms "the best and the brightest"-- as head of AIG in June, 2008.

The Bush Depression has brought with it a new world, and Society needs to do something about economic predators like the Madoff family, the Bush family, Edward Liddy and the kind of folks the NY Times was writing about this weekend in Uncorked!, a story that could have been published on the even of the French Revolution.

Champagne corks are always popping somewhere, of course, and the high life never disappears entirely, especially in New York. But these days, a $750 magnum of Perrier-Jouët stands in striking contrast to the scene outside Bagatelle’s glass-paneled door, where the Dow has lost half its value since the fall of 2007, the recession has claimed a net total of 4.4 million jobs since it began, more than 850,000 families lost their homes to foreclosure last year, and the word “depression” is being heard in the land.

...A man who works in finance and was standing near the bar of Merkato 55 the following Saturday started to talk about this issue, but then he had second thoughts, saying he could be fired for drawing attention to the subject in the news media. Any overt display of conspicuous spending, he added, even if not a dime was expensed to a corporate account, would not sit well with his employer. “Excess,” he said, “is frowned upon heavily.”

As for how he and his fellow Wall Streeters could still afford such afternoons, he said: “We all made so much money in the past five years, it doesn’t matter.”

A 29-year-old man who works for a large investment management firm and was at Bagatelle’s brunch one recent Saturday and at Merkato 55’s the next, put it another way: “If you’d asked me in October, I’d say it’d be a different situation, and I don’t think I’d be here. Then the government gave us $10 billion.”

UPDATE: LIDDY ON THE WITNESS STAND

Congress gets to question Liddy on Wednesday, not just "Congress," but the very aggressive House Financial Services Committee which includes banes of banksters' existence like Barney Frank (chairman), Maxine Waters, Brad Sherman, Keith Ellison, Jim Himes and, best of all, Alan Grayson, the Orlando congressman who previously made a legal career out of successfully skewering war profiteers. (On the other hand, AIG's Liddy will not just have fellow Republicans like Spencer Bachus and Frank Lucas there to stick up for him; some of the worst Blue Dogs in Congress, like Melissa Bean, Travis Childers, and Joe Donnelly will be there to help out as well.)

Eric Massa, a member of the Populist Caucus, was seething about AIG this weekend. "I am furious over this blatant waste of taxpayer dollars," he said. "I opposed the banking bailout specifically because I saw this kind of government waste on the horizon. When we have AIG executives giving themselves $165 million in bonuses after the government committed $170 billion to save the company, it is not only unacceptable, I think it's borderline criminal.
 
"American taxpayers are sick and tired of failed Wall Street executives using their money on bonuses and extravagant resort vacations. I cannot remain silent while families in my district worry about their jobs and their pensions. That is why today I have asked my colleague Rep. Barney Frank, the Chair of the House Finance Committee, to hold open and public Congressional hearings so we can get our money back from AIG."
 
"I think it's about time that we use the full power of the Congress to get into the wallets of those greedy executives that have decided its ok to fleece the American taxpayer. It's not their money, it's our money and we need a full Congressional investigation. These specific executives give American business and the vast majority of CEO's who are working to save our economy a bad name. It's not fair and we need to hold them accountable for their decisions."
 
"In the end, Washington lawyers may win this fight, but if we had let AIG go bankrupt these bonuses would never have been paid and it's about time that we let that happen. I will continue to fight any Wall Street bailouts." But keep in mind, there are dangers when that populist thing gets out of the bottle: open with care; the far right uses it to install fascism.

Obama must have felt the heat. He's stepping up to the plate and saying he'll "try" to block the AIG bonuses. I hope-- for all of our sakes-- he tries real hard. Glen Greenwald dicusses the sanctity of the AIG contracts today at Salon.

Obama rebuked his own economic team over the AIG bonus outrages. There's a movement afoot to try to get CNBC to stop shilling for Wall Street and start holding crooked banksters accountable. Watch the president discussing the AIG bonuses (notice where the applause comes in):