Connecticut AG continues his case against AIG

Despite what Obama may think, it's not about whether Geithner or anyone else is perfect. The issue here is showing a very angry public that someone is listening and that someone in authority is moving in the right direction. Shrugging your shoulders and telling people that there are no options is all too convenient. Go ahead and let AIG and their people fight for their bonuses in court. Let them sink millions into legal battles and PR disasters for years so they can gamble on whether they have a case or not. As the Connecticut AG says, none of the bonuses would be possible of the company was bankrupt so all deals are off.

Unfortunately, this also comes back to the initial bailout of AIG and Geithner's tenure at the NY Fed. His team was in the thick of things so to hear him know act surprised about any bonus money is insincere and ignorant. Everyone deserves much more than Geithner's weak efforts, but at least a few AG's out there are moving the process.

"We heard a few explanations, but quite honestly, none of the apparent justifications hold water with me," Blumenthal said. "Because whether the payments were made in December or March, I want to know how much they were."

Blumenthal is among 20 state attorneys general who announced investigations Friday into the $165 million bonuses paid out by insurance giant AIG last week. Connecticut's top lawyer said he discovered discrepancies after issuing subpoenas to CEO Edward Liddy and 11 other executives for "original or copies of documents regarding the AIG Financial Products Corporation retention bonus plan and any related contracts or agreements."

AIG officials are citing a Connecticut law to justify their payment of the bonuses. The law says employees can sue in civil court for payments withheld that are due them and recoup double the amount of money.

But Blumenthal says there's grounds to challenge AIG's payment.

"These contracts were contingent on the company remaining in existence. This company would have ceased to exist but for the bailout with our taxpayer money," he said.

"So there are various grounds on which the contracts could be made unenforceable."

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Hey Paul Krugman

Blah, blah, blah...on a good day. Read the rest of this post...

FOX mocks Canadian military's involvement in Afghanistan as four Canadian soldiers are killed in Afghanistan

Nothing is too low a blow for FOX News. Read the rest of this post...

What did he tweet and when did he tweet it?

ABC's Jake Tapper enters the world of Twitter, and quickly regrets it. :-) You have to scroll about halfway through Greg's post, but it seems that ABC's Jake Tapper tried to carry ABC into the 21st and a half century by starting a Twitter feed. Well, words were exchanged with some of those following his feed, some folks got subsequently banned, and then all Twitter hell broke loose.

Coulda been worse. They could have not cared about being banned. Read the rest of this post...

Krugman pans new Obama toxic asset plan

From NYT writer, and Nobel economist, Paul Krugman:

So now we have a bank crisis. Is it the result of fundamentally bad investment, or is it because of a self-fulfilling panic?...

Now, early on in this crisis, it was possible to argue that it was mainly a panic. But at this point, that’s an indefensible position. Banks and other highly leveraged institutions collectively made a huge bet that the normal rules for house prices and sustainable levels of consumer debt no longer applied; they were wrong....

Why am I so vehement about this? Because I’m afraid that this will be the administration’s only shot — that if the first bank plan is an abject failure, it won’t have the political capital for a second. So it’s just horrifying that Obama — and yes, the buck stops there — has decided to base his financial plan on the fantasy that a bit of financial hocus-pocus will turn the clock back to 2006.

What's most disturbing isn't that Krugman may be right. It's that we can't name a single senior Obama economic adviser who represents the Krugman/Stiglitz wing of economic theory and policy. It's not a matter of expecting Obama to buy, and implement as policy, every single thing that Krugman and Stiglitz say. But it's not clear that anyone is even listening to what they have to say, or representing their philosophy at the table when options are being discussed. That is scary. And it's what the last guys who messed up our economy used to do. Read the rest of this post...

A Pecora committee for the credit crisis

While I may disagree with a number of points Joe Nocera makes in this article, it's also easy to agree with some others. If I was convinced that Congress or anyone in power would do the right thing as far as correcting previous mistakes, it would be much easier to sit on the side but the problem continues to be a dysfunctional system that does nothing unless pushed. The relationship with Wall Street remains too cozy and it's a stretch to believe Congress, Obama, Treasury, or the Fed will change and move in the right direction. There's nothing that suggests such a change. Nothing.

One of the best points in the article is his mention of "the real culprits...are counting their money in “retirement.” Exactly. When was the last time you heard anyone in power raise this point and suggest pursuing those people? If it's happened, it's been quiet.

The argument that by bashing AIG, the American public is destroying value in a company they own is tough to swallow. Looking at the trillions spent on this crisis, how can anyone comprehend the difference between an AIG division selling for $10 billion, $5 billion or $0? None of these numbers mean anything anymore. Too many people are wondering what they would do in two months of they lost their jobs and they see crazy money being splashed around. A million dollar plus bonus registers. Billions don't. He may be right, but it's too abstract and mostly a losing battle anyway. Outside of the GOP, few people ever saw the AIG bailout as a money making venture.

The argument about bailing out the likes of Goldman, Citi and foreign banks is another story. This brings us back to the crazy bonuses though, since those bankers continue to be paid rock star compensation without the rock star performance. Slicing and dicing who is doing what within a business (this group is making money, this group is losing) is a Wall Street insiders game that again, does not translate to the rest of the country. What Americans see are too many people making too much money for being massive failures. They should be upset about this slightly hidden game of bailing out Goldman, etc. Let the macho folks at Goldman live with their failures, and explain themselves and why they deserve the big bucks.

What we ultimately need is a Pecora committee for today. The Pecora committee helped change our banking and financial system after the crash and worked for decades until the GOP ripped it apart. It would benefit Obama and the Democrats to get in front of this issue instead of letting the team that ruined our system take the lead. At the present time, the Democrats including Obama, look like a party in chaos. Read the rest of this post...

I just had to

And much to the disappointment of many in the Green Room at CNN, Aaron Schock taped his segment earlier. Read the rest of this post...

Connecticut AG: AIG paid $218m in bonuses

What next with this fiasco? Is there a reason why this number wasn't mentioned to Congress earlier in the week? An adult needs to step up and take control of this instead of the chaotic approach that we've seen to date. Timmy is obviously not up to the task but surely someone out there is. Regardless of the past problems, Obama now owns this and needs to turn this around quickly.

Connecticut's attorney general says documents turned over to his office by American International Group Inc. shows the company paid out $218 million in bonuses, higher than the $165 million previously disclosed.

Attorney General Richard Blumenthal's office received the documents late Friday after issuing a subpoena.

Blumenthal says the documents show that 73 people received at least $1 million apiece, and five of those got bonuses of more than $4 million. The financially ailing insurance giant has been under fire for giving bonuses after receiving more than $182.5 billion in federal bailout money.

AIG spokesman Mark Herr declined to comment Saturday.

Blumenthal said the newly revealed number will "further fuel the justified anger and revulsion that people feel."

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Blistering Frank Rich column about AIG, the administration and more

It's very harsh, and it's a must-read. Rich details why people are so angry, and offers details as to why you should be even angrier. He offers a warning to President Obama that he needs to act now, and decisively.

Inquiring Americans have the right to know why it took six months for us to learn (some of) what A.I.G. did with our money. We need to understand why some of that money was used to bail out foreign banks. And why Goldman, which declared that its potential losses with A.I.G. were “immaterial,” nonetheless got the largest-known A.I.G. handout of taxpayers’ cash ($12.9 billion) while also receiving a TARP bailout. We need to be told why retention bonuses went to some 50 bankers who not only were in the toxic A.I.G. unit but who left despite the “retention” jackpots. We must be told why taxpayers have so little control of the bailed-out financial institutions that we now own some or most of. And where are the M.R.I.’s from those “stress tests” the Treasury Department is giving those banks?

That’s just a short list. In general, it’s hard to imagine taxpayers shelling out billions for a second bank bailout unless there’s a full accounting of every dime of the first, and true transparency for the new plan whose rollout is becoming the most attenuated striptease since the heyday of Gypsy Rose Lee.

Another compelling question connects all of the above: why has there been so little transparency and so much evasiveness so far? The answer, I fear, is that too many of the administration’s officials are too marinated in the insiders’ culture to police it, reform it or own up to their own past complicity with it.

Bush got us into this mess, and Rich readily acknowledges that. But his concern is that if Obama doesn't quickly get a hold of the situation, this is going to damage future recovery efforts, his presidency, and Democratic chances of staying in office in two and four years. Read the entire thing, it's worth it. Read the rest of this post...

Sunday morning open thread

Good morning. Joe is still in the hospital from his appendicitis attack, so you get me for breakfast. By now, you've noticed that the blog has changed a little in the last day. We've finally launched AMERICAblog 2.0, and I hope you like it. We're still tweaking things, and are very interested in your feedback (and have already made some changes based on reader feedback already). So please feel free to tell us how you like it in the comments, or send me an email.

In other news, I'll be going on CNN's Reliable Sources show this morning to talk about the AIG fiasco. My segment should be around 10:10 am, if the spirit moves you. Enjoy the day. Read the rest of this post...

Timmy Geithner is not being scapegoated - he's simply the wrong person

Obama is making a mistake with his defense of Geithner and suggesting it's scapegoating. Quite a few people - myself included - were skeptical of this hire from the beginning. These are extraordinary times and of course, mistakes can happen. The issue here is whether Geithner shows any leadership ability to navigate such a crisis and increasingly the answer is a clear "no." He remains too worried about Wall Street retention, as if there is anywhere to go. It's OK to make mistakes but fewer people have confidence in the general direction of Geithner's plan, whatever that plan may be. Even then, how many mistakes can people accept when this rudderless ship (ahem, Mr President) goes nowhere?

Most Americans are outraged by this bonus system and would much rather see tax dollars going to important projects such as infrastructure and education as opposed to the summer mansion or new car for someone on Wall Street. Geithner has been working with Wall Street for too long and is too cozy with them. Whether Obama wants to admit it or not, Geithner is the wrong person for these critical times.

President Barack Obama told CBS's "60 Minutes" that Treasury Secretary Timothy Geithner's job is safe and that Wall Street needs to appreciate the frustration on Main Street over the magnitude of executive bonuses paid by government-bailout beneficiaries during a severe economic downturn, according to a Saturday preview of an interview to be aired Sunday night.

Obama told "60 Minutes" interviewer Steve Kroft that criticism of Geithner is natural and that neither he nor Geithner had mentioned the possibility of a resignation. The president, according to CBS, joked that he wouldn't accept the Treasury chief's resignation even if it were tendered, saying he'd respond, "Sorry, buddy, you've still got the job."

On the financial-sector recovery itself, the president hinted at a measure of impatience. "It's going to take a little bit more time than we would like to make sure that we get this plan just right," Obama told Kroft. "Of course, then we'd still be subject to criticism: What's taken so long? You've been in office a whole 40 days, and you haven't solved the greatest financial crisis since the Great Depression?"

Ha, ha. That's really funny and almost as hysterical as making fun of the Special Olympics. He needs to knock these stupid comments and get serious or else in a very short period of time the American public is no longer only going to be angry with Wall Street and Geithner. This economy is not a joke but the response to it so far has been a big joke. Read the rest of this post...

Radical new concept in coffee drinking

Enjoy your coffee or tea and watch the world disappear. Read the rest of this post...

Here are the threats against bankers that we should investigate

I suspect we will start hearing about similar threats made in the US and if we don't, that's an even bigger problem. Heaven help us if there were not any bankers warning internally about the risks. If that turns out to be the case I can only hope that quite a few people go to prison.

The scandal engulfing the Royal Bank of Scotland reaches new heights today with serious allegations from a senior Labour politician that at least three of its former non-executive directors may have been intimidated and threatened with the sack for asking searching questions about its financial affairs.

The Observer can reveal that a former government minister, Lord Foulkes of Cumnock, who has been extensively briefed by former bank insiders, has written to the Financial Services Authority, the City watchdog, asking it to pursue the claims which, if true, could trigger a criminal investigation.

The intervention by Foulkes, who is also a member of the Scottish parliament and sits on the Commons security and intelligence committee, comes amid fears that the bank will be exposed as the UK's equivalent of Enron - the US trader that collapsed amid systemic fraud.

Last night Foulkes said there was "widespread public anger among the public and Parliament that bankers in the midst of this financial crisis appear to be profiting and no action is being taken in relation to action which could constitute criminal offences".

In relation to claims of intimidation, Foulkes said: "If it were to transpire that executives were pressured in such a way, then that is a most serious matter indeed that needs urgent action."

He is also understood to have been disturbed by claims that the bank misled investors over its exposure to bad debts. Yesterday it was reported that more than £30bn of "toxic" sub-prime mortgages were bought for RBS by traders in 2007 without the board being informed - a claim denied by the bank.

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Spring floods

There has been a lot of chatter about individuals and banks (who own foreclosed houses) holding back and waiting for a better time to sell. With the glut of houses on the market, sellers have been hoping against hope that the market will provide a window for selling. Now that spring is coming, many see this as the time to try again so keep your eyes on the housing numbers.

A combination of lower interest rates and government efforts to free up credit could result in a flood of homes being put up for sale in the coming weeks.

"We're seeing a lot of activity with (sellers) starting to kick tires again," says Alan Rosenbaum, president of GuardHill Financial, a mortgage advisory firm, in New York. "We try to show them the affordability factor. Rather than waiting for rock bottom, the intelligent ones are moving into the marketplace and seeing what's available."

While great for potential buyers, the added glut of housing could push prices even lower, further depressing the market. At the same time, it could actually jump-start housing by bringing more home-buyers into the market.

With stimulating the real estate market a principal goal of Washington policymakers, the temptation for buyers and sellers to jump into the market could be irresistible, especially if interest rates stay low.

"The first signs of life you see in home sales you're going to see met with a lot more inventory," says Michael Pento, chief economist with Delta Global Advisors. "The last thing you want to do as to add more inventory to an already-oversaturated market."

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Vampire unearthed in Venice

Not everything is about politics. Well... okay... maybe this one is too.

Seriously weird:

Italian researchers believe they have found the remains of a female "vampire" in Venice, buried with a brick jammed between her jaws to prevent her feeding on victims of a plague which swept the city in the 16th century.

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