Elliot Spitzer is back and hes talking. The thought of this, no doubt, brings a small shiver to the boardrooms of some of the perps walking around trying to figure out how to hide the money this week. Today Edward Liddy testified that there have been death threats made to or about executives who received bonuses, so no names will be put on the record, but these anonymous players must know that the jig is up in the land of easy-money. Isn't what to do a no-brainer for these great Americans?

Spitzer may be as "disgraced" as any anonymous sex loving Republican loser, but America is known for its great second acts, and we may be witnessing the curtain rising on Spitzer's.
Today in Slate Elliot Spitzer has a short op-ed that speaks volumes about what is going on, and indirectly, if you follow the money, what happened to him. Plainly stated, Spitzer brings the AIG Ponzi Scheme one step closer to the revered establishment when he explains how the bailout money was funneled straight into the top players, with Goldman Sachs being the name that comes up again and again. These top players already got bailout money, and Goldman is looking at zero losses at this point, while regular Americans are being asked to make concessions or just plain losing everything. here are the biggest financial entities in the world, making billions on what appears to have been nothing but air traded back and forth, and having gutted the American people they are walking away with 100% return to their stockholders. In return AIG seems to think that its appropriate to pay themselves bonuses with the leftover funds. This leaves AIG still a wobbly shell with no plan of how to go forward, and the threat of the collapse of all of the world's financial markets still up in the air. So, what was all that bailout money for? Apparently to make sure that no one at Goldman or the other few top firms in the hand-out-line lost anything!

The relationship between AIG and Goldman goes back long enough that one would think that Goldman would know, having bought so much of this "insurance" or whatever it was, whether the "products" were ...er...real or feasible at all. Indeed, Goldman and AIG almost merged a few years ago, but Spitzer notes that the unknown black hole of AIG's business practices were probably what prevented it. Still, that didn't stop the incestuous dealings; it almost makes one think that this whole thing was a setup.

This is country that Spitzer is familiar with; he has been a terrible liability to entities that, under the Bush administration, were allowed to literally gut the country and its citizens. All of this seems to have been part of the Bush Administration's own Ponzi Scheme, which figured that the illusion of an ownership society, terrified of the "terraism" and steeped in the me, me, me, culture would look the other way while they finished clearing out the vault. Beyond that, it's clear that the media hyped housing bubble encouraged the house flip mentality and the idea that anyone could be rich. The idea of the lottery dropping on our own heads made us more protective of the rich, because we might one day be one....or look, we could be one with no money down, if we could just balance that on this, and flip that house!!

Every week came a new offer from our bank or credit card to just put the enclosed check into the bank for a $50,000 loan, unsecured and with a low APR!! Who would know that those same banks would go out of their way to cause a day or week default by changing the cycle or stopping refusing cards that went over-limit, in order to charge fees and raise the rates. Who could know that the fine print on all those little fliers talking about privacy rights and how they are selling all of our information, also said that by-the-way the interest rate is now 25% and the minimum payment has tripled! Default on that and likely AIG has sold insurance to your lending institution that should repay them for making the bad loan in the first place....no money down mortgages? No problem....its the same story. This is the ownership society and we all need to own alot of stuff. It is... what did he say?...uniquely American!

Spitzer was questioning this back in February 2008 when he wrote his Valentine to predatory lenders in the Washington Post. He detailed that Attorneys General across the country had entered into litigation in an attempt to protect the people of their states from predatory lending. The response from the federal government was astounding!

What did the Bush administration do in response? Did it reverse course and decide to take action to halt this burgeoning scourge? As Americans are now painfully aware, with hundreds of thousands of homeowners facing foreclosure and our markets reeling, the answer is a resounding no.

Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.

snip

In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government's actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.

But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation.

Now, they will say that they fought the consumer protection laws to actually protect the consumers and assure that they could get credit in the future. But actually, Americans could get credit; just credit that they were able to handle and could, by reasonable standards, pay back. This was just more of the same in hindsight. Looking back that all that the Bush administration has done, the beginnings of this disaster looks almost quaint, and not like an institutionalized foray into the dirty underside of criminal activity. There were quotas passed by the government as to who got the loans and the focus was on certain populations who would be helped into homeownership even if they couldn't maintain the credit. It was treated as some sort of fulfillment of the American Dream for people to own something, but really had more to do with the insurance on the loans than the people involved. The American dream is dead, as we well know, but what it was, way back then, was that people could afford to own a house and put their kids in college!

AIG sold insurance to the biggest entities in the financial world to cover the proliferation of bad loans. This insurance became so common that it was impossible that the lions of finance didn't somehow have an inkling that something was wrong. Didn't Goldman and the rest of these huge firms know something about the stability of an impossible business plan? Hadn't Goldman gone over everything in their bid to merge? And what of the government and their mandating of certain loans that were bound to go bad. There were people involved in these things, and its not like regular people understand the ins and outs of the financial industry. They rely on brokers to explain it to them. But these brokers were being forced to see a certain product to an unqualified population. How could they? Why would they? Those are questions for another time.

Spitzer has been fighting these guys and asking questions all along. Coincidentally, right after the WSJ editorial appeared on Valentine's Day 2008, Spitzer was caught up in what was an extremely unusual sting. So unusual is an investigation like this that it seems almost like it was a set-up; and considering where it all came from and how it all came down, it might well have been.

It seems that Spitzer's bank was investigating expenses under the auspices of the newer Homeland Security laws of the Bush administration. Greg Palast wrote about this compellingly, and in light of how the whole thing is shaking out now, and what Spitzer said back then about this financial mess and what he tried to DO about it, Palast had a pretty good early grasp on what had gone down. So now, with Spitzer poking his head up from the underground of "healing his family," at this most compelling of moments, its probably worthwhile for Americans to screw their heads on straight and forget the details of the hooker, and look at what Spitzer was working on when he was taken down. We might all find ourselves wanting to thank the egotistical crime fighter who cant keep it in his pants.

I am no apologist for breaking the law, and usually its the highest and mightiest that fall the hardest. But when the mainstream is showing us the shiny object, we must resist the temptation to succumb to our base natures and try to see the bigger picture. There was never a real case against Elliot Spitzer, and no charges were filed. The release of embarrassing personal information was at the discretion of the Bush Administration's Justice Department.

Why was this information released? It wasn't that he was a crusader against such crimes, because many who have been caught were exactly the same and their information has been kept quiet. It wasn't that the press is all so great in their investigative journalism, either...because we know they're loathe to get off their asses if they can just read a talking point; as is evidenced by the reportage on this case.

Palast:

Not all crimes lead to federal bust or even public exposure. It’s up to something called “prosecutorial discretion.”

Funny thing, this ‘discretion.’ For example, Senator David Vitter, Republican of Louisiana, paid Washington DC prostitutes to put him in diapers (ewww!), yet the Senator was not exposed by the US prosecutors busting the pimp-ring that pampered him.
Naming and shaming and ruining Spitzer – rarely done in these cases - was made at the ‘discretion’ of Bush’s Justice Department.

Or maybe we should say, 'indiscretion.'

Bush's Justice Department.
Its clear to me that all things being equal, this was at the very least, not a transsexual streetwalker a la Hugh Grant, and it was all very ho-hum and quiet. So, whatever the problem that leads to this sort of behavior, I don't want to know about it...its personal, so just walk on by...nothing to see here.



Welcome back Elliot Spitzer. I hope we hear more from you very soon...your voice is needed in this matter.


c/p RIP Coco

Labels: AIG, bank bailout, Bush Administration crimes, lies, spitzer

It's a streak!

Today's honoree: John Aravosis, who says that the correct answer to the threats from Wall Street is "Go ahead: Make my day."

Money quote:

Enough already. First, there are no jobs. There are no competitors to run to. If these people don't get bailed out, they will lose their jobs, they will lose their companies. So please spare us this bull about how if we don't give people $100,000 bonuses, in the middle of a massive recession, they'll somehow leave. Where pray tell will they go? Other than to the 70th floor to jump off the building.

But more importantly, who the hell do these people think they are? I'm worried about making any money at all this year. As I'm sure many of you are. And these folks are whining about the only thing they got going, a free handout mind you, to keep them alive? To keep us alive? If these companies don't want to join whatever program the administration comes up with to save credit, to save our economy, then nationalize them or, if it's safe to do so, let them fail. But enough of this greedy, whiny crap about how they're all going to leave if we don't give them massive bonuses. Let them leave. Then let them join the unemployment line while figuring out how to pay their mortgages on $400 a month. It's time to tell these companies to STFU, and jam this down their throats. They don't like it, they can go bankrupt or be nationalized. But enough of the games, and enough of the weakness telegraphed by the administration and the Fed.

Word.

Labels: AIG, bloggers, economic death watch, greed, spinelessness, Tim Geithner

Our good friend Richard Blair of the All Spin Zone is traveling today to AIG headquarters in NYC to make some noise (look for the guy in the leather jacket with the sign that says GIVE IT BACK MR LIDDY!! ) If you're around there go and find him!...and Richard, text if you need to get bailed out! Security is tight in the big city!
He's not the only one, apparently....It seems that protests are popping up all over the place, and they seemingly stem mostly from guys like Richard who have just had enough and who want to jump into the thick of things in this drunken town.



The new Tea Party movement is gaining momentum, and as the bailouts come down with little reasonable explanation or accountability, the turnouts are growing. If this was the thing that was gonna get people into the streets then so be it. I always thought that it would be tent cities and people dying in the streets, which is likely not so far off. We witnessed Hurricane Katrina and were so numbed that we just watched in horror and maybe sent money. Some went there immediately, but not enough in light of what was going on and the government's non-response. It had to be something that effected us all; and here we are. The thing is that this is all so blatant and corrupt that its almost unbelievable!

Ive been struggling to understand the details of the AIG thing, and its all so illogical that I cant quite believe that the government has given them anything. Why are we bailing them out? I'm hearing alot of this hold-your-nose-and-bear-it talk because its necessary for the world economy...? When it becomes clear that bonuses are being paid out at the same rate as before, and that its business as usual. Are we bailing them out so that they can just continue on with what they were doing that got us into this mess? How are they going to go forward? and what gives them the idea that they don't have to answer to us?

Here, thanks to the Cognitive Dissonance blog is some explanation of the swindle via post and video:



I'm working on this, and I hope that I don't end up with some novella length post about the ins and outs of this nonsense, because it seems that we really have little more to do than to take to the streets; and it occurs to me that people will be spurred to action by short bursts of easy to understand facts about this rather than a long lament.

Its just all too much.


c/p Brilliant at Breakfast

Labels: AIG, bank bailout, crime, lies, mortgage crisis

Speaking of pitchforks and torches, our own good friend Richard Blair of All Spin Zone is taking his Storm the Bastille road show to New York today to demonstrate in front of AIG's headquarters. If you're in the area, stop by 70 Pine Street and say hello. Tell him we sent you. He'll be the guy in the black leather jacket carrying a sign that reads, "Give it back, Mr. Liddy". And while you're at it, if you know of anyone who's hiring, let him know.

Labels: AIG, bloggers

Congratulations, America: You've been robbed blind by a bunch of greedy, incompetent, soulless bastards, and you're not going to see a nickel of it back.

AIG = Bernie Madoff:

Pressure is mounting on the government to revise its bailout of AIG to ensure that taxpayers are repaid as much as possible of the $170 billion lent to the troubled insurer.

Experts warn we shouldn't expect to get much back.

The problem stems from AIG's obligations to its trading partners. So far, the hobbled insurance giant has honored in full its contracts with U.S. and foreign banks. It's paid out more than $90 billion in taxpayer money to keep some of the biggest names in finance from losing money on bad bets linked to subprime mortgages and other risky assets.

As the cost of the rescue swells, experts says it's becoming harder to envision a scenario in which the government could recoup its full investment. Even though the AIG payouts to major banks have angered critics of the bailout, it might be legally impossible to claw back any of the billions already doled out.

"A contract is a contract," said Russell Walker, a risk management professor at Northwestern University. "That money all went to people who bought protection from AIG."

The government agreed to uphold those contracts when it seized control of American International Group in September. It argued that failing to repay the debts of the globally interconnected company could cause catastrophic losses at big international banks, potentially toppling the financial system.

Scrutiny of AIG's dealings with its trading partners comes after revelations over the weekend that the insurer planned to pay out tens of millions in executive bonuses. President Barack Obama on Monday accused AIG of "recklessness and greed." He pledged to try to block the bonuses, which AIG insisted it's contractually obligated to pay.

Later, White House spokesman Robert Gibbs said the administration would modify the terms of a pending $30 billion bailout installment for AIG to at least recoup the $165 million the bonuses represent. That wouldn't rescind the bonuses, just require AIG to account for them differently.

Obama's aggressive stance toward the AIG bonuses raises the question of whether the government could also pursue the billions paid to AIG's trading partners. Under growing scrutiny from Congress, AIG on Sunday finally identified those trading partners that indirectly benefited the most from its bailout.

Among the largest recipients, Goldman Sachs received $12.9 billion; Merrill Lynch got $6.8 billion. AIG also funneled billions into foreign banks, including $11.8 billion to Germany's Deutsche Bank and $8.5 billion to Britain's Barclays PLC.

Asked if he'd favor trying to see if those AIG contracts could be broken so the government could recover some of those payouts, Rep. Barney Frank, chairman of the House Financial Services Committee, stopped short of endorsing the idea. But he said "that's something that has to be examined."

"I would want to know the consequences of not paying those debts," Frank, D-Mass., told The Associated Press.

Other critics want the government to go further. They say AIG's trading partners should be forced to take less than 100 percent of the value of their derivatives contracts with AIG. They noted that the protection AIG offered — in the form of complex products called credit-default swaps — was unregulated and that AIG's trading partners knew the risks and should have to assume some losses.

"If you're in Las Vegas, and you leave the casino to go play craps with a bunch of people on an alley way, you shouldn't be able to go to the state and ask for your money back," said Barry Ritholtz, a financial analyst and author of "Bailout Nation: How Corrupt Money Shook Wall Street."

No bailout recipient has burned through more taxpayer money than AIG, which is now about 80 percent owned by the government. A 90-year-old insurer, it was listed as recently as last year as the world's 18th largest publicly traded company. Back then, AIG's stock traded for about $40 a share. Today, you can buy one share for just under a buck.

The government has made four separate attempts to save the company, including a $30 billion cash injection two weeks ago. The latest lifeline came as AIG reported a $62 billion fourth-quarter loss, the worst three-month performance in U.S. corporate history.

AIG's dire reality has raised doubts about the government's claim that it will recoup much of its investment in the company.

But wait! There's more! You aren't finished paying:

With few legal options available, the White House may be forced to add millions of dollars in bonus payments to the outstanding debt owed by American International Group.

Earlier Monday, President Barack Obama expressed his outrage over AIG's payment of $165 million in bonuses, and ordered Treasury Secretary Tim Geithner to take all legal measures to block them.

However, sources tell CNBC, that there are few legal options available to the White House.

A U.S. Treasury official said that the Treasury will modify a planned $30 billion capital infusion for AIG to try to recoup hundreds of millions of dollars in controversial bonuses paid by the insurer.

The Treasury is finalizing the terms of its latest rescue package for AIG, announced on March 2, and will attach new provisions to it, the official said. The company was due to pay $165 billion in employee retention bonuses by Sunday to employees of AIG Financial Products, the unit that made bad bets on toxic mortgages and credit default swaps.

The official, who spoke to Reuters on condition of anonymity, said the Treasury was considering several repayment arrangements aimed at giving the money back to taxpayers.

Meanwhile, this may be the tipping point that gets the townspeople out with pitchforks and torches:

A tidal wave of public outrage over bonus payments swamped American International Group yesterday. Hired guards stood watch outside the suburban Connecticut offices of AIG Financial Products, the division whose exotic derivatives brought the insurance giant to the brink of collapse last year. Inside, death threats and angry letters flooded e-mail inboxes. Irate callers lit up the phone lines. Senior managers submitted their resignations. Some employees didn't show up at all.

[snip]

"It's a mob effect," one senior executive said. "It's putting people's lives in danger."

Politicians and the public spent yesterday demanding that AIG rescind payouts that they said rewarded recklessness and greed at a company being bailed out with $170 billion in taxpayer funds. But company officials contend that the uproar is scaring away the very employees who understand AIG Financial Products' complex trades and who are trying to dismantle the division before it further endangers the world's economy.

"It's going to blow up," said a senior Financial Products manager, who spoke on condition of anonymity because he was not authorized to speak for the company. "I have a horrible, horrible, horrible feeling that this is going to end badly."

I do too. And I feel just as badly for the secretaries and the clerks and the people like my former co-worker's son-in-law, who works for AIG as an accountant and just bought a house less than a year ago, as I did for the secretaries and clerks and janitors at Lehman Bros., who shared in little of the company's bonanza and similarly found themselves out on the street. But the plight of these lower-level workers in no way mitigates the need that we as a nation have to see this kind of looting of the national Treasury stopped and these blackmailers put out of business and jailed.

Labels: AIG, economic death watch, greed