White House Panics at the Mob Marching on AIG
By John Batchelor on March 18, 2009 at 12:55 AM in Current Affairs
“Obama told Geithner to take all legal means to block bonuses awarded to employees of AIG, Reuters reported, citing White House adviser Goolsbee.” The full Reuters report, though brief, has more puzzles:
WASHINGTON (Reuters) – President Obama has told the Treasury secretary Timothy F. Geithner to take all legal measures to block hefty bonuses awarded to employees of AIG, the insurance company that received up to $180 billion in bailout money, a White House adviser said Monday. “The president told Secretary Geithner … to take every legal means that he has to push back against this, to figure out who put this in the contracts and when, and to make sure this doesn’t happen again,” Austan Goolsbee, a member of Obama’s Council of Economic Advisers, told Reuters Financial Television.
The Treasury Secretary supervising the decision was Hank Paulson, ex-chief of Goldman Sachs. The Chair of the Federal Reserve at the time was the same man who is there now, Ben Bernanke.
In sum, the crew that bailed out AIG is still largely in place. These dignitaries lobbied the 110th Congress to go along with the scheme, along with the TARP money that accompanied the scheme. The first puzzle is, when did it occur to them that by keeping the bankrupt and ruined AIG alive with the public treasury that this meant, logically and legally, that all the employee contracts for bonuses would be paid in time?
Do any of them now say they didn’t know?
The second puzzle is, (2) When did the White House realize that the money was going out? Friday evening? Guru Larry Summers was on TV within the weekend declaring the bonuses an “outrage,” but did he not chat with Tim Geithner and Ben Bernanke about those bonuses when he joined the White House economic emergency team in January?
A third puzzle is, (3) Why now? The big news of the weekend was supposed to be the comity of the G-20 finance minister meeting in Sussex. Instead now the narrative has changed profoundly to protest, indignation, obfuscation, explanation, derogation about the AIG deals. The Obama administration spotted the rebel mob of taxpayers going by outside on its way to burn down the bankrupt and zombie AIG, and so the White House decided to join the mob, sort of, and perhaps lead it if it can be done with measured pomposity.
The Obama team has lost control of the story. The president now goes on air to explain to the mob how this came about, how everyone was only doing the right thing to clean up the mess and no one wanted the AIG bankrupts to be rewarded for their failures, but gosh, it is a nation of laws, and gosh, those are contracts.
This points to that dependent clause from the president to Tim Geithner, according to Austan Goolsebee: “to take every legal means.” This is Washington talk for, There’s nothing we intend to do about it but talk about it. The president also goes on to restate the problem as if he was just told: this is smooth Washington behavior. Make yourself important by pontificating on the problem that everyone already knows about: It is raining, so state loudly that getting wet is icky. Or, Frankenstein is a monster, grab a torch and pitchfork (below), let’s get him!
”All across the country, there are people who work hard and meet their responsibilities every day, without the benefit of government bailouts or multimillion-dollar bonuses. And all they ask is that everyone, from Main Street to Wall Street to Washington, play by the same rules. This isn’t just a matter of dollars and cents,” he added. “It’s about our fundamental values.”
All the big rascals of the firm have already fled with their pensions and pay-outs and consulting deals. What is left is the little rascals who can and will hire rascal lawyers to make sure the bonuses keep flowing. The national upset about the notion of bailing out failed companies, such as banks and their pals, has found a focus.
AIG is the face on the poster of the bail-out. It is grinning at us. Looks like Big Brother in a $3,000 suit? Looks like Goldman Sachs and JP Morgan Chase and Deutsche Bank and the rest of the banks who got their money back (and their chiefs who got their bonuses too) and also looks like Congress? Only the well dressed part of Congress, the lobbyists. It does not look like us. We can’t afford to dress so well. We have to pay for AIG’s wardrobe.
by Ronald Scott
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