Goldman Sachs CEO Lloyd Blankfein

Wait a second. Blankfein admits that Goldman participated in activities that led to the crisis? Get Lloyd back in here and ask him for specifics.

In an attempt to probe as to Goldman’s culpability, I inquired:

What do you think Blankfein was referring to when he stated that Goldman “participated in things that were clearly wrong”? I’ll get the ball rolling with a few possibilities:

1. Manipulated the equity markets via computer programs connected with high frequency trading.

2. Ran over Tim Geithner in the settlement of open positions with AIG.

3. Facilitated insider trading on behalf of hedge funds.

4. Intentionally misled lesser prioritized clients via trading huddles.

5. Abused privileged information provided by former Goldman execs now in government positions.

6. All of the above.

7. Other . . . please share your opinions.

Yesterday we learn the answer is most likely choice # 2. It appears that Lloyd Blankfein would like forgiveness for the aggressive posture it took with Uncle Sam in the process of settling its exposure with AIG. Recall that Blankfein has repeatedly asserted that whether AIG went down or not was not meaningful to Goldman Sachs because Goldman had secured collateral from AIG to cover its exposure.

Does Lloyd regret making those strong and bold assertions? Is he apologizing for these statements? Why would he apologize? Did he intentionally misrepresent Goldman’s position? Did he lie? The Wall Street Journal provides compelling evidence that he did just that. The WSJ writes, Report Rebuts Goldman Claim on AIG:

For more than a year, Goldman Sachs Group Inc. has maintained that it wouldn’t have suffered material losses had the government allowed one of its major trading partners, American International Group Inc., to collapse.

A government report throws cold water on that claim.

Goldman was among the largest beneficiaries of a decision by the Federal Reserve Bank of New York to bail out insurer AIG in September 2008 at the height of the financial crisis. The Fed agreed to pay Goldman and 15 other banks, in full, for $62 billion of insurance contracts they had with AIG to protect against price drops of mortgage securities they held.

The report, issued this week by the special inspector general for the Troubled Asset Relief Program, comes amid controversy over whether the government unfairly helped out big banks in its bailout of AIG. The government auditor’s report broadly found that the New York Fed left itself little room in negotiating with the banks for a better deal for taxpayers.

Goldman’s trading position with AIG centered on $22.1 billion of such insurance the firm had purchased from AIG. In a separate series of trades, Goldman itself had sold protection against losses on the same securities to other trading firms.

The problem for Goldman: If AIG collapsed and markets continued to swoon, Goldman would have had to make payments to the other trading firms and been unable to collect on protection it had bought from AIG.

While spokesmen for Goldman may try to spin Blankfein’s previous statements of Goldman being hedged against an AIG default, it does not take a brain surgeon to tie Blankfein’s apology on Tuesday to the recently released WSJ story. Professional courtesy in the financial industry compels journalists to share articles, especially negative coverage, with selected parties prior to its release. Do not think for a second that Blankfein was not aware of the WSJ article. While some within the industry may look at Blankfein’s statements about Goldman being protected from an AIG default as some semblance of harmless obfuscation, from where I come, we call it lying.

Goldman took the American taxpayer to the hoop in the process. When does Blankfein want to make proper restitution? Keep your apology. Give the taxpayer their money back. Get Geithner in here as well, as he facilitated this transfer and allowed the lie to perpetuate.

If Blankfein lied about this situation, the question begs as to what other lies or half-truths he has spoken.

What do you think?

LD

Today, Morning Joe had Jim Cramer on to put out Spitzer’s fire. Who’s right?

versus Jim Cramer:

So, WHO IS CORRECT? My money is on Spitzer.

Spitzer, by the way, is a regular columnist these days for Slate.com.

His latest column is “Fed Dread: The New York Fed is the most powerful financial institution you’ve never heard of. And look who’s running it.”

And you ALL know who used to run the New York Fed, right? Yes, one Timothy Geithner. Here’s why the New York Fed is so important, and why it is ethically compromised. From Spitzer’s latest column, “Fed Dread“:

A quasi-independent, public-private body, the New York Fed is the first among equals of the 12 regional Fed branches. Unlike the Washington Federal Reserve Board of Governors, or the other regional fed branches, the N.Y. Fed is active in the markets virtually every day, changing the critical interest rates that determine the liquidity of the markets and the profitability of banks. And, like the other regional branches, it has boundless power to examine, at will, the books of virtually any banking institution and require that wide-ranging actions be taken—from raising capital to stopping lending—to ensure the stability and soundness of the bank. Over the past year, the New York Fed has been responsible for committing trillions of dollars of taxpayer money to resuscitate the coffers of the banks it oversees.

Given the power of the N.Y. Fed, it is time to ask some very hard questions about its recent performance. The first question to ask is: Who is the New York Fed? Who exactly has been running the show? Yes, we all know that Tim Geithner was the president and CEO of the N.Y. Fed from 2003 until his ascension as treasury secretary. But who chose him for that position, and to whom did he report? The N.Y. Fed president reports to, and is chosen by, the Fed board of directors.

So who selected Geithner back in 2003? Well, the Fed board created a select committee to pick the CEO. This committee included none other than Hank Greenberg, then the chairman of AIG; John Whitehead, a former chairman of Goldman Sachs; Walter Shipley, a former chairman of Chase Manhattan Bank, now JPMorgan Chase; and Pete Peterson, a former chairman of Lehman Bros. It was not a group of typical depositors worried about the security of their savings accounts but rather one whose interest was in preserving a capital structure and way of doing business that cried out for—but did not receive—harsh examination from the N.Y. Fed.
The composition of the New York Fed’s board, which supervises the organization and current Chairman Friedman, is equally troubling. The board consists of nine individuals, three chosen by the N.Y. Fed member banks as their own representatives, three chosen by the member banks to represent the public, and three chosen by the national Fed Board of Governors to represent the public. In theory this sounds great: Six board members are “public” representatives. …

Here’s more from “Class, Required Overnight Reading on “Toxic Assets”and A.I.G. by Spitzer“:

“There should have been a very different regulatory framework. Not in the sense that we needed more words in the books. We needed more aggressive voices at the SEC, the FTC, the OCC – this welter of federal agencies — people who came to Wall Street and said, ‘Wait a minute. That leverage is crazy’. … [E]verybody derided leverage in public, but in private, participated to the hilt. … This was sort of a disease that got into the bloodstream and the DNA of Wall Street leadership. … The more traditional, old-fashioned investment bankers — you think of Felix Rohatyn, who said, ‘Wait a minute, guys. This doesn’t work’.

“AIG is at the center of the web. The financial tentacles of this company stretched to every major investment bank. The web between AIG and Goldman Sachs is something that should be pursued. …

“[A.I.G.'s] fundamental accounting structure was wrong. … [W]e brought a case alleging that they had manufactured false, fictitious reinsurance contracts. … [T]he underlying effort was to create an illusion of financial strength that was not there. … [F]our people have been convicted. …

“[A.I.G.'s problems] stemmed from an effort from the very top to gin up returns whenever, wherever possible, and to push the boundaries [to] garner returns almost regardless of risk. …

“When AIG initially received $80 billion — a decision that was the consequence of a very brief meeting of the president of the New York Fed [GEITHNER], the secretary of the Treasury [PAULSON], perhaps Chairman Bernanke and [some say the] chairman of Goldman Sachs — $80 billion, virtually all of it flowed out to counterparties, $12.9 billion to Goldman Sachs.

“Why did that happen? What questions were asked? Why did we need to pay 100 cents on the dollar on those transactions, if we had to pay anything? What would have happened to the financial system, had it not been paid?”

[...]

But that’s not how I want to leave you for two weeks. Rather, I would like to leave you with a smile on your face, and a song in your heart.

First for the smile, this very funny piece by Andy Borowitz (which might put a song in your heart, too): White House Replaces ‘War on Terror’ With Symbol, Acquires Cryptic Icon From Funk Rocker Prince

The White House today announced today that it would no longer use the phrase “war on terror” and would instead replace it with a cryptic symbol once used by the funk rocker known as Prince.

The new symbol made its first appearance today at a White House press conference in which spokesman Robert Gibbs answered a question about the war on terror by holding up a picture of the newly acquired icon.

Mr. Gibbs said that the White House had decided to replace the phrase with the symbol after determining that its first-choice euphemism, “overseas contingency operations,” was too much of a mouthful.

“In the years that Prince used the symbol, it was totally confusing and no one knew what it meant,” he said. “It should work perfectly for us.”

To acquire the rights to the symbol, however, the White House had to outbid an unlikely suitor, the insurance giant AIG.

The embattled company, which recently stripped its corporate headquarters of its logo in the hopes of throwing protesters off its scent, had intended to replace it with the mysterious icon coveted by the White House.

It was hoping to rebrand itself as “The Insurance Giant Formerly Known as AIG,” a company spokesman said.

AIG Chairman Edward Liddy was philosophical about being outbid by the White House for Prince’s symbol: “All of our efforts were a total and abject failure, but on the plus side, that means we’re entitled to a bonus.”

I realize this would be funnier if it weren’t so plausible. Ahem. But it is pretty funny, I think.

And now for a few tunes from some of my favorite singers. First up is Dar Williams. I just love this song:

It was a circuitous route that led us to this Swedish singer, but wow, what a song from Titiyo:

For a real toe-tapper, here is Moanin’ Michelle Malone, and “Tighten Up The Springs”:

And last, but certainly not least, one of my all-time favorite groups, the Indigo Girls and “One Perfect World”:

There are so many more artists I would love to share with you, but this will do for now.

Before I go, thank you all again for coming here, for your comments, for caring (especially about my beautiful puppies, Jordan, and other pets), and for your generosity of time. It is much appreciated.

Stay well and safe. See you in a couple of weeks!

Today, Rep. Thaddeus McCotter (R-MI) is on Cavuto, Fox Business, David Shuster, Lou Dobbs, and CBS. Next, from his press release and his Detroit TV appearance:

… Mr. Wagoner has honorably resigned for the sake of his company’s working families. When will the Wall Street CEO’s receiving TARP funds summon the honor to resign? Will this White House ever bother to raise the issue? I doubt it. (Full release below.)

Here’s is Thaddeus McCotter’s pithy two-paragraph statement today:

Detroit is a last bastion of honor. Earlier this week, the President and the Treasury Secretary met with the Wall Street Chieftains who crashed our credit markets and dragged us to the precipice of a global depression. The White house pledged to work with these Wall Street CEOs who, even now, defend their bonus packages.

“Now, Mr. Wagoner has been asked to resign as a political offering despite his having led GM’s painful restructuring to date. Mr. Wagoner has honorably resigned for the sake of his company’s working families. When will the Wall Street CEO’s receiving TARP funds summon the honor to resign? Will this White House ever bother to raise the issue? I doubt it.”

Here’s Rep. McCotter rockin’ the house:

VIDEO UPDATES, from Fox Business channel’s Fox News Happy Hour and Fox News’s Your World with Neil Cavuto:

Note: We will update this post as more videos of his appearances become available. And you should visit his YouTube channel, chock full of interesting commentaries and appearances.

::::::::::::

Editor’s Postscript: Be sure to catch Larry Johnson on John Batchelor’s radio show Sunday nights just after 7 p.m. PT, on Los Angeles’s KFI-AM. Here’s our most recent Sunday reminder with all the links and details. Stop by NoQuarterUSA.net on Sunday to read the topics and linked stories for Sunday night’s programming.

[U]nder the Geithner-Summers plan the loan is precisely designed to be a one-way bet, for the purpose of overpricing the toxic asset in order to bail out the bank’s shareholders at hidden cost to the taxpayers.

People must scream to the high heavens about the the toxic assets plan, not the AIG bonuses. The plan costs incalculably more, and unfairly rewards plutocrats while stealing hard-earned taxes paid by lower- and middle-classes and small businesses (the “underclass”) neglected by 0bama and Geithner.

Readers, this is where YOUR rubber meets the road. Now is the time when we prove if we can get it or, sigh, that we can only comprehend simpleton issues like the AIG bonuses. Populist anger only shakes things up IF it’s focused on what truly matters. You can be sure Obama/Geithner/Summers loved the distracting AIG bonus outrage whilst they launched this far more costly, undemocratic plan to reward their filthy rich pals while further pauperizing the rest of us.

Although the toxic assets plan can require some explanation, you can tell people that:

1) Taxpayers bear the burden and investors carry no risk except their own investment — that even though they get government money six-plus times their own investment, they bear NO responsibility if their venture fails;

2) The toxic assets plan rewards only plutocrats, not the U.S. government or its taxpayers (barring a miracle if toxic assets sell high); and

3) The same long unregulated, irrationally wild gamblers who created our crisis will benefit the most financially.

NOW, here’s another world-famous economics expert, JEFFREY SACHS, who is as correct as Paul Krugman. From today’s Financial Times, in “Obama’s bank plan could rob the taxpayer“:

The Geithner-Summers plan, officially called the public/private investment programme, is a thinly veiled attempt to transfer up to hundreds of billions of dollars of US taxpayer funds to the commercial banks, by buying toxic assets from the banks at far above their market value. It is dressed up as a market transaction but that is a fig-leaf, since the government will put in 90 per cent or more of the funds and the “price discovery” process is not genuine. It is no surprise that stock market capitalisation of the banks has risen about 50 per cent from the lows of two weeks ago. Taxpayers are the losers, even as they stand on the sidelines cheering the rise of the stock market. It is their money fuelling the rally, yet the banks are the beneficiaries.

The plan’s essence is to use government off-budget money to overpay for banks’ toxic assets, perhaps by a factor of two or more. This is done by creating a one-way bet for private-sector bidders for the toxic assets, then cynically calling it “private sector price discovery”. Consider a simple example: a toxic asset with face value of $1m pays off fully with probability of 20 per cent and pays off $200,000 with probability of 80 per cent. A risk-neutral investor would pay $360,000 for this asset.

Along comes the government and says it will finance 90 per cent of the investor’s purchase and, moreover, do so as a non-recourse loan. Non-recourse means the government’s loan is backed only by the collateral value of the toxic asset itself. If the pay-out is low, the loan is defaulted and the government ends up with the low pay-out rather than full repayment of the loan.

Now the investor is prepared to bid $714,000 (with rounding) for the same asset. The investor uses $71,000 of his/her own money and $643,000 of the government loan. If the asset pays off in full, the investor repays the loan, with a profit of $357,000. This happens 20 per cent of the time, so brings an expected profit of $71,000. The other 80 per cent of the time the investor defaults on the loan, and the government ends up with $200,000. The investor just breaks even by bidding $714,000, as we would expect in a competitive auction.

Of course, the investor has systematically overpaid by $354,000 (the bid price of $714,000 minus the market value of $360,000), reflecting the investor’s right to default on the loan in the event of a poor pay-out of the toxic asset. The overpayment equals the expected loss of the government loan. After all, 80 per cent of the time (in this example) the government loses $443,000 (the $643,000 loan minus the $200,000 repayment). The expected loss is 80 per cent of $443,000, equal to $354,000.

The idea of “private sector price discovery” is therefore flim-flam. There would be price discovery if the government’s loan had to be repaid whether or not the asset paid off in full. In that case, the investor would bid $360,000. But under the Geithner-Summers plan the loan is precisely designed to be a one-way bet, for the purpose of overpricing the toxic asset in order to bail out the bank’s shareholders at hidden cost to the taxpayers. …

You must read all of the Financial Times’s “Obama’s bank plan could rob the taxpayer” by Jeffrey Sachs, director of The Earth Institute at Columbia University.

READ and MEMORIZE this closing paragraph of Sach’s op-ed:

Tim Geithner, Treasury secretary, and Lawrence Summers, director of the White House national economic council, suspect that they cannot go back to Congress to fund their plan and so are raiding the Federal Reserve, the Federal Deposit Insurance Corporation and the remaining Tarp funds, hoping that there will be little public understanding and little or no congressional scrutiny. This is an inappropriate institutional use of the Fed, the FDIC and the Tarp. Mr Geithner and Mr Summers should at the very least explain the true risks of large losses by the government under their plan. Then, a properly informed Congress and public could decide whether to adopt this plan or some better alternative.

We have THREE BRANCHES OF GOVERNMENT for a reason. Duh. One of the reasons is to keep the Executive Branch from calling the shots or from STEALING from taxpayers to REWARD their own friends.

I quibble with Mr. Sachs in that I do not wish to hear Mssrs. Geithner’s and Summers’ explanations that will obfuscate the essential problems with the plan (exposed by Mssrs. Krugman and Sachs) and just end up confusing Americans.

This is why our Forefathers protected the Fourth Estate, through which we occasionally get good, factually- and reality-based information we can use to evaluate our government and its leaders. We all lament the state of the media, but it is still, for now, publishing the likes of Krugman and Sachs who dare to tell us the truth.

Mr. Sachs, you and Paul Krugman have done an outstanding job of explaining this massive and undemocratic theft of the underclasses’ money. NOW it is up to US to all call our Representatives and Senators and demand 1) Hearings, and 2) Legislation to disallow Mssrs. Geithner and Summers from “picking our pockets” and bankrupting the United States of America.

::::::::::::::::::::::

WHO’S WHO:

1) Timothy F. Geithner is the Secretary of the Treasury;
2) Lawrence Summers is the director of the White House national economic council; and
3) Barack Obama is the president of the United States who is working on his bowling game except when he practices with his teleprompter.

“Me love you long, long time,” whisper the prostitutes Geithner, Summers, and Obama — telling us what we want to hear — as they slyly slip a drug in our drinks as they pleasure us with seductive talk and acts, but then empty our wallets while we’re passed out.

UPDATE: Run over to CNN and listen to Senate investment hearing. (C-Span3 is only carrying BO’s live townhall b.s.) BTW: Geithner is testifying before Franks’ House committee, but I can’t find live video. Can you? The WaPo is live-blogging Geithner’s testimony. Here’s Geithner’s prepared testimony.

Mar. 25 - U.S. Treasury Secretary Timothy Geithner caused a ruckus in foreign exchange markets after conflicting comments on the dollar’s role as the world’s reserve currency.

His comments follow a growing European backlash against parts the Obama administration’s economic revival strategy. Speakers: Mirek Topolanek, prime minister, Czech Republic; Meg Browne, senior currency analyst, Brown Brother Harriman Conway Gittens reports from New York

So much for Obama’s vaunted promise, his fevered supporters told us, to bring peace and cooperation amongst nations of the world. How could he? THEY know he doesn’t know what he’s doing:

Look. I know this is a lot of material. But if we’re going to get this stuff, if we’re going to be able to call our members of Congress and sound informed, we have to learn all this to be convincing. Someday soon, we’ll be talking to more and more shaken Obama supporters who’re waking up, maybe, and we’ll need to explain this all to them.

No kidding. You can’ make this shit up. Apparently, in the future, we won’t recognize who they are. Let’s call it the Wall Street rendition of the witness protection program.

NEW YORK, March 22 (Reuters) - Workmen rolled up their sleeves at American International Group Inc (AIG.N) this weekend to take down the most prominent sign at the downtown Manhattan offices of the embattled insurer that has become the scorn of America.

A spokesman said the company had decided to replace the large AIG sign — outside the entrance to its property-casualty offices — as part of its plan to change that operation’s name to AIU Holdings Ltd.

The move is designed to “distinguish these well-capitalized businesses from AIG,” said a second spokesman.

In what is probably the closest thing to a truthful remark from AIG’s AIU’s Fed-Selected CEO we have heard in a month, the man finally admitted what a thieving, morally-bankrupt sack of crap this company truly is.

“I think the AIG name is so thoroughly wounded and disgraced that we’re probably going to have to change it,” Liddy told a U.S. House of Representatives subcommittee last Wednesday.

Funny, I kind of get the feeling that the move is to Disappear the name “AIG”. I am sure they are all hoping that angry mobs won’t be able to find their thieving asses any longer.

I get the distinct feeling that in the near future, Geithner, Paulson and Bernanke may be borrowing three sets of those groucho glasses. Barring that possibility due to a run on purchases of these props caused by the rest of their Goldman-Sachs and other Wall Street friends, they can always temporarily go for the bag over the head routine until novelty companies restock. The photo above is a custom-made bag earmarked for Chris Dodd, whose wife seems to have had previous employment ties to AIGan AIU-owned business.

Can you imagine the scenario in my toon actually happening? It seems ludicrous beyond words. The police would probably make a quick stop at the nearest mental facility just to assess how delusional this dumb sap is before booking him for robbery.

And yet it is exactly parallel to what is happening at AIG. I was stunned when Edward M. Liddy said that he asked his executives who ran the company into the ground to give back at least half of their bonuses if they were more than $100,000. Like that would make everyone happy. (Oh, and leave those poor babies alone whose bonuses were still more than what most of us make in an entire year.)

Some are saying that the AIG bonus fiasco is a diversion from more critical issues involving far more than 183 or 220 million (whichever number—several are floating) in bonuses. That amount is, after all, peanuts compared to our country’s overall financial headaches

I disagree. It is a very big deal because it serves as the symbol for what is wrong with America now. Those people played an active role in downgrading and even destroying America lives. Greedy, self-serving, and incompetent people are making decisions that impact on the rest of us–and that involves both financial executives and government officials, including some members of Congress–and are suffering no consequences. Many will actually gain from our pain. And the worst that might happen is that their booty for screwing up may shrink a little. Hell, even if that goofy 90% tax on bonuses goes through, they all still end up with something!

It’s these kind of people who got us into all of our other messes, so don’t you think that spending time reflecting on what we can and should do about how things get done in our country is a worthy use of our time?

Meanwhile, our main street robber will serve 5 to 10 in a state penitentiary.

From “Dodd’s Wife a Former Director of Bermuda-Based IPC Holdings, an AIG Controlled Company,” Real Clear Politics, March 23, 2009, by Kevin Rennie:

Jackie Clegg Dodd introduces her husband Presidential candidate US Senator Chris Dodd to the Democratic Convention at Skyline High School. Photo by Scott G. Winterton / Deseret Morning News July 14, 2007.

No wonder Senator Christopher Dodd (D-Conn) went wobbly last week when asked about his February amendment ratifying hundreds of millions of dollars in bonuses to executives at insurance giant AIG. Dodd has been one of the company’s favorite recipients of campaign contributions. But it turns out that Senator Dodd’s wife has also benefited from past connections to AIG as well.

From 2001-2004, Jackie Clegg Dodd served as an “outside” director of IPC Holdings, Ltd., a Bermuda-based company controlled by AIG. IPC, which provides property casualty catastrophe insurance coverage, was formed in 1993 and currently has a market cap of $1.4 billion and trades on the NASDAQ under the ticker symbol IPCR. In 2001, in addition to a public offering of 15 million shares of stock that raised $380 million, IPC raised more than $109 million through a simultaneous private placement sale of 5.6 million shares of stock to AIG - giving AIG a 20% stake in IPC. (AIG sold its 13.397 million shares in IPC in August, 2006.)

Clegg was compensated for her duties to the company, which was managed by a subsidiary of AIG. In 2003, according to a proxy statement, Clegg received $12,000 per year and an additional $1,000 for each Directors’ and committee meeting she attended. Clegg served on the Audit and Investment committees during her final year on the board.

IPC paid millions each year to other AIG-related companies for administrative and other services. Clegg was a diligent director. In 2003, the proxy statement report, she attended more than 75% of board and committee meetings. This while she served as the managing partner of Clegg International Consultants, LLC, which she created in 2001, the year she joined the board of IPC. (See Dodd’s public financial disclosure reports with the Senate from 2001-2004 here.)

Dodd is likely more familiar with the complicated workings of AIG than he was letting on last week. … Read all.

Ahem. No doubt he is.

P.S. If, the first time I mention her name, you click on the link, you’ll be treated to an interesting story about Dodd’s long courtship of Jackie, as well as the story of her Utah Valley family’s solid Mormon and Republican roots from the Deseret Morning News newspaper in Utah.

“There should have been a very different regulatory framework. Not in the sense that we needed more words in the books. We needed more aggressive voices at the SEC, the FTC, the OCC – this welter of federal agencies — people who came to Wall Street and said, ‘Wait a minute. That leverage is crazy’. … [E]verybody derided leverage in public, but in private, participated to the hilt. … This was sort of a disease that got into the bloodstream and the DNA of Wall Street leadership. … The more traditional, old-fashioned investment bankers — you think of Felix Rohatyn, who said, ‘Wait a minute, guys. This doesn’t work’.

“AIG is at the center of the web. The financial tentacles of this company stretched to every major investment bank. The web between AIG and Goldman Sachs is something that should be pursued. …

“[A.I.G.'s] fundamental accounting structure was wrong. … [W]e brought a case alleging that they had manufactured false, fictitious reinsurance contracts. … [T]he underlying effort was to create an illusion of financial strength that was not there. … [F]our people have been convicted. …

“[A.I.G.'s problems] stemmed from an effort from the very top to gin up returns whenever, wherever possible, and to push the boundaries [to] garner returns almost regardless of risk. …

“When AIG initially received $80 billion — a decision that was the consequence of a very brief meeting of the president of the New York Fed [GEITHNER], the secretary of the Treasury [PAULSON], perhaps Chairman Bernanke and [some say the] chairman of Goldman Sachs — $80 billion, virtually all of it flowed out to counterparties, $12.9 billion to Goldman Sachs.

“Why did that happen? What questions were asked? Why did we need to pay 100 cents on the dollar on those transactions, if we had to pay anything? What would have happened to the financial system, had it not been paid?”

Former Governor Spitzer also told SwampPolitics:

“Parts of AIG needed to be preserved, some of these contracts needed to be stabilized, you couldn’t have another credit crisis such as that happened after Lehman failed, but that doesn’t mean that you write a check for $173 billion, 100 cents on the dollar, to cover all these contracts,” he said.

SwampPolitics asked him more:

“You had Bear Stearns, you then had Lehman on the cusp and I think what really happened is that Washington said, we have to show that somebody can fail, that we won’t bail everybody out,” he said. “The whole discussion of too big to fail is a separate discussion. I think policy was fundamentally flawed to let these banks get that big without putting real constraints upon them.

“Either you are too big to fail and we regulate you, or we break you up so you are not too big to fail. You can’t have it both ways, too big to fail, without the regulation…

[...]

. He was asked if the attorney general’s office had seen the credit default swaps at the company and the risk that they represented when it was examining AIG.

“We were not looking at that part of the company,” Spitzer said. “We were looking at their reinsurance contracts with Gen Re, but what we saw was a company, when you peeled back the first layer of the onion, that was without anything close to adequate controls and adequate structure to know what was going.

“The way they put their financials together was something that was absolutely beyond what was acceptable, which was why they paid a fine of $1.4 billion.”

Now, here is the VIDEO and FULL TRANSCRIPT from Fareed Zakaria’s CNN show every Sunday:

FULL TRANSCRIPT (read every word of it):

FAREED ZAKARIA GPS

Interview With Eliot Spitzer; AIG Bonuses Spark Outrage

Aired March 22, 2009 - 13:00 ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

FAREED ZAKARIA, HOST: This is GPS, the GLOBAL PUBLIC SQUARE. Welcome to all of you in the United States and around the world. I’m Fareed Zakaria.

This has been another week of outrage over Wall Street. But mixed in with the outrage, there continues to be a bewilderment about how these problems in the financial industry could have been piling up without warning.

When being briefed by academics from the London School of Economics, Queen Elizabeth II asked a simple question: Why did nobody notice it?

In fact, some people did notice it. Warren Buffett, Paul Volcker and others did warn about the danger of derivatives and debt. Others warned about Fannie Mae and Freddie Mac.

But through all these warnings, the markets kept rising. Financial firms minted money. The naysayers looked like fuddy- duddies, and the risk-takers like geniuses. No one likes to fight success.

Actually, there was one guy who took on the financial firms at the height of their prestige and power when the country, the media and Washington were gushing with admiration.

That man was Eliot Spitzer.

And he is my guest today, for his first interview since resigning as governor of New York.

You remember him as the governor of New York who resigned after a scandal involving prostitution. But think back before then. He was the attorney general of New York who went after Merrill Lynch, prosecuted AIG and several other institutions for practices he argued were corrupt, fraudulent and illegal. Those prosecutions were deeply controversial, and Spitzer made most of Wall Street his enemy.

I’m going to talk to him about what he thinks about the world he’s watching today.

Also on GPS, we’re going to have a distinguished panel talk about populism. Has it gone too far? And an exclusive interview with Bill and Melinda Gates on the key to America’s recovery and success.

So, stay with us. (BREAK)

ZAKARIA: So, now to my guest today, former governor of New York, former attorney general of New York, Eliot Spitzer.

Welcome.

ELIOT SPITZER, FORMER GOVERNOR OF NEW YORK: Thank you. A pleasure to be here.

ZAKARIA: When you saw the news about these AIG bonuses, what did you think? This was the company that you prosecuted way back when.

SPITZER: On the one hand, I was not surprised. Bonuses are part and parcel of Wall Street compensation. And I think if you looked at any company, you would see bonuses of an equivalent size.

So I think to a certain extent, what we are now doing is looking at what is a typical part of Wall Street compensation, voicing a visceral outrage that is legitimate, but is not particular to AIG.

ZAKARIA: But when you took on AIG, what troubled you about it? What made you look at AIG and say something’s wrong here?

SPITZER: Their fundamental accounting structure was wrong. And when we prosecuted them, we brought a case alleging that they had manufactured false, fictitious reinsurance contracts. It’s a very technical issue, but there were false reinsurance contracts designed to create the appearance of capital on the books, which was not there. And this was a structure that had been designed and orchestrated at the very top of the company.

And as we dug into the accounting…

ZAKARIA: So, they were basically fudging the numbers to make it seem as though they had a stronger balance sheet than they had.

SPITZER: Precisely. That’s exactly right.

And the underlying effort was to create an illusion of financial strength that was not there. And as we dug more deeply into the underlying structure and organization and accounting that was ongoing at the company, we knew there was a problem.

And just parenthetically, four people have been convicted of this. The former CEO was called an unindicted co-conspirator in the federal courtroom by the federal prosecutor. So, this was a fundamental effort to alter the actuality and to lie to the public.

ZAKARIA: So, do you think that the problems that AIG got into later on stem from some of the same practices that you were trying to get at?

SPITZER: They stemmed from an effort from the very top to gin up returns whenever, wherever possible, and to push the boundaries in a way that would garner returns almost regardless of risk. And so, to the extent that there is a discussion, did this begin before or after the tenure of Hank Greenberg, it’s unambiguous — unambiguous that the structures and the flaws and the policies began while he was there. That is why the board that he had controlled with an iron fist asked him to leave. It was their decision — not my decision, their decision — to ask him to step down, something that was then and is now very unusual.

He has invoked the Fifth Amendment, which, of course, is his right to do. But he was asked to leave by his own board, because they saw the flaws and the problems that have since multiplied and created this monster that can bring down the financial system.

Back then I said to people, AIG is at the center of the web. The financial tentacles of this company stretched to every major investment bank. The web between AIG and Goldman Sachs is something that should be pursued.

And as I have written…

ZAKARIA: Meaning what? Meaning that a lot of the money that we the taxpayers gave AIG has ended up being paid to Goldman Sachs…

SPITZER: Precisely. And…

ZAKARIA: … and other companies.

SPITZER: The so-called counterparties to these very sophisticated financial transactions.

When AIG initially received $80 billion — a decision that was the consequence of a very brief meeting of the president of the New York Fed, the secretary of the Treasury, perhaps Chairman Bernanke and arguably, some reports say, the chairman of Goldman Sachs — $80 billion, virtually all of it flowed out to counterparties, $12.9 billion to Goldman Sachs.

Why did that happen? What questions were asked? Why did we need to pay 100 cents on the dollar on those transactions, if we had to pay anything? What would have happened to the financial system, had it not been paid?

These are the questions that should be pursued. Look, bonus is a real issue. It touches us viscerally. The real money and the real structural issue is the dynamic between AIG and the counterparties.

ZAKARIA: Because those payments are in the tens of billions of dollars. The bonuses are a few hundred million.

SPITZER: The bonuses we think are $164 million, give or take — huge money. I mean, nobody should diminish that. These counterparty payments, tens and tens of billions of dollars.

ZAKARIA: And it, to your mind, it seems as though this taxpayer money may have been recklessly and unwisely paid off?

SPITZER: Well, it may be that a case could be made that it should have been paid.

But at a moment in our nation’s history when everybody is being asked to bear a piece of the burden — everybody — people are being told work four days a week, not five. Sales taxes are going to go up. Contracts are being broken and renegotiated for workers across America. Our 401(k)s and our savings have been depleted by the recklessness of Wall Street.

For Goldman and the other counterparties not to be able to say, we can make do with only 50 cents on the dollar, 30 cents on the dollar, after we’ve already given Goldman a $25 billion cash infusion, they are sitting on vast amounts of cash on the sidelines — which is their right, but they’re going to invest it in due course, based upon their judgment — for them, on top of all that to get another $12.9 billion in the dark without questions, after a meeting of this sort, is fundamentally wrong. And that is the nature of the inquiry that should be raised.

ZAKARIA: Is there, as far as you know, a congressional inquiry into these monies?

SPITZER: I do not know if there is or isn’t. I certainly hope that Barney Frank, who is the chairman of the right committee, will do so. He’s a brilliant guy, a spectacular legislator and lawyer. I have absolute confidence that if he pokes at this, he will get to the bottom of it.

He is somebody — there are many on Capitol Hill who are beating their chests so loudly, you know it’s just a cover-up of their neglect and failure over the last decade. They sat there and watched and did nothing, as they clearly should have known that we were building a system that was a house of cards. And they enjoyed it and prospered from it, and there was a symbiotic relationship between them and Wall Street.

Barney Frank is not one of those. Barney Frank will ask the right questions, and I hope he does.

ZAKARIA: Was the regulation — was the regulatory regime in place strong enough? And I’m thinking particularly of the New York Fed, which was headed by Tim Geithner, of the SEC?

Where do you see the flaw having been over the last few years?

SPITZER: Here’s my answer to that. The regulatory system was structurally flawed, but that’s not why this happened.

After the last round of scandals — Enron, et al. — we passed Sarbanes-Oxley. And we said, aha, we’ve solved the problem. Now we have another set of scandals.

There are enough laws, enough regulations on the books for smart, aggressive regulators and prosecutors to make all the cases. What was missing was judgment. And you can’t legislate judgment. You can’t regulate judgment. Either the people who are the regulators will walk into a bank and say “Your leverage is too great. We are going to take actions to pull it back,” or “This type of investment is flawed,” or they won’t. You can’t pass a law that says, you must use sound judgment.

Bubbles have been there through history, through over-regulation and under-regulation. This is a question of judgment and of failure of judgment.

When I was attorney general, people said, “Oh, you’re using this crazy little statute,” the Martin Act in New York, “to bring all these cases.” The Martin Act had a simple anti-fraud provision. That’s all we used.

The federal government has exponentially more regulatory power than we did. What was lacking was the judgment, the tenacity, the desire to rein in a financial system that was spiraling out of control.

ZAKARIA: How do you think President Obama is handling this crisis?

SPITZER: Well, I think he is doing stupendously. I mean, I’m a huge fan of his. I think we all have to be and should be, if only because he has been thrust into a dynamic that is almost impossible.

He is trying to put out not 500 small fires, 500 forest fires simultaneously. And he is addressing them sequentially, trying to keep a political coalition together. But it’s very hard.

And I think one of the largest, most difficult tasks that he has is to control the outrage that is brewing in the public — sympathize with it and garner it, but use it to get good policy, not policy based upon anger.

Populism, if we go to the other extreme — and we had libertarianism masquerading as capitalism for the past 30 years. That didn’t work. And we knew it wouldn’t work.

I’m worried that we will go to the other extreme and end up with rank populism. That could be just as dangerous.

And it’s very hard to craft the reasoned policies that make the market work without losing the support of the public. That’s what he’s trying to do. It’s a very difficult task.

He is a brilliant communicator and a brilliant leader, and I think we all have to hope that he succeeds.

ZAKARIA: Do you worry about this kind of populist anger when you watch the outrage over the bonuses?

SPITZER: Yes, yes. The outrage is legitimate, but it is being fomented by sort of a faux populism by many on Capitol Hill who saw this coming, who knew this was going on. And so, I look at them and I say, “Come on, guys. You’re supposed to be more mature. Express the anger, but then say, how do we solve it? Don’t just throw more oil on the fire.”

And I am worried about that. And I’m worried that it will be destructive to our capitalist system. And I’ve said since the very beginning, that my energy was directed at preserving and protecting capitalism.

The libertarians didn’t understand it. Populists don’t understand it. But capitalism is what we want to preserve.

ZAKARIA: A simple legal question. If you were in a position where you could do something about it, what would you do about the bonuses? Legally, what strategy would you employ?

SPITZER: I think I might go back to a very old tort theory of unjust enrichment — contract theory, tort theory — and say, you know what, guys? There’s a theory in the law that says — a couple of theories — one impossibility saying, AIG just doesn’t have the money to pay you. And absent the federal infusion, it wouldn’t have it, so we can’t pay.

And second I would say, unjust enrichment. You simply don’t deserve it. It’s an equitable argument. Some courts might go for it, some courts might not.

But as a practical matter, as the president of the United States, I think I would call the CEOs into the Oval Office. And I would say, “Guys, this is untenable. We’re all going to have to suck it up a little bit and show the American people that we know what it means to be part of a community, and share the sacrifice. Let’s see if we can’t solve this without the legal wrangling.”

And I bet he could. I have no doubt that President Obama could do that.

ZAKARIA: And we will be back with Eliot Spitzer right after this.

(BEGIN VIDEO CLIP)

ZAKARIA: You know there are a number of people watching who are going to say, Eliot Spitzer doesn’t have credibility to talk about these issues, because of what happened over the last year with your own behavior.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

ZAKARIA: And we are back with Eliot Spitzer.

Eliot, you’ve spent a lot of time looking at Wall Street, battling with them often. What do you think is the fundamental thing that got us into this mess? SPITZER: Recklessness, greed and a misunderstanding of what capitalism is all about, and a belief that financial services alone could generate wealth.

Financial services doesn’t really generate wealth. Financial — the capital markets are designed to raise money and then apportion it to industries that are creative, whether it’s biotech or automotive, or anything else.

Financial services should be a conduit. Instead, we became enamored of the products themselves. And what resulted was this enormous bubble in assets, ginned up and supported by a financial services sector that, because of a series of improper incentives, got us to where we are right now.

ZAKARIA: And what should have been done? Should there just have been a lot more attorneys general like you kind of battling this?

SPITZER: We had one who was enough, I thought. But it was…

ZAKARIA: But should there have been a different kind of regulation? How should this have been prevented?

SPITZER: There should have been a very different regulatory framework. Not in the sense that we needed more words in the books. We needed more aggressive voices at the SEC, the FTC, the OCC — this welter of federal agencies — people who came to Wall Street and said, “Wait a minute. That leverage is crazy.”

And it was — it’s kind of odd, because everybody derided leverage in public, but in private, participated to the hilt. And when you look back at these deals you say, this was crazy. We needed regulators who said it. We needed wiser voices on Wall Street.

This was sort of a disease that got into the bloodstream and the DNA of Wall Street leadership.

Now, there were some who were spectacular who disagreed with it, who said, “Wait a minute, guys. We can’t afford this.”

The more traditional, old-fashioned investment bankers — you think of Felix Rohatyn, who said, “Wait a minute, guys. This doesn’t work.” And…

ZAKARIA: Right, right. Or Warren Buffett or Paul Volcker…

SPITZER: Or Warren Buffett. Well, I love Warren Buffett. We all do. He also invested in some of these vehicles that had the leverage, but I think he always was a voice of modulation.

And we needed more of that and, frankly, less of the sort of, you know, hotdog, cowboy mentality that leveraged everything up, sent it out so that people would structure deals without retaining any of the ownership.

If you want a technical answer, all of the securitization that was done, where you had the rating agencies, you had the originators who would originate loans they knew were bad, securitize them, get AAA ratings, securitize it out into a market — they didn’t maintain any ownership.

So, a simple rule could be, if you securitize a stream of debt, you’ve got to retain 10, 15, 20 percent, so you are at risk. You evaluate deals very differently if you are actually at risk, rather than merely selling it to somebody else.

ZAKARIA: And that could have been part of the regulation.

SPITZER: Absolutely. The power of the federal agencies to do this stuff was unlimited.

And any time I hear the SEC say, we didn’t have the power to do this or that, forget it. They had more people, more power, more money than was necessary. What they lacked was the creativity and the will.

ZAKARIA: In a sense, this is almost a greater failure of Washington than Wall Street.

SPITZER: Well, there have been debates — Washington, Wall Street. It’s one of those debates where, of course, both were at fault.

Now, I happen, having been on the government side, to have a slightly more aggressive view of what government should do, perhaps. And I believe that Wall Street was at fault for fostering an ideology, and imposing an ideology, or buying its way into an ideology in Washington that said, “Let us alone. We will self-regulate.”

So, Wall Street created this notion of self-regulation, sold it to Washington with all of its tremendous capacity through fund raising and intellectual capital. Washington was happy enough to succumb to the temptation.

Self-regulation was a mirage. It was an abject failure. Some of us were saying, it always will be a failure.

So, Wall Street is to be blamed for creating the notion, Washington is to be blamed for buying into it. Who’s more at fault is sort of a puerile debate, but I think both parties.

ZAKARIA: What about the media, CNBC? You actually know Jim Cramer. You know all the parties involved.

SPITZER: Full disclosure. Jim is a great and close friend. And I think he took his licks from Jon Stewart last week. And Jim said on the show, “Yes, we have to have done better.”

And I think the media — writ large. I mean, forget CNBC. I think the entire media — print media, TV media, et cetera — did not ask the hard questions as these deals were being structured, as the bubble was inflating.

We turned the Wall Street masters of the universe into these icons, who bestrode the universe and made no mistakes, when I think a more inquisitive attitude would have said, “Wait a minute, guys. This won’t last.”

And so, I think, yes.

We’re all at fault, which is why the search for villains is emotionally satisfying, not terribly useful. The better effort is, OK, what do we learn? What do we do going forward?

ZAKARIA: Now, a lot of people look at your prosecutions, and they say, “Look. This was very unfair, very selective. You would threaten these companies, therefore plunging their stock price. In many cases you didn’t get convictions. If this is the model, it’s not going to work. It’s unfair.”

SPITZER: Well, I think they’re wrong, needless to say. But I think if you look at the cases, the analyst cases where we highlighted — you referred to the Merrill Lynch case where, at the end, we got Merrill, Goldman, Bank of America — all the major firms, all of the bulge-bracket firms — to agree to an entirely new structure of doing analytical work, which was necessary for the integrity of the marketplace.

Whether it was insurance, mutual funds, analytical work, on and on, each of the major areas we looked at, we sought to craft a solution.

ZAKARIA: But your real leverage was that, once you go out in the public, their share price starts dropping and…

SPITZER: No question about it. And I’ll give you a real example of that, and you can evaluate it as you wish, with Merrill Lynch.

They wanted us to settle. They would have paid some money. But they said, you must keep all the evidence secret.”

And I said, no, my job as a public prosecutor is to explain to the public what the problems are in Wall Street. I said, that is the only way we will get a remedy. And I said, we must present this to the public. It may be right, it may be wrong.

And we didn’t do this to hurt individuals. And we took out the names of most of the individuals. But we said, the public has to understand why the market is flawed.

And I think it’s fair to say we, several years ahead of time, were saying, be careful, beware of what is going on here. I’m not pretending to see everything. I’m not pretending to be smarter or better than anybody else, just saying, wait a minute. We have seen a problem that, if not addressed, will be the downfall of the market.

ZAKARIA: But you got very few convictions.

SPITZER: No, we — well, first of all, most of the cases were civil cases. And there was a reason for that. I did not believe in taking one individual and making him the subject of all the venom. I said, this is a civil issue. Resolve it with the company.

I tried very hard not to vilify individuals, because it wasn’t a mid-level executive who was the problem. It was the whole structure. And that’s why the global deal was with all the banks.

We didn’t say to individual X, you’re the problem. That’s a mirage. That is an emotional, as I said, an emotionally satisfying effort, but it would not have solved the problem.

ZAKARIA: And we will be back with Eliot Spitzer right after this.

(BEGIN VIDEO CLIP)

SPITZER: I never held myself out as being anything other than human. I have flaws, as we all do, arguably. I failed in a very important way in my personal life, and I have paid a price for that.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

ZAKARIA: And we are back with Eliot Spitzer.

You know, there are a number of people watching who are going to say, Eliot Spitzer doesn’t have credibility to talk about these issues, because of what happened over the last year with your own behavior.

What would you say to them?

SPITZER: I would say to them that I never held myself out as being anything other than human. I have flaws, as we all do, arguably. I failed in a very important way in my personal life, and I have paid a price for that.

I have spent a year with my family, with my wonderful and amazing and forgiving wife and three daughters, and have rebuilt those relationships, and hope to do that as time goes on.

I also feel that, to the extent, if I’m asked, and I can contribute to a very important conversation, I will do that as well. That is our right, arguably our obligation as citizens. I will do what I can, and with full awareness and heaviness of heart about what I did.

ZAKARIA: But it wasn’t just a personal failing. There were also legal issues involved…

SPITZER: Well, those were not pursued by those who decided to pursue them.

But I have made no excuses. I have not shirked, and I will not do so. I failed. I resigned my position, because I said this is the appropriate step for me to take.

ZAKARIA: Do you feel like you wish, watching all this, you were back in office doing something about it?

SPITZER: Well, obviously, I, first and foremost, hope that we can solve the problems, because the future of our economy — and without overstating it, our nation — is at stake here. If I can contribute, I will do so in whatever way I can.

Obviously, I care deeply about these issues. They were central to what I did as attorney general. And so, I read the papers and say, sure, these are issues that I feel deeply about. But I am where I am, because of my own conduct. And as I said, I make no excuses.

ZAKARIA: Do you imagine you could ever be back in government?

SPITZER: I don’t think about it. I don’t worry about it. I focus on a family, on the issues. If I write an occasional column and speak occasionally, that is all I’m doing.

ZAKARIA: Eliot Spitzer, thank you for coming on.

SPITZER: Thank you.

Foreword: Special thanks go to my dear friend Truthteller who introduced me to the incendiary phrase, “Lava hot!”

Let’s face facts: Obama does not have a plan for the economy. There IS NO PLAN. That’s because he doesn’t do the work. Most critically, he performs NO oversight or knowledgeable scrutiny of his Treasury Department, his Secretary of the Treasury (the anti-regulation extremist Timothy F. Geithner), his economic advisers galore — nearly enough to fill half of a NCAA game gymnasium — or any of the related and immensely important federal departments. I can imagine his input in the crisis SitRoom as decisions about, say, unmanned drones come up, would be something akin to, “That’s cool. Let’s do it,” as he quickly slips out the door, leaving behind the slack-jawed, head-scratching top executives from the military, Pentagon, and Defense, Intelligence and State Departments (who expected at least a question or two) because he must always be doing what he wants to do — to work out some more, listen to Jay-Z, play in the bowling alley, or hang with his political guru David Axelrod or Chief of Staff campaign adviser Rahm Emanuel.

How do I know this? I know this because this blog and its exceptional team of highly disciplined, fact-checking writers has exhaustively studied this man and we know that he solely cares about (1) campaigning before adulatory crowds, (2) winning at all costs, (3) keeping happy the richest who really benefited his campaign chests most and, we think, sneaked money to Acorn people who got pre-paid credit cards to induce the poor to donate 80% and pocket the rest, and (4) plotting the next campaign and the next big win — while bamboozling the American people, praying that he can keep them as ignorant about his lack of work ethic as he can through his speechifying and teleprompter readings.

Now I give you Senator Judd Gregg and former New York governor Eliot Spitzer, who both appeared on CNN this morning (yes, both men have strikes against them, but they’re still worth heeding):

[NOTE: THE NEW LONGER VIDEO IS JUST BELOW THIS SHORTER ONE.] This is the short version of Eliot Spitzer on Fareed Zakaria’s show today. His site says they’ll have the full interview up later. Frankly, I don’t care about Spitzer’s scandal. I just want to hear about AIG, because SPITZER KNOWS A LOT ABOUT AIG, given his previous post as New York state’s A.G. and his intensive investigations of Wall Street:

UPDATE: HERE IS THE FULL INTERVIEW OF SPITZER, JUST POSTED AT ZAKARIA’S TRIM, USEFUL WEB SITE FOR HIS CNN SUNDAY SHOW that I regard as must-see TV (and below is one more update you mustn’t miss!):

SECOND UPDATE: See also, my earlier story that featured another Zakaria interview — and which we ALL should watch again — the Financial Times columnist Martin Wolf, in my March 4th story, “The economy: Scarier than we thought, and Obama’s plans are too timid to fix it.” My story features a special UPDATE by Larry Johnson that is a MUST-READ. (I love it when Larry interjects commentary into my stories because he is so incisive and smart, and he sees “big picture” scenarios that many people miss.)

See also, my earlier story, “Just The Facts, Barack.”

And DO NOT MISS Larry Johnson’s story earlier today, “Hey Frank. Barack is Drowning Black Folk?.” LARRY HITS IT OUT OF THE PARK!!!

POSTSCRIPT: While I say at the outside of this post that there is no plan, we must remember that tomorrow, the administration is going to announce a “toxic assets” plan. But I’m not optimistic given the vague, wormhole speeches that were intended to be regarded as a “plan.” We’ll all have to check the news tonight — the wire services and the big newspapers — to see if they’ve been leaked an early copy of the “toxic assets” plan.

I will interpret an early leak of the plan as a positive sign. No leaks? That means it’s just more of the same empty words we’ve become accustomed to from the 0bama administration that isn’t administered.

Last night, I tucked this into my article, “The Cover-Up by All The President’s Men,” — below the fold and towards the end of the post — I did so somewhat on purpose, as a test, to see how many readers would spot this astounding news:

There are more A.I.G. bonuses to come:

On Friday, [A.I.G. CEO Edward Liddy told Congress] said he could not block the bonuses; he did agree to reduce executive bonuses set for July 15 and Sept. 15.

I’m searching around to see if I can find out more about those next two sets of bonuses, but am striking out so far. Can any of you help look for more details on the bonuses in June and September 2009?

As you all know from your own experiences, it’s fun to search just because you never know what you might discover! One can stumble on a site one has never heard of before and, once in a while, that accidental encounter can turn out to be truly hot find!

Here’s a site I discovered today, and one article at the site you’ll want to read:

“Liddy Says Geithner Knew About Bonuses,” Securities Law Blog (SECLaw.com — “Issues, news and commentary on the law of the financial markets.”) Here’s an out-of-context blurb to get your interest piqued:

Morgan Stanley staff gets paid salary plus bonus. Secretaries, IT folks, internal accountants, attorneys, all get bonuses as part of their overall compensation. It is almost guaranteed that most of those folks who are married with a working spouse make over $250,000 a year, combined. It’s relatively easy, given the cost of living in a major city these days. An in-house attorney makes something on the order of $200,000. Her husband probably makes over $100,000 and BAM, they get hit with a 90% tax on her bonus, and she has absolutely nothing to do with the bank’s current problems. Some of the IT professionals make over $200,000. Same situation. There are assistants who make significant amounts of money working at these firms, who get paid with a bonus, and the government is going to tax them too at 90%.

Congress cannot possibly justify this. They have created this mess and they are now pandering to the public. AND, they are too lazy to write a bill that actually addresses what they are trying to address. While I wouldn’t agree with it, if you want to get the bonuses that were paid to executives, use the power of additional TARP funds to do it, not the tax code.

If you want to use the tax code, then apply the tax to bonuses over one million dollars. I would still have a huge problem with that, but you would not be taking money from the innocent secretary, bookkeeper and IT guy.

Don’t believe it? Read it yourself, it’s only one page long - The House Bonus Bill

And so now, we have finger pointing between senators and representatives, the Department of the Treasury, and the White House. Do I even need to tell you that the White House is COMPLETELY blameless in this?? Oh, you know Obama is taking ZERO responsibility for the tax payers, many of whom have lost their own jobs, not just paying to keep these companies afloat, but giving them BONUSES!!!

Oh, yes - Obama is just railing away, despite his Chief of Staff actually working on the whole piece that had the bonuses in it. Oh, wait - that was two minutes ago. That story has already changed to make everything, absolutely everything, Chris Dodd’s fault. Except - Oh Wait - now we find out that Tim Geithner, the man who can’t even be bothered to download Freakin’ TURBO TAX, has admitted that Dodd was ASKED to put in this little loophole. By the Treasury Department. Oops!

So, um, Chris - how happy are you now that you threw your support to Obama?!?! Hahahahahaha! I mean, karma’s a bitch, ain’t it??

Anywho - the whole issue is discussed fully in the video below (H/T to SusanUnPC for the heads up on the video, and Cheneywatch for the video). Pay special attention to Charles Krauthammer:

Well, I gotta say, I think he makes a pretty good point, and not just because he talks about my team, the New York Yankees! Anyway - yes, in the scheme of things, it is not that much money. But I think what bugs people about it all, besides it being OUR taxpaying dollars, is the hubris of it all.

More importantly, though, is the manner in which the Democrats went about this. They have forgotten that when they are solely in power, they will solely take the blame, too. Rightly so, in this case, I think we can agree. Pelosi crafted this pork-laden stimulus bill, any number of top Democrats, they rammed it through, claiming all kinds of horrors would befall us if they didn’t, then Obama sat on it for a couple of days so he could finish up his SECOND vacation (he’s now on his third - in two months), then jet off to Denver to sign it. Yes, I can see why it was so important for them to use fear mongering tactics, then sit back and relax. And apparently, even THEN, no one bothered to read the damn thing. So we get loopholes like the one Dodd, or Emanuel, or Pelosi, or Reid, or Geithner, or WHOEVER the hell it really was, to allow bonuses for people at AIG. That kind of thing just doesn’t sit very well with a lot of people. Still, it is, as Krauthammer was implying, a smokescreen for the BIGGER issues at hand, at which we should be looking, and that is the proposed Budget, the Economy, and the billions in earmark projects for which we are paying.

Well, wait - let me ask you, in this completely scientific way: Are YOU mad that your money is going to pay these other people’s bonuses, especially at a company that you have already given around $173 BILLION dollars? Yes? Well, David Axelrod doesn’t think you are. I am not kidding. That is his latest message: that the American people don’t give a crap about stuff like this. Greg Sargent had this at The Plum:

Come on, guys, can’t we get the message straight on this one?

Yesterday I noted that Rahm Emanuel had said that Obama saw the AIG fiasco as a “big distraction” from efforts to fix the economy. Later in the day, Obama walked that back, asserting that the public was right to be “angry” about the whole mess and right to find it “consuming.”

Today, another senior Obama adviser, David Axelrod, is throwing in his lot with Rahm and the AIG-isn’t-a-huge-deal camp:

“People are not sitting around their kitchen tables thinking about AIG,” Axelrod said. “They are thinking about their own jobs.”

So are people upset about this, or aren’t they? Actually, people are thinking about the AIG disaster. Yesterday’s Gallup poll found that a big majority is very upset about it. Only 11% said they are “not particularly bothered” by it.

Again, this just seems weird politically. Why pretend that folks aren’t pissed off about this at a time when Republicans are moving aggressively to paint Obama as too passive on the issue and position themselves as the outraged and heroic defenders of the taxpapers?

Update: David Kurtz says: “I honestly don’t get what up-side they see politically in taking this tack.” He suggests that it’s “tone deaf.” Agreed on both counts.

I agree on both counts, too, in case you are keeping score.

Has it really only been two months of this guy? Good grief. I wonder who’s going to have to take the fall for Obama next? Hmmm, maybe that new pup the girls are getting (and so much for the whole shelter dog thing - I think we all knew that was just words, too)…

Honestly, I’m getting motion sickness from all of this…

Rep. McCotter comes from Michigan’s 11th Congressional District and is, yes, a Republican. Here’s his YouTube channel and the link to his House Web site. BELOW, REP. McCOTTER ASKS THE SAME QUESTIONS THAT I DID in my story below which, for short, I’ll call “All The President’s Men”:

“What did he know and when did he know it?,” asked Senator Howard Baker.

“Follow the money,” said Deep Throat.

“It’s not the crime, it’s the cover-up,” a saying used thousands of times since Watergate.

     Was I ever impressed. Hannity, who is not famous for high-level discourse, scored as his guest the top-flight attorney David Boies to comment on the confiscatory retribution law passed by the House on Thursday. Remember that word confiscatory. Listen to Boies describe, below, what Congress should have done. I know Congress operates like we live in a third-world country (ever try to find a video or transcript on their confusing, inconsistently formatted, 1995-era-styled committee Web sites?). But aren’t a great number of them attorneys who also have, on staff, a number of attorneys they can consult? Can’t they call up, oh, let’s say the Attorney General’s office, for help? Well, yes. So watch the sensible, knowledgeable David Boies in the video below. And weep.

Actually, I suspect something far more insidious. God, I loathe conspiracy theorists and their theories, but. … We know that Dodd tried to cover his own ass and that of the Fed and Geithner, who has borrowed Obama’s line in saying he accepts “full responsibility,” as if ownership of the problem means it’s solved.

The clever (they assume) words on the White House Web site (above left) have been eating at me: I found it somewhat astonishing that, in a play on the title of a great, historic book and film about the devastating self-destruction of a president and his administration, Obama’s Web master and communications staff used the phrase “All The President’s Picks” to describe his unpresidential emphasis on selecting NCAA March Madness picks as the #1 image on the official White House Web site.

We know that Treasury Secretary Tim Geithner lied when he said he learned about the bonuses only last week because he was the lead person in building the 2008 Bush-era AIG bail-out. (”The A.I.G. tempest has been especially explosive for Mr. Geithner because, as president of the New York Fed, he was the one administration official who had been involved in the Bush-era bailouts.” - “A.I.G.: A Defining Moment for Geithner,” March 19, 2009, New York Times blog, “Dealbook.”)

We know that Fed chair Ben Bernanke and other Fed officials knew about the contracts offering bonuses, as long ago as last year. So, who else knew?

Was it indeed ALL the President’s men? Might the President himself have known, even while he feigns outrage for his campaign rallies town hall discussions?

Yes, best we know, Senator Dodd and/or his senior staff secretly rewrote the Wyden/Snowe amendment that capped executive bonuses. We know that Senator Ron Wyden talked to every official at the Fed and to the White House, because Senator Wyden said so in a television interview. But, at whose behest did everyone at the Fed and White House tell Wyden that his amendment was VERY unwelcome? Who else besides Geithner and/or Bernanke was behind the message to Wyden that his and Olympia Snowe’s amendment made them ALL very unhappy?

Was Rahm Emanuel, the President’s Chief of Staff, involved — he who is surely highly aware of AIG’s past beneficience to the campaign chests of Mssrs. Obama, Dodd, et al.?

We now know that David Axelrod was aware, which speaks volumes about the levels reached in this discussion about the pesky bonuses — so necessary to ensure the continued beneficience of the rich whilst also being so potentially enraging to the growing number of poor. (”The next morning, Mr. Geithner informed White House advisers. Later that day a senior adviser, David Axelrod, informed the president.” - “A.I.G.: A Defining Moment for Geithner,” March 19, 2009, New York Times blog, “Dealbook.”)

Wouldn’t this touchy issue have been discussed in the Oval Office? And far earlier than last Wednesday (March 11, 2009) when Mr. Axelrod supposedly informed President Obama — for the first time? Come on. Of course it was because it was a “hot potato,” and the White House just hoped that Dodd’s sneaky shift of language wouldn’t get detected and cause such a furor.

Wouldn’t those handsomely compensated AIG execs — grateful as they must be for that secretly amended amendment — have donated in 2010 and 2012? Wouldn’t every donation possible be sought after even at this early date, given the sure-to-fade appeal of “The One” and and his faux presidency, especially given how tired he is already of the work, oh the actual work required (!), of that job. He who’s never worked 40+ hours a week, except when it was to win?

I am just asking some questions. Necessary questions.

Why? Because we know, from Obama’s, Axelrod’s and Emanuel’s histories in Illinois and during the 2007-2008 campaigns — as well as Emanuel’s strong-armed leadership of the DCCC — that those donations matter above all else to the two top executives in the White House, for whom life is a campaign and for whom work is only tedious, torturous toil that fills the hours between the ever-present, perpetual campaigning and becoming the hit on the joint, why the very powder pressed into the pierced artery sweet-talking its way straight to the hearts and brains of the cheering, thunderous crowds with tens of thousands of adulatory fans. Not citizens. No. FANS! As meekly, mindlessly flattering as possible. With as many fainting women as the paramedics can handle, called upon as they are by the mentally masturbating Obama to seduce care for those swooning mistresses of the aphroditous Man In Chief. The Commander. In Command. The One. The One With It All.

And all that work is just a bother. The only thing that matters is the really big prize for winning the campaign. The name. Especially the Commander name. The plane. Oh that plane. Air Force One. The Force One for “The One.” With which to escape. Escape that toilsome job. Escape the inevitable hand cramps from all that bill signing. Escape those stuporific, stiff, and bothersome, boring meetings with foreign leaders who don’t even speak English.

But winning and holding onto that prize takes staggering amounts of money. What? Five times the total of those A.I.G. bonuses? At the least. So it’s always about the money really. You see, it takes money, money, money to hold those rallies and get those people revved so much so that it’s like the biggest orgasm they’ve ever had just to see “The One,” who loves the mutual masturbatory high that strokes his needy ego.

So it’s always about keeping those with the money the happiest.

Oh that populist talk? That’s for the adulatory dumb-dumbs. But the rich people get their greed fix with secretly amended amendments and that hotly sought-after access.

Oh that faux socialist talk? That’s to keep the middle class from realizing they’re slipping into the lower class while their incomes are being inflated so they’re in a higher tax bracket while a loaf of bread costs more and more.

And it’ll be the same as before. Under Bush. The rich will keep getting richer. And the poor will get hungrier and hungrier. And poorer.

And I’ll keep musing … and you can all think about it … and tell me what you think.

Meanwhile, listen to Mr. Boies:

Now, an AFTERWORD, from an e-mail I sent to Larry Johnson about the story above:

Disturbing to me is the fact that the Special Olympics snark popped into Obama’s mind so easily. Which tells me he has made similar remarks in the past and heard his friends make them too.

It was not a freshly minted idea or phrase — it signals that he habitually mocks those he considers lesser than himself. It is part and parcel of his overall arrogance. His sense that he is better than others…. which goes along with his addiction to having adulatory acknowledgement of his specialness via those worshipful rallies. He’s like a famous jock. He engages in jock talk that often involves mocking other people and, like famous players, he needs the “high” from recognition and adulation.

i am also FURIOUS with Jay Leno for “enabling” Obama re the AIG bonuses when Leno said, “You must have been stunned.” Oh The One Loved That Leno Last Night.

In my draft, I draw on the book title “All the President’s Men” — and I believe that these bonuses for AIG and ALL these bailed-out companies were discussed at the highest levels, including in the Oval, because, while Obama dishes out the faux populism to the average voter, he is ever mindful that it is the wealthy donors he must cater to and protect. He knows that altering the Wyden/Snowe amendment would please all his rich donors and that those grateful recipients of higher bonuses will remember the intervention in 2010 and 2012. It all boils down to the absolutely necessary campaign donations that enable his addictive need to stage those huge and expensive campaign rallies.

David Boies was on Hannity last night and brilliantly pointed out ALL the more intelligent ways to dispense with such undeserved bonuses as well as all of the legal problems with Congress’s utterly stupid, reactionary, confiscatory, and unconstitutional legislation yesterday. BUT (!!!!) HERE’S THE THING ::: THE CONGRESSIONAL DEMOCRATS KNOW THEY MUST DISPENSE WITH THE AIG KERFUFFLE POSTHASTE BECAUSE THEY NEED TO GET BACK ON TRACK TO PASS that budget.

Members of Congress pray their vote, coupled with all of their insincere outrage shouted out on every talk/news show, will placate voters, and they also know that, eventually, the courts will toss that legislation out on its ear.

But Rahm and Barack have given them instructions to get that mess handled and get back on track. (Everything done is tactical — even Barack’s loudly professed disdain for D.C., and his need to get away from it — is on purpose to make dumb people believe he’s one of them and hates D.C. practices as much as they do.)

POSTSCRIPTS:

(1) There are more A.I.G. bonuses to come:

On Friday, Mr. Liddy said he could not block the bonuses; he did agree to reduce executive bonuses set for July 15 and Sept. 15.

Will Mr. Boies be consulted before then, and will the unconstitutional, confiscatory House bill be quietly shelved in a back room somewhere down in the bowels of Congress?

(2) THIS WAS SOME “PICK,” MR. PRESIDENT: Your “pick” for the Treasury, Mr. Timothy F. Geithner, who shares an identical philosophy about business and an aversion to any regulation with former Fed chief Alan Greenspan:

Mr. Geithner’s instincts are that government should not dictate compensation issues to businesses.

So President Obama chose an anti-regulation extremist who believes business should be left to its own devices. That is hardly in keeping with the tenets of the Democratic party or the beliefs of the voters, ignorant as they were, sigh, of Obama’s campaign-era group of pro-privatization, heavily-pro-capitalist, anti-regulatory economic advisers (although we Hillary Democrats tried to tell them, in response to which they’d invariably stick their fingers in their ears and yell, “Racists! RACISTS! RAAAACCCCCIIIIIIISSSSSSSTTTTTTTS!!!”).

Here’s a description of Alan Greenspan that underscores that Geithner’s view of Wall Street and all business, really, is just like Greenspan’s:

SHORTLY AFTER she was named to head the Commodity Futures Trading Commission in 1996, Brooksley E. Born was invited to lunch by Federal Reserve chairman Alan Greenspan.

The influential Greenspan was an ardent proponent of unfettered markets. Born was a powerful Washington lawyer with a track record for activist causes. Over lunch, in his private dining room at the stately headquarters of the Fed in Washington, Greenspan probed their differences.

“Well, Brooksley, I guess you and I will never agree about fraud,” Born, in a recent interview, remembers Greenspan saying.

“What is there not to agree on?” Born says she replied.

“Well, you probably will always believe there should be laws against fraud, and I don’t think there is any need for a law against fraud,” she recalls. Greenspan, Born says, believed the market would take care of itself.

For the incoming regulator, the meeting was a wake-up call. “That underscored to me how absolutist Alan was in his opposition to any regulation,” she said in the interview.

Over the next three years, Born, ’61, JD ’64, would learn first-hand the potency of those absolutist views, confronting Greenspan and other powerful figures in the capital over how to regulate Wall Street. … Read all [requires subscription so I may reprint it this weekend] via the Stanford alumni magazine front-page story, “Prophet and Loss.”

Here’s the subtitle to “Prophet and Loss”:

Brooksley Born warned that unchecked trading in the credit market could lead to disaster, but power brokers in Washington ignored her. Now we’re all paying the price.

And, if you ask me, I predict we will CONTINUE to pay the price because we have a president who will welcome the coming inflation — even hyperinflation — because, after all, inflation will create more wage-earners who make over $250,000 per year, and he’ll be able to collect taxes, in all forms, on many more people, goods, and services.

I doubt we’ll get to the $1 billion paper money required in Zimbabwe to buy a loaf of bread. But who knows what we’ll be paying for bread soon. Want to predict its cost?

Contributions to Obama Campaign Track Bailout Money

Barack Obama’s lack of leadership in a down economy has now hit [1] crisis proportions, as his claimed inability to block millions of dollars in bonuses for executives of bailout recipient AIG has caused even his supporters to turn on him.

But while the ire of Congress and the media focus are on the $165 million that AIG paid out in bonuses to their executives, the president is hoping you won’t notice the $100 billion in taxpayer bailout dollars that AIG paid out to other banks, including $58 billion to foreign banks and [2] $36 billion given to French and German banks alone.

The Obama administration is allowing AIG to bail out the rest of the world with your tax dollars.

So by all means, the president is happy to have you railing at “evil” but relatively small potatoes AIG executive bonuses, as it points your outrage away from his own far more costly executive abuses.

And of course, the re-distributor-in-chief hopes you won’t notice where much of the rest of the AIG bailout cash is being spent.

While $58 billion of your tax dollars — or more accurately, your children’s tax dollars — are being used to pay foreign banks, a substantial portion of that money ($43.5 billion) is being used to pay American banks, including Goldman Sachs, Merill Lynch, Bank of America, Citigroup, Wachovia, Morgan Stanley, AIG International, and JP Morgan.

The following recipients of President Obama’s trickle-down-to-my-donors bailout plan rank among his top 20 contributors to his 2008 presidential election campaign, according to [3] Open Secrets:

Goldman Sachs: $955,473

Citigroup: $653,468

JP Morgan Chase & Co.: $646,058

Morgan Stanley: $485,823

Well, looky there!! Don’t THOSE names look just a little familiar?! Just WAIT:

Three other banks that were significant contributors to Obama received money through AIG:

Bank of America: $274,493

Wachovia: $214,151

AIG: $112,170

Lehman Brothers, which did not survive long enough to join the list of banks leaching off the work of the American taxpayer, also gave the Obama campaign [4] $276,088.

Individuals identifying themselves as working for the banks above gave Barack Obama’s presidential campaign $3,617,724. In other words, more than 3.6 million reasons for the president to help focus the media’s glare on the relatively minuscule $165 million in AIG executive bonuses, and away from their $43.5 billion portion of $100 billion of taxpayer dollars the administration, by design or incompetence, filtered to other banks through AIG.

In receiving $43.5 billion for their investment of just over $3.3 million, it looks like the banks that gambled on Wall Street certainly got their money’s worth out of their investment in Barack Obama.

Your tax paying dollars at work, folks! To help pay back Obama’s big-money contributors to buy him the highest office in the land. Wheeee!!!!

If you want to read more on the AIG issue, SusanUnPC also has a good piece on the recent AIG/Dodd stuff, “Listen To Your Aunt Susan.” There is also Larry Doyle’s, “AIG Contracts A Brain Freeze,” are just a couple of other articles at No Quarter on the AIG issue.

(FROM LARRY JOHNSON–This is big trouble for Dodd and Timmy Geithner. Geithner lied as well about his role in this fiasco. You cannot have a liar at the top of Treasury and hope to be taken seriously.)

Larry Johnson called me and told me he’d seen this video of Sen. Christopher Dodd (D-Conn.) admitting that he secretly fixed the bill, taking out amendment language (written by Senators Ron Wyden (D-Ore.) and Olympia Snowe (R-Maine)) that would have prevented bonuses in excess of $100,000. From CNN’s story:

– After denying having anything to do with crafting language in the stimulus bill that allowed bailed-out insurance giant American International Group to keep its bonuses, Sen. Christopher Dodd admitted that he and the Treasury Department were responsible for the loophole. … Read all.

Yesterday, the Liar-Pants-On-Fire hemmed and hawed like this:

This is the Chris Dodd of yesterday, which I had titled in the drafts as:

Government is buying you off.

If anyone is going to raise an angry mob, and scream *off with their heads!* at anyone, it is the American people on Washington. The fault lies with Washington. Those who granted the bailouts, those who wrote the loopholes for those bonuses, those who didn’t monitor what was happening with the bailout money, and those who claimed to know what was happening with the money, and granted even more bailout money. Watch this video.

That’s not to say there aren’t some at AIG guilty of mismanagement, or that some big wigs worked with the Treasury Department to ensure those bonuses remained. They have some responsibility in this financial mess, but we elect Congress, and the President, to spend our money wisely. They failed. They lied. And they are trying to cover it up, and create distractions.

Mob rule in Washington.

The bad guys aren’t those at AIG. The bad guys are in Washington. They are lying, covering up, and creating distractions (see my post obama hypocrisy watch). They are either the most corrupt or the most stupid people, ever.

Case in point - this little tidbit of Breaking News!

At least 13 firms receiving billions of dollars in bailout money owe a total of more than $220 million in unpaid federal taxes, a key lawmaker said Thursday.

Rep. John Lewis, chairman of a House subcommittee overseeing the federal bailout, said two firms owe more than $100 million apiece.

Banks and other firms receiving federal money were required to sign contracts stating they had no unpaid taxes, Lewis said. But he said the Treasury Department did not ask them to turn over their tax records.

Washington is granting all these bailouts, with tax payer’s money, and these companies owe MILLIONS in back taxes. Stop the insanity!!!

Here is a bonus video, which touches on some of what I wrote about the other day, in my piece president bamboozler.

For Obama it’s politics over principle.

The first deal with Domestic Violence. This issues has been in the forefront recently because of Rihanna and Chris Brown. Disturbingly enough, HALF of young people surveyed in Boston think it is Rihanna’s fault that Chris Brown beat the crap out of her. HALF of them!!! That says a lot for what they are learning from their music, and from the culture. And it is disturbing beyond belief.

Below is a video from someone who knows about Domestic Violence, and speaks eloquently about it:

And now for the next PSA. I received this video from one of my cousins:

Now is when I tell you that the cousin who sent this to me, who said, “Please watch this video and forward to women you know. I had no idea this type of breast cancer was out there…” is in remission from Breast Cancer. Her mother, my aunt, died from it after it metastasized to her bones. I had never heard of IBC, either. And clearly, it is something about which women need to know.

Speaking of breast cancer, the Quilters of SC are doing a great project to raise Cancer Awareness (major h/t to my dear friend, Connie, for alerting me to this project). Please go take a look at their Artful Bras Project. You know I love sports, so here is the Artful Project version of a Sports Bra:

Finally, I am sure you have been hearing a lot about AIG right now, including Obama getting all puffed up and angry at them for their bonuses (please - like that had not been going on already with the OTHER gazillion dollars we’ve given them out of our own pockets). So, I thought I’d give you a little humor to help deal with the whole situation from the desk of Andy Borowitz:

In New Terror Video, AIG Demands Huge Ransom from U.S.: Shadowy Group Seeks Bonuses, Golf Retreats

American intelligence experts are analyzing a new terror video from the American International Group (AIG) in which the leader of the shadowy organization demands billions of dollars from the United States.

In the four-minute tape, which surfaced over the weekend and caused deep concern among U.S. officials, a man believed to be the chairman of AIG says that if his organization is not paid its ransom, “chaos and destruction will rain down on the American economy.”

“If we are not paid billions more in bonuses and corporate golf retreats, America will be made to suffer,” the man threatens.

Intelligence analysts said that the man, AIG chairman Edward M. Liddy, appears to be speaking at a luxury beach resort that offers few clues as to his exact location, although there is “good intelligence” pointing to the Ritz Carlton in the Cayman Islands.

“We have some reason to believe that he and other AIG executives are there, based on a series of intercepted room service orders from the all-day dining menu,” one analyst said.

Reacting to the video, Homeland Security Secretary Janet Napolitano raised the nation’s terror alert level to orange, meaning “taxpayers are about to get reamed again.”

Treasury Secretary Timothy Geithner also released a response to AIG’s latest demands, but intelligence experts said they would need several weeks to decipher Mr. Geithner’s response.

Oh, wait - I guess that’s not too far from the truth. Oh, well - I hope you enjoyed it anyway!