Nobody Could Have Predicted That Geithner And Summers Would Be Tools

Tools of Wall Street, tools of the status quo, just tools in general.

Nobody could have predicted, that is, except for the same dirty hippie bloggers that correctly predicted the disaster that Iraq would become, and correctly predicted that Bush's War on Terror would accomplish the direct opposite of its stated goals, and correctly predicted the housing bust, and the move from subprime mortgages in crisis to a general mortgage crisis. . .

Now these same dirty hippie bloggers - one of whom is a Nobel laureate, not that it matters - are correctly calling out Geithner and Summers for their methods in dealing with AIG.  As Atrios says, little Timmy Geithner has his hands in America's cookie jar, and he's throwing chocolate chip cookies to all of his little friends from down The Street.

The latest bit of criticism which they'll ignore is the latest and greatest round of bonuses AIG is paying out.  Neil reproduces a bit of an email justifying these bonuses:

-AIGFP is in the hole something like $100b, with potential losses much higher than that. Unwinding all their contracts is a bitch, and the people who already understand how best to do that are the current employees. Unwinding strange positions effectively is a giant mess even if you already understand all or most of them. I believe that having new employees step in would cost way more than the 10 bps they're paying to current employees.

- Imagine you're a trader at AIGFP. You've done pretty well for yourself over the last decade, actually, and probably you've got enough savings to retire. Not in the kind of luxury you're accustomed to, maybe, but some. Certainly you can ride out the recession without changing your lifestyle. Do you really want to keep working at AIGFP for a small amount (to you) of money to minimize the cost of unwinding the thing? No reputation, no promotion, no head start on a new career of some kind, and the job itself will be no fun. Honestly, you've got lots of egg on your face, but why stay?

So sure, I have no desire to pay these idiots, but this is one of those things that you just suck up in a bad situation. If it helps retain staff at AIGFP (those bastards), that cash was probably money well spent.

This falls for the competency excuse we're hearing so much about.  But there's no reason for us to worry about losing these people and their suppoed ability to work through their contracts.  The plain fact is AIG is staffed by people who were either incompetent or criminal.  Incompetent because they didn't see how what they were doing was unsustainable and destructive in the long run, to their own business and the economy as a whole.  I hardly think we need to spend hundreds of millions of dollars - every few months, it seems - to retain utterly incompetent workers.  If, however, they weren't incompetent, it means they knew that what they were doing was unsustainable and destructive.  They knew their actions would precipitate a huge crisis, and they did it anyway in order to make a fast buck.  That's criminal.  And I don't see the need to spend hundreds of millions of dollars to keep criminals around so they can continue rooting through the contracts of a business they no longer own to see what kinds of fast bucks they can still make.

As Jane Hamsher points out, the difference in our government's treatment of the AIG criminals/incompetents who are directly responsible for their company's problems and the autoworkers who aren't responsible for their companies' problems is astounding.  With AIG, there's a wide-open money spigot and high-ranking government officials in front of the country making excuses and justifications for them.  With the UAW, there's nothing but condemnation from every side, nothing but expectations that they of course need to make sacrifices.

We don't need to honor the contracts made by AIG.  We didn't see any need to honor the UAW's contracts with GM and Chrysler.  It's a bogus argument made by a couple of guys who are entirely too chummy with the people who put us into this mess. 

Finally, it sickens me to see Geithner and Summers make such stupid arguments, such blatantly false declarations.  It smacks of the kind of ham-handed incompetence we used to see all the time from the Bush Administration, half-assed attempts to cover or justify incredibly wrong decisions.  There simply is no justification for what they're doing, and they know it, but they're doing it anyway.  How many times did we see that from Bush Administration officials?  I can understand that Obama is not as liberal as I'd like.  I can understand that his people are going to make decisions in this crisis that I will oppose.  But it's infuriating to see rank incompetence, denial of the facts on the ground and dismissal of the concerns of American citizens from the very people who were supposed to represent a clean break from such Bushian nonsense.

Comments

[Sir Charles]

It would be irresponsible of me as a lawyer to advocate some form of Jacobinite violence against the AIG corporate criminals.

I really think the Obama people need to get someone out there -- most likely the President himself -- to speak to the outrage that this is and to make clear that some pound of flesh is going to be extracted from AIG management for what they have done here. If they allow the Republicans to somehow make credible claims to outrage here, then they are making a huge political mistake.

[litbrit]

From your lips to God's ear, Sir C.

BREAKING: WASHINGTON — President Obama vowed to try to stop the faltering insurance giant American International Group from paying out hundreds of millions of dollars in bonuses to executives, as the administration scrambled to avert a populist backlash against banks and Wall Street that could complicate Mr. Obama’s economic recovery agenda.

[Sir Charles]

D.

I just saw that and was pleased. I think they need to do more -- as Barney Frank noted, maybe as the owners of the company, we should just start firing a few of these people.

I think consistent outrage -- followed by substantive action -- is both morally and politically the right thing to do.

That, and heads on pikes.

[Stephen]

It is good news; I hope they go further.

If Obama and his team are half as smart politically as they acted last year, they have to know they're putting themselves in a dangerous position. Obama won in several swing states because his supporters were excited, willing to stand in long lines and do whatever it took to get to the polls. It was a campaign of very clear distinctions between him and McCain, and that's what drove the excitement.

In 2000 the media and Bush did everything they could to pretend that Bush was really just like Gore, only he never worked for anyone that got blowjobs. In 2004 Kerry did everything he could to make people believe that he was just like George Bush, only without the evil.

While I know that there are real differences between Democrats and Republicans in the White House, if Obama bankrupts us so that assholes can keep going to their ostentatious New York Brunches and pay for the upkeep on their mansions, then it's really going to dampen my enthusiasm in 2012. If Obama doesn't get those idiot Democrats in Congress in line about EFCA, repealing DADT, reforming health care in a way that doesn't turn into just another giveaway to corporate interests, etc. etc., then I'm going to be pretty tempted to just tell Obama to go fuck himself.

I'll still support him, but only because I've seen the evil accomplished by the GOP when they're in power. But if I can get so dispirited, then what about all the Naderites and other delusional people for whom their own ideological purity is more important than just getting the best deal we can?

If Obama could find the intestinal fortitude to wage war on the moneyed interests in this country, we'd probably see a repeal of the 22nd amendment.

[ballgame]

emptywheel over at FDL presents the disturbing possibility that a form of blackmail is involved:

I take this to mean that if a bunch of AIGFP managers quit because they didn't receive bonuses promised in their contracts, then France could, if it wanted, to appoint its own designee. And if that happened, then it would equate to a default and those contracts would kick in, at a cost to AIG the US government of at least tens of billions.

In other words, I take this to be a threat: "if you don't give us our bonuses, we'll trigger a default event that will cost AIG the US government tens of billions of dollars." It's just a polite way of saying, "Pay us the $100 million ransom or we start exploding the suicide bomber vests we're wearing."

I have no idea how valid this line of reasoning is, but it wouldn't shock me if this is exactly the way things were structured.

Heads on fucking pikes, for sure.

(BTW, does anyone know what happened to Ian Welsh over at FDL? His last post appears to be dated 3/1/2009, and his bio now says he "was" the managing editor there.)

[Gene O'Grady]

Perhaps the lawyers on this weblog can explain to me just how the compensation contracts for AIG's managers have a higher status than the employment contracts for the state employees in Oregon? Or teachers everywhere? Or auto workers? Can't be that AIG isn't bankrupt, I would think.

[Sir Charles]

Gene,

You got me. I think as the owners of the company, we could force them to renegotiate the deal, just as the UAW was forced to do.

[Jacquotlaw]

GEITHNER & RANGEL TO BE SUBPOENAED IN TAX FRAUD CASE

Federal Case Alleges Political Elite Get Favorable Tax Treatment Over Ordinary Citizens

On 5 March 2009 a Motion was filed in U.S. v. David Jacquot, Case # CR 08-1171, in the Federal District Court, in San Diego, California seeking to dismiss a false tax return indictment on the grounds that the Defendant was not treated in the same manner as politically prominent individuals. A hearing on this matter is set for 30 March 2009 in San Diego and the Defendant in this case intends to subpoena Secretary of the Treasury Timothy Geithner, House Ways and Means Chairman Charles Rangel, former Senate Majority Leader Tom Daschle, and others.

The Defendant in this case is David Jacquot, an attorney and retired Army Officer. He is a decorated disabled Desert Storm veteran living in rural Idaho with his family.

This “Geithner Motion” cites HR 735 titled the “Rangel Rule Act of 2009,” which if enacted, would eliminate penalties and interest for common citizens to allow them to be treated in the same manner as House Ways and Means Chairman Representative Charles Rangel. The Geithner Motion also quotes President Obama stressing the need to “treat common citizens in the same manner as politically prominent individuals in regards to tax matters”.

The Geithner Motion details how Mr. Jacquot was vindictively indicted in retaliation for his successful defense of his clients against the IRS. The tax returns of his corporate law firm for the four (4) years of 2001 to 2004 were investigated and the government alleges that the law firm declared almost $200,000 TOO MUCH income during this time period. The Geithner Motion contains descriptions of numerous actions by the government and Assistant U.S. Attorney (AUSA) Faith Devine that are the basis for the claim of retaliation against Mr. Jacquot for his zealous representation of his client’s Constitutional and statutory rights. The improper actions of AUSA Devine have been reported to the DOJ Office of Professional Responsibility for disciplinary action and are currently under review.

A copy of the Geithner Motion can be downloaded at:

www.jacquotlaw.com/vindictive-prosecution.html

Vindictive-Prosecution