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Monday, March 16, 2009

Great Recession Roundup — AIG Bonus Blow-Up

Items of Interest:

Helene Cooper / New York Times:
Obama Orders Treasury Chief to Try to Block A.I.G. Bonuses — 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 …

discussion:
Jonathan Martin / The Politico: March Madness: How W.H. plays defense
Conor Clarke / The Atlantic Business Channel: What's the point of a “nation of laws”?
Josh Marshall / Talking Points Memo: WHY IT'S CUTTING
Tom Maguire / JustOneMinute: The 22nd Book: The Book Of The Dead
Matt Miller / Blogs and Stories: Give the Bonuses Back-Or Else
Noam Scheiber / The New Republic: Obama to AIG: Nuh-Uh
Say Anything: Welcome To Socialism: Obama Will Use Bailouts As Leverage …
Massie Ritsch / OpenSecrets.org: Before the Fall, AIG Payouts Went to Washington
Dan / Riehl World View: Another Day, Another Town
Sandy Levinson / Balkinization: “every legal avenue”
Felix Salmon / Portfolio: How to Not Pay the AIG Bonuses
Mary Kane / The Washington Independent: Obama Speaks Out on the AIG Bonus Fray
Matthew Continetti / Weekly Standard: Obama Also Very Angry at AIG
Jill Tubman / Jack & Jill Politics: AIG Bonuses: Is the Outrage Fake or Real?
Jane Hamsher / Firedoglake:
Who Stole Our Country, and How are We Going to Get It Back? — The White House is worried about backlash over AIG's payout of $450 million in bonuses to the executives in its high flying Financial Services Group, the out-of-control derivatives trading arm that looted the company …
discussion:
Mark Blumenthal / Pollster.com:
AIG Bonuses: A Double Edged Sword – In this morning's New York Times, Adam Nagourney writes about concerns within the Obama administration that the latest news about bonuses paid to AIG executives could spark "a populist backlash against banks and Wall Street" that might "end up being directed at Congress and the White House and could complicate President Obama’s agenda." How real is that threat since, for the moment at least, the Obama administration appears powerless to stop it?** ...
discussion:
Noam Scheiber / The New Republic: Measuring the Backlash Against Wall Street
Domenico Montanaro / MSNBC: FIRST THOUGHTS: RAGE AGAINST THE MACHINE
Ed Kilgore / Democratic Strategist: AIG Fever—the Broader Stakes for Obama
Andrew Sullivan / The Daily Dish: Polling The Anti-AIG Populism
Alex Koppelman / Salon: Obama's populism problem
Johanna Neuman / Top of the Ticket: Obama outraged at AIG bonuses
Glenn Greenwald / Salon:
The sanctity of AIG's contracts – Apparently, the supreme sanctity of employment contracts applies only to some types of employees but not others. Either way, the Obama administration’s claim that nothing could be done about the AIG bonuses because AIG has solid, sacred contractual commitments to pay them is, for so many reasons, absurd on its face...
discussion:
Aaron Zelinsky / The Huffington Post: Larry Summers: Stop the AIG Bonuses. Yes You Can.
Richard A. D'Errico / Albany BizJournal:
NY AG issues subpoena to AIG – New York Attorney General Andrew Cuomo has issued a subpoena to American International Group Inc. seeking a list with the names of executives receiving bonuses. "We had given AGI up to 4 o'clock today to provide the information on the latest round of bonuses that they paid out," Cuomo said. "Four o'clock has come and gone." ...
discussion:
Marc Ambinder / The Atlantic Politics Channel:
A Modest Proposal For AIG – AIG claims that it promised bonuses to its derivative traders and that it can't break its contracts. Sounds like AIG is using legal formalism to avoid a messy court fight. Contracts, like promises, are often broken when premises change. Financial products brought the firm down; why hasn't AIG informed the people in that unit that if they want their bonuses, they're going to have to sue to get them?...
discussion:
William Kristol / PostPartisan:
AIG Bonus Babies – The AIG moment feels like a big one. Public distaste for both the Bush and Obama administrations' handling of the financial crisis seems to be crystallizing in response to the reports of bonuses for executives at the AIG financial products subsidiary, whose derivatives trading helped contribute to AIG’s bankruptcy. Well, the executives had contracts, we’re told. The firm would risk a lawsuit not to pay up...
discussion:
DealBook:
Cuomo Seeks A.I.G. Bonus Information – Attorney General Andrew M. Cuomo said Monday afternoon that he has not received information about the American International Group’s bonuses and will be issuing subpoenas momentarily. The bonus checks were sent out Friday...
discussion:
Jessica Pressler / New York Magazine: Bonus Buster Andrew Cuomo Gets a Super-Friend!
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Ben Bernanke60 Minutes / CBS News:
Ben Bernanke's Greatest Challenge -- Fed Chairman Discusses Recession, Financial Rescues And Recovery In Wide-Ranging 60 Minutes Interview

Aside from the president he's the most powerful man working to save the economy, but you have never seen an interview with Ben Bernanke.

Bernanke is the chairman of the Board of Governors of the Federal Reserve System, better known as the Fed. The words of any Fed chairman cause fortunes to rise and fall and so, by tradition, chairmen of the Fed do not do interviews - that is until now.

The Federal Reserve controls the economy by setting interest rates. But after the crash of 2008, Bernanke invoked emergency powers, and with unprecedented aggressiveness has thrown a trillion dollars at the crisis...
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Mr. Practical / Minyanville:
Illiquidity -- Only much lower prices will get economy flowing again.

Real economic liquidity is generated by productivity, which increases income by either increasing revenues or decreasing expenses, or both. This is what creates real wealth and raises the standard of living. Printing money does nothing to raise the standard of living, and desperate calls for the government to do something in reality does nothing but transfer real wealth from one person to another.

A true deflation (which we are in) will continue until prices drop enough, and enough unsupportable debt is destroyed...
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Bernard Madoff mugshotMadoff's Mugshot

CNN:
Feds go after Bernard Madoff's riches -- Federal prosecutors are seeking the forfeiture of Bernard Madoff's four homes and other assets after Madoff's guilty plea to masterminding a massive investment fraud.

Madoff is in jail at the Metropolitan Correctional Center in lower Manhattan after pleading guilty to operating on the largest Ponzi schemes in history.

He faces 150 years in prison when he is sentenced June 16.

Many of the assets are held in the name of Madoff's wife, Ruth. That should not prevent the government from seizing them, said former federal prosecutor Bradley Simon of Simon & Partners...
Minyanville: Will Mrs. Madoff Slip Out the Back Door?
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One Year Anniversary - Bear Stearns Demise

James Freeman / Wall Street Journal:
Bear Stearns: The Fed's 'Original Sin' -- One year ago today, the Federal Reserve saved Bear Stearns from bankruptcy. The central bank's agreement to invest $30 billion (later reduced to $29 billion) in Bear's opaque securities greased a sale of the firm to J.P. Morgan Chase. For the first time since the 1930s, the federal government was putting taxpayers at risk to rescue a Wall Street investment bank. To this day, the government has not explained precisely why.

J. Dorfman / Bloomberg:
Bear Stearns Shows Why Heavy Debt Is Murder
Flashback:
The Johnsville News:
Bear Goes Broke [March 16, 2008] -- WSJ: Bear Stearns Cos. reached an agreement to sell itself to J.P. Morgan Chase & Co., as worries grew that failing to find a buyer for the beleaguered investment bank could cause the crisis of confidence gripping Wall Street to worsen...

related:
TJN: October 2008 News/Events
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What a Fine Mess ....

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