Obama to try and block AIG Bonuses

Now you guys are worried about the government's power to selectively tax? Uh, aren't you a little late to the party?
 
[quote name='KingBroly']I'm not surprised AIG is suing. But then again, did we honestly think Government didn't think AIG would react?

As much as I'd like to let AIG die...doing that would be really, really bad. Like...worldwide economic collapse instantly.[/quote]

I can't claim to fully understand the nuances of the worldwide economic situation, but isn't this a case of peeling the band-aid off slowly or quickly? Whatever horrible fate awaits us when these crappy financial giants fall is inevitable isn't it? I heard an economist on NPR saying that we're basically just making the problem bigger by delaying the impact. So I think the whole "too big to fail" concept is kind of misleading. If AIG and other firms were "too big to fail" before, what will they be after taking in so much of the tax payers' money?
 
[quote name='willardhaven']I can't claim to fully understand the nuances of the worldwide economic situation, but isn't this a case of peeling the band-aid off slowly or quickly? Whatever horrible fate awaits us when these crappy financial giants fall is inevitable isn't it? I heard an economist on NPR saying that we're basically just making the problem bigger by delaying the impact. So I think the whole "too big to fail" concept is kind of misleading. If AIG and other firms were "too big to fail" before, what will they be after taking in so much of the tax payers' money?[/QUOTE]
You're on the right track. "Too big to fail" is nonsense.
 
I say we let them keep all the bonuses and put the blame where blame is due, our government. Maybe we'll learn to not pass laws nobody reads out of this?

Yeah right...
 
Too big to fail is nonsense. The government should let bankrupt companies fail and instead pre-emptively bolster the other companies on more solid financial footing to help them weather the fallout so they don't get dragged down with them. It would cost much less in the long-run, avoid the ridiculous moral hazard of bailout fund allocation we have now and give an incentive to manage corporations responsibly.
 
I'm swaying rapidly to that side. Collapse of credit system would have been a huge blow. Unemployment would have sored with companies failing when they can't get loans for payroll etc.

But as I said, I'm just not so sure that our generation suffering wouldn't be worth it to kill the extreme elite executive class and end the system of economies built totally on credit and debt.
 
The big unknown factor about AIG is that we don't know how many companies they back financially, and to what degree they back some of the more major ones, but I assume it's a lot considering they continue to talk about giving them more money, even in the face of these bonuses.
 
[quote name='KingBroly']The big unknown factor about AIG is that we don't know how many companies they back financially, and to what degree they back some of the more major ones, but I assume it's a lot considering they continue to talk about giving them more money, even in the face of these bonuses.[/QUOTE]

If they were truly that important, then the government should have just completely bought them out and nationalized them.

Rather than give them billions to continue pissing away. Hell could have ended up being a good revenue source for the feds owning the biggest corporate insurance provider--get rid of toxic debts over time and start making money.
 
[quote name='dmaul1114']If they were truly that important, then the government should have just completely bought them out and nationalized them.

Rather than give them billions to continue pissing away. Hell could have ended up being a good revenue source for the feds owning the biggest corporate insurance provider--get rid of toxic debts over time and start making money.[/QUOTE]
Government-backed risk-taking was a major cause of the crisis. You really want that to happen again?
 
[quote name='dmaul1114']If they were truly that important, then the government should have just completely bought them out and nationalized them.

Rather than give them billions to continue pissing away. Hell could have ended up being a good revenue source for the feds owning the biggest corporate insurance provider--get rid of toxic debts over time and start making money.[/quote]

But Obama said he wouldn't nationalize companies, and if he didn't say that and did nationalize AIG the stocks of other banks, namely CITI and Bank of America would've plummeted on the fears of them being nationalized, too.
 
[quote name='rickonker']Government-backed risk-taking was a major cause of the crisis. You really want that to happen again?[/QUOTE]

Not really. Like I said, I've pretty much changed my tune on these bailouts and think we should have just been willing to suffer though a major depression to actually change the fucked up system and society we live in.

Independent thinking. ;)
 
[quote name='dmaul1114']Not really. Like I said, I've pretty much changed my tune on these bailouts and think we should have just been willing to suffer though a major depression to actually change the fucked up system and society we live in.

Independent thinking. ;)[/QUOTE]
Not really, because hidden in your "independent" thought is the assumption that not bailing out those companies would have necessarily caused a major depression. I wonder where that came from.

Outside influence. ;)
 
I said willing to suffer through...meaning it was a chance we should have been willing to take--not a certainty. ;) I'm not convinced it would have gotten that bad or lasted that long. Other banks would have risen to fill the void--and hopefully a bunch of smaller ones rather than big ones with too much of the economies capital attached to them.
 
[quote name='dmaul1114']I said willing to suffer through...meaning it was a chance we should have been willing to take--not a certainty. ;) I'm not convinced it would have gotten that bad or lasted that long. Other banks would have risen to fill the void--and hopefully a bunch of smaller ones rather than big ones with too much of the economies capital attached to them.[/QUOTE]
I don't know dmaul, it kinda sounds like you're backtracking from [quote name='dmaul1114']I'm swaying rapidly to that side. Collapse of credit system would have been a huge blow. Unemployment would have sored with companies failing when they can't get loans for payroll etc.

But as I said, I'm just not so sure that our generation suffering wouldn't be worth it to kill the extreme elite executive class and end the system of economies built totally on credit and debt.[/QUOTE]
 
Eh, whatever. I'm not going to speak with 100% certainty on the matter as I'm not an economist so I have no idea what the chances were of a major depression if they'd not bailed anyone out. I was just saying I think now we shouldn't have bailed them out regardless of whether it would have led to a major depression.

For the latter, letting tons of banks and big corporations go under would have forced changes in the extreme elite executive class and getting the economy less based on credit and debt irrespective of whether we just had a recession or a major depression. The bailouts are preventing that change since flawed businesses are just able to continue their flawed practices.

Depression would have forced change. But no depression and you still have the worst offenders gone and smaller banks/corporations taking over for them and not having so much wealth concentrated in so few corporations.
 
[quote name='dmaul1114']Eh, whatever. I'm not going to speak with 100% certainty on the matter as I'm not an economist so I have no idea what the chances were of a major depression if they'd not bailed anyone out. I was just saying I think now we shouldn't have bailed them out regardless of whether it would have led to a major depression.

For the latter, letting tons of banks and big corporations go under would have forced changes in the extreme elite executive class and getting the economy less based on credit and debt irrespective of whether we just had a recession or a major depression. The bailouts are preventing that change since flawed businesses are just able to continue their flawed practices.

Depression would have forced change. But no depression and you still have the worst offenders gone and smaller banks/corporations taking over for them and not having so much wealth concentrated in so few corporations.[/QUOTE]
I kind of agree with this. I do think there was a chance to hit the financial sector hard and that's obviously been missed. But a depression alone, even a severe one, wouldn't necessarily be enough to permanently wipe out the elite structure, because they could always do what they did again. A depression could be good as the first step towards destroying the system that allowed this to happen, though.

But we probably don't agree on exactly who belongs to the "extreme elite executive class". I'm guessing you're thinking only of Wall Street and CEOs of big corporations, but I would go way beyond that.
 
[quote name='rickonker']I kind of agree with this. I do think there was a chance to hit the financial sector hard and that's obviously been missed. But a depression alone, even a severe one, wouldn't necessarily be enough to permanently wipe out the elite structure, because they could always do what they did again. A depression could be good as the first step towards destroying the system that allowed this to happen, though.

But we probably don't agree on exactly who belongs to the "extreme elite executive class". I'm guessing you're thinking only of Wall Street and CEOs of big corporations, but I would go way beyond that.[/quote]

I don't agree that a "scorched earth" policy would necessarily eradicate the eeec. In fact I think it would probably wipe out the middle class first, and when USA initially rebounded it would be closer to a third world country with extreme rich and extreme poor.
 
[quote name='camoor']I don't agree that a "scorched earth" policy would necessarily eradicate the eeec. In fact I think it would probably wipe out the middle class first, and when USA initially rebounded it would be closer to a third world country with extreme rich and extreme poor.[/QUOTE]
It depends on exactly what we mean by "depression" and the timeframe we're talking about. The first thing we should've done was to hang the financial sector out to dry. As soon as they were hit hard, sure they'd complain loudly, but we'd be better off in the long run.

I don't think what we're doing now - taking from the poor and middle class and giving to Wall Street - is somehow better for the middle class.
 
Looks like the shaming/bad PR has had some good effects.

http://dealbook.blogs.nytimes.com/2...y-big-aig-bonuses-were-returned/?ref=business

Cuomo Says Most Huge A.I.G. Bonuses Were Returned

Attorney General Andrew M. Cuomo of New York announced late Monday afternoon that 9 of the top 10 bonus recipients at the American International Group had given back their bonuses.

He also said 15 of the top 20 bonus recipients in A.I.G.’s financial products division had given the money back, for a total that he estimated at about $30 million. “Those bonuses will be returned in full,” Mr. Cuomo said during a conference call with reporters.

The attorney general noted that about 47 percent of $165 million in retention bonuses was awarded to Americans, accounting for nearly $80 million, and he said he expected to get that money back.

Mr. Cuomo acknowledged that some bonus recipients declined to give back bonuses, especially those overseas who are outside the jurisdiction of New York State.

He said he did not think it would be in the public interest to release the names of those who gave back their bonuses.

Mr. Cuomo received a list of bonus recipients from A.I.G. on Thursday. The bonuses have caused a public uproar because A.I.G. received more than $170 billion in government bailout money to avoid collapse. Mr. Cuomo subpoenaed the giant insurer for names of the recipients as part of his investigation into how the company is using taxpayer money.

Mr. Cuomo reiterated Monday that his office was sensitive to the security and privacy concerns of A.I.G. employees and that it would conduct a risk assessment before releasing name. More than 400 people received bonuses in A.I.G.’s financial products division.

A.I.G.’s chief executive, Edward M. Liddy, told Congress last week that he had asked employees to give back half of their bonuses. Mr. Cuomo responded that this was inadequate. On Thursday, the House of Representatives agreed as it overwhelmingly passed a 90 percent tax on bonuses given out by A.I.G. or any other company getting more than $5 billion in federal bailout money.

Mr. Cuomo reported last week that 73 A.I.G. employees were paid more than $1 million in bonuses.

The highest bonus was $6.4 million, and six other employees received more than $4 million, according to Mr. Cuomo. Another 15 people received bonuses of more than $2 million, and another 51 people received bonuses of $1 million to $2 million.

A.I.G., which is now nearly 80 percent owned by the government, had argued that the bonuses were needed to retain employees in its financial products division.

–Jack Lynch
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