Tuesday, March 17, 2009

Blame Chris Dodd, Wall Street insider: On the AIG controversy

Republican Senator Charles Grassley's comments that AIG executives who have been awarded $165 million in bonuses that come from government bailout funds (TARP) should return the money--or kill themselves--comes at a very interesting political moment:

Republicans, seeing that the Obama administration are as apathetic as they are about corporate accountability have found an opening-of-sorts and are doing their best to steal the coveted "Populist" outrage ball. This entails very real risks when one is engaged in the same behaviors. The Obama administration and many legal experts are saying that the contracts cannot be violated, that they're "airtight," and were made in the spring of last year. But contracts can be broken, and the federal government now owns 80% of AIG at this writing.

There's an interesting dynamic here of the dodge, and by all sides.

Most of the problems arising out of the bonus issue were the creation of the Bush II administration, just one-of-many gifts they left the American public and the Obama administration before leaving office. This could all have been avoided, and it appears that the new inhabitants of 1600 Pennsylvania Ave. have walked right into one of their bear-traps...and one created by Congress, generally.

From the American Recovery and Reinvestment Act of 2009, Title VII, Sec. III:
"(iii) The prohibition required under clause (i) shall not be construed to prohibit any bonus payment required to be paid pursuant to a written employment contract executed on or before February 11, 2009 [Ed.--My emphasis.], as such valid employment contracts are determined by the Secretary or the designee of the Secretary.
And who wrote these lines? According to Rawstory and the papers on the bill itself, it was Senator Chris Dodd (D-Conn.), one of AIG's largest recipients of campaign donations in 2007 and 2008, and a former Goldman Sachs executive.

The AIG contracts-in-question were written in April of 2008, so you cannot say Dodd and his fellow Wall Street lobbyists aren't proactive in their corrupt and unethical practices. They even left a little clause in there so that the burden then rests with the Treasury Secretary, a kind of a catch-22 of throwing the ball to the executive branch.

Yet the new president signed the bill with this language still contained within it. He may not have had any real choice in the matter and was more-or-less blackmailed into accepting the stimulus package "as-is." As a matter of fact, these could be some of the very lines that were fought over behind the scenes and reported about widely, though without detail since there was little transparency in the negotiations. If so, little of this is Obama's fault at all, and the attacks and demands that he do something are little more than political theater and a way for the authors of this mess to avoid the real brunt of public outrage.

But then, there's the president's lack-of-enthusiasm for doing much about the bonuses or the questionable methods of expediting the bailouts and the creation of the stimulus package of which Dodd was a major party to.

To say that President Obama's outrage is more than a little too subdued over the bonuses during an economic crisis would be euphemistic, as evinced by his comments yesterday, but it's possible that he had no other choice but to accept this provision or get no stimulus deal at all. That should tell you all you need to know about most incumbents now sitting in Congress. Is there a game being played? Of course there is, and by all sides, it's poltics. My bet is that much of this was done to smear the president, frankly. It's all about avoiding responsibility, and the longer these kinds of shenanigans continue, the longer we're going to be in this crisis. So be it until we get real representatives. Trust: where is it?

The crisis could even deepen as a result when trust becomes a foregone conclusion, a casualty of some of the same practices that created this economic crisis in the first place.

The GOP are the kings of claiming that someone else has engaged in "political theater," just never them. Rational adults should understand that it's a hollow position in every rewspect, but the real danger is in representatives like Dodd. However, the public's outrage, the monkey-like flinging of dueling rhetoric, and Senate Majority Leader Harry Reid's introduction of a bill that would recover most of the funds could bring a kind of a "fix" for the public since it's the squeeky-wheels that get oiled.

If you want to blame anyone, blame Congress--especially Republican incumbents and red dog Democrats like Dodd who have an identity crisis of their own. The time to clean house is coming up again next year's elections. If order hasn't eroded by that time, we might know what to do to repair and restructure a wrecked economy.

One thing's certain here: President Obama had better start reassessing who his real friends are in his own party, and fast, and begin sweeping the federal bureaucracy of all Bush II appointments. The public also needs to look very closely at the voting records and public behavior of those yelling the loudest in Congress over these bonuses and the need for reform. Trust--it's a hard thing to come by in Washington and on Wall Street, and it's going to be crucial to any kind of a recovery, but there's little reason for it these days from so-called leadership.

These clowns could be running themselves out of office sooner than you think, you watch.
At the head of the list should be one Sen. Chris Dodd, former Goldman Sachs employee and still a lobbyist for Wall Street.

"Senate plans on introducing bill to claw back AIG bonuses," Rawstory, 03.17.2009: http://rawstory.com/news/2008/Senate_plans_on_introducing_bill_to_0317.html