Tuesday, March 17, 2009

quit or commit suicide

Politico | Sen. Charles Grassley is so angry over AIG bonuses that he says the executives should resign or kill themselves.

In a comment aired this afternoon on WMT, an Iowa radio station, Grassley (R-Iowa) said: “The first thing that would make me feel a little bit better towards them if they’d follow the Japanese model and come before the American people and take that deep bow and say I’m sorry, and then either do one of two things — resign, or go commit suicide.”

Obama squanders political capitol over AIG payouts. A tidal wave of public outrage over bonus payments swamped American International Group yesterday. Hired guards stood watch outside the suburban Connecticut offices of AIG Financial Products, the division whose exotic derivatives brought the insurance giant to the brink of collapse last year. Inside, death threats and angry letters flooded e-mail inboxes. Irate callers lit up the phone lines. Senior managers submitted their resignations. Some employees didn't show up at all.

President Obama's apparent inability to block executive bonuses at insurance giant AIG has dealt a sharp blow to his young administration and is threatening to derail both public and congressional support for his ambitious political agenda.

The Obama administration was already facing a skeptical public and members of Congress critical of the huge sums of money the government has allocated to shoring up the devastated financial system.

News of the latest AIG bonuses only compounded the political problems that the huge expenditures pose for the president. The administration has tried to manage the public anger by expressing empathy with the outrage over the large outlays to financial firms, while explaining that they are necessary to stabilize the economy.

What's most amusing and most instructive in all the ballyhoo about AIG bonus payouts, however, is the fact that news of the bonus payouts has completely overshadowed news of the $50 Billion paid out to foreign owned banks. When it emerged on Sunday that foreign banks had received more than $50bn of US federal funds as part of the AIG bail-out, big beneficiaries such as Deutsche Bank and Société Générale must have braced themselves for an outcry in Washington.

Instead, the reaction has been muted as US politicians focus instead on revelations about the $165m of bonus payments to AIG employees in spite of the insurance group’s multi-billion dollar losses.

Barney Frank, chairman of the House financial services committee, said questions would be raised about the payments to foreign banks at a planned hearing on AIG on Wednesday.

But he acknowledged that anger about taxpayer money flowing overseas had been “displaced” by the bonus issue. More than 20 banks in Canada and seven European countries benefited from the bail-out as counterparties to derivatives contracts and financial deals with AIG. The biggest winners were French banks, with Société Générale receiving $11.9bn and BNP Paribas $4.9bn. Deutsche Bank of Germany received $11.8bn and Barclays of the UK $8.5bn.

Most prominent figures on Capitol Hill appeared to accept that the payments were unavoidable given how interwoven AIG was in the global financial system.