Power to the People: A.I.G. and Pakistan

Paul Krugman
Fareed Zakaria

“Of all the events and all of the things we’ve done in the last 18 months, the single one that makes me the angriest, that gives me the most angst, is the intervention with A.I.G.” - Ben Bernanke

"These people may have a right to their bonuses but they don't have a right to their jobs forever." - Barney Frank

"Honoring contractual commitments is at the heart of what we do in the insurance business." - Edward Liddy, A.I.G.


Wow. Sometimes public outrage and protests actually work. A.I.G. actually released where its money has gone, as reported by the NY Times: "Amid rising pressure from Congress and taxpayers, the American International Group on Sunday released the names of dozens of financial institutions that benefited from the Federal Reserve’s decision last fall to save the giant insurer from collapse with a huge rescue loan.

With public anger rising, A.I.G. disclosed some financial institutions that benefited from the federal bailouts meant to prop up the troubled insurance giant. Financial companies that received multibillion-dollar payments owed by A.I.G. include Goldman Sachs ($12.9 billion), Merrill Lynch ($6.8 billion), Bank of America ($5.2 billion), Citigroup ($2.3 billion) and Wachovia ($1.5 billion).

Big foreign banks also received large sums from the rescue, including Société Générale of France and Deutsche Bank of Germany, which each received nearly $12 billion; Barclays of Britain ($8.5 billion); and UBS of Switzerland ($5 billion).

A.I.G. also named the 20 largest states, starting with California, that stood to lose billions last fall because A.I.G. was holding money they had raised with bond sales. In total, A.I.G. named nearly 80 companies and municipalities that benefited most from the Fed rescue, though many more that received smaller payments were left out." 

A.I.G. did this to deflect criticism on their paying out $450 million in bonuses to the members of the Financial Products division, with $1.2 billion across the whole company, whose names they are keeping confidential. 370 people will receive over a million dollars each... As Robert Reich pointed out: "the scandal is that even at this late date, even in a new administration dedicated to doing it all differently, Americans still have so little say over what is happening with our money." Impotent we are. Mr Liddy is flipping off the Fed. As I said before, if the taxpayers now own 80% of companies like A.I.G., its time we fired the CEOs and board of directors, and find some responsible people to take their place. Ahh, but where can we find an honest person?..

In Pakistan, a week's worth of protesting and demonstrating in the streets, mostly by lawyers has resulted in that nation's top judge being reinstated, as reported by the NY Times: "The Pakistani government agreed early on Monday to reinstate the independent-minded former chief justice of the Supreme Court, a stunning concession to the opposition leader Nawaz Sharif, who had been heading toward the capital in a convoy threatening to stage a mass protest over the issue after he broke free from house arrest at his residence near here."

Showing that diplomacy works better than guns, TPM reports: "Nine former senior US officials and one current adviser are urging the Obama administration to talk with leaders of Hamas to determine whether the militant group can be persuaded to disarm and join a peaceful Palestinian government, a major departure from current US policy.

The bipartisan group, which includes economic recovery adviser Paul A. Volcker and former national security advisers Brent Scowcroft and Zbigniew Brzezinski, made the recommendation in a letter handed to Obama days before he took office, according to Scowcroft." Yep, times sure are changing, away from the Dick Cheney view of the universe...

Bernie Madoff's wife is claiming that $92 million in cash and property is hers, not from ripping anybody off. They were from previous  contractual agreements...some of the most expensive hummers in recorded history...

And good news for the parents of teenagers everywhere, some agency is reporting that teens are inhaling less paint thinner and lighter fluid, sniffing less glue than during previous years. The bad news is the latest crop of Afghan heroin is cheaper than ever... Now that West Africa is being cracked down on as the major import point for South American cocaine, heroin is quickly taking its place as the drug of choice from Russia to Iran...

Some late night jokes on the economy:

"The federal government announced today that the recession ended back in November of 2001. It ended two years ago! Be sure to pass that on to all your unemployed friends. So you know what that means? The past twenty months of job layoffs, corporate bankruptcies and declining stocks, those were the good times. We should have been living it up." —Jay Leno

"Yesterday Federal Reserve Chairman Alan Greenspan said he would be willing to serve another term. Greenspan said, 'Where else would I get a job in this economy?'" —Conan O'Brien

"Democrats were quick to point out that President Bush's budget creates a 1 trillion dollar deficit. The White House quickly responded with 'Hey, look over there, it's Saddam Hussein.'" —Craig Kilborn

"President Bush unveiled his new economic stimulus plan this week. It was reported that if the plan passes, the president himself would save $44,000 in taxes, Dick Cheney would save $327,000, and you could afford to take the whole family down to Burger King to pick up job applications." —Tina Fey, on Saturday Night Live's "Weekend Update"

"President Bush's economic plan will create 2.5 million new jobs. The bad news, they are all for Iraqi soldiers." —Craig Kilborn

"According to a new study, bad economic times can actually be good for you because people tend to exercise more and eat better. This is not a recession, this is the Bush Health Care Plan." —Jay Leno