Category Archive 'AIG'

27 Mar 2009

Teaching America to Hate

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A security guard at the Fairfield home of AIG Financial Products executive Douglas Poling reasoning with demonstrators, who are being egged on by the press

Elections have consequences. One conspicuous consequence of the last election is angry mobs at the front doors of suburban Connecticut homes. As if they were living in some Third World country, American executives in Fairfield County now need to protect their families with bodyguards.

AIG employees and their families became victims of mass hatred and were placed in real physical danger by deliberate policy crafted at the highest levels of the Government of the United States.

The Obama Administration and the corrupt democrat congress have cynically chosen to advance their socialist agenda by the left’s traditional tactic of divisive agitation.

Paul Kengor, at American Thinker, puts the AIG show trial into perspective.

“We must teach our children to hate,” Vladimir Lenin instructed his education commissars. The Bolshevik godfather declared that hatred was not only “the basis of communism” but “the basis of every socialist and Communist movement.”

Class envy has been a defining staple of the left for centuries, from the frenzied mobs leaping around the French guillotines to the Soviets to, well, the new masses circling AIG executives today. …

Historically, this behavior is both foreign and antithetical to the American experience. Unfortunately, modern Americans don’t understand their founding and the nation’s core principles — our educational system doesn’t teach those things. Thus, they are now voting, and behaving, in kind. And we are now witnessing our own homegrown socialist movement in action, inspired by hate.

Some Americans, whipped into poisonous hatred by their elected representatives, have literally called for death for AIG executives, and one U.S. senator openly requested that these businesspeople commit suicide.

Liberals in Congress, from Senator Chuck Schumer to Senator Chris Dodd, plus a wild gaggle of unleashed central planners in the House, have conducted a show trial of AIG executives, with the larger purpose of placing American free enterprise in the dock. …

As members of Congress target the likes of AIG chief executive Edward Liddy, mobs target the homes of AIG employees in Connecticut. …

AIG workers are being demonized, noted the Times; they are hiring bodyguards. And it isn’t only AIG. Merrill Lynch is dealing with similar assaults.

And that’s just the start. It’s only a matter of public exposure until another group of private-sector “reptiles” — Lenin’s word — is identified for the proletariat. Congress and the White House will be happy to call out the next group of kulaks. …

[T]he mob wants someone’s head on a platter — now. Time to eat the rich. Perhaps our dear leader, President Obama, can go to Connecticut to play the role of healer, addressing the faithful, calming their fears, a political sermon on the mount. Blessed would be the peacemaker.

But not yet — for now, this hate is just too excellent, too perfect for advancing the agenda of the leftist ideologues and envy-mongers running the republic.

Who’s to blame? The American people are to blame. I’m tired of the populist nonsense from talk-radio on how Americans “deserve better than this.” They do? Why? They voted for this. Obama is being Obama. Pelosi is being Pelosi. Schumer is being Schumer. The American people cast the ballots.

You reap what you sow. Enjoy the hate, America. You elected it.

Read the whole thing.

26 Mar 2009

Rahm Emanuel Already Had His Bonus

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Barack Obama recently told the press that he thought about it for some time before deciding to go ahead and unleash attacks on AIG employees receiving contractually-specified compensation for job performance or as retention incentives. Doubtless, the president talked over whether it would be a good idea to use the White House as a platform to whip up public emotion into outraged anger directed at ordinary private citizens with his Chief of Staff Rahm Emanuel.

Rahm Emanuel, as the Chicago Tribune reports, had at the time already long since collected his own bonus for passive collaboration on the board of the Federal Home Loan Mortgage Corporation “Freddie Mac” in the policies directly responsible for the mortgage default crisis, unlike Jake DeSantis, for example, who would soon be nationally targeted despite having no actual real connection.

Before its portfolio of bad loans helped trigger the current housing crisis, mortgage giant Freddie Mac was the focus of a major accounting scandal that led to a management shake-up, huge fines and scalding condemnation of passive directors by a top federal regulator.

One of those allegedly asleep-at-the-switch board members was Chicago’s Rahm Emanuel—now chief of staff to President Barack Obama—who made at least $320,000 for a 14-month stint at Freddie Mac that required little effort. …

The Freddie Mac money was a small piece of the $16 million he made in a three-year interlude as an investment banker…

He was named to the Freddie Mac board in February 2000 by Clinton, whom Emanuel had served as White House political director…

The board met no more than six times a year. Unlike most fellow directors, Emanuel was not assigned to any of the board’s working committees, according to company proxy statements. Immediately upon joining the board, Emanuel and other new directors qualified for $380,000 in stock and options plus a $20,000 annual fee, records indicate.

ACORN probably won’t be busing any demonstrators over to Representative Rosa DeLauro’s house (where Emanual lives in the basement) to threaten him though, will they?

25 Mar 2009

Jake DeSantis Shrugged

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The New York Times published yesterday’s resignation letter from Jake DeSantis, executive vice president of the American International Group’s financial products unit, to Edward M. Liddy, the chief executive of A.I.G.

Dear Mr. Liddy,

It is with deep regret that I submit my notice of resignation from A.I.G. Financial Products. I hope you take the time to read this entire letter. Before describing the details of my decision, I want to offer some context:

I am proud of everything I have done for the commodity and equity divisions of A.I.G.-F.P. I was in no way involved in — or responsible for — the credit default swap transactions that have hamstrung A.I.G. Nor were more than a handful of the 400 current employees of A.I.G.-F.P. Most of those responsible have left the company and have conspicuously escaped the public outrage.

After 12 months of hard work dismantling the company — during which A.I.G. reassured us many times we would be rewarded in March 2009 — we in the financial products unit have been betrayed by A.I.G. and are being unfairly persecuted by elected officials. In response to this, I will now leave the company and donate my entire post-tax retention payment to those suffering from the global economic downturn. My intent is to keep none of the money myself.

I take this action after 11 years of dedicated, honorable service to A.I.G. I can no longer effectively perform my duties in this dysfunctional environment, nor am I being paid to do so. Like you, I was asked to work for an annual salary of $1, and I agreed out of a sense of duty to the company and to the public officials who have come to its aid. Having now been let down by both, I can no longer justify spending 10, 12, 14 hours a day away from my family for the benefit of those who have let me down. …

The profitability of the businesses with which I was associated clearly supported my compensation. I never received any pay resulting from the credit default swaps that are now losing so much money. I did, however, like many others here, lose a significant portion of my life savings in the form of deferred compensation invested in the capital of A.I.G.-F.P. because of those losses. In this way I have personally suffered from this controversial activity — directly as well as indirectly with the rest of the taxpayers. …

But you also are aware that most of the employees of your financial products unit had nothing to do with the large losses. And I am disappointed and frustrated over your lack of support for us. I and many others in the unit feel betrayed that you failed to stand up for us in the face of untrue and unfair accusations from certain members of Congress last Wednesday and from the press over our retention payments, and that you didn’t defend us against the baseless and reckless comments made by the attorneys general of New York and Connecticut. …

I have decided to donate 100 percent of the effective after-tax proceeds of my retention payment directly to organizations that are helping people who are suffering from the global downturn. This is not a tax-deduction gimmick; I simply believe that I at least deserve to dictate how my earnings are spent, and do not want to see them disappear back into the obscurity of A.I.G.’s or the federal government’s budget. Our earnings have caused such a distraction for so many from the more pressing issues our country faces, and I would like to see my share of it benefit those truly in need.

On March 16 I received a payment from A.I.G. amounting to $742,006.40, after taxes. In light of the uncertainty over the ultimate taxation and legal status of this payment, the actual amount I donate may be less — in fact, it may end up being far less if the recent House bill raising the tax on the retention payments to 90 percent stands. Once all the money is donated, you will immediately receive a list of all recipients. …

This choice is right for me. I wish others at A.I.G.-F.P. luck finding peace with their difficult decision, and only hope their judgment is not clouded by fear. …


Jake DeSantis

23 Mar 2009

Media Bias in Connecticut

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Don Surber admires the fair-minded impartiality of the Bridgeport (Renamed: Connecticut) Post.

Not that after 30+ years in this business that I know anything about newspapers. I mean, after all, I do not think that the most important news story in the state of Connecticut would be the agitprop theater of federally financed lefties (ACORN takes grants) protesting executive salaries.

That involved 40 people including some from Washington. This is what they do for a living. They are professionals.

AP originally reported the reporters and news crews outnumbered the Paid Protesters 2-to-1.

The Conn Post gave this item two big pictures, a main story, and a side story.

Buried inside was a story of 300 people in Ridgefield staging a Tea Party against the entire $700 billion bailout and the subsequent $787 billion stimulus.

An actual grassroots movement was brushed off with “Tea Party’ protests spending to stimulate economy.”

The reporter assigned to the story, Eugene Driscoll, had an ironic line: “The difference here: many of the protesters were political conservatives who had never felt it necessary to take to the streets before.”

One of the classic examples.

Hat tip to the News Junkie.

20 Mar 2009

Carol Baum: Maybe Atlas Should Shrug

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Carol Baum, at Bloomberg, reads today’s news and finds herself living in a Rand novel.

Somewhere John Galt is smiling.

The hero of Ayn Rand’s “Atlas Shrugged” is smiling because he’s seen it all before: the government’s intervention in the private sector; the constraints placed on business in the name of the people; the desperation on the part of government bureaucrats when they realize their leverage is limited; and — this part is still fiction — the decision on the part of business leaders to walk away from the enterprises they built.

That’s all I could think about when I read that American International Group Inc., recipient of $173 billion in taxpayer funds, was paying out $165 million in bonuses to employees of its financial-products group, the poster boy for risk and greed.

The Obama administration, Congress and the public are outraged taxpayer dollars are going to enrich the folks who got us into this mess. So am I.

Members of Congress want to blame Edward Liddy, the former chief executive officer of Allstate Corp., who was recruited by former Treasury Secretary Hank Paulson in September to steer AIG away from the shoals.

Liddy is paid $1 a year for his efforts. “My only stake is my reputation,” Liddy said in a March 16 open letter to Treasury Secretary Timothy Geithner.

His only crime, as far as I can tell, is inheriting compensation contracts providing for retention bonuses for certain AIG derivative traders, some of whom have left the company, and listening to lawyers on his options. …

I’m not alone in noting the parallels in the government’s evolving response to the financial crisis. For a year I’ve been waiting for Paulson or Geithner to announce “the John Galt Plan to save the economy,” which is right out of Rand’s novel.

It wasn’t until the AIG bonus brouhaha broke last weekend and I watched government officials flailing to contain the fallout that I realized the government is losing its leverage. Or maybe it never had any leverage to begin with.

Let me explain. The government has been propping up teetering financial institutions, including AIG, Citigroup and Bank of America, creating the illusion that the banks need the government.

The government doesn’t care about these institutions. It cares about the stability of the financial system: the totality, not the parts.

Congress can refuse to allocate more money to institutions in which it already owns a share (80 percent in the case of AIG). It can levy a tax on the AIG bonus payments or withhold them from the next $30 billion cash infusion, although who would notice? And it can install new management.

Why hasn’t the government put in its own people already? Maybe no one wants the job.

The government needs Liddy and Citigroup’s Vikram Pandit and Bank of America’s Ken Lewis to continue working to restore their firms to prosperity in the same way the looters in Rand’s novel need Hank Reardon and Francisco d’Anconia and Dagny Taggart, respectively, to run their steel mills, copper mines and railroad.

From their perches as chairmen of the House Financial Services Committee and Senate Banking Committee, respectively, Democrats Barney Frank and Chris Dodd fulminate about the lack of regulation and about inflated CEO compensation. For Dodd, it’s a good opportunity to deflect attention from his sweetheart mortgages from former Countrywide CEO Angelo Mozilo and his questionable real estate deal in Ireland.

All that’s left for life to imitate art completely is for these CEOs to quit. Let Barney Frank and Chris Dodd run AIG. Let’s see how they fare.

The government needs these companies to survive — and buy back the government’s ownership stake — more than they need the government. Most of these CEOs are already wealthy. They don’t need a job working for the government, which is what running a bank amounts to today.

What’s in it for them? One dollar of compensation? Their reputations? The house on the lake looks more appealing by the day.

Is anyone surprised sales of “Atlas Shrugged” have spiked in recent months as reality comes to resemble Rand’s fiction?

20 Mar 2009

Congress Plays Class Warfare on the Titanic

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Glenn McCoy

Charles Krauthammer puts into perspective the scale of the AIG bonuses which have occasioned such histrionics in Washington. Targeting executives as overpaid is a handy way of diverting the public’s attention from the really significant looting going on at the hands of Congress itself.

A $14 trillion economy hangs by a thread composed of a comically cynical, pitchfork-wielding Congress, a hopelessly understaffed, stumbling Obama administration, and $165 million.

That’s $165 million in bonus money handed out to AIG debt manipulators who may be the only ones who know how to defuse the bomb they themselves built. Now, in the scheme of things, $165 million is a rounding error. It amounts to less than 1/18,500 of the $3.1 trillion federal budget. It’s less than one-tenth of 1 percent of the bailout money given to AIG alone. …

[A] contract is a contract. The AIG bonuses were agreed to before the government takeover and are perfectly legal. Is the rule now that when public anger is kindled, Congress summarily cancels contracts?

Even worse are the clever schemes now being cooked up in Congress to retrieve the money by means of some retroactive confiscatory tax. The common law is pretty clear about the impermissibility of ex post facto legislation and bills of attainder. They also happen to be specifically prohibited by the Constitution. We’re going to overturn that for $165 million?

Nor has the president behaved much better. He too has been out there trying to lead the mob. …

It is time for the president to state the obvious: This recession is not caused by excessive executive compensation in government-controlled companies. The economy has been sinking because of a lack of credit, stemming from a general lack of confidence, stemming from the lack of a plan to detoxify the major lending institutions, mainly the banks, which, to paraphrase Willie Sutton, is where the money used to be.

17 Mar 2009

Journalistic Lynch Mobs

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People going through today’s American educational system can be assured to have been intensely trained to understand that using crude stereotypes to whip up hatred toward Jews and blacks in order to justify targeting them with public and private persecution is gravely wrong.

I can remember, though, a day back in my parochial elementary school when our nun brought in a film projector and told us all about the Holocaust. Scarcifying images of great piles of emaciated bodies being pushed into mass graves by bulldozers, of skeletons lying in piles in ovens, of the pitiful starven and emaciated survivors took the entire class of children through the emotional wringer. How could human beings do such things to other people? more than one classmate demanded indignantly in the subsequent discussion.

Then rang the recess bell. As my classmates filed down the porch steps to the asphalt school yard, the dark atmosphere of the tormented history of Europe suddenly lifted, and, to my own astonishment, first one aggressor singled out a particular class misfit for persecution, then one by one nearly all of my classmates joined in. I marveled at the time that so much enthusiasm for the accepted moral lesson could go hand in hand with a complete incapacity to generalize it.

Editors and journalists employed by major newspapers and television networks are highly paid members of America’s upper middle class community of privilege, but that does not stop them from behaving like nasty school children ganging up on vulnerable victims, or from forming lynch mobs to go after not-necessarily-in-every-case better-paid business executives.

We’ve had a disgraceful orgy of class hatred for days now directed at AIG employees who receive, in accordance with the custom of their industry, large portions of their compensation in the form of bonuses. The bolshevik quarter of the blogosphere and the mainstream media have been deliberately whipping up public indignation by using selective and inflammatory reporting and general ignorance of the bonus compensation system as a basis for stirring up group hatred aimed at Wall Street and the business community as a class.

A trader or division leader in a firm which is losing money may himself, of course, be making his firm all kinds of money, and may be more than amply exceeding his own profit targets. It is not extraordinary or astonishing in the least that in an industry in which bonuses play a major role that, even in times of negative overall earnings, firms may be obligated by contract to pay bonuses to many executives.

The press also doesn’t stop to remind the public that any responsible business organization will first pay its own employees, before it attempts to meet external obligations to creditor or stockholders, or even to Big Brother.

The press and the leftwing blogs are simply cynically manipulating the emotions of the public by relying on false stereotypes and imaginary grievances to stir up envy and hatred which they propose to use to as the mechanism for gaining public support for their own radical, pernicious, and socially and economically destructive agenda of institutionalizing class warfare in public policy.

The American socialist revolution ironically typically features the fat and comfortable bourgeoisie yelling for the blood of the harder-working, less prestigious representative of exactly the same class as himself.

The gleeful tricoteuses at the Washington Post report that the public’s “rage swells,” proud of having whipped the mob into a sufficient fury as to pose actual physical hazard to their fellow citizens.

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.

“It’s a mob effect,” one senior executive said. “It’s putting people’s lives in danger.”

Even so-called Republicans senators, like the egregious Charles Grassley of Iowa, have been unable to resist the temptation to pick on a defenseless target. Grassley is quoted by the Politico suggesting that AIG executives entitled to bonuses should resign or commit seppuku.

American life is growing darker and more dishonest.

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