Matt Yglesias

89 Responses to “The Commanding Heights”

1. sash Says:
   September 16th, 2008 at 8:32 pm

   Remember the days when Alan Greenspan supported the Bush tax cuts because he was afraid of the consequences of the government having to invest its surplus in the private sector? For my monay I’d rather take my chances that the government may pick the wrong industries/companies over knowing for certain that the government is supporting people who couldn’t/wouldn’t stay out of trouble.

2. howard Says:
   September 16th, 2008 at 8:35 pm

   as matthew suggests, there is almost no way that this is currently legal, although the various poobahs at the meeting the link reports on will almost certainly go ahead and make it legal.

   this is happening so fast that it’s almost impossible to grasp the full extent, but the risk factor at this point is rising fast: the long-awaited deleveraging is taking place with a vengeance and balance sheets are being destroyed right and left.

   the fact, btw, that warren buffett has shown no interest in AIG is, for me, the biggest tell of all.

3. E. O'Neal Says:
   September 16th, 2008 at 8:38 pm

   The Fed’s charter makes it the lender of last resort to maintain liquidity and solvency in the financial system. AIG is a great company with many strongly performing businesses. The nit wits running it decided they could boost returns by developing new products that involved assuming the risk for garbage mortgage securities from banks and other institutions. Now we taxpayers are on the hook to keep the whole system from locking up due to spiraling defaults.

4. E. O'Neal Says:
   September 16th, 2008 at 8:42 pm

   howard, good point about Buffett. He probably wants some of the parts when the subs are sold off, but to let the taxpayers end up with the toxins.

5. El Cid Says:
   September 16th, 2008 at 8:44 pm

   It was really awful when Hugo Chavez bought out the Venezuelan branch of a Mexican cement company last week for a bargain price since no one was offering anything close to what they were asking. That is a terrible intervention into the free market and Americans are against that sort of thing.

6. Jeffrey Davis Says:
   September 16th, 2008 at 8:48 pm

   George W. Bush is Midas-in-Reverse: what he touches turns to shit.

7. Rich Says:
   September 16th, 2008 at 8:53 pm

   The Fed has very few good options, so I can understand the apparent necessity of the bridge loan to AIG, but in return, Congress must begin to re-regulate the financial services industry so that the precipitating causes of this financial meltdown (lack of transparency, short selling, undercapitalized loans) don’t present a continuing threat to the financial system, and now by implication, the US taxpayer.

8. Jeffrey Davis Says:
   September 16th, 2008 at 9:00 pm

   Over the week-end, I saw speculation about a $50 billion package for AIG. Then, $70 billion. This evening $85 billion.

   The water swirls fastest at the bottom of the bowl.

   This reminds me of Truman attempting to seize the steel industry. The Republicans complained then, but IOKIYAR.

   Mostly, it’s the Bush family. The S&L crisis on daddy’s watch. The meltdown of financial services on sonny’s. And the funny thing — and by funny I mean funny like mesothelioma — is that Jeb Bush is waiting in the wings. And what makes it farkin’ hysterical: the Republicans will WELCOME him. If Gore Vidal or some other political novelist had made up a family like the Bushes, nobody would believe it possible. Apparently, the Republicans won’t rest until every last nickel is shaken from our pockets and shipped overseas. What a world. What a world.

9. Walt Says:
   September 16th, 2008 at 9:01 pm

   I think it’s legal, though it’s probably a gray area. (The Fed could have legally done the Chrysler bailout, but declined to do so.) The Fed has some provision where it can lend to anyone. Given that they invoked this provision, they can (probably) freely demand terms for the loan just like anyone else. AIG is free to turn down the loan, so it’s a voluntary nationalization.

10. nukev Says:
    September 16th, 2008 at 9:02 pm

    Un freakin beleivable. The Free Marketeers rule. Yeah- The “Democrat” party loves big government. Why nationalize health care when you can nationalize Wall Street?

11. E. O'Neal Says:
    September 16th, 2008 at 9:04 pm

    Rich, Congress IS the problem. They allowed, encouraged and celebrated the reckless expansion of credit that fed the housing bubble. Alan Greenspan, though he warned about the predictable train wreck of Freddie and Fannie, kept rates too low, too long.

    Barnie Frank is still in denial, claiming the Fs are healthy even today. Obama’s presidential campaign has received $70+ thousand from Fannie and Freddie PACs, and two of his top advisers and fundraisers are former CEOs of Fannie. No wonder he’s so quiet about the financial abuse that put the taxpayers on the hook for $5.2 trillion of GSE liabilities.

12. V.I. Somethingorother Says:
    September 16th, 2008 at 9:10 pm

    All power to the Soviets of preachers and brokers!

13. El Cid Says:
    September 16th, 2008 at 9:14 pm

    I admire the Republicans for having the discipline that Democrats don’t — when they get the word to try to blame this on the Dem-o-crat Congress, they do it. And they don’t take the first 5 sentences to talk about how awesome and honorable their Democratic colleague is and how they’re sure that he / she is not directly to blame, just their philosophy, etc.

    So a tip of the hat to them for message discipline, even if they do run the nation into the dirt every time they get in charge, and we end up losing an entire sector of our banking system every time they do.

14. rapier Says:
    September 16th, 2008 at 9:15 pm

    It’s not legal. Law has nothing to do with it. The Fed and the Treasuries position is that it’s a lot easier to ask for forgiveness than permission. Besides, democracy is not designed to respond quickly to crisis.

    All matters macro economic must be decided behind closed doors by the experts and the financial elites. The high priests of money. Such things are beyond the understanding of ordinary citizens or even politicians. All other matters are easily understood by the average schmuck and in those cases experts are to be disdained and eventually will be eliminated. Not Pol Pot style perhaps, but bannished.

15. nukev Says:
    September 16th, 2008 at 9:16 pm

    Rich, Congress IS the problem. They allowed, encouraged and celebrated the reckless expansion of credit that fed the housing bubble.

    And the Wall Street thugs were so impressed with the massive power of Congress (choke, cough) that against their better judgement decided to make loads of cash before bailing out and begging for help.

    what a load of shit

16. Rich Says:
    September 16th, 2008 at 9:20 pm

    E. O’Neal, most of this deregulation took place when the Republicans controlled Congress, more specifically, when McCain’s main financial adviser (formal or otherwise), Phil Gramm, chaired the Senate Banking Committee.

    As for Fannie and Freddie, let’s not forget that much of the $5 trillion is secured by assets, i.e., houses, which in most cases, still have substantial value.

17. kafka Says:
    September 16th, 2008 at 9:22 pm

    Next up – $billions in “loans” to the automakers.

    Quick, somebody tell Bernanke: the Fed is no longer the lender of last resort. The taxpayers are.

18. Joe Chi Says:
    September 16th, 2008 at 9:22 pm

    In for a penny, in for a pound, so why not? The federal government controls housing mortgages, now controls insurance, and within the next year will probably also own the auto companies and a few airlines to boot. Then when the Fed has to run the printing presses to pay for all this, and the dollar collapses, we will be owned lock stock and barrel by the PRC.

    I for one welcome our prospective Chinese overlords!

19. rapier Says:
    September 16th, 2008 at 9:26 pm

    It’s not industry being nationalized, it’s the Treasury and Fed being privatized by the financial elites. Privatized not being quite the right word I admit. It’s more in the nature of a full partnership, in the open. They’ve always been in partnership but it was never quite full and was done with winks and nods. That is no longer a political necessity since all that matters politically is if the leader is a patriot committed to free markets.

    The dreams of the capitalists behind the Third Reich have finally been realized. (Facism has nothing to do with it) Many will see the current market decimation as a defeat for capital but far more likely is this will mark its final victory.

20. neil Says:
    September 16th, 2008 at 9:26 pm

    The Fed does, of course, have the authority to do this.

    In unusual and exigent circumstances, the Board of Governors of the Federal Reserve System, by the affirmative vote of not less than five members, may authorize any Federal reserve bank, during such periods as the said board may determine, at rates established in accordance with the provisions of section 14, subdivision (d), of this Act, to discount for any individual, partnership, or corporation, notes, drafts, and bills of exchange when such notes, drafts, and bills of exchange are indorsed or otherwise secured to the satisfaction of the Federal Reserve bank: Provided, That before discounting any such note, draft, or bill of exchange for an individual, partnership, or corporation the Federal reserve bank shall obtain evidence that such individual, partnership, or corporation is unable to secure adequate credit accommodations from other banking institutions.

21. E. O'Neal Says:
    September 16th, 2008 at 9:27 pm

    Rich, what deregulation? Investment banks have NEVER been regulated. Bush, Clinton, Greenspan and many Republicans have wanted to regulate Freddie and Fanny more effectively and to boost capital requirements, but Dems in Congress blocked it Look it up.

22. Johnnyk Says:
    September 16th, 2008 at 9:27 pm

    ….this raises the question of how these companies are going to be run.

    Brownie may be looking for a job.

23. El Cid Says:
    September 16th, 2008 at 9:31 pm

    Since he has been invoked here, might as well quote Frank’s response to the right wing meme blaming him:

    Letter to the editor of the Wall Street Journal from Rep. Barney Frank, September 9, 2008:

    The Journal’s recent misleading and inaccurate editorial on my relationship with Fannie Mae and Freddie Mac leaves out one central fact, and it does so in a very revealing fashion.

    At the bottom of the first column of the editorial, the Journal begins by saying that “by early 2007, Mr. Frank was in charge of the House Financial Services Committee, arguing that he had long favored some kind of reform.” A reader unfamiliar with the facts would have no idea that I did not simply argue in favor of reform, but presided over passage of a very tough reform bill.

    When the Democrats obtained the majority in the 2006 Election, and I became Chair of the Committee, I made a very strong reform bill one of our highest priorities and worked closely with Secretary Paulson to break the logjam that hindered the bill in the past. As a result, the Financial Services Committee, which organized under the Democrats on January 31, 2007, passed the bill restructuring the regulation of Fannie and Freddie — specifically including all the increased powers that the Bush administration requested — on March 28, 2007 and the full House followed — by a vote of 313 to 104 in early May. The House passed these important reforms in May of 2007 — only four months after we became the majority. It is true that the bill was held up for over a year by inaction in the Senate, but that is not surprising given the difficulty the Senate has moving controversial legislation on any subject.

    Additionally, when we were considering the stimulus package in early 2008, I proposed to Secretary Paulson that in addition to raising the jumbo loan limits for Fannie Mae and Freddie Mac, we include the GSE reform that the House had passed. He did not agree, fearing that it might slow things down.

    In fact, my reform efforts had begun when we were still in the minority. In 2005, I joined Michael Oxley, then Chairman of the House Financial Services, in supporting legislation to increase the regulation of Fannie and Freddie that passed the House by a vote of 330 to 90. When former Congressman Richard Baker proposed to examine the compensation structure of Fannie’s and Freddie’s top executives, and some Members of Congress tried to block him, I explicitly spoke out in support of his right to do that and our right, as a Congress, to examine the GSE’s compensation practices.

    There is another glaring distortion in the editorial, driven by the Journal’s opposition to our efforts to help build affordable rental housing. The editorial laments the fact that as part of the ultimate package I received my “biggest payoff” in the Affordable Housing Trust Fund. While that is true, I am struck by the Journal’s absolute inability to understand that some of us think that the plight of people who do not have adequate rental housing ought to be addressed. The bizarre belief that adequate housing means homeownership and not rental housing was one of the push factors in the subprime crisis. That is apparently the basis for assuming that the only reason we would support an affordable housing program – along with such as the non-partisan groups as Catholic and Lutheran Churches, Habitat for Humanity, and Enterprise Community Partners — was so that we could personally profit from this politically. The truth is that the way this fund will be created, Members of Congress will have no say over its disbursements. To the right-wing ideologues who write the Journal’s editorials, funding to build affordable residential housing is “loot.” Fortunately, that is a distinctly minority opinion in the Congress and in much of the country.

    I acknowledge differences between myself and the Journal as to whether or not we should be trying to build affordable rental housing and as to whether or not some public role in housing finance is worth supporting. But the Journal’s assertion that support for those two entities meant opposition to reform is entirely wrong, and it is presented in one of the most dishonest pieces of journalism I have seen. The Journal’s error concerning what happened when the Democrats took over the majority early in 2007 is a classic example of ideological bias. It is important to repeat that the editorial omits the key point, that it was exactly in that period that the House Financial Services Committee, that I chair, passed and helped pass through the House a bill that embodied the reforms asked for by the Bush administration, and that was the basis for Secretary Paulson’s and Director Lockhart’s recent actions. Your readers deserve the whole story.

    http://www.huffingtonpost.com/rep-barney-frank/iwall-street-journali-edi_b_126923.html

24. Swopa Says:
    September 16th, 2008 at 9:32 pm

    A little quick Photoshop in honor of Matt’s reference to Bush echoing Lenin:

    http://www.needlenose.com/wp/2008/09/16/quote-of-the-day-916/

25. Joe Chi Says:
    September 16th, 2008 at 9:35 pm

    Many will see the current market decimation as a defeat for capital but far more likely is this will mark its final victory.

    Ouch – I forgot that the only way the neofascists could hold on to power in this scenario is that they use the only remaining asset the U.S. has, its military and nuclear power.

    Bomb bomb bomb Iran anyone?

26. nukev Says:
    September 16th, 2008 at 9:37 pm

    but Dems in Congress blocked it Look it up.
    So the Republican party is now the staunch proponents of regulation? Really? What a farce.

27. kafka Says:
    September 16th, 2008 at 9:41 pm

    “It’s not industry being nationalized, it’s the Treasury and Fed being privatized by the financial elites. Privatized not being quite the right word I admit. It’s more in the nature of a full partnership, in the open. They’ve always been in partnership but it was never quite full and was done with winks and nods. That is no longer a political necessity since all that matters politically is if the leader is a patriot committed to free markets.

    The dreams of the capitalists behind the Third Reich have finally been realized. (Facism has nothing to do with it) Many will see the current market decimation as a defeat for capital but far more likely is this will mark its final victory.”

    Accurate description, no doubt. The investments in our political system by the moneybags (”campaign contributors”) have produced yields that dwarf anything they ever got on Wall Street.

28. In what respect, Charlie? Says:
    September 16th, 2008 at 9:42 pm

    Humorous TV moment of the day: On Kudlow’s Anarko-Kapitalist Kaffee Klatsch, Don Luskin was decrying the wiping out of common shareholders (Lehman and maybe AIG) by the government as “worse than moral hazard, it’s immoral hazard.” Yes, as Don sees it the big problem is confiscation of private property by the government. As if the vanguard of the proletariat is storming the boardrooms of Wall Street and defenestrating investment bankers. I kid you not!

29. Swan Says:
    September 16th, 2008 at 9:47 pm

    It seems to me that there this step has uncertain implications far beyond the world of high finance.

    Darth Vader is going to try to take over the Galaxy?

30. brewmn Says:
    September 16th, 2008 at 9:54 pm

    I admit I’m not up to speed on many aspects of this issue, but I have read many wingnut comments to the effect that Democrats, who have been either in the minority or supine in the face of Republican control of the White House for almost thirty years, are resposible for a financial crisis almost exclusively caused by deregulation.

    Fair enough. In some parallel universe, it’s possible.

    But to find out that these partisans are basing their argument on a Wall Street Journal EDITORIAL, for chrissakes, now that strains credulity.

    Even the wingnuts aren’t that stupid and/or intellectually dishonest, are they?

31. rapier Says:
    September 16th, 2008 at 10:01 pm

    Luskin missed the memos on this. He’ll come around when he realizes that this portion of the government, the Fed and Treasury are working with/for the private sector. It’s a shame current shareholders are killed, maybe it’s Don himself, but the good assets will eventually be owned by his friends and the bad assets, the fictitious assets, will be given to the taxpayers. Serves them right and the cost will prevent them from getting cash from Uncle Sam so they can sit on the porch all day and drink beer.

32. nukev Says:
    September 16th, 2008 at 10:05 pm

    Even the wingnuts aren’t that stupid and/or intellectually dishonest, are they?

    yes

    Another addition to simple answers to simple questions.
    Where did E. get to anyway?

33. Don Williams Says:
    September 16th, 2008 at 10:11 pm

    1) The Republicans can lie about the Democrats because Obama is a chickenshit coward who can’t bring himself to point out how Republican government over the last 8 years has ruined this country.

    2) If Obama was attacking the Republicans , the country would not give a shit what lies the Republicans were telling.

    But Obama’s cowardly silence is what allows the Republican right wing propaganda machine to broadcast and their lies to be heard. Because noone is contradicting Republican lies and exposing the truth.

    3) We are seeing the same thing we saw with the runup to the IRaq War. With the exception of Nancy Pelosi, Democratic leaders are lying down and spreading their legs.

    What a pathetic bunch of undependable, contemptible chickenshits.

34. John Says:
    September 16th, 2008 at 10:13 pm

    Really deep post man. You clearly have no idea what you are talking about, so just stop.

35. John Says:
    September 16th, 2008 at 10:15 pm

    There could be an effort to manage them in the broad public interest or out-of-control crony capitalism or something like the situation in present-day Russia. It seems to me that there this step has uncertain implications far beyond the world of high finance.

    Yes, I bet the implications are really “uncertain,” genius. What the fuck are you talking about??

36. Don Williams Says:
    September 16th, 2008 at 10:24 pm

    1) What’s infuriating is that our lying whores in the News Media are covering up what a stinking pile of shit AIG has been for years.

    2) The founder and CEO , Maurice Greenberg, resigned under pressure in 2005 after Eliot SPitzner filed a lawsuit against him for fraud. (WHY does NO ONE ask why the Bush Administration wouldn’t prosecute Wall Street figures but a New York State Attorney General did?)

    http://www.usatoday.com/money/industries/insurance/2005-05-26-spitzer-sues-aig_x.htm

    See http://www.marketwatch.com/news/story/aig-sues-ex-chief-greenberg-seeks/story.aspx?guid={9BD41017-CED4-4C23-A577-A4B1FFBC43EB}

    3) Anyone want to guess who’s given Republicans a shitload of money recently?

37. Joshua Says:
    September 16th, 2008 at 10:25 pm

    I work for an insurance company – thankfully not AIG, but a large one – and I decided tonight’s a good night for drinking. There’s no telling how deep this rabbit hole goes.

    I also have to start pulling my money out of WaMu. Ugh!

38. Don Williams Says:
    September 16th, 2008 at 10:34 pm

    1) Look at the hold Maurice Greenberg has over AIG via his ownership of CV Starr and SICO:

    http://www.usatoday.com/money/industries/insurance/2005-05-30-aig-cover_x.htm

    This is the type of shit our money is bailing out?

39. Walt Says:
    September 16th, 2008 at 10:35 pm

    Matthew, E. O’Neal is clearly a paid agent provocateur. The amount of time it takes for the message of the day to go from the blast fax to your comment section can be measured in minutes. Why do you put up with it?

40. Don Williams Says:
    September 16th, 2008 at 10:44 pm

    And how did Greenberg’s SICO and CV Starr get roughly 13 percent of AIG stock? If this account in an AIG lawsuit is correct, he did it the old-fashioned way. He stole them.

    http://www.nypost.com/seven/03282008/business/aig_sues_greenberg_over_stock_misappropr_103912.htm

    Ha ha ha . Welcome to your new partner, Pauli and US taxpayers.

41. Don Williams Says:
    September 16th, 2008 at 10:49 pm

    See also
    http://www.reuters.com/article/idUKN1854042120071218

42. In what respect, Charlie? Says:
    September 16th, 2008 at 11:04 pm

    Thanks for those reminders about Greenberg’s little private club and side-business at the expense of AIG shareholders. I’d forgotten about that what with all the excitement of the past year. He certainly was at the cutting edge of the trend of public company CEOs using the company as a personal piggy bank; most just satisfy themselves with looting –er, restructuring– rank & file employee pension plans to fund their own post-retirement extravagant lifestyles.

    At least the Starr Foundation managed to get the East Asian Library at my alma mater finished before this came about:

    It makes a nice matched set with the biz school’s Arthur Anderson Auditorium.

43. daveNYC Says:
    September 16th, 2008 at 11:44 pm

    AIG is a great company with many strongly performing businesses. The nit wits running it decided they could boost returns by developing new products that involved assuming the risk for garbage mortgage securities from banks and other institutions.

    Yeah, they’re a great company that’s run by morons and has piles of toxic financial obligations on its books. Do you even read what you type?

    I remember Volker saying that the BSC JPM loss coverage was right on the edge of what the Fed was allowed to do, this is way past that.

44. Ralf Says:
    September 16th, 2008 at 11:49 pm

    So what the heck did Lehman Bros do to the Bush Admin? Everyone, everyone gets bailouts except them? Lehman must have not accepted the full campaign cash shakedown.

45. E. O'Neal Says:
    September 17th, 2008 at 12:02 am

    daveNYC, you make a good point. AIG was built by Hank Greenberg into one of the top three financial companies in America. He was forced out three years ago by Eliot Spitzer, that model of rectitude. AIG has a number of very strong units that are dominant in their markets. The company has been very profitable, but they made a decision to develop new products where they basically assumed the risk on substandard mortgage securities for a fee. They sold way too much of these.

    This awful risk management destroyed a great company when the housing bubble burst. I called them nitwits, but they weren’t the lone ranger — look at this fascinating interactive chart in the NYT. http://www.nytimes.com/interactive/2008/09/15/business/20080916-treemap-graphic.html

46. right Says:
    September 17th, 2008 at 12:15 am

    The founder and CEO , Maurice Greenberg, resigned under pressure in 2005 after Eliot SPitzner filed a lawsuit against him for fraud. (WHY does NO ONE ask why the Bush Administration wouldn’t prosecute Wall Street figures but a New York State Attorney General did?)

    The real question is why didn’t Spitzer ever prosecute him? Spitzer never had any evidence that would be admissible in court; rather he had a poorly-written NY State Law that would have allowed him to subpoena every employee and document from every securities firm in NY, without counsel, and ask them anything for no reason at all. He used this to pursue personal vendettas and raise his political stature; the actual cases he brought to trial were few and far between.

47. Ed Marshall Says:
    September 17th, 2008 at 12:27 am

    AIG has a number of very strong units that are dominant in their markets.

    In the business that’s called “juice”. I’m guess good for him, he could scam some money out of the specialty market or wherever AIG looks good right now, but when you get so greedy you make loan shark style loans to people who can’t possibly pay on a scale that bankrupts your company, you aren’t running a serious business.

    As a matter of fact if many of these people had approached actual loan sharks they would have been turned down.

48. Don Williams Says:
    September 17th, 2008 at 12:34 am

    Re Ralf’s comment “So what the heck did Lehman Bros do to the Bush Admin?”
    ———
    1) As the old fucker in the Indiana Jones movie said: “They chose badly.” Hee hee

    2) Lehman ,at $1.9 Million, is ..er..was one of the major contributors in the 2008 campaign. 64 percent Democratic, 36 percent Republican. See http://www.opensecrets.org/overview/topcontribs.php?cycle=2008

    and http://www.opensecrets.org/news/2008/09/brothers-grim-is-lehman-next.html

    Obama: $370,500
    McCain: $117,500

49. Don Williams Says:
    September 17th, 2008 at 12:34 am

    3) You can see from the above opensecrets link that Bear Sterns and Merrill Lynch were more on the fence — roughly 50 50 to both parties so they were just sold off into slavery but were allowed to live.

    4) Here is AIG’s Maurice Greenberg’s donations:

    http://www.opensecrets.org/indivs/donor_lookup.php?name=Greenberg,%20Maurice

    Republicans: 52,400

    Democrats: 10,000

    5) Of course, you have to look at AIG up to when Maurice was forced out in 2005. Republicans still fondly remember that $1.3 Million he tossed to them in 2002. See
    http://www.opensecrets.org/orgs/summary.php?id=D000000123

50. Don Williams Says:
    September 17th, 2008 at 12:35 am

    6) And to see why no Democrat or Republican objected to the Fanny Mae/Freddie Mac bailout with $300 Billion?? of our dollars, look at
    http://www.opensecrets.org/news/2008/09/update-fannie-mae-and-freddie.html

51. JJF Says:
    September 17th, 2008 at 1:18 am

    As I read somewhere earlier today, the Chrysler bailout just a few decades ago, which precipitated an enormous debate at the time, and ultimately was sealed with an act of Congress, was for $1.2 billion (something like $3 billion in today’s dollars).

    With the deal today and others this month, the feds have put us on the line for hundreds of billions. No great debate at all. It’s mind-boggling.

    We sure have come a long way.

52. Don Williams Says:
    September 17th, 2008 at 1:27 am

    Re right’s comment “The real question is why didn’t Spitzer ever prosecute him? Spitzer never had any evidence that would be admissible in court;”
    —————-
    1) Oh bullshit.

    AIG had to cough up $1.6 BILLION to settle with Spitzer for Greenberg’s accounting after Greenberg was forced out.
    And cut its net worth by $2.3 Billion ,after restating net income by $3.9 Billion. See http://www.foxnews.com/story/0,2933,158179,00.html

    2) And Eliot Spitzer did file suit against Greenberg — as a $Billion plus civil suit that’s coming up for trial. Greenberg was deposed just a few days ago — 82 year old fucker is probably having his lawyers drag the process along until he dies — and laughing his ass off along the way.

53. Don Williams Says:
    September 17th, 2008 at 1:30 am

    Greenberg is not out of the woods yet. One of his executives was just found guilty of fraud in February of this year for a deal that occurred on Greenberg’s watch –
    See http://www.nytimes.com/2008/02/26/business/26insure.html .

54. Don Williams Says:
    September 17th, 2008 at 1:41 am

    Here is the article on Greenberg being deposed by Andrew Cuomo just a few days ago — AG Cuomo is carrying forward the civil suit filed against Greenberg by Eliot Spitzer:

    http://blogs.wsj.com/law/category/shareholder-suits/
    (Scroll down to “Hank Greenberg Settles AIG suit, Deposed in New York” )

    Must have been an interesting deposition — Greenberg denying any wrongdoing and claiming he did his fidicual duty while outside AIG screams past the window and splatters on the sidewalk.

    And you guys wondered why people were following Eliot Spitzer around and investigating his sex life.

    Heh heh heh

55. Don Williams Says:
    September 17th, 2008 at 1:43 am

    Notice how the New York Times coverage of the AIG bailout leaves out all the good parts?

56. El Cid Says:
    September 17th, 2008 at 2:16 am

    The New York Times went all Commie today. I notice they also call him Mr. McCain, not Sen. McCain, but I don’t know if that’s common for them.

    NYT Editorial: “Mr McCain and the Economy”

    …the economy is stressed to the breaking point by fundamental problems — in housing, finance, credit, employment, health care and the federal budget — that have been at best neglected, at worst exacerbated during the Bush years. And as a result, American workers have taken a beating.

    In clarifying his comments, Mr. McCain lavished praise on workers, but ignored their problems. That is the real insult.

    For decades, typical Americans have not been rewarded for their increasing productivity with comparably higher pay or better benefits. The disconnect between work and reward has been especially acute during the Bush years, as workers’ incomes fell while corporate profits, which flow to investors and company executives, ballooned. For workers, that is a fundamental flaw in today’s economy. It is grounded in policies like a chronically inadequate minimum wage and an increasingly unprogressive tax system, for which Mr. McCain offers no alternatives.

    As for Wall Street, Mr. McCain blamed the meltdown on “unbridled corruption and greed.” He called for a commission to find out what happened and propose solutions. His diagnosis and his cure are misguided. The crisis on Wall Street is fundamentally a failure to do the things that temper, detect and punish corruption and greed. It was a failure to police the markets, to enforce rules, to heed and sound warnings and expose questionable products and practices.

    The regulatory failure is rooted in a markets-are-good-government-is-bad ideology that has been ascendant as long as Mr. McCain has been in Washington and championed by his own party. If Mr. McCain adheres to some other belief system, we would like to hear about it.

57. Synchronized Drowner Says:
    September 17th, 2008 at 3:07 am

    A new place for Brownie to land, and do a heckuva job.

58. rapier Says:
    September 17th, 2008 at 5:47 am

    If you want to protest there is not much you can do but you can withdraw all your money from the bank. A silly and futile gesture which if it became a flood would insure the crash of the entire system. The Treasury might be able to borrow enough, or the Fed might be able to print enough to cover the losses on pretend assets but nobody has enough money to give Joe Six Pack his own cash.

    The thing is if the system is not cleaned out, purged, which is the most important part of any free market business cycle, then not only have markets been destroyed but the current owners will own us and the country.

59. Don Williams Says:
    September 17th, 2008 at 8:40 am

    1) You will notice that the US Taxpayers only got 79.9 percent of AIG stock –even though they are coughing up a $85 billion loan for a company that would be bankrupt this morning otherwise. Taking on a task that no one in the private sector was stupid enough to assume.

    2) So WHO has rest of the stock? After all, they stand to make a HUGE profit on the back of the US taxpayer.

    3) From http://www.bloomberg.com/apps/news?pid=20601103&refer=&sid=a6QAz6YiyRAI

    ” Greenberg, who remains one of the company’s biggest stakeholders, said the company needed a bridge loan instead of a plan that put the company under government control. An investor group led by Greenberg said in a federal filing hours before the rescue was announced they might want to buy the company or some units or make loans to AIG. ”

    ha ha ha Read ‘em and weep, Rubes.

60. Jeffrey Davis Says:
    September 17th, 2008 at 9:23 am

    So, when the loans come due in 2 years, who thinks there’s going to be enough there to repay them? $85 billion in two years? Plus 11.5%. In two years, this company is going to make BACK +$100 billion dollars off with a portfolio of lots of bad notes. In two years, they’re going to sell off the good bits, keep the bad bits, and then what? Stick the gov’t with the bad bits?

    Exactly why are they trying to drum up a war with Russia? This is just what the Russians went through with the plutocrats looting the treasury. Russia’s our role model here.

61. Jeffrey Davis Says:
    September 17th, 2008 at 9:24 am

    Anyone want to calculate what the Bush family has cost this country?

62. elle loco Says:
    September 17th, 2008 at 9:26 am

    New Wall-Streeter slogan regarding AIG:

    SOCIALIZATION OF THE MEANS OF PROTECTION!

63. lobstakilla Says:
    September 17th, 2008 at 9:27 am

    So is government small enough yet to drown in a bathtub?

64. Braden Says:
    September 17th, 2008 at 9:34 am

    Notwithstanding the very informative link posted above about whether this is legal, I still see two major problems:

    1) This isn’t just a loan, it’s a purchase of a privately held corporation, and that seems to fall well outside the Fed’s purview. I mean, I don’t think the Fed has the authority to willy-nilly scope up companies on the verge of bankruptcy by arranging a takeover through its statutory power to provide a loan in an emergency.

    2) In some respects, this is government seizure of private property, which means if any shareholder believes that he or she was not given fair market value, or that the value of their privately held property declined precipitously because of government action, it could lead to a pretty messy civil court case.

65. E. O'Neal Says:
    September 17th, 2008 at 9:53 am

    Unless the loans are repaid, the stock is worthless. So, the fact that the stock is selling at $2.25 with a mkt. cap of $6B is encouraging.

66. Jeffrey Davis Says:
    September 17th, 2008 at 10:27 am

    So, the fact that the stock is selling at $2.25 with a mkt. cap of $6B is encouraging.

    I wish people wouldn’t parody the trolls. It’s not always clear where parody takes up and where idiocy ends.

67. E. O'Neal Says:
    September 17th, 2008 at 11:24 am

    J.D., it’s encouraging because it means the total enterprise value is $30 billion (the Fed’s 80% is not traded) after the liability of the government loans. The business is thus not seen as insolvent, and the markets believe there is a good chance the loans will be repaid. I’m looking at a glass one tenth full.

68. E. O'Neal Says:
    September 17th, 2008 at 11:26 am

    I should have said total equity value instead of total enterprise value.

69. jonerik Says:
    September 17th, 2008 at 11:34 am

    There’s a good analysis of the bigger picture in this interview with economist Michael Hudson, a former economist with Chase Manhatten Bank and friend/adviser to Dennis Kucinich:

    http://www.dissidentvoice.org/2008/07/the-system-is-broken-were-entering-a-two-economy-society-an-interview-with-michael-hudson/

    I like his quote:

    “. . . the financial crisis is analogous to a “boa constrictor wrapping itself around the economy and slowly strangling it.”

70. An Outhouse Says:
    September 17th, 2008 at 11:35 am

    I vote #3: something like the situation in present-day Russia

71. AlanC9 Says:
    September 17th, 2008 at 12:40 pm

    @ Braden 64: Those don’t seem like big issues. I don’t think anybody really wants to challenge the Fed’s action even if it isn’t strictly legal, and existing AIG equity holders can’t prove any damages — their holdings would have been worth zero if the firm collapsed, so how can they have been undercompensated?

72. Jeffrey Davis Says:
    September 17th, 2008 at 1:12 pm

    I wish someone would let me borrow 12.5 times my net worth.

    That would be 600 of the sweetest dollars I ever laid my hands on.

73. house financial services committee Says:
    December 7th, 2008 at 9:01 pm

    WASHINGTON — The Senate will take up the $25 billion auto bailout bill on Monday, with a procedural vote expected Wednesday to see if Democrats have enough support to overcome Republican roadblocks. Sen. Majority Leader Harry Reid said

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