Tuesday, March 17, 2009

AIG has been the bailout from hell - This is a great article!

AIG Shame
The bottom line is that the bonuses fail the outrage test.
from The National Review Online
March 17, 2009
By Rich Lowry

Now, that’s cost efficiency. It took a mere $165 million to discredit the entire $11.6 trillion edifice of bailouts, capital infusions, and guarantees that have accompanied the financial meltdown.

The bonuses AIG wants to pay its employees are a pittance compared with the $170 billion it has received in government bailouts, a trifling .097 percent. But nothing so angers the gods of populism as the word “bonus” (surely some genius is formulating a suitable euphemism even as we speak). Pres. Barack Obama wants to try to block the bonuses, and other administration officials talk of making AIG pay back the government for the amount of the bonuses. Fine, but where do we go to get the other $169.835 billion back?

AIG has been the bailout from hell, dysfunctional and opaque. The government has had to restructure its rescue over and over, throwing billions more into its maw. Only now have we learned the identity of the true recipients of the bailout, the so-called counterparties to AIG’s credit default swaps, financial firms strewn around Wall Street and the globe, from Goldman Sachs to Deutsche Bank and France’s Société Générale.

Republicans and Democrats are now stumbling over one another to give AIG a good populist beat-down, and no one should pity AIG. But what everyone in Washington wants to ignore is that the banking system, festooned with $1 trillion or $2 trillion worth of bad assets, may still need more government attention rather than less. Obama has been taking a pass on cleaning up the banks in favor of passing Great Society II because the issue of the banks is too politically difficult.
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