AIG (That's Us) to Pay Its Ex-CEO's Legal Fees
By Don Bauder
November 25, 2009
The insurance conglomerate A.I.G. waited until late in the day before Thanksgiving to announce an outrageous move that has the Internet abuzz. The firm, which is 80% owned by U.S. taxpayers, has had a long-running legal dispute with its former chief executive, Maurice (Hank) Greenberg, who had run afoul of authorities before he departed. This afternoon, the day before a national holiday, AIG announced that it has kissed and made up with Greenberg. Among other things, AIG (that's us, folks) will pay $150 million in legal fees run up by Goldberg and the firm's former chief financial officer.
This is just one of many AIG outrages. While Hank Paulson, former head of Goldman Sachs, was treasury secretary, the government pumped an initial $85 billion into AIG, although it had dubious authority to do so. Of that sum, $13 billion went right out the back door to Goldman Sachs. Paulson should be under investigation for that caper -- ditto Tim Geithner, then head of the New York Federal Reserve. Don't get your hopes up.
AIG is a company that the Securities and Exchange Commission, Department of Justice and New York Attorney General have said engaged in fraud and bid-rigging.
A group of attorneys, mainly in San Diego, has filed suit against AIG in Los Angeles, attempting to stop the company from engaging in fraudulent and unfair business practices in California. The lawyers have made a new filing showing that "AIG is held together by a Gordian knot" of interlocking support, interdependent guarantees, and reinsurance agreements among its various entities. Evidence of more of these incestuous ties was put into evidence today."AIG has remained a going concern based on artificial income, phantom assets, and perverse incentives," says the filing.
What AIG was engaged in was insurance fraud-plain and simple.
They were writing BILLIONS/TRILLIONS of dollars in policies with NO collateral to back the policies up. And the majority of those policies were credit default swaps to cover the collaterallized debt obligations that were 100%, grade A, junk.
The company should been allowed to fail-it was a major mistake to bail it out.
This is why the country is in such dire financial straights.
Response to post #1: It was bailed out because of that old argument: other firms would have collapsed, too. But how do we know? Are we sure that other firms would have collapsed, domino-style, around the world? We do know that Goldman Sachs was in real trouble because of its mortgage/debt insurance commitments to AIG. Then we should have let Goldman fail. We have done nothing to reform or unwind the derivatives that supposedly brought the world to the brink. If the situation were that dire, wouldn't world governments have made moves to make sure it would never happen again? The domino theory, as in Vietnam, may have been a hoax. Best, Don Bauder
It was the old, "It's too big to allow it to fail!" theory. Which is crap. I would have let that big giant overstuffed turkey burn and would have thrown the charred carcass out for the stray, mangy dogs. I do not believe in bail-outs, I do not believe in "stimulus" B.S. from the Keynesian blowhards, and I do not believe that the Government of any country has the right to affect the economic future of its citizens by pretending to save the present by mortgaging the future.
Response to post #3: It's more a matter of "too interconnected to fail," according to the argument. I agree with you: put the domino theory to the test. Let 'em go. The world didn't end when Lehman went down. The world's so-called financiers made a horrible bet as they piled into derivatives based on mortgages, and insurance on those derivatives. If they really believed in capitalism (and they don't), they would have agreed that the firms should fail. Bankruptcy reorganization is a well-honed process in the U.S. It should have been allowed to work. Best, Don Bauder
I would have let that big giant overstuffed turkey burn and would have thrown the charred carcass out for the stray, mangy dogs. I do not believe in bail-outs, I do not believe in "stimulus" B.S. from the Keynesian blowhards,
By refriedgringo
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"big giant overstuffed turkey"...LOL, that was pretty funny.
I agree with you 100%, we should have let that turkey burn. And with 94% of American citizens against the TARP bailout-it is pretty obvious nealry all Americans felt the exact same way. But Wall Stree and Big Business buy and own the Congress these days.......Instead the turkey burned us. So did Goldman. It is basically like I said- straight up fraud, perpetrated against the poor and middle class by the top 1% of the richest people in this country. It is sad how our country has been detsroyed by the baby boomer generation.
Response to post #5: Why can't there be a progressive/populist movement as there was in the late 19th and early 20th century period? One reason: Wall Street didn't control the White House and Congress in those days. Oh, Mark Hanna controlled McKinley, and Wall Street had Taft dancing on a string (quite a fete, since Taft weighed more than 300 lbs.), but Teddy Roosevelt was not beholden to the money crowd. Best, Don Bauder
Why can't there be a progressive/populist movement as there was in the late 19th and early 20th century period?
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I think Lou Dobbs has tapped into this populist movement, and I have pretty much found myself in agreement with everything Dobbs stands for-with the exception of the Obama "birther" movement.
I no longer belong to, or will ever go back to, the democratic party-which I was for 20+ years. I have never been no will ever be a republican-today the two parties, IMO, are the same-the only differnce is who owns them. Dems are owned by public unions, repubs by Big Business. No difference to me. That is why I am going with guys like Dobbs, who are Independant/s.
Response to post #7: I have barely ever watched Dobbs. But from everything I read, he largely concentrates on the immigration issue, and uses demagoguery. It remains to be seen if he has really tapped into a populist vein. Best, Don Bauder
I have barely ever watched Dobbs. But from everything I read, he largely concentrates on the immigration issue, and uses demagoguery.
By dbauder
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Don, I watched Lou Dobbs for the 5 years, right up until he went off the air.
The immigration issue was one of about 10 major issues he focused on, and I know if you watched his show you would (probably) agree that he is not a demagogue on the issue, and is in fact very straight forward and fair in his views-which are we need to control ILLGEAL immigration b/c it is driving down our standard of livign for middle call America. He was also very critical of our H-1B visa programs (just one of like 50 different VISA programs) for legal workers-because firms like MS and other tech firms try to import foreign labor so they can pay them less than the American citizens-again driving down wages for the middle class.
I have a few of his books, and I strongly suggest you read one of them and then make the call on him. I would suggest "War on the Middle Class".
BTW, David Cay Johnston was/is a frequent guest on Lou's radio and TV show. So was David Walker ("IOUSA" the Movie).
Response to post #9: David Cay Johnston is a first-class researcher and writer. Best, Don Bauder
Greenberg's payout could not have been made without the approval of the President. What the President is to receive from Greenberg and Wallstreet in exchange for this payout is anyone's guess.
Dobb's in most respects is a carbon copy of Don Bauder, with the exception of immigration, which Don does not cover. As early as 2000, Dobbs began attacking Bank of America for handing out bank accounts, credit cards, and mortgages to illegal aliens who lacked social security numbers in violation of federal law. The illegals were given these products without having to prove income or assets, while Bank of America still required full documentation from citizens. Bank of America was committing felonies in violation of federal law yet nothing was done about it. Nobody listened to Dobbs. Mainstream media remained silent while illegals with $10 an hour jobs obtained $500,000 mortgages they could never hope to repay. The write-offs of credit card debts and mortgages attributable to illegals have cost the taxpayer hundreds of billions yet there has been no criminal prosecution of Bank of America managment and board members.
Dobb's also debunked the myth that blacks were lazy and would rather collect welfare benefits than be employed. He covered the immigration raids in the South where ICE cleaned the illegals out of chicken processing plants. The owners of these plants were forced to hire US citizens or go bankrupt. After the raids the owners replaced their illegal workers with blacks who left the welfare rolls to obtain fulltime employment and a pay check. The owners were able to operate their business profitably without wetback labor.
Burwell, the mortgages were handed out to anyone they could get to qualify under whatever convoluted requirements they had. Illegals had so little to do with it that it isn't worth mentioning. And the Government was complicit, so of course B of A isn't going to be prosecuted. Three years ago, people who worked for me were buying houses while making 15 dollars per hour. They weren't smart enough to refuse the Kool-aid.
Response to post #11: That decision may not have reached Obama. Summers might have made it. Best, Don Bauder
Response to post #12: I have been critical of promiscuous handing out of credit cards, but not necessarily to illegals. Best, Don Bauder
Response to post #13: I was not aware that Dobbs covered this topic. Best, Don Bauder
Response to post #14: And it will happen again. There is little outrage. Best, Don Bauder
#14
so true gringo...and we have Barney Frank and Dodd to thank for those demands to loan to anyone. Didn't hurt that their own loans got special treatment too.
Robert, it wasn't just liberal politicians, conservative politicians were in on it as well. When the Reagan administration adopted economic policies that lifted possible controls on the market, every single administration after that took complete advantage. Institutions were tacitly urged (wink, wink, nudge, nudge), to do whatever it took to ensure that people could buy houses and cars and anything else they couldn't otherwise afford. This brings votes, voters do not tend to vote against those who have seemingly brought economic prosperity.
And, of course, the politicians are in the back pockets of all of those who profit from such scheming. It costs millions to run for office, and you know where that money came from.
If the government wasn't complicit, then Freddie and Fannie would have been investigated and brought to task. They weren't.
..."I no longer belong to, or will ever go back to, the democratic party-which I was for 20+ years...."
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SurfPuppy:
I applaud your new stance. It's time more people looked at each and every issue/proposition, etc. and voted on what was best, NOT on what the party you belong to says to vote it.
Response to post #19: Frank and Dodd should not escape intense examination for their roles in this. Best, Don Bauder
Response to poste #20: Both liberals and conservatives deserve blame for this mess. But what's a conservative? Conservatives used to believe in free markets and limited government. That's not what they are about now. They want to milk the maximum from a government they control. Best, Don Bauder
Response to post #21: If you are looking at each and every issue, are you going to read the entire healthcare bill? Best, Don Bauder
With this kind of corruption from both parties can we even wonder why the rest of the world looks at our nation with doubts. My daughter left for Washington DC with her class yesterday. I hope she connects with the historic memories of our Capital and not the controversy that seems to inspire our current elected leaders.
Sad but true Dlauder. I was back there in DC last year, in July. I made it over to the Lincoln Memorial (which is WAY to far from the subway) and just absorbed the magic of being there. And then turned around to see a bunch of protestors walking by. I think they were pro-choice, and they were all up in arms about something. Then, as I walked back to the subway (a long walk) I passed by some NRA marchers. What a great country we live in where two very different groups and peacefully march without worry of being shot.
And then, you have the saving-loans and Iran/Contra scams of the 80s, Clinton getting blow jobs in the white house, Bush selling us a bridge in New Jersey, and Obama spending money like he's playing a monopoly game, and you have to wonder what Lincoln and all the other greats might say in times like these.
I think I'll go home and watch Mr. Smith Goes to Washington, or maybe Showgirls. We'll see what mood I am in later.
Response to post #25: When my high school class went to Washington in 1954, we found some saloons that would serve minors. Best, Don Bauder
Response to post #26: When Lincoln was president, nobody even dreamed of trillion dollar budgets. Best, Don Bauder
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