ELIOT SPITZER: Scandal not bonuses but banks paid back in full who already got bailout bucks

[yurbud]

The Real AIG Scandal
It's not the bonuses. It's that AIG's counterparties are getting paid back in full.

By Eliot Spitzer Posted Tuesday, March 17, 2009, at 10:41 AM ET

Everybody is rushing to condemn AIG's bonuses, but this simple scandal is obscuring the real disgrace at the insurance giant: Why are AIG's counterparties getting paid back in full, to the tune of tens of billions of taxpayer dollars?

For the answer to this question, we need to go back to the very first decision to bail out AIG, made, we are told, by then-Treasury Secretary Henry Paulson, then-New York Fed official Timothy Geithner, Goldman Sachs CEO Lloyd Blankfein, and Fed Chairman Ben Bernanke last fall. Post-Lehman's collapse, they feared a systemic failure could be triggered by AIG's inability to pay the counterparties to all the sophisticated instruments AIG had sold. And who were AIG's trading partners? No shock here: Goldman, Bank of America, Merrill Lynch, UBS, JPMorgan Chase, Morgan Stanley, Deutsche Bank, Barclays, and on it goes. So now we know for sure what we already surmised: The AIG bailout has been a way to hide an enormous second round of cash to the same group that had received TARP money already.

It all appears, once again, to be the same insiders protecting themselves against sharing the pain and risk of their own bad adventure. The payments to AIG's counterparties are justified with an appeal to the sanctity of contract. If AIG's contracts turned out to be shaky, the theory goes, then the whole edifice of the financial system would collapse.

But wait a moment, aren't we in the midst of reopening contracts all over the place to share the burden of this crisis? From raising taxes—income taxes to sales taxes—to properly reopening labor contracts, we are all being asked to pitch in and carry our share of the burden. Workers around the country are being asked to take pay cuts and accept shorter work weeks so that colleagues won't be laid off. Why can't Wall Street royalty shoulder some of the burden? Why did Goldman have to get back 100 cents on the dollar? Didn't we already give Goldman a $25 billion capital infusion, and aren't they sitting on more than $100 billion in cash? Haven't we been told recently that they are beginning to come back to fiscal stability? If that is so, couldn't they have accepted a discount, and couldn't they have agreed to certain conditions before the AIG dollars—that is, our dollars—flowed?

The appearance that this was all an inside job is overwhelming. AIG was nothing more than a conduit for huge capital flows to the same old suspects, with no reason or explanation.

http://www.slate.com/id/2213942/">FULL TEXT

[notadmblnd]

1. I kinda thought they were double dipping

[inna]

2. rec #10, and thanks for poosting this!

i'm glad Eliot Spitzer is still politically active; i recently read that his being "spitzergated" was sort of a retribution for his earlier attempts to draw attention to Wall St./Bush administration's 'screw-ups'.

[yurbud]

3. He should be appointed to run the SEC or something.

[kimmerspixelated]

12. Exactly what I read as well!

[snot]

4. K&R'd. As usual, Spitzer nails it.

[amandabeech]

5. Can't someone find a place for him to do some good?

What's worse, Spitzer and the cover up of using a hooker or the $200,000+ Geithner tax problems?

This guy wants at 'em. Maybe he can redeem himself.

[yurbud]

6. that hit on Spitzer killed me--like these Wall St. degenerates aren't having dominatrixes shit on

them or Jeff Gannon blow them under the desk.

That hooker thing disqualifies Spitzer from marrying my daughter--but I still want him as a prosecuting attorney.

[amandabeech]

7. I agree. n/t

[inna]

20. exactly!! +1 to yurbud! NT

[tomm2thumbs]

8. he should just change his name, grow a beard and join the Obama administration

too many other things to worry about, no one would give it a second thought.

[leftstreet]

9. K&R

[KoKo]

10. K&R

[change_notfinetuning]

11. I guess Spitzer needs flowers and a NOKIA logo on him in order to . . .

get the attention of DUers. For all the money he paid that 'tute, she should have brought the body paints. Spitzer was telling us about this Wall Street scam before he was busted for sex. Any connection to his indictment? Somebody knows, but they aren't talking. He was a sleazeball, sexually, like a lot of politicians, but he was telling the truth about Wall Street. Too bad we fell for his fall. Too bad a Nokia paid-for HIPPIE VW is now the new gaga for the Obama gaga-ers. (although the video rocked)

Is President Obama the real thing, or is he beating the lowest of standards of the worst president the United States has ever seen? Don't fall for a smidge better. If Obama really cared about solving our problems, he'd have Spitzer in a position that matters, not the mistakes he appointed, like Geithner. No one was happier than me when Obama ran and when he won. But he needs to do what he knows is best - not what Axelrod thinks will win re-election!!!!!!!!!

If, in fact, Obama thinks we should be guaranteeing the bets of outright gamblers who dealt in credit default swaps, then he isn't the person who could ever solve our problems. He needs to call Spitzer for a primer on what the facts are and how Wall Street screws Americans.

[inna]

21. good post, and welcome to the DU! :) NT

[ProSense]

13. Appears Connecticut doesn't share the view that the bonuses are not an issue

Connecticut steps on AIG's contract argument

Wall Street’s $18.4 Billion Bonus

It's time for a full-scale investigation into the financial crisis

The real scandal is everything these banks have done for years.

[Jefferson23]

14. The only thing that irks me about Spitzer, is that he should have known

better than to even take the slightest risk with any aspect of his personal or professional life.

He was on to them and they knew it, he was the one speaking out and unfortunately gets silenced for it. I am thrilled he is writing again against the greed and out right theft of unprecedented proportions. When you are going after the biggest and filthiest politically powerful people, you have to live squeaky clean. Ultimately that in no way changes my opinion of him, my hat is off to you Spitzer!!

[tomm2thumbs]

15. Spitzer was too busy trying to convince prostitutes not to use a condom (see details)

Kristin Davis, the Manhattan madam known as disgraced former Gov. Eliot Spitzer's personal "Madam Butterfly," blows the whistle on him and others in her gang of clients in a tell-all book available online. The busty, bottle-blond bombshell writes in "The Manhattan Madam" that Spitzer, a client of her escort service, was "good for a call at least once a week" from 2004 to 2006 - when she cut him off because he liked it too rough.

Spitzer meant "thousands of dollars of steady income for me and my ladies," wrote Davis, "that is, until the complaints began coming in hot and heavy" about the client who gave the phony name "James."

"James was getting rough and too aggressive with the girls - repeatedly pressuring them to do things they didn't want to do." She also said Spitzer tended to obsess about a girl, would want to see her every day and was pushy and whiny with her."

But his biggest problem, she said, was that he didn't want to use a condom, and "he'd be a real weasel about it, too."

"Eventually, this is what I told 'James,'" she writes. "'I no longer feel comfortable with you as a client. You are blacklisted. Please don't ever call me or my other phone bookers again. Thank you and good luck.'"

[Jefferson23]

16. I know what he did, and it was disgusting imo, my point was, I just wish he had

had kept his priorities straight at the time but I'm glad he is writing again.

[tomm2thumbs]

19. I agree with you - he lost an opportunity for real hero-status

and I think people could get over the 'cheating' on some level, and perhaps the prostitution (although daily/weekly??), but the nature of how he treated the prostitutes and his unwillingness to be safe and being a 'weasel' about it with those women (which affects his wife's safety) and his rough treatment of the women sounds like someone with a real problem. Not just a horny guy. We'll see if he can get past his actions thus far.

[inna]

22. well, humans are not perfect.

honestly, i could not care less what he does in bed or whom he screws; i'm not his wife.

what i care about though is his job performance.


the Spitzer "scandal" was completely orchestrated, which is really too f'ng bad.

[Jefferson23]

23. Yes, certainly his personal life is not a concern to me, but when you

are confronting the most powerful political forces, you need to expect they will be looking at everything you do, and unfortunately they found enough to hurt him.

[BrklynLiberal]

17. This kind of anaysis is why Spitzer was targeted by Wall St

[CHIMO]

18. “Perp Walks Instead of Bonuses”: Veteran Journalist Robert Scheer on AIG Bonuses, the “Backdoor Bail

Appearing on Capitol Hill, AIG CEO Edward Liddy was repeatedly questioned over why the failed insurance giant is paying out over $165 million in bonuses after it received a $170 billion taxpayer bailout. While the Obama administration is expressing outrage, more details have come to light indicating that some officials have known about the bonuses for months. Meanwhile, little attention has been paid to what might be a bigger scandal: AIG’s funneling of tens of billions of dollars in taxpayer bailout money to other banks. We speak to veteran journalist and Truthdig editor Robert Scheer, author of the forthcoming The Great American Stickup: Greedy Bankers and the Politicians Who Love Them.

http://www.democracynow.org/2009/3/19/the_great_american_stickup_veteran_journalist

http://play.rbn.com/?url=demnow/demnow/demand/2009/march/video/dnB20090319a.rm&proto=rtsp&start=00:14:31