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"... He holds a public trust ..."Boy! That's rich - using "Dodd" and "trust" in the same sentence.Remember, this is the guy who, with Teddy Kennedy, invented the term "waitress sandwich." After which, the citizens of the great state of Connecticut returned him to that august body, the United States Senate.LOL.
Gee. Do you think that if they took the time to actually READ this world changing legislation, they might have figured out some of the finer details?What a bunch of clowns. We are so screwed.
At this point, Dodd is exuding lame excuses. As he walks around the Capitol they are falling off him and smothering feral rodents, who have become Dodd's only companions. They aren't friends, they're hoping for first crack at him when he finally gives up the ghost.
Do as your president does, throw everyone else under the bus and deny everything. It seems to win people elections...
This was the same Dodd, who AIG staff gave more money to than any other Senator, though Obama came in second or 3rd.
The apple doesn't fall far from the tree. I grew up in Connecticut and most of my family are still there. Chris Dodd's father, Sen. Thomas Dodd, was also a self-serving, double dealing, arrogant parasite, documented in his official censure by the United States Senate in 1967.The voters of Connecticut turfed out Dodd in the 1970 election. Tel pere, tel fils.
Turfed him out, but not before he engineered the Gun Control Act of 1968, largely based on Nazi gun control in the '30s and '40s.Dodd was a prosecutor at Nuremberg and had ready access to those old German gun control documents.
Well, blaming Dodd seems lame. Wasn't it Geitner (and in effect Obama) who made Dodd put the amendment on the bill which allowed for those bonuses? I've heard like ten different stories.You know what's really lame though? That suddenly, after this kind of bonus shit and swindling and ass licking between politicians and corporations has been going on FOREVER, everyone is only now starting to get "mad" and demand "their money back." Spare me the drama and angry villager routine. You should have known this was going on, and your protest is sadly too little, too late. Deal with it and grow up, and vote for somebody different next time.
This whole bonus kerfluffel is a distraction. We should focus instead on the $160B and benefitted counterparties.
Does it hurt that much ZPS?
To use the next blog title, and we had such high hopes for maggots!
Spare me the drama and angry villager routine. You should have known this was going on, and your protest is sadly too little, too late. Deal with it and grow up, and vote for somebody different next time.Well Zach buddy, 52% of the electorate did just that for the guy who said he was going to end the 'business as usual' way DC works. It now looks like the new boss is same as the old one but with bigger ears.Hopefully you 52% are at least getting a reach around.
LOL, Zach. We did vote for somebody different. ;-)
I hope the citizens of Connecticut (Imagine having Dodd and Lieberman as Senators! Ugh!) have some kind of memory two Novembers from now.
Benefitted counterparties ...Goldman Sachs got about $13 Billion of it. European banks, however, received something approaching $100 B in insurance payouts from AIG.Had that not happened the entire European banking system would have collapsed like the WTC towers. Eurobanking remains in great peril, and it can be argued that the US crisis is the result (not the cause) of the European banking mess.Had AIG failed we would be looking at something far, far worse today. The corruption, special deals, and so forth are a side show.
This is not the first time Althouse. From Wapo back in Sept 08Taxpayers face a tab of as much as $200 billion for a government takeover of Fannie Mae and Freddie Mac, the formerly semi-autonomous mortgage finance clearinghouses. And Sen. Christopher Dodd, the Democratic chairman of the Senate Banking Committee, has the gall to ask in a Bloomberg Television interview: "I have a lot of questions about where was the administration over the last eight years."If you believed Senator Dodd, Clueless must be one of his major donors.
By the way, I wasn't addressing any of you guys when I said "you" in my last comment. And I wasn't talking about Obama specifically when I said "vote for somebody different."
"We should focus instead on the $160B and benefited counterparties."Oh, you mean the $16 billion in US taxpayer money paid through AIG to millionaire German and Swiss bankers?That's right folks ... Chris Dodd is laundering your tax dollars through AIG and paying billions to millionaire bankers in Germany and Switzerland.Have you heard Obama utter one word of surprise that our tax dollars are being paid out to millionaires in Berlin and Bonn?I guess Leno forgot to ask.
Dodd's comments are an offense to everyone's intelligence. He had to have known. Anybody who believes that he didn't know has fewer than two digits in their IQ.
Is anyone getting the guillotines out of storage? I bet they work really good on congress critters.[knock knock knock- ooops it seems the secret service is at my door]. Heh.
MM,The maggot line was excellent.Althouse theme of the day?
Ah, Zach, I haven't heard/read that last line in any language since 5th grade...thanks for the good memories!
"Had AIG failed we would be looking at something far, far worse today. The corruption, special deals, and so forth are a side show."There's still time for it to fail. Those bonuses were there to keep the only people who may be able to straighten out the mess at AIG on board. CK has a must read WP article on this: http://www.washingtonpost.com/wp-dyn/content/article/2009/03/19/AR2009031903041.html
Zachary Paul Sire said..."Well, blaming Dodd seems lame. Wasn't it Geitner (and in effect Obama) who made Dodd put the amendment on the bill which allowed for those bonuses? I've heard like ten different stories."The infantilization of politics in the age of Obama - "Timmy made me do it!" Is this kindergarten? How did - or does, or would - Geithner, or anyone else, "make" Dodd put the amendment in the bill? They hold a gun to his head? Blackmail him with incriminating photos? You may have heard "like" ten different stories, Zach, but there's one and only one real story, so far as I can tell: Chris Dodd decided to stick the provision in, and majorities in each house of Congress decided to vote for it.
You may be right, Simon. But I'm not willing to believe any of them when it comes to how that amendment got in there. All liars. All phony outrage now.
You may be right, Simon. But I'm not willing to believe any of them when it comes to how that amendment got in there. All liars. All phony outrage nowSo humor me this Zach. What do you trust the government to do? You want these phoney liars handling health care? I mean they did such a bang up job on public housing.Perhaps you're starting to see the conservative POV when it comes to big government.
Cut this old guy some slack. After lying for a living in steering small shares of government corruption to his Demo party supporters for 30 years, he got in over his head. He never knew that it would all be exposed when the amount of the money Re-distributed, and self-righteously lied about, got to be so big. Lesson for Dodd: never steal anything Big.
ZPS,it does say something interesting about the sausage making process that constitutes the joint reconciliation process when:Snowe and Wyden propose an amendment that strictly limits bonuses to TARP firms and it passes the Senate 96-0that Senate Bill with its Bonus restriction does into a Senate/House (apparently they let the WH in as well) and one of the Senate Conferees deletes the amendment and adds text that directly replaces it negatively. I thought Senate conferees ought to represent the position of the bill passed by their chamber? Or do they just now make bills up in conference? why have initial votes at all. Interesting reconciliation.
Republicans:We have no alternate plan to the current economic crisis from what the Dems are proposing, we are either for the bonuses or we aren't, depending, but what we do know is that this is all so wrong! Whatever Obama is doing that is.
Perhaps you're starting to see the conservative POV when it comes to big government.I don't think it's conservative to understand that all of them (Reps and Dems) are greedy whores.
Zach, the only way the amendment could have got there is by a member of Congress introducing it and other members voting for it. ("I didn't read the bill before I voted" is no excuse: if you voted for it, you own it.) Yes, they are all liars, but the lying and ass-covering is necessarily limited to the why not the how: claims that Geithner "made" them introduce or vote for the bill, for example. This is one reason why I find focus on "Congressional intent" in legal interpretation so profoundly misplaced. There's no such thing as collective intent, and to the extent that we can sum the intents of the individual members of the institution, we find the same intent at the heart of nine of every ten Congressional actions: "how can I maximize my personal wealth and reelection prospects, while minimizing any kind of bad publicity against me?" Intentionalists wouldn't come across as nearly so naive if they'd only start by openly acknowledging politicians' real intents.
"I don't think it's conservative to understand that all of them (Reps and Dems) are greedy whores."Actually, Zach, it's a core conservative principle.
I think Congress has proven something in the last three months. It is unqualified and incapable of writing quality legislation that fixes big complex problems. I'd be happy to see Congress go on vacation. We really don't need new laws and regulations at this time. They should stick to fixing and enforcing existing laws. But I guess that is no fun.
How many examples do we need before the 53% realize that government (large or small) does not have the information, knowledge, experience, motivation, or cajones required to make banking, business, manufacturing, industry, research, compensation, operations, education, [and on] decisions?Next on the agenda - these same people deciding which hospital, doctor, and treatment you can receive. I'm not looking forward to them deciding amputation is more cost effective than knee-replacement. Or that Doctors should be indentured to work at the wages decided by Congress, or that the government approved pill is blocking development of new more effective remedies.Or in energy, they could decide something stupid like continuing to pay overseas providers (in unstable regimes) for our oil instead of utilizing resources we have. oh, wait.Or in banking, when the government decides who is entitled to loans? oh, wait.Socialism is defined as the state owning the means of production. What do we call it when they don't actually own 100%, but do control it? Is it a difference without meaning?
AJ Lynch said... I think Congress has proven something in the last three months. It is unqualified and incapable of writing quality legislation that fixes big complex problems. That has been true for the entirety of American history ("If the opposite of pro is con," quipped John Adams, "then the opposite of progress must be congress"), and as a general rule, government in abstracto is incapable of fixing big complex problems. Government is a blunt instrument, and the further removed from its actions its decisions, the more acute the problem (hence federalism and subsidiarity as amelioratives); it works well on simple, brute-force problems like going to the moon, going to war, or abolishing segregation, but big, complex, densely interlinked and interlocking problems are beyond its capacity to resolve without causing significant unforeseen consequences.
I don't think it's conservative to understand that all of them (Reps and Dems) are greedy whores.Ditto what Pogo said. It's a central tenant of conservatism. It seems the only difference between you and me is that you still want to rely on them to fix all the problems and give out free ponies.
Zach, the only way the amendment could have got there is by a member of Congress introducing it and other members voting for it.Right. But that doesn't mean someone higher up didn't encourage some member of congress to introduce it. Why am I willing to place some blame on Obama and Geitner but you're not?!
sorry, I forgot to put the quote marks in my comment above, but I think it's obvious that the first paragraph quotes AJ.
you still want to rely on them to fix all the problems and give out free ponies.Not quite. I would just like them to solve problems without being corrupt.
The problem is that they are corrupt and their solutions come tainted by that corruption.That is why among other things that conservatives would prefer less rather than more government solutions
Without being corrupt - that is the laugh of the day right there.Dodd, Rangle, Barney "I run a whore house in my townhouse" Frank, Kennedy, Clinton, Obama, all of his staff - you have got to be kidding me, right?
This is a record-setting fake outrage week all around.
Not quite. I would just like them to solve problems without being corrupt.You Democrats keep voting these corrupt people in- Dodd, Frank, Biden, Obama, etc. What do you expect? Not that the Republicans hands are clean.Their constituents are not voters but corporations. Voters only vote. Big corporations give them bribes called campaign contributions in return for favorable legislation.Dodd and Frank should be indicted and imprisoned instead of lauded as heroes of the republic.
Zachary Paul Sire said..."But that doesn't mean someone higher up didn't encourage some member of congress to introduce it."Sure, but the fact remains that it was the member of Congress that made the decision. Absent some claim of coercion, people are ordinarily responsible for their own decisions . It's no different to these insufferable pricks who bought a $5m house on a $30k salary who now whine that it isn't their fault because their bank told them they could afford it, or the idiotic (putatively) conservative pundits who voted for Obama and now express shock and dismay that he's acting exactly as everyone else understood full well he would act. Individual choice is the circuit breaker in the legislative process. The President can propose legislation, Art. II § 3 cl. 1, and can approve or veto legislation, Art. I § 7 cl. 2, but no legislation comes before Congress other than by the choice of an individual member of Congress to propose it, and the choices of a majority in each house to vote for it. If Chris Dodd decided to introduce the amendment, he takes the blame - not President Obama, not Secretary Geithner, Senator Dodd. And the Senators who voted for it take the blame for it passing. "Why am I willing to place some blame on Obama and Geitner but you're not?!"It's kind of funny, huh? :p Still: An admission against interest is usually thought reliable for just that reason.
you still want to rely on them to fix all the problems and give out free ponies.Not quite. I would just like them to solve problems without being corrupt.Yes and people in hell want ice water. I'm not trying to be mean Zach but you got pissed at me once for making a comment to you about 'when you grow up...' That kind of remark reinforces exactly that sentiment.
Perhaps you're starting to see the conservative POV when it comes to big government.If you had to guess, would you say Citi and AIG collapsed from too much government intervention, or do you think that AIG insured a crapload of dumb bets that Citi (and others) made. And do you now think government should intervene to put in place safeguards so it doesn't happen again? Like repealing Gramm-Leach-Bliley.
By the way, does anyone else think that Congress might do well if the rules required the clerk to reject all bills not cosponsored by at least X other members (where X > 20 but < 100)?
I must say, it feels a little weird to be writing (and reading) all this stuff addressing a person by their last name when they have the same last name as me! No relation, I emphasize.
Chris needs a teleprompter!
AIG could still fail, indeed, but the impact would be a small fraction of what it might have been had they failed six months ago.AIG itself was not bailed out. They indeed served primarily as a conduit for saving the "millionaire [European] bankers" that have 'Florida' so upset.Except they didn't save the bankers, they saved the banks. That matters a whole metric shitload because had it not happened the European banks would have been unable to protect their existing book.For people whose understanding of banking more or less stops at the ATM, that means they didn't have to "call" their loans to productive and profitable business in a last ditch attempt to preserve some semblance of solvency.Those banks had bought insurance (primarily from AIG) to protect themselves against default on the assorted pieces of paper they hold. Had AIG been unable to make good on that insurance -- in the event with pass-through US taxpayer dollars -- the European banks would have begun immediately requiring (as is their right) their borrowers to cough up a bunch of cash.It would have precipitated a deflationary collapse of European business and manufacturing of monumental proportions.The Eurobanks' big problem now is eastern Europe and the looming defaults by businesses and individuals in Poland, Hungary, Ukraina, etc who thought they were smart to have borrowed at such low interest in euros or Swiss francs.The story is not finished. Austrian banks are sitting on bad eastern paper about equal to the national GDP.Austria? Who gives a $#!+ about Austria? REMINDER: it was the collapse of the Austrian bank Credit Anstalt in May of 1931 that put a difficult recession on the slide into deep worldwide depression.
John Lynch... Traditionally that was called Facism.
As a Presidential candidate, Dodd filled me with wonder. I could understand how men like Kucinich and Forbes were able to overlook their own lameness in order to publicize their causes In some way they were in on the joke. But Dodd who was outstanding only in his mediocrity really thought he was Presidential material. Dodd was first the child of a Senator and then a Senator himself. He has lived his life surrounded by syncophants and has never gleaned the smallest insight into his own limitations.
If you had to guess, would you say Citi and AIG collapsed from too much government intervention, or do you think that AIG insured a crapload of dumb bets that Citi (and others) made. And do you now think government should intervene to put in place safeguards so it doesn't happen again? Like repealing Gramm-Leach-Bliley.Keep in mind that a crapload of those dumb bets were subprime mortgages that the Federal goverment insisted be made to the 'low income' who deserved a house too.
The funny thing is (funny as in pathetic) that I haven't seen diddly squat of this on the news. Admittedly, I don't sit down and watch a lot of news anymore (for obvious reasons), but that probably makes what I see about average for the general populace. All I've seen is AIG, AIG, AIG, nothing about Dodd, Geithner, or anything in the actual bill that allowed it. They give a blurb about how outraged Obama and congressmorons are and how awful AIG is, end of story. Hence, I predict this will amount to nothing that will damage either Obama or Dodd or Democrats generally.
ZPS said, "Why am I willing to place some blame on Obama and Geitner but you're not?!"Because Obama is untouchable and Geitner is already a scapegoat. He may be gone before the first term is up, but that'll be on his own merits. No need to pile on.
I think Dodd is wrong to apologize for this. The reason the change to the bill was introduced seems valid: not to pay the bonuses would result in a lawsuit, because they were written into contracts. I'm all for pillorying politicians, but why is it wrong to try to avoid lawsuits in a case such as this?It seems like the shame should be directed to the person writing the contracts. Why are they guaranteeing bonuses to inept businessmen? I could see giving them bonuses if their subsequent work somehow undid all the damage they did to the company, but just to stick around and help? I'd like a bonus for sitting in a chair all day too, doing nothing. 'Cause near as I can tell, that's what they're getting a bonus for. Had AIG improved?I asked yesterday: where did these people go to business school? I wonder what they learned there.
Socialism is defined as the state owning the means of production. What do we call it when they don't actually own 100%, but do control it?In the past we've called it "National Socialism."
$160B and benefitted counterparties.The whole point of giving AIG money in the first place is so that AIG can cover its liabilities. And that means paying out to cover contracted trade positions that went bad.If they didn't need to pay others, we wouldn't have needed to pay them.But we did it to prevent all the dominos from falling.But now that we the tax payers own 80% of AIG common stock (notice that we sit junior to everyone else), rather than driving all the talent out of our company by taxing bonuses and mobbing the smart guys, I suggest we pay the highest salaries we can and attempt attract more talent to save our stock value.There actually are traders and fund managers that didn't get sucked into all this bad assets crap. I know one that saw it coming 2 years ago and stayed clear.Another one in California made $550M on short trades of mortgage securities.Not everyone was stupid or risky, just the one's playing with other people's money.
While not addressed to me, I'll take a crack at that one.The heavily regulated financial industry operated under the false assumption that risks were being managed and controlled through the federal reserve, monetary policy, and regulatory oversight. The industry was about as far from a capitalist system as an industry can get without actually being owned by government. The free-wheeling decision making taken by risk-takers who fully priced in their risks was not present. Neither was risk-free decision government managed making. In this hybrid, risks were hidden through the GSE mechanism, implying government guarantees (which were not sufficient), asset bundling into large thinly traded securities supported and encouraged by regulation, and greedy capitalists making what money they could in the system as rigged.Alarms were raised to the overseers of this contraption, which were largely ignored by some of the same people now making individual compensation decisions.The system was fraught with potential for failure, but worked until put under heavy stress (falling home prices) and government oversight was once again shown to be inadequate to move quickly to counter the problems, and some of the institutions were, and are, too large to resort to the capitalist solution which is to let them fail.
"Not quite. I would just like them to solve problems without being corrupt."One of the main conservative arguments for a small government lies in the indisputable fact that power corrupts. ZPS retains the utopian ideal that if we only had the right leaders, this would not happen.Conservatives believe this is part of the basic human condition, that man is unavoidably a fallen creature, and therefore it is wisest to design a government that expects corruption (i.e. power limited by small size, checks and balances), rather than the repeatedly failed hope for leadership by the incorrupt and incorruptible.Friedman: "Is it really true that political self-interest is somehow nobler than economic self-interest?"
Burt Hall... Thanks for shedding some much needed light on Banking. The rescue was necessary and proper, as were the bonuses in question. The issue is directing the public's anger at the horrible losses generated by the collapse of this Bad Loans system of world finance. The Althouse commenters are upset that BO and Pelossi get to keep up their political theater that they had no part in this disaster. They say that Bush caused hurricane Katrina's damage by a bad response. That nonsense is accepted lore. Now the Dems need to produce a scapegoat from within. Who will it be? Dodd and Geitner seem to be the ones picked to take this fall. Stay tuned for the resignation speeches.
I asked yesterday: where did these people go to business school? I wonder what they learned there.They learned that it is always what the market will bear, and the market was willing to pay huge bonuses to place large up-side bets with other people's money.One win and you are set for life. Lose, and at worst you get fired.Thus, the demise of the partnership investment banks was a huge contributor to this mess, and stock holders of the newly public investment banks were the suckers.The traders were gambling with shareholder money to get that big bonus.Back in the day, the partners would never have allowed a trader to take those risks with the partner's money.
I wouldn't be surprised when the people of Connecticut reelect Dodd.
MM,The bonuses were to retain a bunch of technical talent to untangle the CD's. AIG and effectively the FED had an exposure of 2.7 trillion. The good rocket scientist types at AIG could move elsewhere. The FP division was closing itself out of business. To keep some talent in key but dead end jobs, they made contracts like: Stay 6 months and we pay you x amount at the end of that time. They stayed and at the end of 6 months, got what was contracted. AIG's liabilies are apparently down from 2.7 to 1.6 trillion.I don't have to like paying it, but It sounds like a good (or at least fair contract) deal to me.
Simon,What would the point of that be? A vote-before-the-vote will do something that the actual vote won't? (And don't most grandstanding solo bills just die in committee anyway?)
On that last point, doesn't a move to refer to committee often mean "don't waste our time with this sh*t"?
Madison Man, perhaps you can ask Richard Holbrooke, Obama's man at State, as he sat on the board of AIG when those contracts were written and while, if (A)I(G) may be so bold, the years when they were underwriting such subprime garabage vis a vis FANNIE MAE.Holbrooke has claimed through WH aides that he was not aware of these bonuses, but unfortunately that is not how Boards Of Directors work. They do have to review and approve such high level compensation packages, so that sounds like he might have more to explain.
Keep in mind that a crapload of those dumb bets were subprime mortgages that the Federal goverment insisted be made to the 'low income' who deserved a house too.Like, "Hey you Citibank, give this poor person a loan. We insist!"? Is that how that works?
MadisonMan said..."not to pay the bonuses would result in a lawsuit, because they were written into contracts."A lawsuit against who or what, and requesting what relief? If the answer to question one is "the federal government," how do you get around sovereign immunity? Can the claim be shoehorned into Ex parte Young or the FTCA?Kirk: it would reduce the total volume of material before Congress, provide a disincentive to duplicative effort, and limit the amount of time wasted writing frivolous legislation.
Holbrooke has claimed through WH aides that he was not aware of these bonuses, but unfortunately that is not how Boards Of Directors work. I know nothing about the particulars of this BoD, but normally, the "Outside Directors" (e.g. Holbrooke) are overly represented on the Compensation Committee for just this reason.
Keep in mind that a crapload of those dumb bets were subprime mortgages that the Federal goverment insisted be made to the 'low income' who deserved a house too.Keep in mind that a crapload of those dumb bets were subprime mortgages that the Federal government insisted be made under threat of sanctions, penalties, and fines, to the 'low income' who deserved a house too.There fixed. All nice and tidy now.
Like, "Hey you Citibank, give this poor person a loan. We insist!"?Is that how that works?No, it works like this: Hey, you, Citibank! We're from ACORN and we're monitoring every loan you make, and there better be plenty of loans made to our friends or we'll have our bought-and-paid muscle in Congress check your lending practices against the CRA and maybe pull your charter.And while we're at it, we're going to bus a bunch of our members to your home every weekend have a big protest in your neighborhood.Don't fuck with us Citibank, we've got Barney Frank, Chris Dodd, and a whole lot of others on our side, and we can hurt you, bad. By the way, our friends will be expecting campaign contributions from you.
The lawsuit would be against AIG, wouldn't it? The feds don't own it all just yet.If the bonuses aren't paid for from federal funds because of Congressional fiat, I think they'd be found somewhere else in AIG -- say, the travel budget -- and federal funds would then pay for travel.
Like, "Hey you Citibank, give this poor person a loan. We insist!"? Is that how that works?Something along those lines. Garage are you really insisting that the Federal government was blameless in the whole sub prime disaster? You really want to go that route?Then again, why the outrage over bailing out corporations that made bad decisions? We've been bailing out individuals who made bad life decisions since LBJ's Great Society.
Don't forget garage, Barney Fwank told that idiot Bush that Fannie and Freddie were just fine and he should just go back to Crawford and clear out some scrub.
So ACORN, Barney Frank, and Chris Dodd showed at up Citibank and demanded they start giving out loans to poor people who couldn't afford it? That's Glenn Beck crazy.
Dodd knew about the bonuses before he did not know about them.Dodd wrote the amendment before he did not write the amendment.Dodd voted for the bonuses before he was against the bonuses.Sounds like John Kerry is running a cover up class for the Senate.
One reason these banking crisis keep happening is because the boobs always go along.Yeah, we need to give Citi/AIG $50B, $100B, $150B, now ???B" because otherwise the sky will fall.B.S. - We don't know what would have happened. The people who opposed TARAP in 2008 were right, and all the "sensible" "responsible" "we need to trust the experts" types were wrong. As for AIG management, they've been government employees since Sept 2008 and they should be paid like Federal employees.
Traditionalguy - Dodd resign? Hardly, he's not officially part of the executive, and senators take falls for no one. Voted out? I doubt a Repub could pull off a Daschle-like defeat of an incumbent in a state like CT. Dodd has sinecure the same as Kennedys have in MA.Geitner however - he's just hoping the bus isn't so heavy that he becomes "street pizza".
So ACORN, Barney Frank, and Chris Dodd showed at up Citibank and demanded they start giving out loans to poor people who couldn't afford it?No, silly, they passed a law requiring it. Read the news; banks are still getting criticized by regulators for not giving out enough loser loans.
garage,I know you are more intelligent then that. Most of these laws were passed during Clintons first term. When the major banks balked at making these loans he threatened them with sanctions, fines, and other penalties.The banks run by smart people made the loans them sold them as fast as they could to get them off their books. They are the solvent ones today.
Meanwhile, no one has gotten lathered up about the bonuses to be paid out to execs at Freddie and Fannie........
Here's the bigger, scarier, point; congress still hasn't passed laws addressing the fundamental issues that got us into this mess nor have they passed simple laws (like changing mark-to-market rules) that could help us get out of it. Instead, they just threw money at the problem and now whine that it wasn't used the way the envisioned, completely ignoring the fact that they had no vision.As for Dodd, the issue isn't the provision recognizing contracts and the limits of congressional constitutional power (though I doubt that's what they had in mind); it's him being such a weiner about it. The problem is that he's such a dolt that he can't articulate why such a provision would exist. (Point being that some staffer understood the legal problems of voiding contracts and wrote the provision in question, but Dodd and most the rest of Congress is too dumb to understand that.)
So ACORN, Barney Frank, and Chris Dodd showed at up Citibank and demanded they start giving out loans to poor people who couldn't afford it? That's Glenn Beck crazy.For Allah's sake garage quit being obtuse. I know when you're snarking but you asked a serious question and I responded in kind. If you think that this whole situation can be laid soley at the feet of AIG, Citi and the government is the innocent babe who will rise to save the day then I may as well quit while I'm ahead and just stick with trying to get Althouse to get you your own tag.
I presume you are referring to the CRA, and there is absolutely nothing in that act that made any bank whatsoever give out a loan to unworthy applicant. Nothing. It only stated that community banks make efforts to loan money in the community. And the smaller community banks are ones not needing bailout money. Imagine that.
garage, yes, that's pretty much how it was:Check it out!That was 1999, about 1 year and a month before Bush...
garageFind a real banker and talk to him off the record about this. He'll be happy to fill you in on the various ways banks were pressured to give loans to unqualified applicants, and threatened as to the consequences if they did not.There were plenty of other mistakes by other people. But this was a big part of it.
So ACORN, Barney Frank, and Chris Dodd showed at up Citibank and demanded they start giving out loans to poor people who couldn't afford it? That's Glenn Beck crazy.Garage, Mortgage companies who did not give out loans to low-income (unqualified) recipients faced fines or lawsuits. Obama himself took part in a lawsuit against Citibank in the 90s.Banks were given a choice: go out of the mortgage business completely (some did) or play along.
While I agree that Dodd is an idiot of exceptional merit, my question is why does any company give bonuses without tying it into performance and profitability? Is that too simplistic? Or was bonus performance expected to be mediocre and profitability non-existent?
Garage - here's an explanation from Larry Kudlow.
Bearbee - retention bonuses are given to reward talented people who stay with an employer during a difficult period. They have nothing to do with profit.
Zachary Paul Sire said:"But that doesn't mean someone higher up didn't encourage some member of congress to introduce [the bonus amendment to the stimulus bill]. Why am I willing to place some blame on Obama and Geitner but you're not?!"The president and treasury secretary are not "higher up" than the chairman of the Senate Finance Committee. Geithner can't "make" Dodd do anything. Dodd lacks either balls or integrety or both.OT -- garage mahal has been pretty civil recently. Thanks, garage!!
"integrity," not "integrety."
OT -- garage mahal has been pretty civil recently. Thanks, garage!!garage is always civil. I don't think many confuse snark with being uncivil. While he's had some heated replies, he hasn't told anyone to suck his dick or referred to others as brownshirts like someone we know.
I think the irony of all this is that AIG is being castigated by for using taxpayer money for bonuses by the same people who passed the vital stimulus bill which contained billions for things like tattoo removal and swine odor research. It would be funny if it wasn't so fucking tragic.
Hoosier Daddy - just say it, you miss Michael, don't you?Well, here's his roommate.
I'm not trying to be mean Zach but you got pissed at me once for making a comment to you about 'when you grow up...' That kind of remark reinforces exactly that sentiment.Don't mistake optimism for immaturity. I'm simply wishing for something better. Know that I have no faith that it's really possible. Conservatives complain about big government, but then they repeatedly elect people who make the government bigger. Spare me.
I would just like them to solve problems without being corrupt.Ha ha ha ha ha ha. Thanks for my laugh of the day.
Michael H, I personally think that you've nailed it with your remark about no one looking at bonuses being paid at Fannie and Freddie. I think that's kind of the whole point of the kerfluffle over AIG bonuses right now -- sort of like the way stage magicians use misdirection. Was this coordinated by JournoList? I can see the exchange now:Bonuses are going to be handed out at Freddie Mae and Fannie Mac [sic] There will be Hell to pay when the US citizens realize it.Anybody got any ideas?Yeah, I've got something, Ezra. How about if we get people pissed off at AIG executives first. Then by the time anybody notices Frannie and Feddie [sic] we can call it "old news."Great! Everybody got that? Go hammer on Ed Liddy and AIG.Ah, I don't mean to seem contrarian or anything, but these AIG guys are already receiving death threats. If we hammer AIG something bad might happen.And that will be something good for us. A couple juicy murders and we can sell lots of newspapers.You're right! Sorry 'bout that.Remember, you read it here first!
Conservatives complain about big government, but then they repeatedly elect people who make the government bigger. Spare me.Really? Is that why all those big government GOP folks didn't lose thier seats in Congress.Oh wait...
Like, "Hey you Citibank, give this poor person a loan. We insist!"? Is that how that works?Sheesh. Do I have to explain this again?
Mortgage companies who did not give out loans to low-income (unqualified) recipients faced fines or lawsuits. No they didn't! There is nothing in the CRA that mandated any bank to give out a loan to an unqualified recipient. Remember in the 80's speculative lending led to thousands of banks and S&L's failing from wealthy real estate developers and get rich schemers, yet not a single bank has failed from borrowing too much to disadvantaged borrowers. The Federal Reserve Board did a study that found "no evidence of lower profitability" at banks that specialized in lower income borrowing, and the same amount of losses from affordable home loans to standard mortgages.
"garage is always civil. I don't think many confuse snark with being uncivil. While he's had some heated replies, he hasn't told anyone to suck his dick or referred to others as brownshirts like someone we know."Apologies, garage!!
Find a real banker and talk to him off the record about this. He'll be happy to fill you in on the various ways banks were pressured to give loans to unqualified applicants, and threatened as to the consequences if they did not.Hello? You called? I was a lending officer from the early 1980for almost 20 years. I've gone over this time and time again in the comment section of this blog.
Name that party!
Dodd fucked up.
"Not quite. I would just like them to solve problems without being corrupt."One of the main conservative arguments for a small government lies in the indisputable fact that power corrupts. ZPS retains the utopian ideal that if we only had the right leaders, this would not happen.What I always found humorous was hearing about progressives/ liberals being the "reality based community". They never have been, and really the primary difference between a liberal and a (non-religious) conservative is that the former is invariably a Utopian, and the later, a cynical pragmatist. As noted, part of the problem is that power corrupts, etc. Another part of it is that we now have trillions of dollars sloshing around, and getting a tiny piece of that could make someone very, very, rich. So, everyone who can make any sort of marginally plausible case for a piece of the action is pushing up to the trough. So, how do you get heard with everyone else pushing to get to the trough too? The obvious answer is bribery, of some sort or another. Sometimes it is merely campaign contributions. Sometimes it is buying lobbyists who know the key legislators. And sometimes those lobbyists are related to the politicians (e.g. Biden). Sometimes it is more overt, like what Dodd (and possibly Obama) have been involved in here. Why are the Democrats more involved in this corrupt being bought? - they tend to have been in office much longer, and there is seems to be a direct relationship between time in office and the level of corruption (plus, the higher they get in seniority, the more the opportunities).- Often they come out of corrupt big city machines. - And, the philosophy behind liberalism, that of big government solving all of our problems, lends itself to accepting this sort of corruption as acceptable.
Know that I have no faith that it's really possible. Conservatives complain about big government, but then they repeatedly elect people who make the government biggerZach, my friend, you're conflating conservatives with Republicans, and you're further assuming that social conservatives are the same as fiscal conservatives. As long as the press pushes the "amount of dollars brought home to their constituents" as a useful metric for judging incumbents, then you shouldn't hope to see many fiscal conservatives elected or reelected.But there is another area of "Big Government" where the Republican record is vastly better, and that is in the area of regulatory agencies and the hidden costs of foolish regulations. As long as people working in an agency are graded for promotion based on how many regulations they write, you are going to have some really weird ones on the books, and compliance with the weird regulations will cost somebody -- either individuals as a hidden tax or corporations that pass on the hidden costs to consumers.Getting to garage's comment above, I haven't personally read the CRA and so I'll take garage's word for it that there's nothing specific in the CRA that tells bankers to do something stupid. Just like there's nothing in Title 9, as written, that discriminates against male college athletes. But the way the laws are interpreted and applied by the regulators and the courts, is the way to see to it that colleges shut down male sports (sometimes having a women's cross country team or a women's swim team, but no men's equivalent) and quietly pressure bankers into giving out bad loans for fear of being called "racist" and non-compliant.
D**m Blogger. Whenever I don't copy my post before posting it, it loses it because it conflicted with someone else blogging at the same time.What the notorious Glen Beck pointed out graphically last night is that the Fed is printing money like there is no tomorrow. It dumped hundreds of billions of dollars in one day, and trillions over the last couple of months. And it has been well known now for decades that ultimately the result of that is inflation.It is almost as if the bonus scandal is being pushed in order to keep our eyes off the big thing going on by the government in the economy right now, that of cranking the money supply as fast as they can. I suspect that the justification for this is that with credit markets locking up, the velocity of the money supply has dropped significantly over the last year. And, so the money supply is being cranked to compensate. But does anyone believe that the Fed will be able to suck all that excess out of the money supply when velocity rebounds? I sure don't think they will be able to react that quickly and that massively, esp. since that will have its own effects.So, why crank the money supply right now?- The easiest solution to all those under-water loans is inflation which would increase the value of the properties underlying those loans.- As noted, with velocity sinking, a failure to crank volume would result effectively in a deflation at the wrong time of the economic cycle,- Inflation, at least initially, has a stimulative effect. However, it is like some drugs - it takes more and more to get that effect, as we found in the 1970s. Geithner has to know all this, coming from the NY Fed. Obama may not, and likely did not six months ago. So, it seems likely to me that this is precisely what Geithner, et al., are hiding from the American people by everyone focusing on all those bonuses.
Um garage,The banks that are solvent and profitable sold the bad loans they were forced to make. The Clinton Administration did threaten lawsuits, sanctions, fines, and penalties if the banks did not loan the money. They just did what any responsible person does- sell the bad loans.BTW, I got the above from a smal community banker.
@Zach:"Don't mistake optimism for immaturity. I'm simply wishing for something better. Know that I have no faith that it's really possible."Wishing for the impossible, but especially voting and making policy based on an unrealizable desire, is not optimism, but rather delusion, a kind of magical thinking.
Um garage,The banks that are solvent and profitable sold the bad loans they were forced to make. The Clinton Administration did threaten lawsuits, sanctions, fines, and penalties if the banks did not loan the money. They just did what any responsible person does- sell the bad loans.BTW, I got the above from a smal community banker.Correctamundo. The banks sell away the loans that they can, meaning generally the residential real estate loans.In addition to the fines etc mentioned above, more important to the Banks was the threat of refusing to allow the Bank to expand: aquire other banks, build new branches, enter into other States (interstate banking). In order to NOT have their ability to grow squashed, banks are required to have a certain percentage of CRA loans.So it is more like: "Do you want to grow? Well? Do ya punk?" Yes. Yes I do. Our shareholders want us to grow. Please, let us do business."Then make these crap loans!! Make Barney's day and keep ACORN happy" Whew. That was close. Quick sell this shit and get it off of our books
I call Bullshit.Are we to believe that Treasury didn't read and sign-off on AIG's 10-K before filing on March 2nd?
How many examples do we need before the 53% realize that government (large or small) does not have the information, knowledge, experience, motivation, or cajones required to make banking, business, manufacturing, industry, research, compensation, operations, education, [and on] decisions?This is precisely why we need to excise the unproductive class from government. People need to start their careers in something productive, become very good at that thing, and, if desired, loan their talents to government for a finite period of time (I've been suggesting ten years, whether elected official or bureaucrat) and return to the productive class after that. Nobody should suckle at the government teat for the duration of a career!This administration has (whether it wanted to or not) clearly defined our current conflict as one between the productive class and the unproductive class. The former must take over again if our nation is to truly prosper.
DBQSo how were these threats carried out? Written? Orally? How?
Maxine Waters threw Obama under the bus on The Joe Scarborough Show:"They've got some explaining today. I think the President is going to have to clarify to the American people what took place between the Treasury and Mr. Dodd. There appears to be some kind of agreement that they had to protect AIG and those bonuses." she said."Maybe the President is not up to speed on what's going on!"Seems Waters is as irony challenged as she is ethically.
One of the main conservative arguments for a small government lies in the indisputable fact that power corrupts. ZPS retains the utopian ideal that if we only had the right leaders, this would not happen.Well said. On the whole, people don't do well with power. The vast majority of them lose sight of what they were elected, appointed or hired to do in the first place and make it all about themselves. The result of that is the mess we now see before us.That's why, as I said above, I'm a big fan of term limits for both Congress and the federal bureaucracy at large. We may not be able to place limits on the power of those atop private concerns (save for not doing business with them), but when people's jobs are funded by the public coffers, limits on their power must be put in place.Why am I willing to place some blame on Obama and Geitner but you're not?!I'm willing to blame Geithner for pretty much anything at this point, because he shouldn't be in the Cabinet at all; he should be in prison. The man has confessed to tax fraud, for crying out loud. When will someone come and bring him to justice? Every day that he's in office, that office becomes more and more of a joke.(In a truly just world, Dodd, Murtha, et al. would be in prison as well, or at least headed there.)
I would like to drag this converstion back to what's important here, folks:How are President Obama's b'ball picks doing so far?
@ZPS:"Conservatives complain about big government, but then they repeatedly elect people who make the government bigger."No, they don't!If *conservatives* could elect a government we wouldn't be in this mess.Unfortunately conservatives are the red-headed stepchildren of the Republican Party.The reason GW Bush's ratings were so awful is that conservatives were as pissed at him as leftists.
garage, my man, DBQ pwns you. Deal with it.
garage mahal said... DBQSo how were these threats carried out? Written? Orally? How?Here's an example this last week:http://boston.bizjournals.com/boston/stories/2009/03/16/story3.html?b=1237176000^1793570&page=1Joseph A. Petrucelli is one of the most cautious bankers in America.In fact, Petrucelli is so cautious that the Federal Deposit Insurance Corp. recently criticized his bank for not lending enough.The FDIC’s negative review of East Bridgewater Savings Bank’s loan volume is an anomaly in today’s current banking scene as lenders reel from their role in offering too many cruddy mortgage products to borrowers with weak credit.Still, the FDIC slapped East Bridgewater Savings with a rare “needs to improve” rating after evaluating the bank under the Community Reinvestment Act.apologies? or do you need more examples?
One clarification is needed about the CRA. The banks could meet that requirement with a few well chosen sub-standard borrowers. They were part of the ethos of "do not say a word to a black borrower about his bad credit". But it was the 1998 re-structuring of the FNMA loan criteria for those same reasons that opened a flood gate for making and re-selling bad and fraudulent loans. These loans were (1)re-sold for big profit margins because the poor black borrowers did not realize how overcharged they had been, and (2) they generated big fees for inception shared by everyone in the system. The Losers holding the bag were supposed to be the foreigners. The day the scam could no longer fool anyone, the "Toxic Assets" in the system had grown large enough to bankrupt every owner of those Bad Loans.To hold up the now bankrupt world wide Financial system became the crisis. To use that crisis as a reason re-distribute the rest of our inheritance is a Cruel joke.
But wait, there's more; Richard Holbrooke served on the AIG board and approved the bonuses in question.Here's where it gets even funnier:"...a White House spokesman said Thursday that Holbrooke was unaware of AIG's decision to award retention bonuses to key employees..."So what the White House is saying is that Holbrooke did not uphold his fiduciary duties as a member of the AIG board of directors. Isn't one of the criticisms in all these messes that boards of directors weren't doing their jobs?Add to this Dodd claiming he's innocent because some staffer pulled one over on him. Obama's not at fault for the debacles with our various friends across the pond because...The excuse from the administrator and Congress for everything now is: We're not at fault because we're incompetent!
garage, my man, DBQ pwns you. Deal with it.I'd deal with it if were true. As I said, nothing in the CRA demands any bank to make bad or unsafe loan. All I've seen to date are claims that "they" made "some" banks make bad loans that have brought on the bank and financial sector's collapse without a shred of proof.
garage, you're being deliberately obtuse. Nothing requires banks "to make unsafe loans" specifically, but requiring banks to reach specific quotas will result in unsafe loans being made. The citation above and the evidence given by people ACTUALLY WORKING IN THIS FIELD proves that.
garage,You are looking at a piece of legislation. You seem to forget that regulatory agencies can make rules and regulations that have the effect of law on their own.I believe these banking rules and regs were the knife held to the throats of the banks.
So ACORN, Barney Frank, and Chris Dodd showed at up Citibank and demanded they start giving out loans to poor people who couldn't afford it?You might want to read this:Plaintiffs filed their class action lawsuit on July 6, 1994, alleging that Citibank had engaged in redlining practices in the Chicago metropolitan area in violation of the Equal Credit Opportunity Act (ECOA), 15 U.S.C. 1691; the Fair Housing Act, 42 U.S.C. 3601-3619; the Thirteenth Amendment to the U.S. Constitution; and 42 U.S.C. 1981, 1982. Plaintiffs alleged that the Defendant-bank rejected loan applications of minority applicants while approving loan applications filed by white applicants with similar financial characteristics and credit histories. Plaintiffs sought injunctive relief, actual damages, and punitive damages.One of plaintiff’s lawyers: one Barack H. Obama.
Scoop, Here is classic VRWC story from the LAT 1999 on CRA and Fannie MAEhttp://articles.latimes.com/1999/may/31/news/mn-42807All of this suggests that Clinton's efforts to increase minority access to loans and capital also have spurred this decade's gains. Under Clinton, bank regulators have breathed the first real life into enforcement of the Community Reinvestment Act, a 20-year-old statute meant to combat "redlining" by requiring banks to serve their low-income communities. The administration also has sent a clear message by stiffening enforcement of the fair housing and fair lending laws. The bottom line: Between 1993 and 1997, home loans grew by 72% to blacks and by 45% to Latinos, far faster than the total growth rate.Lenders also have opened the door wider to minorities because of new initiatives at Fannie Mae and Freddie Mac--the giant federally chartered corporations that play critical, if obscure, roles in the home finance system. Fannie Mae and Freddie Mac buy mortgages from lenders and bundle them into securities; that provides lenders the funds to lend more
Good Old Senator Dodd(ge)
Obama is our new superhero, "Teflonman"! There is no one who works for him who could possibly be unaware of this. I would have loved to see Dodd's face when he realized the music stopped, and he was left holding this bag. All of this while "O" is on Leno defending Geithner. Of COURSE he is defending Geithner. Poor Tim can't seem to find anyone to work with him. New "Goats" are at a premium in Washington these days.
The fact is that this bonus to AIG managers is a deliberate attempt by the Obama administration to distract us from the fact that there remain liabilities for AIG and many other financial institutions of some 50 trillion dollars (that is 50,000 billion dollars, or 50 million million dollars) of side bets that remain to be paid off in the forms of credit default swaps, credit default options, etc. The US government is very close to declaring ITS bankruptcy. This is paralyzing the Obama administration, since there is nothing that the US government can do to 'fix' the problems that our 'financial experts' developed for their own benefits, except to temporize (fiddle, while Rome burns).The Obama administration is leaking the idea that the federal deficit will be 1 trillion (1 million millions) dollars for the next ten years. Obviously, this is to support the failed financial experts who contractually offered 50 trillion dollars of various 'insurance policies' for the junk debt they sold as prime, AAA, debt.AIG is at the hub of this 'debt insurance' debacle. As a result, the government is using AIG as the government's conduit to save all of those investment firms complicit in the swaps and hedges scams that only worked if the economy overall continued to advance and no one looked seriously at the books.We, the citizens of the United States, are going to pay the price for our lack of attention to what our government and financial institutions were doing behind the screen for the last 30 years.
The chief argument against term limits, at the least the one that convinced me, is that we don't want the government run by the experienced but unelected staffers. The argument no longer convinces me.
AIG bonuses are just a distraction to the TRILLIONS in HOG BILLS.If AIG needs to return legal bonuses (thanks to the idiots in CONGRESS) then why aren't those CONGRESS CROOKS being told to give back the bribes that they took from AIG, Freddy and Fannie?I don't care if they're Democrats or Republicans or Socialists! No politician should have accepted money from a company that the taxpayer has billed out.
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