March 17, 2009

"Resign, or go commit suicide." Who said that to whom?

Sen. Charles Grassley said it to the executives at AIG.

Now, let me be fair. Let me put it in context. He was also telling them to act more Japanese:
"The first thing that would make me feel a little bit better towards them if they’d follow the Japanese model and come before the American people and take that deep bow and say I’m sorry, and then either do one of two things — resign, or go commit suicide."
Later, he got a spokeswoman to clarify. (Is it really sufficiently Japanese for a man to get a spokeswoman to explain his remarks?)
[S]pokeswoman Jill Gerber clarified Grassley’s comments, saying "clearly he was speaking rhetorically – he meant there’s no culture of shame and acceptance of responsibility for driving a company into the dirt in this country. If you asked him whether he really wants AIG executives to commit suicide, he’d say of course not."
Okay, then: Fuck yourself, Senator Grassley. That's rhetoric. Of course, I don't really want you to fuck yourself. And, actually, I agree with you. We need more shame around here. Let's do some shaming. Let's shame everyone in the executive branch and Congress who let our money flow into AIG without building in the kinds of restrictions that would have prevented the use of the money in the way that Grassley and others are bitching about now that it's too late. So bow down, Senator Grassley. Take a deep bow and say you're sorry. And then resign or go commit suicide like the Japanese stereotype that you think is cool to bring up when you are making a display of venting your anger at the people you want us Americans to be angry at — instead of you.

94 comments:

MadisonMan said...

I wonder what business school the AIG Execs attended. I wonder what was taught there.

MadisonMan said...

But you're right on, Professor, about the lack of oversight put in this crammed-through-Congress-in-an-EMERGENCY! bill. Why'd the President sign that thing and why'd Congress pass it (and how can they complain about it now?)

Bissage said...
This comment has been removed by the author.
Bissage said...

Senator Grassley’s preening moral vanity is galling but what is worse is his ignorance of Japanese culture.

A Japanese executive would neither resign nor commit seppuku.

He would, however, submit himself to be raped by a giant octopus.

Fred4Pres said...

Bissage! Very good. Where can we get an army of such octopi because a lot of individuals need to...submit.

And Professor Althouse, for a second I thought I was reading Ace or Protein Wisdom. Some well said profanity is definitely in order.

Melissa said...

Woo! I love to see a little fire in my daily Althouse!

fcai said...

Business as usual. I really don't see what the problem is. Democrats are in control and money is being wasted. Situation normal, eh?

How about the 93 billion AIG sent overseas? Any problem with that?

Keep voting democrat - they are hopey and changey.

Bart Hall (Kansas, USA) said...

The real scandal in the AIG situation is that the moneys directed to AIG were intended primarily to enable AIG to make good on its insurance coverage for a metric shitload of bad paper held by ... Goldman Sachs. At least $13 Billion worth that I'm aware of. AIG money passed right through to GS.

The Department of Treasury has been infested with GS people for years, including Mr. Paulson who engineered the first AIG bailout last autumn.

Does anyone else have a problem with this whole picture? Even without mixing in Mssrs Dodd, Schumer, Frank and the rest of the sorry lot.

Balfegor said...

And then resign or go commit suicide like the Japanese stereotype that you think is cool to bring up when you are making a display of venting your anger at the people you want us Americans to be angry at

It may be a stereotype, but they do in fact do that. Not the suicide part, but the bit where they all line up and bow to the public. See this(apologising for problems with the pizza at a family restaurant chain) or this (apologizing for, I think, using expired ingredients in their candies) or this (apologising for releasing user information into the public) or this(apologising for faulty water heaters) or this (apologising for an accident in which 28 students died, er, 21 years after the incident, it looks like from the caption.)

cumberlandpeal said...

Well said. The fact that the government did not think to impose compensation limitations on recipients of bailout funds is evidence of the governments lack of business competence. I believe that Mr. Geitner was the architect of the plan back in the evil Bush days, but I could be wrong about that. As to what the AIG executives learned at business school, it is clear that they learned to get written contracts from fimrs that were on the brink of failing even if the failure was of their own making. A community orgainizer or a tax cheat might not of thought of that.

ricpic said...

Gee, congress is learning that if you give away billions with no strings attached unexpected things happen, duh.

traditionalguy said...

The Congressional follies go on and on. Anything to fool 51% of the voters. Why do we expect any truth from a politician anyway? The AIG guys are Insurance sales people. They sold lots of an insurance product which give them a bonus under their contracts. The US government then prevented their collapse when the Insurance market blew up in their faces, all due to the Congressionally protected FNMA and friends mortgage fraud pipelines. Do we blame LLoyds of London for too many Hurricane losses or do we need it to continue in business? Its just scapegoat time in DC again. Bad loans are the ONLY culprit and Dodd knows it because he connived to set that up mess himself. Now he connives to set up the extraordinary risk Insurer of the hurricane of losses from Bad Loans, that he caused, to take his fall.Everything Dodd says on the subject of Bad Loans is classic BS. When will a real Journalist seek out and tell us any any truth again???

Lem said...

This post brings back some memories.. When the congress could not find out Who hired former bar bouncer Craig Livingstone. He ordered him to illegally obtain for the Clinton administration the FBI files of hundreds of people that had worked in the Bush 41 and Reagan WH. One senator (name escapes me) seemed to urge Craig to do as a navy officer Boorda had done (for wearing unearned medals) and commit suicide. Rush had some fun with that one.

Also.. speculation has it that Vince Foster committed suicide as a result of the Travel Office mess. Or was it an affair with Hillary that was about to be uncovered ;)

You can say anything you want about the Clintons but boring is not one of them.

The Drill SGT said...

Balfegor,

I have no picture, but you might remember this great story about Japabese apologies (from wiki):

Japan Airlines Flight 2 was a flight that was piloted by Captain Kohei Asoh on November 22, 1968.[1] The DC-8 plane was scheduled to land at San Francisco International Airport but due to heavy fog and other factors, Asoh mistakenly landed the plane in the waters of San Francisco Bay, two and a half miles short of the runway.[2][3] None of the 96 passengers or 11 crew were killed or injured in the mishap, and the plane was eventually recovered and refurbished for service. Asoh had served as a flight instructor in the Imperial Japanese Navy during the Second World War and was a 15-year veteran of JAL.

In the NTSB hearing, Asoh took the stand, when asked how he had managed to land the aircraft in the bay, replied "Asoh fuck up." This frank acceptance of blame became the "Asoh defense", and the story and term have been taken up by a number of management theorists.

David said...

No Asoh in Congress. They never fuck up. It's always someone else.

Fuck you Senator indeed! Pile it on, Althouse.

Franco said...

They really get angry when the private sector wastes taxpayer money. When the government does that on a daily basis - not a peep.

Peter V. Bella said...

I love these politicians. They say exactly what they mean then have their PR weasels try to convince the pubic that they did not mean what they said. Grassley said it and he owns it. And yeah, he and all the rest- both parties- can go fuck themselves. I really mean that.

Ern said...

I live in California, so, for the past sixteen years, my US Senators have been Feinstein and Boxer. It would be hard to find a state with two US Senators who are worse, but it is possible. I'm about to move to Iowa, where my US Senators will be Harkin and Grassley. I think that I'm being punished.

Peter V. Bella said...

You cannot listen to what these politicians say. You must read what they say. So sayeth Saint Hillary.

Balfegor said...

I live in California, so, for the past sixteen years, my US Senators have been Feinstein and Boxer. It would be hard to find a state with two US Senators who are worse, but it is possible.

I dunno -- I don't think that's fair to Feinstein, really. I think she's actually better than average, among Senators. It's just that Boxer drags the California average way down.

Big Mike said...

Well, as always there is another point of view about AIG, pretty thoroughly hashed out by Tom Maquire at http://justoneminute.typepad.com/main/2009/03/the-22nd-book-the-book-of-the-dead.html

Let's suppose that you're a capable manager (yes, I know, you're an academic and management probably looks a heck of a lot easier from a universtiy campus than it is in real life) and you can plainly see that your corporation is unraveling. Under what circumstances other than a bonus pool or huge salary bump, why would you stay? Doesn't somebody have to try to rescue whatever can be rescused?

David said...

Big Mike:

Generally I agree with your point of view, but in this case all of these bonuses went to the people in the London unit who brought down AIG in the first place. Not much doubt they knew what trouble they were in at the time they set up these guaranteed bonuses.

The money has been paid. It's gone. But if anyone at Treasury, in Congress or even on AIG's board had been paying attention, this situation could have been fixed well in advance of the payment.

Not staffing up Treasury has consequences. This is one of them.

TMink said...

Every now and then I have a sad and confused spouse come in to discuss their marriage. After asking some questions it becomes clear that one person in the marriage will NEVER appologize.

I never say it, but I always think it: "You're screwed."

A relationship with someone who never appologizes is a stuck relationship. The other partner will continue in their present course.

It works the same way for Barnie Frank and the other liars in congress. Vote them out is you are smart, but NEVER think that they will change, they see no reason to.

Trey

Simon said...

The "FAIL" aspect of this is the lameness of saying it and then retracting it. Either say it or don't say it - don't say it and then issue a simpering press release disclaiming it! Hiding behind a press secretary's skirt - that's a manly way to behave!

Peter V. Bella said...

I live in California, so, for the past sixteen years, my US Senators have been Feinstein and Boxer.

You should live in Illinois. We have Durbin the turban. We had the invisible Senator- they guy who never showed up to work because he was too busy running for president.

Now we have the corrupt and racist Burris. Durbin the turban and Burris the burro. The dumbo duo.

Big Mike said...

@David, you obviously have information that I'm not aware of. Can you post a link or two? Thanks.

Sofa King said...

As far back as I can remember, I always wanted to be a Congressman.

To me...being a Congressman was better than being president of the United States.

Even before I went to the staffers' office for an after-school job, I knew I wanted to be a part of them. It was there that I knew I belonged. To me, it meant being somebody in a country full of nobodies.

They weren't like anybody else.
They did whatever they wanted. They parked in front of hydrants
and never got a ticket. When they shmoozed lobbyists all night nobody ever called the cops.

The hardest thing was to leave the life. I love the life. We were treated like movie stars
with muscle. We had it all.

Our wives, mothers, kids,
everybody rode along.

I had bags filled with cash
stashed in the refrigerator. I had a bowl of coke next to the bed. Anything I wanted was a phone call away. Free jets. Keys to a dozen
apartments all over the city.

I'd tax a billiion over a weekend, then blow the revenues in a week
or go to bonds to pay the entitlements.

Didn't matter.

It didn't mean anything. When I
was broke I would go fundraise some more.

We ran everything. We paid the cops. We paid the lawyers. We paid the judges. Everybody had their hands out. Everything was for the taking.

And now it's all over.

That's the hardest part. Today everything is different. There's no action. I have to wait around like everyone else.

Can't even get decent food. After I got here I ordered orzo with arugula leaves, and I got macaroni with lettuce.

I'm an average nobody.

I get to live the rest of
my life like a schnook.

Big Mike said...

@Ern, Boxer isn't even the worst female senator. That (dubious) honor has to go to Maryland's Barbara Mikulski.

Original Mike said...

I agree with him that there is an appalling lack of responsibility borne by the execs. However, I continue to be amazed of the complete lack of contrition on the part of politicians who are at least as culpable as the execs.

What's sauce for the goose...

JAL said...

Well it's clear the don't-sign-anything-before-you-read-is something for simpletons, right? I mean, nobody's gonna screw the US Congress or POTUS, are they? (They needed to have their [our] lawyers read it first, doncha think? They gave away the farm.)

Meanwhile the US government under Obama doesn't want to be responsible for the medical expenses of guys and gals who lose eyes, limbs, brains and health in the service of their country. But hey - he's all for giving billions to "community organizing" stuff and mice in California swamps ...

Can't wait for 2010.

amba said...

It may be a stereotype, but they do in fact do that. Not the suicide part

I personally knew one who did. Of course, he was more of a gangster than an executive. (Like there's a difference? Maybe there is. Maybe gangsters have more of a culture of shame and accountability.) But he made an investment for some people that went bad, and he killed himself. He left a wife and two kids.

Balfegor said...

(Like there's a difference? Maybe there is. Maybe gangsters have more of a culture of shame and accountability.)

Even in the US, the stereotype is that when you're with the mob, the penalty for failure is death. But when you're with, say, Goldman Sachs, the penalty for failure is you get fired.

That said, I think investments are one of those areas where people of all cultures commit suicide out of shame over their failures. In Korea, there have been some suicides as a result of the economic situation. In Germany, one of the richest men in the country committed suicide earlier this year when his investments collapsed in value. And in the US, wasn't stockbroker suicide sort of emblematic of the Great Depression, right up there with the soup lines and the bonus army?

Original Mike said...

Even in the US, the stereotype is that when you're with the mob, the penalty for failure is death. But when you're with, say, Goldman Sachs, the penalty for failure is you get a bonus.

Fixed your post.

Joe said...

AIG isn't having problems because of their insurance business, but because they had a small group of arrogant greedy assholes who thought they could beat the market with derivatives and betting on credit default swaps. Several business units in AIG are very well run and still profitable!

The mistake the government made was not breaking up AIG and splitting the corrupt, unprofitable parts out as the proverbial "bad bank."

Grassley has long been a hypocritical asshole, why is everyone surprised?

john said...

JAL said -

Can't wait for 2010.


JAL, that's next year! What the hell is going to happen in one year?

Trouble is, JAL, we both want to "vote the bums out", but that's never a ballot option: we always have to vote someone else in.

The GOP has ossified on a national level, and that has hurt them on the state level, as they are a long way from having a slate of good candidates to run against the incumbents. It looks to me that the Dems could actually increase their majority in at least the House in the 2010 midterms.

amba said...

If someone could start a movement that would really take off, right now, and accomplish something, what would it be? Harnessing this good rage and disgust seems more important than wind power.

rhhardin said...

I need more data but the bonuses sound legit to me. It's how sales people are paid, rather than salary, for example.

What it sounds like to me is the 1933 Goehring:

Things have changed : kindness is no longer something that belongs to people, only to lords or to societies, like justice, and justice is now the kindness of many of us, which means concentration camps are instance of the kindness of our species, of the ways it pays its dues, of the distorted forms of intimacy we buttress with our solemnity and piety. As when Jews were sent to concentration camps in the thirties in Germany, propelled there in part by arguments produced by the head of the major German humane society of the period, the Tierschutzverein. Hermann Goering by name.

Let me say that more slowly. One of the striking things about the memories of my friends who lived through the 1930s in Germany is that in some cases it was not until Kristalnacht, in 1938, that they had any sense that Hitler meant anyone ``real'' harm. What people were aware of when they thought of Hitler and the Nazis were words, words such as ``purity,'' ``nobility.'' There were ideals everywhere, according to the memories of my friends, and the ideals included kindness to animals. Hence there was not much stir when Goering went on the radio to urge the incarceration of ``cruel'' scientists of blood ``alien to our nation'' and to reassure his audience that true Germans were kind to animals. In a radio broadcast on August 28, 1933, he announced, ``In order that animal torturing shall not continue, I have now stepped in ... and will commit to concentration camps those who still think that they can continue to treat animals as inanimate property.'' This speech was specifically concerned with vivisection and the religious use of animals, and unless you were offended by its anti-Semitism or had some awareness of what the lack of restraints on the power of the Tierschutzverein signified - for Jewish scientists, say - it probably sounded reasonable enough.


People are not noticing what it leads to.

Big Mike said...

@john, all political parties are coalitions. Democrat coalition continues to hold despite major internal disconnects (see today's column by Thomas Sowell for one example). Meanwhile the primary Republican coalition is between fiscal conservatives (like myself) and social conservatives, and this coalition is fraying.

I think we will get it back together in time to make a big dent in the Democrats' margins in the House and Senate. I'm hard pressed to imagine recapturing either part of Congress, but the 2010 elections are 19 1/2 months away and a lot can happen (in either direction, alas). My own thought is that the Obama-Reid-Pelosi axis of evil will sink themselves further -- taking the country down with them, but maybe not so far the boat can't be righted.

Did you notice that "ORP" as an acronym sounds like the noise you make when you lose your lunch? Accident? Or is there a God after all who has a sense of humor?

MadisonMan said...

I have to say I like the proposed bill to tax TARP-funded bonuses exceeding $100K at 100%. However, it seems inefficient to me to give money to the government, the government gives it to the Company, the Company gives it to the Executives, who then turn around and return it to the Government.

Christy said...

All you lawyers know that admitting "Asoh fuck up" is the height of irresponsibility in this land of litigation.

I read once that depression era stockbroker suicides were largely mythical - only a couple - but I couldn't find any links.

I'm all for using shame to pressure proper behavior - in theory. For my very own personal self, however, I've used Ted Kennedy as a model whenever I've behaved badly. Hold my head up, act as if I'm guiltless, and continue to act like the most important person around. My deepest shame is that, of course, this works.

Big Mike, I don't like Mikulski's politics, but she is damn good at constituent service (for regular folks, not just big contributors) and bringing home earmarks.

Shame? Isn't that a conservative value? Why is a liberal law prof touting it?

john said...

Big Mike - Unless you live in both Nevada and California, you aren't going to have much influence on the ORP AoE. I would guess Pelosi's district is as safe as safe can be, but I don't know much about how Reid is viewed in his own state. His scandals and "clerical errors" were conveniently hashed out in the first 2 years of his current tenure, which makes it ancient history now.

Cedarford said...

Balfegor - It may be a stereotype, but they do in fact do that. Not the suicide part, but the bit where they all line up and bow to the public. See this(apologising for problems with the pizza at a family restaurant chain) or this (apologizing for, I think, using expired ingredients in their candies)

And sometimes they actually do commit Seppuku to wipe away shame, preserve family honor, and to make an example for subordinates.

Several did kill themselves when Japan suffered it's US-style banking meltdown. Many in the gruesome traditional manner.

I was impressed by one Japanese shipping captain doing it in LA about 18 years ago. He was shipping Toyota cars and ten broke free in a terrific Pacific storm, went lurching about like proverbial loose cannons and totaled a couple dozen more cars. Once he arrived at San Pedro (LA's mega port), he went to his cabin, wrote letters of apology to Toyota, to Suminoto Maru or whatever shipping firm he worked for, to his crew and family - then partially disembowled himself and cut his jugular vein.

In the US, only the US military and certain firms still maintain accountability (and many of them only on petty employee crooks).

9/11? not a single FBI employee apologized, was reprimanded, demoted, or fired.
The economic meltdown? Can you just imagine the din of apologies from Reaganomics true believers, the Clintonistas who opened the housing market up, the Bushies and Dems asleep in regulatory offices? From bankers before they jumped out of windows? Imagine you must, because they are all silent.

So far, the only apology was by Dick Fuld - who was knocked cold by an angry jock at his Exercise club. When Fuld woke up, he said whatever made him get punched out, he was sorry, and don't let the guy hit him again.

But the military?
20+ AF people lost their careers over the nuke bomb mishandling incident at Barksdale.
7 lost their careers last year over allowing a defective F-18 Marine Hornet fighter to fly and later crash near Miramar.
An Army commander that tried pulling rank on and abusing a sentry at the Pentagon was immediately relieved of command.
My old colleagues over at Navy say that they actually bet on how long - days vs. hours - it will take to relieve a Captain who grouds any Naval vessel. Sometimes a helo shows up with a new CO and a flight of the skipper into ignominity while the ship is still lodged on a sandbar or reef..

Me, I would be ecstatic if a "Unregulated Free Marketer" like Grassley killed himself, or Barney Frank went out barebacking in remorse. If a Rabbi stood up and denounced members of Goldman Sachs and returned their millions donated to a relief fund. If Chris Cox, Chris Dodd, the black guy who ran Fannie Mae each got a public letter from his country club saying they were unwelcome to show up again based on moral turpitude. If the whole AIG executive staff crashed and burned in the Atlantic while on an "executive retreat" to shoot grouse in Scotland.

rhhardin said...

I have to say I like the proposed bill to tax TARP-funded bonuses exceeding $100K at 100%.

The prohibition of bills of attainder ought to prevent it.

If it's not inoperative yet.

Original Mike said...

I need more data but the bonuses sound legit to me. It's how sales people are paid, rather than salary

But if the instruments they sold are the cause of the meltdown (and I'm not saying they are, I'm not up on this enough), do they really deserve a bonus? And I realize that contractual obligations are another matter as well.

pj said...

just an observation. I went off to college with plans of being an MBA. In a strange schoolgirlish way, I was under the impression that elite university dons would teach me how to be a legal $$$ criminal on the level of greenmailers and the like. When I got into the intro classes and found them full of frat boys learning accounting I was dismayed. I changed majors. Later I had a moral awakening, but that is immaterial to my point which is that I was right the first time. I wasn't even a bad kid, so much as a smart kid with a oddly romantic streak.

If someone as relatively naive and removed as I was already had that impression w/ no knowledge as yet of derivatives, well, I don't see much hope here - because derivatives were *exactly* what I had in mind when I thought I would be taught to be this high end con artist.

rhhardin said...

Rush, who has no more data than I do, says that the bonuses are retention bonuses to people who have already been told they'll be fired.

To get them to hang around and help rather than looking for another job.

That conflicts with the long standing contractual agreement news.

Rush is all upset rather with payments to other banks, which is why Rush is painful to listen to on economics.

Probably the payments to other banks are collateral required on AIG paper that they hung on the other banks, once AIG's credit rating declined. If your credit rating declines, you have to put up so and such collateral on the loan, which they did.

That's beneficial to the plan to stabilize the financial system, which was paralyzed by unknown counterparty risk that kept you yourself knowing if you were solvent; as well as everybody that you owed money to.

You have to stabilize the financial system because bankruptcy law is unable to deal with the dominos that would be involved; it would simply stop all the action for several decades until it was sorted out, freezing things permanently.

Maguro said...

Sure, let's just have the politicians pick and choose which contracts should be honored based on nothing more than their own sense of "fairness". What could possibly go wrong?

Freeman Hunt said...

I'm fine with citizens being mad about this as it is our money.

But Congress? Give me a break. What do they have to be mad about? Competition in the arena of screwing us over? They've wasted, over the course of only a few months, trillions of dollars. Trillions. And they want me to go and focus on not quite half a billion that they handed out with no strings attached?

Sorry guys, the AIG bonuses may tick me off, but they're your fault and a mere drop in the ocean of your own fiscal irresponsibility.

pj said...

On this note, I was truly surprised back during the Enron days that one of the PG&E guys (whose retirement was decimated through a buyout and not any wannabe high-flying fault of their own) didn't lay in wait and assassinate Ken Lay. I figured either things weren't as bad as they seemed or americans weren't remotely as violent as the culture would suggest.

Peter V. Bella said...
This comment has been removed by the author.
Peter V. Bella said...

This is a phony scandal and phony outrage. Democrats never let facts get in the way of their incompetence:

Fact: These AIG bonuses were contracted in 2008, before the faiure.
Fact: Chris Dodd wrote an amendment to the bailout legislation that would exempt al bonuses prior to February 2009.
Fact: The legislation passed.
Fact: Obama signed the legislation

Fact: Obama and Company are now outraged that bonuses they legally allowed were given out. The real outrage they feel is they got caught. Now they are trying to cover-up their gross ineptitude by phony outrage.

Fact: This is phony outrage and a phony scandal.

Oh, and now Shumer, Frank, et al want to shred the constitution and confiscate earned wealth. You guys thought Bush was bad? These guys will take all of our rights away. Remember, that Harvard Law grad thinks that the constitution is an imperfect document.

Peter V. Bella said...

the government gives it to the Company, the Company gives it to the Executives, who then turn around and return it to the Government.

MM, it is called a circle jerk, which out whole government has become.

Felix said...

You nailed it, Ann! (though the Senator was giving an interview when he made the comments, not talking face-to-face with AIG execs.)

Not only did I find his comments offensive, inaccurate, and stupid, I thought them hypocritical. After all, Senator Grassley voted for the Emergency Economic Stabilization Act's Troubled Asset Relief Program in 2008, despite the fact that Fed had already bailed out AIG to the tune of over $120 Billion. And the TARP that he voted for was used to buy $40 Billion in AIG preferred stock. Seems to me that he's smokescreening.

traditionalguy said...

Ok, when your army loses a battle, you should fire the army and re-cruit a new one. That is stupid. Insurance is all about battles of risk guided by actuarial computations from past history. The bad judgement that the Demo-scammers Party snuck thru was the idea that great amounts of money could be "distributed" by using Bad Loans coupled with a simple insurance device that would spread around the risk from an acceptable level of losses. That was Pure Ignorance or it was a Conspiracy. (No one had any experience base in lending to Bad Risk Black borrowers). Either description applies to this Demo-scammers entitlement mentality. The shame is that no one else wanted to blow the whistle while the money was still flowing and allow themselves to be called racist. Of course Dodd and friends, who had always sold out to highest bidder, deliberately failed at their Congressional oversight roles and are the culprits. FYI any more than 2% loan losses will bankrupt most Banks. After Pearl Harbour, Nimitz kept his Admirals and with them he won the next battles. Only one scapegoat was needed. So let's quit allowing ourselves to be incited to a riot against experienced insurance salesmen by these Demo-scammers in need of Scapegoats.

blake said...

I'm having a Letterman moment:

ORP...TARP!

TARP...ORP!

cumberlandpeal said...

So if you listen in on the cell conversation of a prospective child rapist you are akin to Hitler. But tax 100% of a contractual bonus because you failed to condition a bailout on the non-payment of bonuses and you are....what?...a congressman. And a Democrat. Good going. Very very humorous to watch.

Balfegor said...

The bad judgement that the Demo-scammers Party snuck thru was the idea that great amounts of money could be "distributed" by using Bad Loans coupled with a simple insurance device that would spread around the risk from an acceptable level of losses.

I think there was a pretty bipartisan consensus that using regulatory guidance to force banks to make loans to poor people with bad credit was a good thing, since it helped close racial gaps in home ownership and could -- if things went well -- let poor people build up an ownership stake in society. Bush II was very much in favour of that kind of thing, and pushed hard for increases in minority homeownership. His efforts towards regulating the market-makers in mortgage backed securities (Fannie and Freddie) were somewhat more desultory. And to be perfectly honest, I thought pushing homeownership for poor people and minorities was a good idea at the time too. As it turns out, that was wrong.

Bruce Hayden said...

I would guess Pelosi's district is as safe as safe can be, but I don't know much about how Reid is viewed in his own state. His scandals and "clerical errors" were conveniently hashed out in the first 2 years of his current tenure, which makes it ancient history now.

The Republicans, of course, hate Reid. But overall in the state, it seems like there are more who like the pork he brings in as majority leader, than dislike how he does it.

Remember, Nevada has a questionable past. At one point, the mob ran Las Vegas. I suspect that there is still a bit of that around, which may be why voters in Nevada are more forgiving of Reid, than those in South Dakota were of Dashle. Also, Reid does appear to have a very good reputation for constituent service.

traditionalguy said...

The government did not give away government lands or properties to anyone. What they did was give away/pledge the Credit of the US government to effectively corner the market for home loans for the profit of their friends. Before 1998 FHA and VA loans competed very well alongside Conventional loans which required high PMI (mortgage insurance) premiums if less than 20% down was paid by a buyer at closing.After 1998 the FNMA began to purchase a pipeline of uninsured conventional loans at no down payment. We could not believe it when we heard about it. Even the "no money paid by the seller over 3% of price" rule was removed by a fantasy Down payment Assistance Plan with a pretend Borrowers school diploma and incidentally paying 1% of the home prices to Friends of the Democrats who ran these private scams. In the next 6 months the FHA and VA loans disappeared (since they required Fees/MIP to be paid into an Ins. fund to spread the terrible risks created by 100% loans). The circus of new homes being sold to people who had no credit, or were just Pretend people with fake id's and fake job verification, and the scam of flipping properties 2 or 3 times in phony sales amomg friends to drive up appraisals on junk houses, all went wild from 2000 thru 2005. The antidote to this scam is truth, but our country now relies upon fantasy in its dealings.That's why Obama is popular: he can win American Idol performance-of-fantasy voters way better than much ridiculed skills of a Palin or a Jindal. We are a third world country now.

Lawgiver said...

It works the same way for Barnie Frank and the other liars in congress. Vote them out is you are smart, but NEVER think that they will change, they see no reason to.

I saw Barney on the tube last night saying he had no idea the AIG execs would be getting bonuses with government money. It was something the Bush administration had done on its own. Frank has bee chairman of House financial services Committee since 2007. If anyone should have known about it Frank should have. Either he's a liar, incompetent, or maybe he's both.

Peter V. Bella said...

At one point, the mob ran Las Vegas.

Also at one point, Harry Reid was run by the mob. He was on the Gaming Control Board and Commission. He was in their pocket.

BTW, how come their was so much angst and anger over Rommney being a Mormon and not one peep about Harry Reid, a Mormon. I guess Dumbocrat Mormons are good and Republican Mormons are evil.

Seneca the Younger said...

Fuck yourself, Senator Grassley. That's rhetoric. Of course, I don't really want you to fuck yourself.

Actually, I do, if only for the amusement value.

In the mean time, though, I wish people would take a deep breath, read up on "retention bonuses" and why they're needed in a company like this that's in the process of liquidation.

Seneca the Younger said...

He would, however, submit himself to be raped by a giant octopus.

Actually, that's fishermen's wives, and we don't know it wasn't consensual.

Lawgiver said...

He would, however, submit himself to be raped by a giant octopus.

It might be better if they were raped by a giant walrus whose baculum can be 2 feet long. I just learned the word baculum today and wanted to use it in a sentence.

David said...

Big Mike said...
"@David, you obviously have information that I'm not aware of. Can you post a link or two? Thanks."

Ooops. I took the info from a comment on TV, which turned out to be wrong. So apologies for the mistake.

But it does seem that Treasury was told about this last September. Geithner (says he) found out only a week or two ago. Obama? Gibbs says he doesn't know when Obama learned about it--but the sense is that he learned just recently.

Treasury understaffing is really a problem, as they are surely not attending to things much more important than this.

Revenant said...

I have to say I like the proposed bill to tax TARP-funded bonuses exceeding $100K at 100%.

The government can put whatever strings it wants on this money, of course. But how are you going to find competent people to work for a company if you're legally forbidden from offering competitive benefits?

Maybe the current crop of executives and traders aren't that bright. But even if THEY aren't, what are you going to replace them with? Do you really think there's a surplus of smart managers out there willing to work for the government at a cut-rate salary subject to confiscation whenever there's a media frenzy?

It looks to me like something like one out of every 1100 dollars went to eomployee bonuses. That's not significant wastage. There are more important things to worry about.

WB said...

Ann, your closing par is perfect. I am sitting in Sydney watching all this stuff unfold Stateside and the incompetence of the politicians is staggering (and we've had some doozy doofuses downunder over the years but your current batch is absolutely taking the cake). Keep up the great observational work - this is all a record - never let them forget.

Big Mike said...

@David, thanks for the honesty. If only some network news anchors and dead trees reporters were as honest.

@Cedarford, right on! (Er, am I giving away my age?) I have yet to see Barney Frank or Chris Dodd explain why they thought that Fannie Mae and Freddie Mac needed less regulation.

@Balfegor, the housing thing got to be ridiculous at the end. I know of a case where a taxi driver (wife not working) bought a McMansion. The mortgage broker probably thought he'd get a couple payments and then have a nice big house he could foreclose on and sell. I don't have much sympathy with the taxi driver and even less for the broker or his institution.

@traditionalguy, when your army loses you sack the general. Modern Urban Legend has it that Omar Bradley and Ike sacked a two-star general after only 3 days in theater during WWII. Despite the affection in which I hold Bush the younger, I still don't understand why he didn't immediately sack Tommy Franks when he let Bin Laden escape Tora Bora into Pakistan. Both Bushes were way too slow to pull the trigger on subordinates that didn't pan out.

But, traditionalguy, the rest of your comment is, err, right on.

@Peter VB, interesting. Can you document your 4 facts? (Number 5 is manifest and #6 speculative -- it wouldn't be the first time in American history that congressional leaders joined the President in very real outrage that citizens took advantage of poorly thought-out legislation. Unlike senators and representatives Barack Obama at least had 3 or 4 days to read the danged bill before he signed.

Big Mike said...

@Peter VB, never mind. I just went over to Instapundit and it's all there.

Can Chris Dodd do anything right anymore? Scary thought, did he ever do anything right. Is there anybody in this thread from Connecticutt? How do you sleep at night?

Great White Father George said...

Ganbatte kudasai!

(Chin up!)

traditionalguy said...

Big mike... Sack the single scapegoat head man, but keep the rest of your Army/Navy was my point. The AIG retention bonuses were the device used to keep the rest of the army. The failure to be prepared for a surprise attack is not acceptable, but your trained staff with a brand new focus from that experience of a defeat is the best thing you have going for you.

Joe said...

Eisenhower made very serious mistakes in North Africa and lesser so mistakes in Italy. Operation Garden Market failed, though it offered invaluable lessons. Fortunately, he largely learned from all these mistakes by the time D-Day rolled around (for one, he gained much more respect in properly planned and run supply lines.)

Peter V. Bella said...

The Messiah has his first scandal. He lied, Dodd lied, Frank and Shumer lied. Now they are covering it up. Will there be hearings? Nah. Where is Pilate when we need him.

David said...

What amazing incompetence!

The only people in the Administration looking bad here, in order of badness, are: Geithner, Dodd, Obama, Gibbs, Summers. They look like utter fools. I say Summers because he had to have his hand in all this, but Geithner is the worst because he was there in the middle of AIG from September.

Take a look at Jake Tapper's piece tonight on how this all came down. There is no fucking excuse for the Obama administration having been blindsided.

Of course there is the chance that they are lying and that Pres. O did know before last week.

The Buck Stops at Obama, though, and the incredible fuckups in getting Treasury staffed have to be a big factor in the whole mess.

What else are they screwing up that we don't know about yet?

They will need a better scapegoat than the AIG execs. Watch your back, Geithner.

Peter V. Bella said...
This comment has been removed by the author.
Peter V. Bella said...

There is no fucking excuse for the Obama administration having been blindsided.

Blind sided my ass. Obama signed the bill with the Dodd amendment forgiving the bonuses. Either he did not read the bill, he can not read at all, or he just signed off on it. He is incompetent. Harvard Law must graduate the dullest and the dumbest.

Dodd is now backtracking saying the amendment was rewritten. Yeah, like who is going to believe that thief. He is one of the people who caused the mortgage meltdown by taking bribes from Freddie Mac and Fannie Mae.

Obama knew this was going to happen. Now, in the grand tradition of the Dumbocrat party he is going to cover it up and blame someone else.

Oh, and BTW, that nonsense about retributive and punitive taxes- our civil liberties will be eroded thanks to the Dumbocrat party. They will shred the constitution to cover their butts!!!

I hope all you civil libertarians who voted for this mook are happy. You will finaly get what you deserve. A country of the government, by the government, and for the government. The people be damned.

Big Mike said...

If people were going to blame Bush for the failures of Michael Brown then it's only fair to blame Barack Obama for the failures of Tim Geithner.

Sauce for the goose is sauce for the gander.

Revenant said...

My understanding is that these retention bonuses are NOT being paid to the folks in the division that got AIG into this mess. They are being paid to people in profitable, effective divisions who might otherwise want to jump jump (and thereby sink the company).

Big Mike said...

@Peter, right on again. You're on a roll.

Trying to take back the AIG bonuses surely would amount to a bill attainder, would it not, Professor? If it gets to the Supreme Court then I hope the four left-wing loonies on that bench condescend to remember that part of their 7th grade civics class about bills of attainder being forbidden.

Eric said...

The government can put whatever strings it wants on this money, of course. But how are you going to find competent people to work for a company if you're legally forbidden from offering competitive benefits?

There are a lot of savvy financial types looking for a job right now. They don't have to pay anything like what they would have paid last year.

Bruce Hayden said...

To reiterate, the law specifically protects any such bonus by AIG pursuant to an employment contract signed before February 11, 2009. It was officially inserted into the bill by Dodd (and if he didn't do it, then he still has responsibility for what his people did), voted into law by the most of the Democrats, with negligible Republican help and signed into law by Obama. And, yes, there wasn't time to review the bill, but whose fault was that?

My view is that anyone who voted for the bill or signed it into law is a hypocrite for complaining about it now.

Peter V. Bella said...

Our government is now being led by the inexperienced and the incompetent. I have said this before and I will say it again; Obama's resume is about as slim as Hillary Clinton's. Bullshit biographies that too many people believed are now coming back to haunt us.

Now Hillary wants Ireland to take the Gitmno detainees. Nice. Have a country that has a history of terrorism take suspected terrorists into their country. This is as bad as the cheap plastic button she gave the Russians.

BTW, I find it amusing that Obama feted the Irish leadedr and embarrassed the British Prime Minister. The Dumbocrat Party strikes again. Grab your wallets, buy more guns and ammunition. Soon we will have no rights.

People, we are doomed and we will pay for this massive mistake.

Peter V. Bella said...

...there wasn't time to review the bill, but whose fault was that?

That is pure, unmitigated bullshit. There was all the time in the world to review the bill. incompetence, inexperience, and the Dumbocrat mantra of political expediency over effective policy allowed this to happen. the smartest guys in the room turned out to be dunces.

Peter V. Bella said...

Obama, the Mesiah, the One, the Savior, finally has his own Hurricane Katrina. What is he doing about it? Covering up of course. Now he and his legion of idiots wants to shred the constitution to get the money back. Yeah, Bush was a real monster alright.

Revenant said...

There are a lot of savvy financial types looking for a job right now.

Not really. The top talent is always at a premium and never spends much time out of work, no matter how bad things get.

The people getting these bonuses work for profitable branches of AIG, a company which is in seriously deep shit. There are exactly two types of people willing to stay in that situation: idiots, and people given the financial incentive to stay. Eliminate the incentive and all you'll have left is people who can't find a better job than an underpaid one at a dying company. I don't care how bad the economy is, you never get decent workers that way.

I remember my company trying to find good tech workers during the dot-com collapse. You'd think it would be easy, right? Not even. The company refused to offer a decent wage. The skilled workers opted to blow us off and keep looking. The only ones willing to work cut-rate were the dead weight that had gotten axed from the dot-coms when the investor money started to dry up. The talent knew they were worth more, and knew better than to take a salary cut for a job that'd only end up looking bad on their resume.

The US government bought this stupid company. WE own 80% of it. It behooves us to run it intelligently. Good luck trying to get your money back out of a company that relies almost entirely on human capital when you insistently tell the human capital to go fuck itself.

Balfegor said...

The US government bought this stupid company. WE own 80% of it. It behooves us to run it intelligently.

If AIG is now a state owned company, why would this kerfluffle surprise anyone? If it wasn't bonuses now, it would be something else in the future -- I'm sure there are other reasons, but state run companies are inefficient partly because they're subject to this constant interference with business judgment by political authorities. We could raise a stink about what Congress is trying to do now, but can anyone seriously imagine that, while AIG remains under government control, we're not going to see similar flare-ups over and over, as the political authorities demand this and that of the leadership? This is going to happen over and over again.

The Exalted said...

hitler? vince foster? haha. good show.

The Exalted said...

Revenant said...
There are a lot of savvy financial types looking for a job right now.

Not really. The top talent is always at a premium and never spends much time out of work, no matter how bad things get.

The people getting these bonuses work for profitable branches of AIG, a company which is in seriously deep shit.


uh, no. you could not be more wrong. these people work for the financial products division, also known as the division that sank the company. it is the insurance segments that are on generally solid ground.

so, should the men and women who cost AIG hundreds of billions of dollars requiring its federal bailout in the face of complete collapse (imperiling the entire financial system to boot) get bonuses averaging over a million dollars each for their work and retention?

to any sentient being, that answer is pretty obvious.

Big Mike said...

Oh, Exalted One (not you, Barack!), some of the commenters assert that the bonuses are going to the people in the profitable sections of AIG and you assert the opposite. I think everybody needs to take a deep breath and find out what reality really is.

The ability to do in-depth fact-gathering is what the MSM assert that they can do, and not bloggers, but I see little evidence that they are bothering in this case (or many others, for that matter). Who gets these bonuses, how much did they get, and where in AIG do they work? Does anybody even know? Apparently that information is not publicly available, is it?

What we do know for a fact is what Peter VB said at 1:27 CDT yesterday -- the Democratic leadership in the person of Chris Dodd deliberately wrote a clause into the stimulus bill (so far it's only stimulated a lot of hot air, but that's for another post) allowing the employees to keep their bonuses. We might get mad about that, but right now only the voters of Connecticutt can do anything about it, and even them not for another 19 1/2 months.

The Exalted said...

uh, you could read the AIG white paper that is out and publicly available defending the bonuses paid to employees of the financial products division.

the other commenters are wrong.

downtownlad said...

The government forced both healthy and non-healthy banks to take TARP money. Now they're going to apply a 100% tax on the employees of the healthy banks that did nothing wrong?

You are at risk of having all of the employees quit and go work for foreign banks. Yes - why don't we kill the American banking industry while we're at it. Why do we want high-paying jobs in America? Ship them to Europe and Asia. That will show them.

Big Mike said...

@Exalted, got a link? I tried using Google to find it but all Google could come up with were comments -- and often comments on other commentaries -- on AIG's bonuses.

You and I are coming down on different sides of this issue, but I defend the right of the AIG employees to receive and keep their bonuses not because I necessarily think they are entirely innocent, but because of the damage that doing otherwise would do to the Constitution. To quote James Madison, who has a great deal of standing to speak on the subject of the Constitution:

"Bills of attainder, ex post facto laws, and laws impairing the obligations of contracts, are contrary to the first principles of the social compact, and to every principle of sound legislation. ... The sober people of America are weary of the fluctuating policy which has directed the public councils." In Federalist Papers #44.

I really wish that Professor Althouse, who teaches constitutional law, would weigh in on this topic.

amba said...

This thread is probably dead, but I just read this by a fascinating character named Nassim Nicholas Taleb:

"106- On Killing Oneself

Thierry de la Villehuchet --an acquaintance of mine -- just killed himself in the aftereffects of the Madoff case. He had dragged his clients into investing with Madoff . "Killing himself over money?" I kept hearing. No, it is not about the money --it was other people's money. It is about dignity. I could not help comparing it to Madoff, pictured walking around Manhattan with a faint smirk --totally insensitive to the harm he caused.

This is an aristocratic act coming from an aristocratic character: you take your own life when you believe that you failed somewhere -- and the solution is to inflict the ultimate penalty on yourself. It is not the money; but the embarrassment, the shame, the guilt that are hard to bear. Someone callous, indifferent to the harm done to others would have lived comfortably ("it is all about money"). A life of shame is not worth living. Christianity never allowed suicide; the stoics did --it allows a man to get the last word with fate.

Thierry, veuillez recevoir l'expression de mon respect le plus profond."

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