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To: geode00 who wrote (191415)	3/18/2009 2:10:56 AM
From: Skeeter Bug	Read Replies (1) \| Respond to of 306849

geode, either these SOBs pay back all the tax payer money or we are funding their millions in bonus payments - PERIOD. this is absurd that geithner would suggest otherwise. "we'll take it from operations... neener, neener, neener!" O's team thinks americans are idiots.

To: geode00 who wrote (191415)	3/18/2009 2:22:15 AM
From: stockman_scott	Read Replies (1) \| Respond to of 306849

Obama’s Real Test ______________________________________________________________ By THOMAS L. FRIEDMAN Op-Ed Columnist The New York Times March 18, 2009 When you hear a sitting U.S. senator call for bankers to commit suicide, you know that the anger level in the country is reaching a “Bonfire of the Vanities,” get-out-the-pitchforks danger level. It is dangerous for so many reasons, but most of all because this real anger about A.I.G. could overwhelm the still really difficult but critically important things we must do in the next few weeks to defuse this financial crisis. Let me be specific: If you didn’t like reading about A.I.G. brokers getting millions in bonuses after their company — 80 percent of which is owned by U.S. taxpayers — racked up the biggest quarterly loss in the history of the Milky Way Galaxy, you’re really not going to like the bank bailout plan to be rolled out soon by the Obama team. That plan will begin by using up the $250 billion or so left in TARP funds to start removing the toxic assets from the banks. But ultimately, to get the scale of bank repair we need, it will likely require some $750 billion more. The plan makes sense, and, if done right, it might even make profits for U.S. taxpayers. But in this climate of anger, it will take every bit of political capital in Barack Obama’s piggy bank — as well as Michelle’s, Sasha’s and Malia’s — to sell it to Congress and the public. The job can’t be his alone. Everyone who has a stake in stabilizing and reforming the system is going to have to suck it up. And that starts with the brokers at A.I.G. who got the $165 million in bonuses. They need to voluntarily return them. Everyone today is taking a haircut of some kind or another, and A.I.G. brokers surely can be no exception. We do not want the U.S. government abrogating contracts — the rule of law is why everyone around the world wants to invest in our economy. But taxpayers should not sit quietly as bonuses are paid to people who were running an insurance scheme that would have made Bernie Madoff smile. The best way out is for the A.I.G. bankers to take one for the country and give up their bonuses. I live in Montgomery Country, Md. The schoolteachers here, who make on average $67,000 a year, recently voted to voluntarily give up their 5 percent pay raise that was contractually agreed to for next year, saving our school system $89 million — so programs and teachers would not have to be terminated. If public schoolteachers can take one for schoolchildren and fellow teachers, A.I.G. brokers can take one for the country. Let’s not forget, A.I.G. was basically running an unregulated hedge fund inside a AAA-rated insurance company. And — like Madoff, who was selling phantom stocks — A.I.G. was selling, in effect, phantom insurance against the default of bundled subprime mortgages and other debt — insurance that A.I.G. had nowhere near enough capital to back up when bonds went bust. It was a hedge fund with no hedges. That’s why taxpayers have had to pay the insurance for A.I.G. — so its bank and government customers won’t tank and cause even more harm. Unfortunately, all the money we have already spent on A.I.G. and the banks was just to prevent total system failure. It was just to keep the body alive. That’s why healing the system will likely require the rest of the TARP funds, plus the $750 billion the administration warned Congress in the new budget that it could need. Best I can piece together, the administration’s recovery plan — due out shortly — will look something like this: The U.S. government will create a facility to buy the toxic mortgages off the balance sheets of the major banks. They will be bought by a public-private fund or funds in which taxpayers will, in effect, be partners with hedge funds and private equity groups. The hedge funds will be there to provide expertise in pricing and trading the assets. The taxpayers will be there to guarantee — gulp — that the hedge funds won’t lose money if they take the early risks and to also lend them money to make some of the purchases. Taxpayers will benefit from any profits these partnerships make. Once the banks sell their toxic assets, many will need capital, because, while they may be carrying these assets on their books at 85 cents on the dollar, they initially may have to sell them for less. So, the government will probably have to inject capital into more banks to maintain their solvency, but once the banks begin to clear their balance sheets of those toxic assets, they will likely attract the private capital they need and relieve the government of having to put in more. Will it work? We can only hope. But I know this for sure: unless the banks are healed, the economy can’t lift off, and that bank healing is not going to happen without another big, broad taxpayer safety net. The only person with the clout to sell something this big is President Obama. The bankers and Congress will have to help; every citizen will have to swallow hard. But ultimately, Mr. Obama will have to persuade people that this is the least unfair and most effective solution. It will be his first big leadership test. It is coming soon, and it is coming to a theater — and a bank — near you. Copyright 2009 The New York Times Company

To: geode00 who wrote (191415)	3/18/2009 2:35:35 AM
From: stockman_scott	Read Replies (1) \| Respond to of 306849

A.I.G.’s Bonus Blackmail ______________________________________________________________ By LAWRENCE A. CUNNINGHAM Op-Ed Contributor The New York Times March 18, 2009 President Obama on Monday instructed the Treasury Department to “pursue every single legal avenue” to recover $165 million in bonus payments the insurance giant A.I.G. recently made to nearly 400 employees in its financial products unit. A.I.G. has, of course, received $170 billion in bailout funds and yet continues to incur extraordinary losses — some $62 billion last quarter alone. A.I.G. insisted it was legally obligated to make the bonus payments and that failure to pay would breach its contracts with employees and expose it to penalties under state employee protection laws. The company also warned that breaching the agreements would amount to defaulting on numerous other business contracts, at staggering cost. Amid this standoff, there has been an explosion of outrage against perceived excessive compensation to those who precipitated the financial crisis. Some lawmakers have threatened to impose a 100 percent tax on the A.I.G. bonuses and Senator Chuck Grassley, Republican of Iowa, even wildly suggested that the company’s executives consider suicide for their culpability. But moral outrage and public rebuke do not provide legal grounds for backing out of a contract. If the government is serious about finding a legitimate basis for abrogating these payments, officials must look to basic legal principles. And if A.I.G. is serious that it is legally bound to pay these bonuses, it must do more than say nonpayment would expose it to damages or penalties. Nor is it enough to invoke the sanctity of contracts, because our legal and business system recognizes plenty of valid excuses from contractual duty and even justification for breaching. There are numerous issues both sides must contend with to evaluate whether A.I.G. was bound to or excused from its payment duties. First, the specific promises that employees made or conditions stated in their agreements must be examined. Determining what promises exist requires only reading the contracts; identifying conditions (which will likely offer more wiggle room in A.I.G.’s duty to pay) requires both reading the contracts and understanding any negotiations that preceded them. Subpoenas issued by Andrew Cuomo, the New York attorney general, have put much of this vital information into the hands of government officials. Those officials would do well to compare the provisions in these contracts to the job performance of the employees who received bonuses. If employees did not meet stated performance goals, they would be in breach of contract and A.I.G. would not have to pay. Likewise, A.I.G. has stated that these agreements expressly state that if employees are terminated for cause, they are not entitled to any bonus payments. It follows then that the contracts may preserve the company’s power to deny bonuses to employees who could be terminated for cause but have not yet been. Apart from specific contractual terms, there are other reasons A.I.G. might rescind these bonuses. They include the nondisclosure of important material information — for instance, if an employee failed to be absolutely candid about the size and risk of trading positions taken on the company’s behalf. Findings of fraud on the part of an employee would certainly also excuse A.I.G.’s duty to pay. This isn’t to say that any A.I.G. employee engaged in such activity. But given the scale of problems that A.I.G. has confronted, and credible allegations of serious misconduct within the organization, it’s worth investigating. There is also at least some chance, given A.I.G.’s functional insolvency and the government takeover, that these agreements may be rescinded either on the basis of impracticability or by virtue of unforeseeable and uncontrollable circumstances. A credible fact supporting both excuses is precisely the company’s huge loss last quarter. Courts excuse contract duties when governmental action essentially destroys the original purpose of a contract — and the taxpayers’ 80 percent stake in A.I.G. is a more extreme sort of governmental action than usually appears in such cases. A final potential legal basis for rescinding these payments is fraudulent conveyance law. This generally limits the right of a financially troubled company to transfer property to favored claimants on sweetheart terms when doing so would hurt the interests of other claimants, like lenders and shareholders — in this case, perhaps even taxpayers. Again, this is not to say that these payments violate this doctrine, but it is a relevant question for the government to probe. Without reading the contracts, understanding their background and learning about employee performance, one cannot say whether A.I.G. is legally bound to pay or legally excused from paying these bonuses. But we won’t resolve this question by simply trading nebulous assertions and hysterical threats. -Lawrence A. Cunningham is a professor at George Washington University Law School. Copyright 2009 The New York Times Company

To: geode00 who wrote (191415)	3/18/2009 3:35:25 AM
From: NOW	Respond to of 306849

he gets the point, this is more obfuscation about the real issue which is why GS is getting made whole on their stupidity

To: geode00 who wrote (191415)	3/18/2009 4:59:44 AM
From: stockman_scott	Read Replies (2) \| Respond to of 306849

Goldman's share of AIG bailout money draws fire reuters.com Tue Mar 17, 2009 7:44pm EDT By Paritosh Bansal - Analysis NEW YORK (Reuters) - American International Group(AIG.N) funneled over $90 billion of taxpayer bailout funds to various U.S. and European banks, but the biggest beneficiary was politically connected Goldman Sachs Group Inc (GS.N). Suspicions of potential conflicts of interest and favoritism have been fueled by $12.9 billion AIG paid to Goldman Sachs -- where then-Treasury Secretary Henry Paulson had previously worked as chief executive -- in the months after the insurer was rescued by the government last September. Goldman, for its part, has insisted it did not need the bailout money because it was "always fully collateralized and hedged." Long Wall Street's largest investment bank before it recently became a bank holding company, Goldman answered a series of questions from Reuters about the bailout funds. "We can say that our notional exposure to AIG is a fraction of what it was at the time of the September bailout," Goldman spokesman Michael DuVally said. Asked why Goldman Sachs took $12.9 billion of taxpayer money if it was collateralized and hedged on its AIG positions, DuVally said it was because AIG was not allowed to fail, so Goldman did not get money from hedges that would have paid out if the insurer had collapsed. And, he said, under the terms of its contracts with AIG, Goldman was entitled to collateral. DuVally also said the bank does extensive due diligence on all its counterparties. How much Goldman and other counterparties received from AIG has been just one of several flashpoints over the taxpayer rescue of what was once the world's largest insurer. AIG has also infuriated politicians -- including U.S. President Barack Obama -- with its plan to pay $165 million in bonuses to employees at the unit at the heart of its problems. Still, the payments to counterparties like Goldman Sachs dwarfed the bonuses, and some experts contend that these companies should have been made to share some of the losses resulting from the giant insurance firm's near collapse. "People see that the guys that ruined AIG are getting paid more money, and that creates outrage," said Porter Stansberry, managing director of Stansberry & Associates Investment Research. "If you want to be outraged, be outraged that the counterparties got paid out full value." Goldman was not the only large bank with exposure to AIG. The list of counterparties that AIG disclosed on Sunday included others that got large sums. Goldman was followed by Societe Generale (SOGN.PA) with $11.9 billion, Deutsche Bank (DBKGn.DE) with $11.8 billion and Barclays PLC (BARC.L) with $8.5 billion. Moreover, the AIG disclosures are still incomplete in that they do not include payments to the banks since December 31. "We are looking at a small piece of it right here. So what is the total exposure? That's the question. And then the issue is, well, if that was wiped out what would it do to Goldman's capital?" said Campbell Harvey, a finance professor at Duke University. "It is obvious that firms underestimated the counterparty risk. That was their mistake," Harvey said. "Yet they are getting bailouts of U.S. taxpayer money. Why should we pay for their mistake?" In an editorial on Tuesday, the Wall Street Journal pointed to Goldman's claim that "all of its AIG bets were adequately hedged and that it needed no 'bailout.'" "Why take $13 billion then? This needless cover-up is one reason Americans are getting angrier as they wonder if Washington is lying to them about these bailouts," the Journal said. The bailout has stirred resentment not just in the U.S. Congress, but on Wall Street, where investors have speculated that Goldman and its connections helped it get a better deal. In recent years, many former Goldman executives have moved into government. Paulson left Goldman in 2006 as chief executive. The chairman of the New York Federal Reserve is former Goldman Chairman Steve Friedman. "The person that should be subpoenaed is Hank Paulson. How do you go from running Goldman Sachs in '05 and '06 and making all of these bets with AIG's financial products unit and then end up in the government guaranteeing those bets and not have a conflict of interest?" Stansberry asked. DuVally said Goldman Sachs was not party to any discussions about the bailout of AIG. (Reporting by Paritosh Bansal; Additional reporting by Lilla Zuill and Kevin Drawbaugh; Editing by Gary Hill) (For more M&A news and our DealZone blog, go to www.reuters.com/deals)

To: geode00 who wrote (191415)	3/18/2009 9:47:54 AM
From: Amelia Carhartt	Read Replies (3) \| Respond to of 306849

This is simply insane and shows that the government thinks Americans are morons.

To: geode00 who wrote (191415)	3/18/2009 11:42:10 AM
From: average joe	Read Replies (1) \| Respond to of 306849

They should have made them sign a code of conduct prior to handing them your cash but that is their mistake not AIG's. "The Treasury Department has already concluded that the bonuses in question, which were first made public in late January, cannot be rescinded because they resulted from airtight contracts that had been signed in April 2008." time.com "When you see that trading is done, not by consent, but by compulsion - when you see that in order to produce, you need to obtain permission from men who produce nothing - when you see that money is flowing to those who deal, not in goods, but in favors - when you see that men get richer by graft and by pull than by work, and your laws don't protect you against them, but protect them against you - when you see corruption being rewarded and honesty becoming a self-sacrifice - you may know that your society is doomed." AYN RAND