Wednesday, March 18, 2009

AIG Bonus Outrage is a Red Herring

All the bluster and hyperbole coming out of DC about the $165 million bonus money being paid by recently-bailed-out AIG is a load of tripe.

First, and foremost, AIG is contractually bound to pay that money and would be in violation of Connecticut law if they failed to do so.

Second, the total spent on bonuses represents less than 1/10th of 1 percent of the $173 BILLION in "bail-out" money AIG received.

If taxpayers really want to get angry about something, let's talk about the $172,835,000,000 that the feds in all their wisdom forced AIG to take without so much as getting the company's shareholders to vote whether or not they wanted to accept it.

The fact is, the ObamaNation has been preaching the twin lies of a "systemic risk" and "rogue executives" who managed to slip thru the cracks of weak regulations. And, forcing AIG to take the money was nothing short of a hostile takeover by the government. They hijacked a multi-billion dollar international corporation, and used it as a funnel for redistributing wealth. Remember, by their own admission, $120 billion of the $173 billion they gave to AIG actually ended up in the hands of other banks and local governments--not to mention the billions more that ended up in the hands of FOREIGN institutions. AIG's net "bail-out" was only a fraction of the sum over which the herring throwers would have us all wringing our hands.

If the media would stop basking in the glow of their Messiah, they might ask him and his minions exactly what "system" was at risk and required government involvement. It certainly was not the capitalist system, whereby those who make poor decisions have to suffer the consequences.

Furthermore, it's absolute balderdash to claim there isn't enough government regulation of our financial services. In the case of AIG, the SEC and the Office of Thrift Supervision both had direct oversight, a responsibility they took quite seriously. And that was just the federal layer of government that was watching their every move. On the state level, it was the oh-so-ethical watchdog Eliot Spitzer, then New York's attorney general, whose "oversight" marked the decline of the financial giant.

In March 2005, Spitzer pressured AIG to fire its CEO Hank Greenburg over accounting practices he couldn't comprehend. This accomplished, he never pursued the charges . . . probably because he knew he couldn't argue his case intelligently. But, the damage was done to AIG's credit rating, denying them the ability to get favorable terms from their creditors, and leading them to begin investing in risky derivatives.

Bigger government is not the answer to this question, or most others for that matter. Stop the madness! Return AIG and other "recipients" of government takeover money back into private hands as soon as possible. And, stop the aforementioned bluster and hyperbole. It's disingenuous in the extreme.

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Blogger Scott said...

Spot on analysis. I found your blog because I was searching for someone who felt the same way I do about the AIG situation.

This is nothing more than an intentional and systematic effort by our government to seize control of private assets (AIG shareholder wealth).

It's not impossible to imagine this happening several more times in coming years to other insurers, financial institutions, energy companies and manufacturers.

At least Hugo Chavez was honest about his plans to seize and nationalize the oil industry in Venezuela. Our leaders are doing it backdoor fashion and calling it a bailout.

5:19 PM  
Blogger wsmv said...

Thanks, Scott. It's nice to know that everyone in this country isn't drinking the Kool Aid!

10:14 AM  

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