Barack Obama has shown no hesitation to wield the power of the state, but he claims that he’s unable to stop these outrageous AIG bonuses, even though taxpayers now own 80% of AIG.
Obama wants the government to dominate the health care and energy economies. He’s proposed huge new taxes to help finance expansion of the federal government. More to the point, he would allow bankruptcy judges to abrogate contracts as part of his mortgage bailout. His automaker bailout contemplates the setting aside or revision of UAW contracts.
It is astonishing that these bonuses will be paid to executives at AIG’s financial products division, the unit that wrote trillions of dollars’ worth of credit-default swaps. AIG placed bets on derivative trades that it could not possibly pay off if it lost. This is called fraud. These bad bets were big enough to bring down the financial system.
Instead of claiming they are powerless to stop the bonuses, the Obama administration should prosecute these criminal acts. Why haven’t the perpetrators been shown the door? Why has no one been shown a cell door?
The tally for AIG is now $175 billion with no end in sight. Obama should produce a plan to deal with the banking crisis. Throwing more taxpayer money at AIG and Citigroup as they lurch from crisis to crisis is not a plan. I am worried that by the time Obama and Timothy Geithner come up with a strategy, there will be no money left.
The AIG bailout is really a bailout of AIG’s counterparties, like Goldman Sachs. The populist rhetoric is a ruse. Obama and Geithner are the best friends failed Wall Street executives have ever had.