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Hullabaloo


Tuesday, January 08, 2013

 
No good deed: the chutzpah files

by digby

They're baaaack:

Fresh from paying back a $182 billion bailout, the American International Group Inc. has been running a nationwide advertising campaign with the tagline "Thank you America."

Behind the scenes, the restored insurance company is weighing whether to tell the government agencies that rescued it during the financial crisis: thanks, but you cheated our shareholders.

The board of A.I.G. will meet on Wednesday to consider joining a $25 billion shareholder lawsuit against the government, court records show. The lawsuit does not argue that government help was not needed. It contends that the onerous nature of the rescue - the taking of what became a 92 percent stake in the company, the deal's high interest rates and the funneling of billions to the insurer's Wall Street clients - deprived shareholders of tens of billions of dollars and violated the Fifth Amendment, which prohibits the taking of private property for "public use, without just compensation."

Maurice R. Greenberg, A.I.G.'s former chief executive, who remains a major investor in the company, filed the lawsuit in 2011 on behalf of fellow shareholders. He has since urged A.I.G. to join the case, a move that could nudge the government into settlement talks.

You know what? To hell with the shareholders. They're lucky they still own a piece of a company that by all rights wouldn't even exist if it weren't for the US taxpayers.

But it's typical. AIG has been whining and sniveling from the very beginning of the crisis they helped create. Remember this?

As saintly AIG executive Jake DeSantis plaintively wailed detailed in the NY Times:

After 12 months of hard work dismantling the company — during which A.I.G. reassured us many times we would be rewarded in March 2009 — we in the financial products unit have been betrayed by A.I.G. and are being unfairly persecuted by elected officials. In response to this, I will now leave the company and donate my entire post-tax retention payment to those suffering from the global economic downturn. My intent is to keep none of the money myself.

The profitability of the businesses with which I was associated clearly supported my compensation. I never received any pay resulting from the credit default swaps that are now losing so much money. I did, however, like many others here, lose a significant portion of my life savings in the form of deferred compensation invested in the capital of A.I.G.-F.P. because of those losses. In this way I have personally suffered from this controversial activity — directly as well as indirectly with the rest of the taxpayers.
Breaks your heart, doesn't it? How could anyone have asked such victims to suffer even more by asking them not to take their hard earned bonuses?
As most of us have done nothing wrong, guilt is not a motivation to surrender our earnings. We have worked 12 long months under these contracts and now deserve to be paid as promised. None of us should be cheated of our payments any more than a plumber should be cheated after he has fixed the pipes but a careless electrician causes a fire that burns down the house.
Well ... they were actually like employees of a housing contractor that burned down the whole town because they cut corners who then held up the residents for big bucks to clean up all the toxic waste. But whatever, there was no denying just how unfair it was to complain about these bonuses when these guys were such hard workers who had made such sacrifices:
So what am I to do? There’s no easy answer. I know that because of hard work I have benefited more than most during the economic boom and have saved enough that my family is unlikely to suffer devastating losses during the current bust. Some might argue that members of my profession have been overpaid, and I wouldn’t disagree.
Right:
On March 16 I received a payment from A.I.G. amounting to $742,006.40, after taxes
He said he was going to donate that full amount to charity as a political protest --- yet another high-minded sacrifice.

The least the lazy unemployed can do is follow this noble person's example and give up their 300 dollars a week in benefits. We all have to pitch in.
And that has been the operative argument ever since. If the big boys have to pay, then so do the rest of us. Except our fair share is to live in terrible financial insecurity, debt and joblessness while their's is to suffer the indignity of being forced to donate their $750,000 bonus to charity in protest. (Or pay slightly higher tax rates as part of a balanced approach.)

Now go read this amazing new piece by Taibbi about the bailout. If you weren't mad already you will be when you finish reading it:

It has been four long winters since the federal government, in the hulking, shaven-skulled, Alien Nation-esque form of then-Treasury Secretary Hank Paulson, committed $700 billion in taxpayer money to rescue Wall Street from its own chicanery and greed. To listen to the bankers and their allies in Washington tell it, you'd think the bailout was the best thing to hit the American economy since the invention of the assembly line. Not only did it prevent another Great Depression, we've been told, but the money has all been paid back, and the government even made a profit. No harm, no foul – right?

Wrong.

It was all a lie – one of the biggest and most elaborate falsehoods ever sold to the American people. We were told that the taxpayer was stepping in – only temporarily, mind you – to prop up the economy and save the world from financial catastrophe. What we actually ended up doing was the exact opposite: committing American taxpayers to permanent, blind support of an ungovernable, unregulatable, hyperconcentrated new financial system that exacerbates the greed and inequality that caused the crash, and forces Wall Street banks like Goldman Sachs and Citigroup to increase risk rather than reduce it. The result is one of those deals where one wrong decision early on blossoms into a lush nightmare of unintended consequences. We thought we were just letting a friend crash at the house for a few days; we ended up with a family of hillbillies who moved in forever, sleeping nine to a bed and building a meth lab on the front lawn.
I think this AIG move illustrates that point perfectly.

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