AIG rage: Washington is just as guilty
That's what many readers seem to think. While nobody is happy about the AIG bonuses, many are also very angry at the government for a botched bailout.
NEW YORK (CNNMoney.com) -- Arrogance. Incompetence. Greed.
That's what Rep. Paul Hodes, D-N.H., said AIG stands for during Wednesday's congressional circus, uh, hearing about the now notorious $165 million in bonuses.
Well, many Buzz readers have a message for Hodes, the rest of Congress, the Federal Reserve and the Treasury Department. A lot of them think that the government is just as arrogant, incompetent and greedy as all those credit-default swap peddling geniuses in AIG's London and Connecticut financial products offices.
Earlier this week, I wrote about what I thought was the real AIG outrage: the fact that the $165 MILLION in bonuses was overshadowing the need to sell AIG assets so taxpayers could get back the $170 BILLION in bailout money. At the time, I asked readers what they thought the government should do about AIG.
Many readers seemed just as angry at Washington (if not more so) than they were at AIG. Here's a sampling of some of the comments from readers on our Talkback page.
"Here we go again, politicians putting on the show for the public. AIG bonuses, 165 million to losers that helped cause the recession. OK big shot politicians, where the hell is the other 99.9 percent of the 170 billion you gave AIG. One tenth of one percent isn't cutting it. That just gets you on the news." That was Jim from Fox Island, Wash.
Amen, Jim. If politicians want to be outraged about something, they should be angered that AIG has so far been unable to sell off the pieces of itself that still have value. (Or perhaps unwilling to accept bargain basement prices.) The problem isn't the bonuses. The problem is that there seems to be no plan to get even a fraction of the money lent to AIG since September returned to taxpayers.
That's exactly what Doug in Mentor, Ohio wants to see done.
"Don't give them anymore money. And then figure out a way to dismantle AIG and sell the parts to other insurance companies, which there a lot of. Money made on sales can go toward repayment of the monies lent. If AIG fails, tough," he wrote.
I agree with Doug to a point. I don't think that letting AIG fail is a smart idea since the government has already put in so much effort to keep it afloat. It's too late to be having the argument about whether AIG should be allowed to fail.
Plus, for all the anger about AIG, which unfortunately has even led to death threats (that's going WAY too far), it's worth pointing out that there a tens of thousands of hardworking AIG employees who've done nothing wrong. Don't punish the entire company for the mistakes of a few.
People who sell AIG auto insurance policies and annuities, for example, had nothing to do with the exotic financial instruments that have brought the company to its knees.
Another reader is ticked off that it took so long for Congress to notice the bonuses and thinks that the current outcry is just a way for lawmakers to shift the blame for the botched bailout.
"So Congress has the temerity to pretend to be outraged over the PUBLISHED contractual obligations of a company that it acquired with taxpayer money after passing a boondoggle bill with nearly 9000 earmarks in it even after the head of their party said that those days were OVER???? Give me a break. We have a government made up of mendacious hypocrites!!" wrote Bob in Macon, Ga.
Bob has a great point. Somebody in Congress should have made an issue of this much earlier. And I also think that as much as the new administration is talking about change in the nation's capital, it's hard not to think that it's still just business as usual in Washington, especially at Capitol Hill.
Finally, Bob deserves high praise for his use of the word mendacious. It's a great word.
Congress isn't target of criticism from Buzz readers. Many are also quite annoyed with Treasury Secretary Tim Geithner.
Geithner is in a particularly tough spot since not only is he facing questions about when he did or didn't know about the AIG bonuses in his role as Treasury Secretary, Geithner was also the one who spearheaded the first bailout of AIG last September when he was the president of the Federal Reserve Bank of New York.
"Fire Geithner. He ran the Fed Bank of NY during the six years when all of this financial mess was created. He couldn't see what was happening then and still can't now as evidenced by this latest fiasco," wrote AJ in El Dorado Hills, Calif.
Scott in Indianapolis adds that "considering that Geithner authored the AIG bailout plan, and Congress gives themselves raises as the government loses money (hand over fist) every year, why isn't the public outrage directed at these two entities as well? I find it very ironic when the same people that create a negative situation suddenly act appalled by it."
Well, it does seem like there is a growing backlash against Geithner (who a couple of readers also derisively referred to as TurboTax Tim in light of the tax issues that came up during his confirmation hearing.)
President Obama has so far pledged support for Geithner, and I don't think he will be fired. But so far, the Treasury Department under Geithner is showing as much (or little) skill handling the bailout as it did under former Treasury Secretary Henry Paulson. It's obviously a huge undertaking. And some of the criticism of Geithner, and Paulson for that matter, is a tad unfair.
But there have been too many missteps. And it's understandable people are angry about it. The bottom line is that it appears that the government, in its rush to save AIG following the collapse of Lehman Brothers, may not have thoroughly thought through the unintended consequences.
"The REAL outrage should be expressed by the TAXPAYER whose government heaps money on companies without knowing where the bailout money is going or how the bailout is going to be spent. The SIMPLEST of due diligence by the government was obviously NOT DONE! Our government officials should take a part of the blame - They gave taxpayer money away without question," wrote Tom in Pittsburgh.
Spike in Pensacola, Fla. sums it up best.
"I think it's pretty amazing that our elected officials that approved the bailout money are surprised at how it's being used. When I borrow money, I usually have to fill out a lengthy application stating what I intend to do with the money if I get it. I guess our elected officials just handed over $170 billion and said "surprise us". See how well it worked," he wrote.
Shameless plug alert: Before I started writing The Buzz, I covered the media business for several years at CNNMoney.com. Some of this reporting is the basis of a book I've written about News Corp. CEO Rupert Murdoch called Inside Rupert's Brain, which was published on March 19 by Portfolio, an imprint of Penguin Group (USA).