AIG is considering a lawsuit over the terms of the loan for the billions that saved the company. CNN's Ali Velshi reports.
[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2009/CRIME/09/01/bernanke.id.theft/art.ben.bernanke.cnn.jpg caption="Fed Chairman Ben Bernanke urges Congress to enact reforms."]
CNN Financial News Producer
Sales of previously-owned homes rebounded sharply last month to their highest level in two years, getting a strong boost from first-time homebuyers.
Existing home sales jumped 9.4% in September after falling for the first time in four months in August, according to the National Association of Realtors. Year over year, sales were up 9.2% in September.
NAR chief economist Lawrence Yun said much of the buying momentum came from people hoping to take advantage of an $8,000 first-time buyer tax credit, which is set to expire at the end of November.
[cnn-photo-caption image="http://i2.cdn.turner.com/money/2009/08/13/news/economy/compensation_treasury/ken_feinberg_090610.03.jpg" width=220 height=282 caption="White House pay czar Kenneth Feinberg."]
Just how much is a rainmaker at a bailed-out bank really worth? Or a senior executive at a recently bankrupt automaker for that matter?
Such questions will soon be a subject of discussion at the White House as the biggest recipients of government aid begin submitting compensation plans for their top 100 employees to the Obama administration's recently appointed pay czar.
Seven companies - AIG (AIG, Fortune 500), Chrysler, Citigroup (C, Fortune 500), Chrysler Financial, Bank of America (BAC, Fortune 500), General Motors and GMAC - are due to submit proposed employment contracts for their 25 highest-paid employees Friday. Compensation proposals for the next 75 most compensated employees are due by Oct. 13.
Kenneth Feinberg, the man charged with handling the task, is expected to rule on the first set of pay plans within the next 60 days. That information is due to be made public by Treasury sometime after, although any announcement may not include details of pay packages for individual employees.
CNN Financial News Producer
The battered U.S. job market is showing signs of improvement.
Employers scaled back sharply on layoffs in July, cutting 247,000 jobs. That’s the fewest in nearly a year. The unemployment rate, meanwhile, dipped to 9.4% - its first decline in 15 months.
The numbers suggest a turning point is at hand after job cuts earlier in the year that totaled as much as 700,000. The economy has lost 6.7 million jobs since the recession started in December 2007.
But there was still plenty of bad news to be found.
The number of people unemployed for more than six months continued to rise, reaching nearly 5 million people - a record high. And the average amount of time that an unemployed person has been out of work reached 25.1 weeks, the highest reading in the 61 years that the Labor Department has been keeping records.
T. Christian Miller, ProPublica
Doug Smith, the Los Angeles Times
Civilian workers who suffered devastating injuries while supporting the U.S. war effort in Iraq and Afghanistan have come home to a grinding battle for basic medical care, artificial limbs, psychological counseling and other services.
The insurance companies responsible for their treatment under taxpayer-funded policies have routinely denied the most serious medical claims. Those insurers - primarily American International Group (AIG) - recorded hundreds of millions of dollars in profits on this business.
The civilian contractors have played an indispensable role in the two conflicts, delivering fuel to frontline troops, guarding U.S. diplomats and translating for soldiers during dangerous raids. More than 1,400 civilian workers have died and 31,000 have been wounded or injured in the two war zones.
Program Note: Tune in to the CNN Money Summit on Friday at 11 p.m ET to hear Ryan Mack and others weigh in on the economy.
President of Optimum Capital Management
Somewhere in Detroit, right now, there is a union worker sweating as he helps to produce cars for this country on the assembly line. He thought that his contract with the UAW was set in stone but, unfortunately, to his dismay it was renegotiated and he has just found out that his salary was cut in order to keep his job. As well, he is now overly concerned that his health care will be reduced when he retires and his retirement will not be fully funded. All around him he hears horror stories of those who retired without the promised full pension and he sees the numbers of workers around him decrease every month by the dreaded pink slip.
The market falters because of the failure of the banking system, and the government calls upon this worker for help. Bush, Paulson, Bernanke, and other members of the government explain to this worker that if the banks fail he will be negatively impacted. This same story is repeated by Obama, Geithner, Bernanke, and other government officials. This worker is a little reluctant at first but he eventually gets the bigger picture. He understands how the system works so he reaches into his pocket with his calloused hand and pulls out some of hard earned capital to give to the banks to support the system.
Soon after, on his way to work at 4:30 am, getting prepared to do a double shift, he picks up a cup-a-joe and a newspaper with a headline that grabs his attention. Headline: “AIG Gives $165 million in Bonuses!” He doesn’t really follow the news that closely but thinks to himself, “I wonder if they used my hard earned money to bail out AIG as well?”
When he gets to work, in the locker room, many of the co-workers are talking about the same story. They ask him, “Do you see that we bailed out THOSE GUYS only to help them get their million dollar bonuses!?”
For The New York Times
It is with deep regret that I submit my notice of resignation from A.I.G. Financial Products. I hope you take the time to read this entire letter. Before describing the details of my decision, I want to offer some context:
I am proud of everything I have done for the commodity and equity divisions of A.I.G.-F.P. I was in no way involved in — or responsible for — the credit default swap transactions that have hamstrung A.I.G. Nor were more than a handful of the 400 current employees of A.I.G.-F.P. Most of those responsible have left the company and have conspicuously escaped the public outrage.
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.
Senior Producer, CNN Washington
When Ben Bernanke told the Senate Budget Committee that American International Group (AIG) "exploited a huge gap in the regulatory system” and that “there was no oversight of the Financial Products division," it seemed to make sense. The Federal Reserve Chairman went on to say, "This was a hedge fund basically that was attached to a large and stable insurance company."
If nobody was keeping an eye on them, well no wonder it blew up.
But it turns out Mr. Bernanke was not quite accurate when he said “no oversight.” He made that statement on March 3rd.
Just two days later a man hardly anybody has ever heard of explained to yet another Senate committee that - hold the presses - there WAS a regulator for the Financial Products unit of AIG. (By the way, everyone just calls it FP now…that saves time and makes it sound like we know what we’re talking about).
AC360° Contributor and CNN Political Analyst
In the dramatic courtroom showdown between Tom Cruise and Jack Nicholson in the film 'A Few Good Men,' Nicholson, in the role of Col. Nathan Jessep, famously declared to Lt. Daniel Kaffe, played by Cruise, "You can't handle the truth." As I sat in the movie theater in 1992 (yes, there were no DVD's at the time but it was a talkie and in color) awed by that powerful performance, I would never have imagined Jack Nicholson to emerge as a political prophet in 2009. Yet that dramatic line – a challenge to confront the truth - has special insight and wisdom now.
As the Obama administration faces an economic crisis of historic proportions, we hear a self-important refrain from too many political pundits, members of the mainstream media and the political establishment. The public will not be able to "understand," "get their arms around," "grasp" or "appreciate" the "financial stabilization plan," the "mortgage plan," the "economic stimulus program," the "small business loan program" or the "public-private investment program to buy toxic assets." You get the point. Take your favorite pretentious sound bites and place them into a sentence of your choice.