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March 19th, 2009
12:17 PM ET

Financial Dispatch: Bonus battle & a new bailout

[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2009/POLITICS/03/18/aig.bonuses.congress/art.dodd.cnn.jpg caption="Sen. Dodd told CNN Wednesday that officials in the Treasury Department asked him to add the bonus loophole to the stimulus bill before it was passed."]

Andrew Torgan
CNN Financial News Producer

The controversy surrounding bonuses at AIG hit a boiling point Wednesday when company CEO Edward Liddy testified before a House Financial Services subcommittee.

Liddy, who was grilled by lawmakers, addressed one of the key questions surrounding the controversy: When did officials first learn that AIG was planning to give those bonuses that CNN first reported on last December?

Liddy said Fed Chairman Ben Bernanke knew about the payments for three months and Treasury Secretary Tim Geithner found out about them two weeks ago - a week before Geithner has said he first heard of the bonuses from his staff. The Treasury Department, however, said Liddy was mistaken.

Meanwhile, Senate Banking Committee Chairman Christopher Dodd told CNN Wednesday that he was responsible for language added to the federal stimulus bill to make sure that already-existing contracts for bonuses at companies receiving federal bailout money were honored.

FULL POST


Filed under: AIG • Andrew Torgan • Economy • Finance • Gas Prices • Oil • Wall St.
March 19th, 2009
11:51 AM ET

The real AIG scandal

Eliot Spitzer
For Slate.com

[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2009/US/03/14/aig.bonuses/art.aigbuilding.gi.jpg]

Everybody is rushing to condemn AIG's bonuses, but this simple scandal is obscuring the real disgrace at the insurance giant: Why are AIG's counterparties getting paid back in full, to the tune of tens of billions of taxpayer dollars?

For the answer to this question, we need to go back to the very first decision to bail out AIG, made, we are told, by then-Treasury Secretary Henry Paulson, then-New York Fed official Timothy Geithner, Goldman Sachs CEO Lloyd Blankfein, and Fed Chairman Ben Bernanke last fall. Post-Lehman's collapse, they feared a systemic failure could be triggered by AIG's inability to pay the counterparties to all the sophisticated instruments AIG had sold. And who were AIG's trading partners? No shock here: Goldman, Bank of America, Merrill Lynch, UBS, JPMorgan Chase, Morgan Stanley, Deutsche Bank, Barclays, and on it goes. So now we know for sure what we already surmised: The AIG bailout has been a way to hide an enormous second round of cash to the same group that had received TARP money already.

Read more...

March 19th, 2009
10:00 AM ET

How Obama can repair AIG damage

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Drew Westen
Special to CNN

In getting the nation's economy back on its feet and pursuing an agenda aimed at keeping it there for the next 40 years, the White House has to do two things at once: implement effective policies and keep the public behind the president long enough to keep implementing them until they work.

As the president learned in the stimulus debate, even the best policies don't sell themselves, especially when the other side is aggressively attacking them. President Obama's inspiration, Abraham Lincoln, noted that without public opinion behind you, good governance is impossible.

In this sense, the AIG debacle, in which the government has handed nearly $200 billion of taxpayers' money to one of the corporate Leviathans whose misadventures have cost many taxpayers their jobs, homes and savings, is both instructive and destructive.

Keep Reading...


Filed under: AIG • Bailout Turmoil • President Barack Obama
March 18th, 2009
12:15 PM ET

Financial Dispatch: Most Americans delaying big purchases

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Andrew Torgan
CNN Financial News Producer

A new national poll indicates that six in 10 Americans have postponed a major purchase such as appliances or furniture over the past six months.

Sixty-two percent of people questioned in a CNN/Opinion Research Corp. survey released today say they've postponed a major purchase. That's up 10 points from December, during the height of the holiday shopping season.

The poll also suggests just how hard times are for many households. One in three respondents said they've cut back on necessities such as food or medicine over the past six months because of changes in the economy.

FULL POST


Filed under: AIG • Andrew Torgan • Economy • Finance • Gas Prices • Oil • Wall St.
March 18th, 2009
09:38 AM ET

A.I.G.’s bonus blackmail

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Lawrence A. Cunningham
For The New York Times

President Obama on Monday instructed the Treasury Department to “pursue every single legal avenue” to recover $165 million in bonus payments the insurance giant A.I.G. recently made to nearly 400 employees in its financial products unit. A.I.G. has, of course, received $170 billion in bailout funds and yet continues to incur extraordinary losses — some $62 billion last quarter alone.

A.I.G. insisted it was legally obligated to make the bonus payments and that failure to pay would breach its contracts with employees and expose it to penalties under state employee protection laws. The company also warned that breaching the agreements would amount to defaulting on numerous other business contracts, at staggering cost.

Read More...

March 18th, 2009
08:41 AM ET

Is AIG reimbursing your insurance claims?

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David Gewirtz | BIO
Editor-in-Chief, ZATZ Publishing

Yesterday's article, AIG needs to be taught who's boss resulted in a flurry of reader comments. One, by reader Val Beakley caught my eye.

He complains that AIG hasn't reimbursed his wife for her medical insurance expenses. Obviously, there's likely more to the story, but that got me thinking. How responsive has AIG been to its insurance customers? In return for all the bailout billions we've given them, have they actually been supporting their customers and honoring claims?

If you're an AIG customer, please post a comment and let us know. To be fair, if you've had a good experience with them, let us know that as well.

Editor’s note: David Gewirtz is Editor-in-Chief, ZATZ Magazines, including OutlookPower Magazine. He is a leading Presidential scholar specializing in White House email. He is a member of FBI InfraGard, the Cyberterrorism Advisor for the International Association for Counterterrorism & Security Professionals, a columnist for The Journal of Counterterrorism and Homeland Security, and has been a guest commentator for the Nieman Watchdog of the Nieman Foundation for Journalism at Harvard University. He is a faculty member at the University of California, Berkeley extension, a recipient of the Sigma Xi Research Award in Engineering and was a candidate for the 2008 Pulitzer Prize in Letters.


Filed under: AIG • Bailout Turmoil • David Gewirtz
March 18th, 2009
07:31 AM ET

Read what AIG says about the bonuses

[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2009/US/03/15/AIG.bonuses/art.liddy.afp.gi.jpg caption="In a letter to the White House, AIG Chairman Edward Liddy, shown here in December, vows to curb bonuses."]

Joe Johns | BIO
CNN Correspondent

We've received a couple of documents from AIG about the bonuses.

This first letter is from AIG chairman Edward Liddy, to Treasury Secretary Tim Geithner about the bonuses.

The second letter is not as well-known. It is a so-called "white paper" from AIG explaining, among other things, why it had to pay the bonuses. Its pretty interesting stuff –the white paper explains AIG’s concerns about getting sued for double damages in Connecticut, fears of creating a cross default that allows AIG’s counterparties to back out of deals and more.


Filed under: AIG • Economy • Joe Johns
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