TPM News

Is the momentum building for an investigation into the real beneficiaries of AIG's latest bailout?

Earlier this month, the Treasury Department announced it was rescuing the fallen insurance giant yet again, bringing the total amount of taxpayer assistance given to the firm since last September to $170 billion. It soon became clear that much of that money -- over $49 billion, to be exact -- was going right through AIG to the counter-parties on its credit default swaps, both American banks like Goldman Sachs, and foreign ones like DeutscheBank.

Defenders of the move have argued that not giving the counter-parties this indirect bailout would have risked a wider financial collapse.

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Treasury Secretary Tim Geithner will be back before the House Financial Services Committee tomorrow to outline his plea for emergency powers to take over and wind down foundering non-bank financial firms -- but he may leave unanswered the question of how to fund his plan.

Early leaks of Geithner's request, which is slated to head to Capitol Hill in draft form later today, suggest that the emergency "resolution authority" would be paid for either by a mandatory congressional appropriation or by charging the private companies covered by the change.

The latter of those two options could be a non-starter with the financial industry, which is unlikely to welcome a new government fee, while the former could face resistance from members of Congress who would prefer to use the FDIC's deposit insurance fund (reliant on payments from banks) as a model. Either way, as the WSJ reports, we know two things for sure:

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Yes, that was an actual sentence spoken -- or more specifically "groused" -- by an anonymous Wall Street executive concerned for his "personal safety," though not enough to be dissuaded from attending or talking to a reporter at yesterday's Wall Street Journal 'Future Of Finance' Conference, where the future sounded like it had gone back in time and purchased a hundred billion dollars worth of extra credit protection, which is to say suspiciously like Finance Past.

It looks like Wall Street, no doubt emboldened by the recent 20% runup in the S&P 500, the fourteen bucks in matching leverage the government is offering them for every dollar they invest in toxic/"legacy" assets and the prospect of better-than-awful numbers at Citigroup and Credit Suisse, got its hubris back along with its proverbial groove. In the six months since it nearly triggered global financial Armageddon, the investment banking community has seemed, if not quite chastened, at least somewhat subdued amidst the nation's ever-heightening awareness that their industry engineered the ever-intensifying economic morass. But not anymore!

This morning the New York Times ran as an op-ed the resignation letter of one Jake DeSantis, a securities trader and executive vice president at AIG's infamous financial products division and recipient of one of those million dollar bonuses ($742,006.40 after taxes.) That's right: he's keeping it. And don't ask him if he feels guilty about it because he will tell you: NO.

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The Democratic National Committee released this statement today, in response to Bobby Jindal's remarks last night attacking Democrats for demanding that Republicans not want President Obama to fail:

"We understand that Governor Jindal has had some problems with public speaking lately, but turning to Rush Limbaugh to be your new speechwriter doesn't help. What we know has failed is the reflexive partisan politics of the past that Rush Limbaugh and his Republican party continue to be mired in. Rather than rooting for failure, we urge the Republican party to play a constructive role in moving the country forward and offer a budget proposal," said DNC National Press Secretary Hari Sevugan.

The Dems clearly like calling the Republicans the Party of Limbaugh -- and the Republicans keep on giving them the openings to do it.

Is the Obama administration aping its predecessor by taking a dangerously broad view of state secrecy, enabling them to avoid revealing information about warrantless wiretaps and other controversial tactics in the war on terror?

The Washington Post raises the question today, but doesn't provide much of an answer.

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The state of Minnesota will now achieve a new personal milestone: Breaking their previous record for the longest unresolved election.

The Star Tribune points out that after today, the Senate race between Al Franken and Norm Coleman will have become the longest period that any statewide office in Minnesota remained up in the air, breaking the previous record of the 1962 gubernatorial election. In that prior election, however, the office itself did not actually stay vacant, like it is now.

However, this race is still not the all-time record-holder since the direct election of Senators began. That honor goes to the 1974 New Hampshire race, for which the seat stayed empty all the way into the Summer of 1975. Then again, we can't rule that out for this race.

Another thing: That New Hampshire race ended in a do-over election, which Norm Coleman and his legal team have been quite openly agitating for.

During his appearance today at the Council on Foreign Relations, Treasury Secretary Tim Geithner was asked the question on many progressives' minds: Why does the Obama administration's bank rescue plan seem to rely on "socializ[ing] risk but keep[ing] profits private?"

But Geithner seemed to sidestep the question at least in part by offering a explanation for why he decided against setting up a "bad bank" -- not directly addressing the option of nationalizaton or receivership. The full exchange is posted after the jump.

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Is the administration disavowing the term "Global War on Terror"? A report by Al Kamen yesterday suggested maybe. The question arises because of an email Dave Riedel of the Office of Security Review sent to Pentagon staffers informing them that "OMB says: 'This Administration prefers to avoid using the term "Long War" or "Global War on Terror" [GWOT]. Please use 'Overseas Contingency Operation.'"

As luck would have it, though, OMB director Peter Orszag held a conference call with reporters this morning to answer questions about the budget, and fielded a question about this very issue.

"I sometimes am amused by the things I read in the press," Orszag said. "I'm not aware of any communication I've had on that issue. It was a communication by a mid-level career civil service."

So GWOT it is. That doesn't mean the Riedel email didn't go out, though, and some (me, for instance) wonder if some at the Pentagon might stick with the supposedly new moniker (Overseas Contingency Operation) leading to amusing confusion on the Hill.

This has been a problem for the government for some time, and to such an extent that even George Bush was willing to admit error. "We actually misnamed the war on terror," Bush said in August 2004. "It ought to be the struggle against ideological extremists who do not believe in free societies who happen to use terror as a weapon to try to shake the conscience of the free world." Touche.

The big budget news (always an eyeball grabber) is that Senate Budget Committee chairman Kent Conrad (D-ND) and his House counterpart John Spratt (D-SC) are taking machetes to Obama's proposal, released last month. The Washington Post reports that the two are poised to release budget blueprints that "cut hundreds of billions of dollars from Obama's spending request over the next five years."

But is there really any there, there? Short answer: not really. The blueprints, called resolutions, aren't binding on the work of congressional committees, which are still plowing ahead with their legislative agendas. And at the same time, many of Conrad's changes are geared more toward hiding spending than toward specific cuts. For instance, "Conrad...pressed some Bush-era budget maneuvers eliminated by Obama back into service: Instead of a 10-year budget that shows deficits steadily accumulating, for example, Conrad is proposing a five-year spending plan."

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A new Rasmussen poll shows that the American public has a clear grasp of an easy concept: He who pays the piper calls the tune.

The poll asks: "If the government provides funding to keep a company in business, should the federal government regulate the level of pay and bonuses for executives of that company?"

The numbers are 61% in favor, to only 27% against.

On the other hand, a 64%-23% majority opposes regulation of executive pay at businesses that do not receive government money in order to stay in business, and respondents say 66%-21% that the federal government should not regulate pay at all publicly-traded companies.

But if we take it as a given that a company is getting bailed out, the public wants control of the pay structure.