Don’t let your two year old play with your iPhone if it’s enabled for Twittering.
Could Chase be on the line (financially, not criminally) for some of Madoff’s fraud?
As noted last night, I don’t think contractual bonus obligations have much standing in bankruptcy proceedings. But this article from CFO.com, sent along by TPM Reader JM, suggests that that’s only the start of it. The article is about the follow-on to the Lehman bankruptcy. But what it argues is that if creditors can show the the bankrupt institution was actually insolvent at the time the payments were made they can force the execs to cough up earlier bonuses as well. And remember AIG was in dire straights long before the US government stepped in and provided the lifeline last fall.
Late Update: As we know, AIG isn’t legally in bankruptcy, though it’s only been saved from that fate by a government bailout. But TPM Reader CW raises what is in many ways a more spot-on point: “Have Richard Shelby and Bob Corker held their press event demanding that AIG break their contracts with their overpaid Financial Products workers for their shoddy work?”
Good point.
As noted in other contexts, beggars can’t be choosers. It’s really too rich for AIG to continually come back to the government asking for billions of dollars and tell us it’s tough luck when we ask for revisions that should be no brainers. The folks running AIG’s financial products division should be happy to escape this mess without criminal indictments. And that’s not hyperbole. When you look at what they were doing, foolish or high-risk behavior are inadequate descriptors. It really amounts to fraud.
From TPM Reader MM …
Granted they were different banks (North Fork vs. Chase), but you gotta love that Eliot Spitzer’s transactions of a few thousands of dollars here and there raised alarms, led the bank to report them to the Feds, and resulted in wiretaps of Spitzer. Â Bernie Madoff’s transactions of billions of dollars back and forth? Â Nah, nothing to see here; perfectly normal!
Not that it’s a defense of Spitzer. But it does raise very serious questions about JP Morgan/Chase’s behavior with Madoff. More on that here.
Former VP Dick Cheney says that President Obama is putting America at risk of another terrorist attack. That and other political news in today’s TPMDC Sunday Roundup.
DARPA (the deep R&D outfit at the Pentagon, which ‘invented’ the internet) is starting to explore ‘geoengineering’.
What does that mean? In this case, it basically means way out things you could do to the earth to slow down, arrest or perhaps even reverse global warming.
The first reports said either $100 million or $170 million in bonus payments. But there was a lot of unclarity about what kind of bonuses they were and how many were going to the folks at AIG ‘financial products’ division, where they wrote those credit default swaps that blew up the company and will likely cost taxpayers hundreds of billions of dollars.
But the Journal says the number is actually $450 million to execs at the financial products division and a $1.2 billion spread across the whole company.
As you can see, despite the fact that this relatively small division of the company created almost all the loses, it’s still drawing in a vastly disproportionate share of the cash bonuses.
AIG has released limited information on who its biggest counter-parties were.
Here’s the broken out list. And here’s their general press release announcing the list.
The ‘toplines’ don’t seem terribly different from what had been assumed. European banks show up disproportionately among the highest payouts. Barklays $7B in payments to counterparties by US Securities Lending, $.6B through Maiden Lane III, $.9B in collateral postings under AIGFP CDS.
The biggest recipient seems to be France’s Societe Generale for about $12B. Deustche Bank got slightly less.
The one thing I had not heard of previously was $12.1B that went to municipalities in twenty states.
Right there in that AIG press release, with some really simple addition, is the amount of taxpayer money that went to Goldman Sachs via the AIG: $12.9 B.