Archive for the ‘AIG’ Category

Sen Dodd brings more doubts on the honesty of government officials

March 20, 2009

Sen. Christopher Dodd (D-Connecticut,) who is chairman of the Senate Banking Committee was given preferential treatment by Country Wide Mortgage Co, the leading mortgage company which made bad decisions and needed bail-out from government.

The lawmaker from Connecticut, an ardent democrat and supporter of Obama is under investigation by the senate ethics committee for refinancing his homes with a special rates by the mortgage company—part of the “V.I.P.” program that gave lower than usual rates given to “friends” of the company.

Dodd got a low 4.25 percent interest rate on a $506,000 refinancing loan for his Washington town house, and another low 4.5 percent rate on the $275,000 loan on his East Haddam home—all because he is classified as VIP and friend of Country Wide. —US News / AP (01/23/09)

This is the same 64-year old Dodd who received hefty campaign money from AIG. Now, the senator is being blamed for letting the bonuses to be paid by the American International Group (AIG) to its employees amounting to up to a staggering $165 million. The money however is a drop in the bucket—a small part of the trillions of dollars Barack Obama has planned to spend using American taxpayers’s money. The spending can compromise the finances of the next generation.

After wavering on his role in the AIG mess, Dodd is singled out as the person who added protection in the stimulus package that allowed the giving away of bonuses to AIG executives who were responsible for the company’s failure.

“Republicans are also turning a spotlight on Dodd’s longtime friendship with Edward Downe Jr., a former director of the Bear Stearns investment firm who was snared in an insider trading scandal. Dodd owned a condo with Downe in a fashionable Washington neighborhood but bought out Downe’s share in 1990 after learning Downe was under investigation. Downe eventually pleaded guilty to trading inside information.”—-Yahoo News/ AP (03/20/09, Miga A)

If Obama’s administration is filled with people of shabby integrity, how can America expect a quick recovery from the economic crisis? Many critics think there isn’t much difference in how Capitol Hill is being run. The same rotten greed, denials, and lies are coming out early on in the new administration whose campaign promise is “change.”

The exposure of Dodd comes at a bad time that Treasury secretary Tim Geithner is besieged with calls to resign after accepting a job that looks after public money when he is among those who avoid paying taxes. According to Dodd, Geithner asked him to remove the executive bonus restriction in the big economic stimulus package lawmakers in Capitol Hill approved last month. This decision permitted AIG officials to rake in the controversial bonuses. (Photo Credit: http://ussenate.gov PD)=0=

RELATED BLOG: “AIG’s excessive bonuses of $165 million infuriate Americans” Posted by mesiamd at 3/18/2009

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AIG’s excessive bonuses of $165 million infuriate Americans

March 18, 2009


It is if the world has to be reminded that greed is alive in the failing financial institutions bailed out by the US government. After American International Group Inc. (AIG) received its 170 billion rescue package, it has allotted $165 million to pay for company bonuses. This is very infuriating for the ordinary citizens who contribute tax dollars to help prop up the ailing economy.

“Fresh details pushed outrage over AIG ever higher: New York Attorney General Andrew Cuomo reported that 73 company employees received bonus checks of $1 million or more last Friday. This at a company that was failing so spectacularly that the government felt the need to prop it up with a $170 billion bailout… On Capitol Hill late Tuesday, House Democrats directed three powerful committees to come up with legislation this week to authorize Attorney General Eric Holder to recover massive bonus payments made by companies like the ones paid last week by American International Group Inc.” —–Yahoo News/ AP (03/17/09, Kellman, L)

Will the US government recover the bonuses? Who knows?

Republicans blamed the democrats for doing little in preventing this scandalous diversion of money. The giving away of hefty bonuses wasn’t done by AIG alone, but politicians in Washington are feigning outrage. Earlier Merrill Lynch paid $3.6 billion in bonuses to its executives while it negotiated its sale to Bank of America Corp., a big recipient of government bailout.

The rescue packages for ailing businesses and financial institutions which made bad decisions aren’t politically popular. It gives a bad rap on the Obama administration. Innocent people in the street are suffering for the big companies who take advantage of the bail-outs.

A growing number of irate Americans think Treasury secretary Timothy Geithner did little to prevent the giving of excessive bonuses to happen. It is believed that he knows about this bonuses early on. There are those who opine Geithner whose appointment by Obama was questioned because of failing to pay taxes must be fired.

Party supporters of Obama want the return of the bonus money to the government prompting democratic senate majority leader Harry Reid to say recipients will not be allowed to keep the money. Many Americans however are distraught to realize how untrustworthy the deals have been, compromising the taxes they give the government. They can’t fathom how leaders could be so arrogant,, extravagant, and callous to have these massive bonuses at the expense of American taxpayers—at a time when they are saddled by joblessness, loss of savings and pension plans, a slump in housing market, and bankruptcies of businesses and financial institutions. (Photo Credit: drugs crews 2)=0=

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Obama takes a statistical lead on the 41st day before election; McCain suspends campaign and debate to address financial crisis

September 24, 2008


Presidential candidate Barack Obama gains 6 point lead over John McCain today September 24, 2008, 41 days before the November 4 election. Obama’s present advantage is probably a windfall from the blame the Republican party is getting from the financial meltdown bogging the market after Fannie Mae, Freddie Mac, Lehman Brothers, Bear Stearns, among others filed government protection from bankruptcy.

The genesis of the economic crisis is traced on long-standing corporate greed pervasive in Wall Street, the weak oversight by government regulators for many years, corruption, and the lack of accountability in the banking system, making both Democratic and Republican parties culpable.

In 2001, the Bush administration had pushed for a tightening of the mortagage lending, but Democrats like Cong. Barney Frank (D-MA) head of house financial services committee blocked the initiative.

Citing urgency of the matter, McCain,in a display of leadership, cancels a scheduled debate with Obama on Friday night, September 26, 2008, to focus in bringing a bipartisan solution to the crisis. A bail-out financial package is needed to be passed by the Congress to avert further damage in the economy.

At this time, Obama doesn’t want to stop his campaign. He thinks he can do the campaigning and helping fix the economic crisis at the same time. The impasse in the proposed $700 billion bailout of the financial institutions need to be addressed quickly to avert full-blown economic collapse. (Photo Credit: Mario Zucca)=0=

With market still bleeding, corporate greed blamed for financial woes in Wall Street

September 17, 2008

With last week’s unprecedented government bail out of Fannie Mae and Freddie Mac to the bankruptcy of Lehman Brothers, the United States and the financial world are finding ways to avoid further meltdown in Wall Street. Spooked by financial uncertainties, money institutions are finding ways to avert market collapse.

American International Group Inc. (AIG,) the largest insurance company of the world, suffered losses as its shares fell down 92% after fool-heartedly insuring risky bonds. The Federal Reserve had to loan $85 billion to save the company from financial ruin which could disrupt markets and put the economy in jeopardy if its losses aren’t contained. This is in addition to the Treasury Department’s commitment to infuse up to about $100 billion in funds to the Fannies, America’s top mortgage lenders to keep them from going insolvent. Merrill Lynch, Bear Stearns, and Washington Mutual suffer money problems too, feeding uncertainty, confusion, fear and distrust in the banking system. At this point it is unclear whether these measures will reverse the on-going bleeding in the market.

To where this economic woes will end is anybody’s guess. For ordinary citizens, the uncertainties that shake the market bring new realities and offer opportunities to reassess where their investments will go. In spite of their efforts to improve their finances, people have been gripped with scary concerns about jobs, higher taxes, social security, healthcare, retirement and the future in


The financial crisis had been predicted since the Clinton administration. When the stock market slumped in 2000, the housing market boom that followed built unrealistic expectations and over-taxed the lending system. After a long run of profitable home buying and selling, prices slumped in 2006 and continued to the fall thereafter. In the midst of mounting mortgage debts, many borrowers were unable to pay their loans, forcing them to default. The accrued losses quickly mounted, triggering the current financial crisis.

The crisis caused by multifactorial reasons didn’t happen overnight and the blame is shared in many fronts. Corporate greed of Wall Street is partly responsible. CEO’s and money managers, pandering on their interests, rake astronomical profits in overseeing stocks and investment funds to the disadvantage of regular shareholders. Government regulators were remiss in protecting the public when they did little to restrict flagrant money lending schemes and shady business deals of corrupt opportunists.

The Congress on the other hand had been slow in updating the laws that regulate the business of Wall Street. Loans in banks were approved by mortgage lenders in spite of the borrower’s questionable ability to pay. The bullish optimism among house-buyers had caught them ill-prepared for the ups and downs of the market. Investigation and prosecution of corporate malfeasance and abuses had been inadequate.

To promote stability, the government has little choice but to bail-out the floundering companies at the expense of tax payers. To clean up the mess, it has to recognize the weaknesses and failures of the system that lacks oversight. With a huge trade deficit, America needs a correction and tougher regulations in the financial markets to avoid further damage to the economy.

The adverse effects of this economic downturn have serious repercussions on the economies abroad. There is volatility of stocks traded abroad. There is worry across Europe, Asia and Russia. If the confidence to USA’s financial institutions weakens or altogether lost, economies worldwide will suffer affecting the most, the poorest nations.


T
axpayers, shareholders of investments and portfolio owners have to foot the bills to keep the economy going. They scramble for solutions to counter depreciation of homes and restore confidence in doing business. They need to bring back the profits in the stock market, lower the cost of borrowing, and stimulate the growth of businesses.

Yet new policies instituted by the emergence of global economy stand on the way. Saddled with debts and the on-going war on terrorism, the US finds itself in weaker economic footing now than in the past. If the American economy suffers further and reversal of the financial turmoil comes late, a possible worldwide recession can result to social and political instability.

The lessons learned from past hardships—the great depression and the world wars however make Americans resilient and hopeful. As they watch the events unfold, they try to find a wiggle room to solve their problems to escape the worst. The Bush administration is doing unprecedented measures to do just that, though its choices for solution are pretty limited. Photo Credits: Gingerbugjones; BeebsandChi; Steely.scott)=0=