There is a transcript from executives at the American International Group (AIG) that is likely to infuriate many Americans, still smarting over the $165 million in bonuses paid to executives after the huge federal bailout. Statements from a conference call reveal executives who express contempt for the public and bravado in their own business abilities. These include statements from employees hoping that the public loses a trillion dollars and blaming the problems on Congress, and the public rather than their own business decisions.
Notably, one employee asks if the company could secure a second round of bonuses, which produces laughter from the group given the public outrage. Yet, AIG employees did get a second round of bonuses.
While AIG expressed contrition in public, employees denied any mistakes on the call. One employee stated “I will stand behind every action I have taken in this company from Day One.”
On the the conference call of March 23, 2009 with Gerry Pasciucco, who was hired to help shutdown Financial Products after the AIG bailout, the employees refused his suggestion that the employees waive their right to bonuses due to the company’s meltdown and bailout. The reaction was outrage, with one employee saying “I think it violates everything I believe in, and it’s un-American.”
One employee objected to the very notion of a penalty and insisted that some of the bailout money go to reward employees: “You made a commitment to us, and we made a commitment to you. And for anybody to look beyond that, as the politics and the media are at the moment, is missing the point. You can’t expect us to just roll over and ignore that commitment because there is a bunch of immoral bigots that intend us to do something different. It’s not going to happen.”
There are likely to be many citizens who have concluded that both Congress and AIG “missed the point” by giving these bailouts. What is really striking is how these employees are demanding bonuses after the bailout while blaming the public for their problems. One employee states “To be honest with you, I really hope it blows up. I think the U.S. taxpayer deserves to lose a trillion dollars over this thing for the way they have behaved.” The employee then declares “Well, none of them cares about the country, none of us cares about the institution. They really don’t care, and I really don’t care. And frankly, if a trillion dollars gets lost, fine.”
Pasciucco himself blames Congress and the public rather than the company: referring to the process, he states “I think it’s distasteful. It’s unfair. It’s unjust. I agree with you, it’s not American. It is McCarthy-ite. . . . It will be viewed as a horribly dark period.”
For the full story, click here.
I found the following Huffington Post article via Matt Taibbi’s blog at True/Slant
Washington Must Ban U.S. Credit Derivatives as Traders Demand Gold
by Janet Tavakoli (From Huffington Post, 3/8/2010)
Excerpt:
Congress should act immediately to abolish credit default swaps on the United States, because these derivatives will foment distortions in global currencies and gold. Failure to act now will only mean the U.S. will be forced to act after these “financial weapons of mass destruction” levy heavy casualties. These obligations now settle in euros, but the end game is to settle them in gold. This is so ripe for speculative manipulation that you might as well cover the U.S. map with a bull’s-eye.
Credit default swaps are not insurance. If you buy fire insurance on your home, you must own the house. If you buy credit protection on the United States, however, you do not need to own U.S. Treasury bonds. If your protection gains value after you buy it — not because the U.S. defaults, but because of market mood changes — you can resell that protection and make a profit.
Lower credit risk means a lower price for protection. Zero implies zero risk. The higher the basis points, the higher the implied risk. When U.S. credit default swaps were first introduced, the price of protection was around two basis points. According to Bloomberg, the price for five-year protection was around 38 basis points (per annum) on Friday. But the price in the over-the-counter market — where this stuff actually trades — was almost double or around 75 basis points.
Since most traders in U.S. credit default swaps don’t think the U.S. will default any time soon, why are they trading U.S. credit default swaps? They are speculating on price movements the way a day trader buys and sells stocks to speculate on stock price movements.
Volume in U.S. credit default swaps is relatively small, but it can explode rapidly, just as volume expanded rapidly for credit default swaps on mortgage debt in 2006 and 2007.
http://www.huffingtonpost.com/janet-tavakoli/washington-must-ban-us-cr_b_489778.html
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Taibbi’s take on all this:
I’d like someone to explain to me how trading a credit default swap on a U.S. Treasury note isn’t gambling. This is purely betting on crowd behavior — after all, nobody really thinks the U.S. will default.
It’s weird enough living in a country where a man can legally own an arsenal of machine guns, but his neighbor growing a pot plant will send a team of DEA agents kicking his door in with a no-knock warrant. But this goes even beyond that. If I go online today to HaveNoLifeAndBetOnSports.com and bet fifty dollars on the Bucks against the Celtics tonight, I’m a criminal. But some gazillionaire firm in New York can legally bet against the United States of America in unlimited amounts in a trade that has nothing to do with anything, but a guess about how many other people will make the same bet.
Jesus, are we a weird country.
http://trueslant.com/matttaibbi/2010/03/09/shorting-america-rocks/
Mike:
maybe the solution is to buy all these small, limp dick politicians and wall street types strap ons. It will be cheaper in the long run for all of us.
And yet, if I were to walk down Wall Street, randomly swinging a machete and maiming investment bankers, I would be the one to go to jail!
The system is so unjust when it comes to this kind of crime against us all.
“May I point out that the Government bailed them out (I know it was a republican government).”
Byron,
That’s why you and I hold different beliefs as to how to run a political/economic system, but can still communicate productively with eachother. As someone else here has said the parties are really two sides of the aristocratic/corporate cabal, one side saying in effect screw the peasants, while the other says let’s throw them some bones, but not enough to have comfortably lives. In truth though it ain’t politics. It’s status and inflation of penis size that makes the world go round.
Elaine,
I envy you the evening.
http://www.huffingtonpost.com/2010/03/09/insurance-industrys-final_n_491369.html
roflol
ROFLMAO
Nothing like getting caught with your hand in the cookie jar.
“Mom! It wasn’t me!” isn’t going to work, Insurance Industry Skim and Scam Artists.
“Mike S.
However, let me conclude by saying that the remedy to this is first understanding and then finding a means to educate people to the fact that we don’t have to live our lives as Great Apes, who are after all almost extinct.”
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A silent nod of the head and a whispered Hallelujah
Mike S.–
Matt Taibbi and Charles Pierce are going to be speaking at the Mark Twain House & Museum in Hartford, Connecticut, on Saturday. I bought tickets today.
Saturday, March 13, 2010
7:30 p.m. A Pen Warmed Up in Hell: Matt Taibbi and Charles P. Pierce:
Rolling Stone political columnist Matt Taibbi and author Charles P. Pierce (Idiot America), fresh from The Daily Show and elsewhere.
http://www.marktwainhouse.org/calendar/
Was not AIG one of the major re-insurer for the world trade center ? If they were you have your answer. Check the liability of Lloyds of London.