Financial Services AIG Hearing Liveblog, Member Blowhard Statements

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The hearing can be view on the committee stream or CSPAN3.

The witnesses are:

Panel one

  • Mr. Scott Polakoff, Acting Director, Office of Thrift Supervision 
  • The Honorable Joel Ario, Insurance Commissioner, Pennsylvania Insurance Department, on behalf of the National Association of Insurance Commissioners 
  • Ms. Orice M. Williams, Director, Financial Markets and Community Investment, Government Accountability Office 
     

Panel two 

Liveblog

Barney starts by warning the hecklers.

Three other members included–I missed the first one [oh, I think it was Joseph Crowley], but Marcy Captur and Elijah Cummings are in there.

Kanjorski: AIG unique. Not a bank, and has received much more assistance than any other bankster. Treasury and Fed could not accommodate us. "We need to hear form them, directly and publicly." Full committee hearing on March 24. 

[Note, AIG’s much greater assistance was really assistance for the banks via other means. That Kanjorski statement does not inspire confidence in me, because it hides the degree to which this is still about the JP Morgans and Goldman Sachs of the world.]

Garrett: Where was the outrage when Bush was demanding money from taxpayers? I think I’ll blame it on Democrats.

[Note, the Republicans are going to be out for Geithner’s head here. He’s not going to have much fun when he testifies on Tuesday.]

Frank: I hope we can focus on the subject at hand, but I have to respond to Garrett’s complaint that he didn’t get a hearing quick enough. We did have the hearing in July 2008. At that hearing he asked no questions at that hearing. He declined to ask any questions about it. I suppose he’s disturbed that we didn’t give him a chance to ask questions a month earlier. 

Garrett: My understanding is that I went into other issues as well.

Frank: Not according to my reading of the transcript. Covered bonds hardly seemed to be the major topic that the gentleman wanted to have the hearing about. The committee had a hearing on this well before the Fed went into AIG. It is important for us to amend that statute, but doing it in the midst of that uncertainty is probably not a good idea. I guess we’ll just release the transcript. I guess a lot of people left their fight in the gym. Time to exercise our ownership rights. 

[Frank reading from compensation limits.]

Frank: If there’s a net loss on the year, they still get the bonuses. Losses of $225 million insulated from the bonus pool. That’s a rounding error in this matter. We ought to be exercising our rights as owners of AIG. Federal govt should not abrogate contracts [unless they’re UAW workers] to say, the losses we’re so bad that we’re right to refuse to pay those bonuses. We’ll be asking Mr. Liddy to give us the names of the recipients. If Mr. Liddy declines to give us the names, I will convene the committee to vote a subpoena to get the names. This contract appears to be signed in contemplation of serious losses. [Ayep] And as for retention, I don’t think these are the guys to retain. The natural tendancy to protect your own mistakes comes into play. Let’s bring a lawsuit as the owners against those who did damage against the company.

Bachus: Chairman Kanjorski and I asked GAO to do an investigation into who the bailout really helped. Plenty of blame to go around. One people not to blame but paying the tab is American people.

Ackerman: There’s a tidal wave of rage that’s building up right now. This is just the tip of the iceburg. The taxpayer knows that they are the ultimate sucker who pays for the greed that has been going on for years and years.  These bonuses are minuscule compared the sums that we really have to be talking about. We have to talk about how an icon succumbed to this greed and figured out how to package this smoke and sell it for billions of dollars without any oversight.

Price: Sorry Geithner declined to testify today. Outrage should be directed at taxpayers. This is exactly why govt should not bail out private companies. 

[2003, 2004, 2005, 2006, 2007, 2008: Republicans refuse to discuss exit strategies. 2009: Republicans screaming for exit strategy.]

Sherman: Make sure Liddy is sworn in. If American taxpayers knew about these bonuses, they would have demanded receivership. No one can support a criminal conspiracy to withhold this information from taxpayers.

Castle: Who knew about the bonuses and when did they know it?

Capuano: Where were thrift regulators when they were getting ready to do what they did? Is this path better or worse than just declaring bankruptcy. Will taxpayers ever get their money back?

Manzullo: I asked Kaskari where he was going to refuse to give one person a bonus. He said it was deferred compensation. [My constituents] are asking "how can govt be this stupid?"

Maloney: American taxpayers outraged. I’m going to play to that outrage so I get some TV time.

Royce: I voted against the bailout and predicted at the time that it would turn into a gravy train. AIG is charging artificially lowered rates and beating out smaller insurers. 

[Note, I’ve heard that too. Basically, AIG is charging premiums that are too small in order to win contracts. It can do so since it knows we, the taxpayer, are going to guarantee whatever AIG does. But of course that means it’s not taking into account the risk involved in these insurance contracts.]

Hodes: Arrogance Incompetence and Greed. Unacceptable that TARP funds being pocketed.  It is ridiculous to stand on these contracts. The contract provisions that allow bonuses for failure ought to be unenforceable. 

Biggert: Did anyone represent the taxpayer. Did taxpayers vote on these bonuses?

Peters: In my district, thousands of UAW employees have been asked to renegotiate contracts. Thousands of white collar workers asked to forgo bonuses. People are sick of this double standard.

Hensarling: Why didn’t Obama fix this back when Bush gave this money away last September?

Scott: We’ve got to look at this as fraud. We’ve got to make sure we’re doing our job.

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64 replies
  3. dakine01 says:

    Kanjorski is all over the place in his statement. And he seems to be fellating Liddy.

    Blergh

  7. BoxTurtle says:

    IMO, those hecklers would do a better job of questioning than most of the panel.

    Boxturtle (It’s not that the witnesses are lying that bothers me, it’s the respect they show my intelligence when they do it)

    • selise says:

      IMO, those hecklers would do a better job of questioning than most of the panel.

      amen.

      been listening to lots of hearings on this issue and one of the most frustrating aspects is how bad, really horrible, people like frank and dodd have been. from what i’ve heard recently from the senate budget and senate banking committees for example, bunning has done the best questioning. how sad is that?

  9. cbl2 says:

    just now caught ranking member Garrett hang the ‘architect of the AIG bailout’ jacket on Geitner

    • BoxTurtle says:

      The jacket doesn’t fit that well…looks like there rooms for a couple more folks under it.

      Boxturtle (Geitner didn’t do this all by himself)

  10. Elliott says:

    too bad Frank is more concerned about the petty politics of the committee than he is about the business at hand.

  11. Leen says:

    As Christy pointed out this morning we are going to watch congress dance and sing in front of the cameras. They know we are watching. Christy went further pointing out that what they do after those cameras are turned off is what we need to stay on top of. How do they follow through holding these thieves accountable. ACCOUNTABLE

    Did folks just here Sestak point out how many brain injured soldiers have returned from Iraq and Afghanistan? Christ Allmighty! He said that only “90,000″ would not heal “90,000″ brain injured for life based on a “pack of lies”. BushCo thugs and murderers…still running free

  12. goldpearl says:

    transferred from my comment on jane’s thread:

    i cant get over that they scheduled this hearing at the same time as the fed’s bi-monthly meeting – thus giving the entire fed staff an excuse not to attend this hearing & be questioned before america. WHY?!

      • jayt says:

        my guess is that geithner is going to be made into a ritual sacrifice…

        I’ve got no problem with that.

        in an attempt to protect summers and bernanke.

        oh. never mind.

        • selise says:

          707!

          thank you. best laugh of the week.

          aig is important for what it show us about the corruption that runs through all of this. but the bonuses are not by a long shot our biggest problem.

          important insight from brad sester:

          One other point. The fact that several of AIG’s largest counterparties are European financial firms is by now well known. What is I think less well known is that the expansion of the dollar balance sheets of “European” financial firms — the BIS reports that the dollar-denominated balance sheets of major European financial institutions (UK, Swiss and Eurozone) increased from a little over $2 trillion in 2000 to something like $8 trillion (see the first graph in this report) — played a large role in the US credit boom.

          As the BIS (Baba, McCauley and Ramaswamy) reports, many European banks were growing their dollar balance sheets so quickly that many started to rely heavily on US money market funds for financing. And if an institution is borrowing from US money market funds to buy securitized US mortgage credit, in a lot of ways it is a US bank, or at least a shadow US bank.

          my bold.

          they are trying to protect what is left of the shadow banking system. it’s a zombie system filled with zombie banks.

        • jdmckay says:

          Thanks for Sester snippet.

          His account reads like a plan to ensure cascading collapse, and indeed said plan has fulfilled it’s purpose. Looks to me like we’re entering the stage where public awareness there’s a fire in the theater is solidifying, however belatedly… lots of people burned to this point but the mob only now taking shape… things are heating up, w/subsequent energized activity resembling boiling water, but source of the heat not quite identified yet.

          Almost get the feeling a spontaneous explosion of some sort is imminent.

        • selise says:

          i don’t know. just think the situation is extremely fragile right now and could go any number of ways. and i’m especially concerned about the relative lack of real progressive populism and the pervasiveness of right wing memes and rhetoric.

        • jdmckay says:

          i’m especially concerned about the relative lack of real progressive populism and the pervasiveness of right wing memes and rhetoric.

          I’ve shared that concern since election day, & it intensified between then and inauguration. That BO never addressed “right wing memes and rhetoric”, much less their actions which created this thing has been source of major angst for me, degrading now into utter BO lethargy.

          EJ Dione addressed this several times, most recently last Sunday:

          Maybe pragmatism isn’t enough after all.

          President Obama regularly speaks disdainfully of “ideology,” says he is focused only on “what works” and loves to be described as “pragmatic.”

          Well, sure. No one ever admits to being an ideologue, and as historian Arthur Schlesinger Jr. observed many years ago, democratic government should be about “the search for remedy.”

          But there comes a time when first principles need to be articulated. The economic crisis has let loose a furious philosophical debate over the meltdown, its causes and its cures. Conservatives have entered this fight with guns blazing while Democrats, including at times the president, often want to retreat behind a Maginot Line armed only with the word “pragmatism.”

          It’s true of course that Obama has answered many of the conservative arguments, particularly in his address to Congress last month. But he never wants to acknowledge that in doing so he is actually joining the ideological debate, and he always goes out of his way — as in his repeated insistence that he never intended to increase the size of government — to dull the philosophical edges.

          He did win the election, so it’s hard to quibble with his politcal effectivenes. But this is also surprising.

          Deregulating the financial markets, we were told, would do wonders for growth, as would slashing the income taxes of the wealthy and levies on capital gains and dividends. We were urged to trust the Wall Street wizards creating those innovative financial instruments and to believe that jacking up CEO pay relative to everyone else’s would be splendid for corporate performance. Don’t worry, we were assured, about rising inequalities.

          And it has all come crashing down.

          Conservatives know that if the narrative I just offered takes hold, they and their ideas will be forced into the wilderness for a generation or more. So they are shrewdly changing the story line, trying to pretend that the past eight or even the past 30 years don’t matter. They are trying to blame everything on Obama policies that have been operational for just a few weeks. And they are playing for keeps.

          They are right to do so, because ideologically, the country is now on a knife-edge. The conventional view, pushed hard by conservatives, is that we are a “center-right” nation because polls tend to show that there are roughly three conservatives for every two liberals, with the rest of the country in the middle.

          I think EJ hits nail on the head, both looking foreword and back.

        • selise says:

          fair trials!

          but that can be tomorrow.

          today summers and geithner both need to be fired. imo, summers more than anyone else, needs to be fired right now.

      • cbl2 says:

        if we are lucky enough to see him leave public service any time soon, it will be to protect POTUS aka ‘The Brand’

  16. BoxTurtle says:

    You know, if I was one of the people who got the big bonus, I’d have already moved my money out of the country and I’d be prepared to move my a$$ to the same place on very short notice.

    Boxturtle (We should be collecting passports)

  18. Hugh says:

    my guess is that geithner is going to be made into a ritual sacrifice in an attempt to protect summers and bernanke.

    And Obama and distract from Congress’ role or that the AIG takeover happened under Bush.

  20. Hugh says:

    These were some possible questions I put up yesterday:

    Why has AIG been paying off in full obligations that weren’t even in default?

    Has AIG been paying off any naked CDSs? Has it demanded proof of whether a CDS was naked or equity backed? How many of the CDSs it sold were of the naked variety? How many are still on its books?

    Why did AIG say it could not release the names of those it paid off? And then why did it then do so? Were any of the payouts to banks for obligations held by third parties (like hedge funds)? Did it demand this information? If not, why not?

    Do any of AIG’s divisions have any direct exposure to what AIGFP was doing or is their exposure limited to that of the parent holding company?
    How many new staff and regulators have been added to the AIGFP unit to learn and monitor its activities?

    Did Liddy AIG’s current CEO and before that an employee at Goldman Sachs ever have any contacts with the current Goldman CEO Blankfein or anyone else at Goldman about AIG or the $20 billion in bonds that Goldman would have lost out on if AIG imploded? Did Liddy still own any Goldman stock whose value would have been protected by the government’s AIG takeover?
    Liddy receives $1 in salary heading AIG. Does he receive any other compensation or perks of any kind for his work?

    Would this have happened if Glass-Steagall had been kept in place?

  23. jayt says:

    Hodes wants the contracts declared void as being against public policy.

    Yep – that’s not gonna cause any drawn-out litigation or anything….

  24. RevDeb says:

    Funny how the rethugs are asking angry questions now. Last admin. they did nothing but stroke witnesses in all of the hearings held.

    • selise says:

      i know their (Rs in congress) motivations are base, but it irks me no end that the D in congress are mostly so very useless (both during the previous administration and this one).

  27. JimWhite says:

    In honor of today’s hearing, I have a pork butt on the smoker doing a slow roast.

    I’m afraid that I’m roasting at a higher temperature and am nearing combustion.

    • BoxTurtle says:

      Gimme directions to your place. I’ll bring coleslaw and ale.

      Boxturtle (What else need be said?)

  29. damagedone says:

    I have to wonder who bet correctly on the real estate market collapse. From this WSJ, some people did.

    http://online.wsj.com/article/…..65061.html

    If some of the people are the same people who bet correctly on say the internet bubble bursting – then they are very, very lucky. It takes a matter of timing as well as skill – even if there are no insider games going on. I would like to know the names of the winners in the bubble bursts – if that can be determined.

  30. Nola Sue says:

    Wait just a gol darn minute. Did I just hear a Republican Congressman use the word “oversight”? Rich.

    • crack says:

      Lol. Meredith Whitney was a disciple of one of the biggest benefactors of AIG’s idiocy, Steve Eisman. Eisman was all over the CDS market on RMBS.

      So of course she thinks AIG acted idiotically, but she and Eisman were perfectly willing to take their bets. Is she ready to give some of that taxpayer money back?

      Oh and she’s married to the former pro-wrestler Bradshaw who by all accounts is a total dnozzle.

  32. Hugh says:

    I meant to say Charlie Rose had a good AIG panel last night: Gretchen Morgenson, the reprobate and former head of AIG Hank Greenberg, Carol Loomis of Fortune, and someone I had not seen before Meredith Whitney. I thought Whitney was the best of the lot. And no it was not because she was an attractive blond. In a question about whether things would get worse, she said yes and something that I have been waiting to hear anyone in the media say for some time, If you look at the math . . . The media and the politicians try to distract us with atmospherics but it is the numbers that tell the story. We need to keep our eye on the math and the math continues not to add up.

  33. jayt says:

    I wonder why, when someone is sworn in before a congressional committee, the words “under penalty of perjury” are not included?

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