Manzulllo: Why Do Americans Who Lost Their Retirement Have to Pay AIG?
Congressman Donald Manzullo (R-IL) read this line in Tim Geithner’s opening statement to the House Financial Services Committee today.
AIG directly guarantees over $30 billion of 401(k) and pension plan investments and is a leading provider of retirement services for teachers and educational institutions.
And this line in Ben Bernanke’s opening statement.
Workers whose 401(k) plans had purchased $40 billion of insurance from AIG against the risk that their stable value funds would decline in value would have seen that insurance disappear.
Manzullo asked why it is that the Americans who have lost up to half their own 401(k)s or IRAs because of the decline in stock markets are paying to make sure the 401(k) and pension holders insured by AIG don’t lose any value in their retirement funds.
I understand the point Bernanke tried to offer in response. This is just a loan, it probably will be repaid, these aren’t the same things.
But the exchange was another example of the complete tin ear about how this looks to Americans who are struggling. And Bernanke’s refusal to answer "yes" or "no" simply made it worse.
There really is an amazing resemblance to Madoff’s ponzi and this ponzi. I wonder if AIG ever invested in anything of value, any actual factual asset? It appears their business is vapor as well? I wonder how bad it really is?
the federal reserve is not accountable.. spokespeople like greenspan in the past, or bernanke in the present know this and while they might give a shit, they are mostly going with what they know can’t be challenged and ignoring questions that make them look like the crooks everyone knows them to be…. until the federal reserve is done away with, it will be business as usual here…
Well, I’m one of those whose retirement funds are tied, in part, to AIG, so I have a dog in this fight. But I still think AIG should be split up, a la Glass-Steagall, so that the fate of those whose retirement funds AIG is managing is not tied to those high-risk, high-flying financial product managers (AIGFP).
Bob in HI
Maddening.
Hardens my view this was a WS rescue plan written by their alumni. That those guys not only would not answer, but took obvious umbrage at the question…
I think they ought’a be hung over BofA IRA dept. desk by their jockstrap till they answer the question.
Matt Taibi’s latest Rolling Stone article makes a good case that this is about power; we’ve all seen multinationals and global finance outpace nation states for a generation now.
The AIGs and UBS’s have ruled, via taxation and offshore banks and off-books accounting practices. The curtain has been pulled back, and we’re seeing the scorched remains.
Wall Street expects DC to cower; why not? They’ve been cowering at least since 1980, so why would Wall Street expect them to bark back now?
Unless Geithner and Bernanke can work with EU and other international entities, then smack down regulations at the same time law enforcement starts rolling up the carpet from the edges, this is looking grim.
I remind myself that grass does grow up through concrete, but if I were laying bets, I’d go with Wall Street 10:1.
Time for Billy Chrystal to show up with a ‘chocolate covered miracle’ and bring The Man in Black, the Dread Pirate Roberts, and the rest of the posse, despite their hapless, unthreatening appearance, to wrest control from the Six Fingered types of Wall Street and global finance.
I don’t necesarily hold Taibi in high esteem, but… certainly his case could be made. Thing is, just like under Bush years, it’s all anecdotal now… not much to do but after the fact, rear view mirror recriminations. WS guys got what they wanted, and BO gave it to ‘em w/both hands.
That moment in video captured & confirmed my worst suspicions of motive/charactar for both people & execution of this thing. I can’t imagine McCain, Bush, Phil Graham or any of that crowd doing a more lopsided, in your face fuck you to all but that top 1.x% we were continuously reminded of the last eight years.
Bernacke’s response there, after being pressed, he finally says (my summary:
… translation: fuck you.
I don’t like that bastard too much, reminds of some Dom Delouise fat disgusting emperor from an old Mel Brooks movie.
Working for Obama currently feels like one of more epic betrayals of my life. Completely, thoroughly disgusted.
Adding insult(exponent?) to injury(exponent?)= pitch forks
over at HuffPo, they didn’t get it, claim this is the worst questioning ever by a Congressman.
But it was obvious the point Manzullo was making — and they weren’t going to give him the answer.
But the entire problem is that these people’s retirement depends on the stock market, at least for some. If Geithner and Bernanke pledge to make it all right they are subscribing firmly to Government by Dow. This is for jdmckay more than EW.
You lost me… I’m not clear about whatever distinction you make.
AFAIC, the distinction being ignored (which I intended to imply above) is that CDO’s responsible for IRA/401k (and everything else) declines Manzullo referred to were pretty clearly fraudulent:
* Rating agencies had ‘em wrong (AAA)… not only no due diligence, rating agencies essentially bribe.
* CDS issuers flooded ‘em everywhere, aggressively sold through all kinds of lobbying wings to retirement funds all over the country
* Issuers knew there were huge problems w/these things. By (at latest) ‘05 it was known internally they were going to blow up.
So, if…
a) these things were fraud
b) all the non-AIG insured just have to eat their losses
c) taxpayer coughs up $xxxb to make AIG’s insured “whole”
… how is the underlying fraud addressed? How does a legal system ignore the takings of one by fraud (non insured), re-capitalize the takings of another, and remain “just”… or even remotely credible?
The losses to all those non-insured retirement funds are gone. And as I mentioned here last week, AIG’s list of 20 counter parties did not include those most victimized: the state bonds & retirement funds.
Left uncorrected, what’s to prevent same thing happening again?
Not trying to be combative or anything, I just don’t understand your point.