AIG Bonus Scandal: Why Timothy Geithner is the Wrong Man to Make AIG Pay
Posted: Wednesday, March 18, 2009
by Mogama
http://www.mogama.info
Thanks to New York Attorney General Andrew Cuomo, who issued subpoenas to force AIG to cough up details on the $165 million of bonuses, there were 73 executives who received bonus payments for performance and retention. On average, each recipient got $1 million, with the top payee pocketing $6.4 million. Though AIG calls the payments "retention bonuses", we now know that some of the recipients of the millions are no longer with the company. So why pay to "retain" executives that will leave or have left anyway? It's an outrage indeed, but the important question before us is, Who can we count on to hold AIG CEO Edward Liddy accountable for this criminal madness?
So why hasn't President Obama asked his Treasury Department to fire Eddy Liddy and his fellow corrupt AIG executives?
When President heard of the latest $165 million AIG bonus payments authorized by the same CEO, Mr. Obama said, "Under these circumstances, it's hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay. How do they justify this outrage to the taxpayers who are keeping the company afloat?"
That's great tongue lashing, but where's the teeth to back it up? Despite President Obama's grandpa-like rhetoric, the American people have yet to see him live up to his campaign promise to put the clamp on "greed on Wall Street". It seems like President Obama won't take the action needed to straighten out things at AIG, though this recklessly run enterprise may actually ask the government for more taxpayers' bailout money. Imagine that!
Besides the President, the man closest to the AIG action is Timothy Geitner, the 48-year old who is the 75 th Treasury Secretary of the United States, the same guy whom President Obama described as the best qualified in the country to head the Treasury Department. But there is little chance that left to himself, Mr. Geithner will take meaningful action against the Liddy pack. In the first place, Tim Geithner has known for weeks, if not months, that AIG was going to pay out those bonuses. Liddy got the nod from Geithner, even if by silence, to go ahead and ditch out the millions to the disgraced executives of AIG's financial products unit, the crooks whose performance triggered the collapse of the housing market, followed by the entire financial sector.
Of course, Mr. Geithner has all the leverage he needs to have nipped this thing in the butt. Congress gave Mr. Geithner a blank check "in directing the nation's economic response to the financial crisis which began in 2007." His "specific tasks include directing how $350 billion of Wall Street bailout money is allocated." In other words, the Treasury Secretary has all the authority he needs to do something about Mr. Liddy. He can even fire the AIG CEO, since Geithner is really the administrator of the company, which is all but owned by the government with an 80% stake in AIG.
The truth is that Geithner is the wrong man for this job at this time of economic meltdown largely driven by near total breakdown in business ethics and morals on Wall Street. No doubt Geithner is a financial expert, who understands the markets, but there is much in his background to have molded him into the image and likeness of a diplomat rather than the kind of hawk that the Treasury Department needs right now to play hardball with the likes of AIG and their greedy, corrupt executives. Mr. Geithner served "...as an attache at the US Embassy in Tokyo. He was deputy assistant secretary for international monetary and financial policy (19951996), senior deputy assistant secretary for international affairs (1996-1997), assistant secretary for international affairs (19971998)."
There is more in the making of Geithner the Diplomat: "He was Under Secretary of the Treasury for International Affairs (19982001)..." Not only that, but "in 2002 he left the Treasury to join the Council on Foreign Relations as a Senior Fellow in the International Economics department. He was director of the Policy Development and Review Department (2001-2003) at the International Monetary Fund." In short, this man is too much of a white-collar diplomat. He's just not tough enough for the job of holding irresponsible CEOs' feet to the fire on behalf of the taxpayers.
Also, Mr. Geithner's professional memberships reveal a diplomat much more than a monetary disciplinarian, which we need to face off Wall Street cheats in this economic crisis. His membership affiliations include: Board of the Center for Global Development; Council on Foreign Relations; Group of Thirty; Bank for International Settlements, where he's a member of the Committee on Payment and Settlement Systems.
Repeat: The man is a white-collar diplomat. But what we need right now in the Treasury Chair is a soldier, a real fighter, who's even ready for some blood sports with those crafty, cunning Wall Street crooks.
Furthermore, there is reason to believe that Mr. Geithner has a special, soft spot for AIG, as compared to his attitude towards other financial institutions. In 2008, he "...played a pivotal role in both the decision to bail out AIG as well as the government decision not to save Lehman Brothers from bankruptcy." The official caveat for this partiality is the "AIG is too big to fail" talking point.
To add fuel to fire, Geithner himself is ethically challenged, as was revealed during his Senate confirmation hearings. Geithner cheated the IRS out of "$35,000 in self-employment taxes for several years". Besides cheating on his taxes and blaming the tax preparation software TurboTax for his many "mistakes", Mr. Geithner seemingly gave conflicting information to the Obama team, which said "Geithner was advised by his accountant that he did not owe the taxes." Geithner is a crook in his own right! Yet our honorable Senate treated his tax evasion as no big deal and moved to confirm Tim Geithner on January 26, 2009, by a vote of 6034.
Thus when the AIG CEO doled out those zero-performance bonuses, he probably knew that Geithner wouldn't do a thing.
If Congress were really worth its salt, they would demand that Edward Liddy and his entire management team be removed from heading AIG, after being made to return whatever portion of those millions of dollars we can get from them. Then Congress should also demand that Mr. Geithner step down, and if he refuses, just fire the guy, since he does not have the guts to play hard ball with all of the financial screw-uppers. Anything less is just toothless Obama tongue exercise.
(Source consulted: wikipedia dot com)
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Top-level comments on this article: (3 total)Mogama, They all had a hand in out and now they are all running and pointing fingers in every direction. Just listen to Dodd one of the insiders along with Harry Reid, Pelosi and any number of them. Follow their deeds what they did and didn't. Yes and even our president. Most Americans, not all but most, are finally starting to grasp the scope of this monster well in my opinion collusion. People are getting fed up. Sarcastically, in my opinion the Mafia would be doing a fairer job of running the nation. Now I don't get the play on the front page as much but my latest articles on this and the credit card scam I have been talking to for years. These people have ruled the roost and we have let them do as they please. I only have a few words, arrogance and disdain. best wishes, RobertHi there, Robert. You are right on the money. That tells us just how out of luck we all have become in America. There is nowhere for the people to turn, because Wall Street financial players and Capitol Hill politicians sleep in the same bed, a promiscuous affair of the base sort. And no amount of pretend-outrage shouting by politicians can hide their nakedness from our eyes. But nothing will come of it, because partisanship rules on the political side, while a mix of ignorance and apathy rules among the people. All we can do is cry foul, though we lack the power to affect this despicable game that toys with our lives present and future. Thanks for your comment. ~mogama~
You are absolutely right, Mogama. President Obama is blowing his chance to not only be the first black president but the hero that fixed the economy. Sadly, though, many voters chose him without knowing his intentions, and I'm not even getting started on his odd Arab policies.Geithner should have bowed out like his tax-evading brethren.Great article.Thanks, Ken, for your comment. ~mogama~
Great article. All this financial stuff just makes me cry. I grew up in the 80's where the President talked nonstop about how great people were and how dangerous government can be when given too much power. We sure are seeing first hand just how true that is. These companies arent't too big to fail, they are too big to succeed and I don't recall voting to bail them out in the first place and my children and grand children sure the heck didn't either. These bonuses and all the money these companies pay to political campaingns and so on makes me so ill. I pray because I know that I am as fallen as these same people and I am thankful for Christ's sacrifice on the cross so that we may all experience forgiveness and eternal life. I pray for God's intervention through conviction of those in power to do something, to give us our freedom back. ThanksI appreciate your comment. ~mogama~
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