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Bailout Money for bonuses

by PIM of SPAIN | March 17, 2009 at 01:12 pm

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Taxpayer bailout money made Government to own majority stakes in banks like Citi Bank, Bank of America, Fanny Mae, Freddy Mac, AIG and a few more. However the board members who have presided over these disastrous institutions should have been fired. Unfortunately that’s not the case! Thousands of innocent employees of the firms are losing their jobs, while top managers may stay on. And receiving five times the average annual workers’ salary as part time (bonus) compensation. Isn’t that a shame?

Unfortunately the average taxpayer has no idea how these bailouts work. He may be willing to believe that giving Wall Street hundreds of billions of his money would somehow make his own house going up in price and saving the economy to be back on track soon. Probably not understand macroeconomics, but by now having a grasp how the old guard spends his bailouts.

Today, under pressure, AIG revealed what it did with the bailout money. Everyone is shocked, outraged, or furious about it. Last week it originally was understood the amount in bonuses paid out was $160 million. The real amount appears to be $450 million, says the Wall Street Journal, and one member of Congress charges that many bonuses were disguised as other expenses and the real total sum more likely amounts $1 billion.

It came as no shock (see below) to discover that Goldman Sachs is at the top of the list of recipients. Goldman's main man, Government’s treasurer was in the room with the feds – as the only representative of Wall Street - when the decision was made to rescue AIG. What's more, the feds' main man at the time - Hank Paulson - also used to be the top boss at Goldman was present as well. So the fix quickly was made. The government gave money to AIG and AIG gave it to a long list of speculators, including Goldman and Merrill.

As I wrote on March 11, in my article ‘Bankers Bonuses and More’
“Policymakers now have spent Trillions of dollars for these fraudulent bailouts. AIG, for example, has been described the place 'where taxpayers' money is going to die.' However it doesn't die in AIG, it goes to pay off debts to the biggest creditors called Merrill Lynch and Goldman Sachs. Because Goldman with Tim Geithner now Treasurer in Obama’s Government and the FED were present when the decision was made to 'rescue' AIG. Goldman may not have mentioned at the time that AIG owed Goldman billions of dollars. With the consequence that taxpayers’ bailout money to AIG ends up at Goldman. Doesn’t that smell bad?”

A final suggestion to think about: The prudent savers are paying twice, first for bailing out the imprudent bankers and their cohorts with their tax money and secondly by having their interest income reduced by the rate cuts from the FED. It would be nicer to get the imprudent pay for the prudent people.

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Uwe Paschen

at 16:22 on March 17th, 2009

No bail out money at all would have been a better strategy. We need to fix the problems first and clean house before even considering any bail outs. We need to assist the victims more so then the sharks that caused this disaster in the first place.

Reforms are needed and restructuring is needed. Capitalism has failed and needs to be reformed or replaced.

PIM of SPAIN

at 03:47 on March 18th, 2009

Of course you're right Paschen: This is a very real Depression,with all that goes with it. Including whole industries that go broke, a credit crunch, a big drop in consumer spending, a huge political shift toward socialism(?) or else, interest rates at zero, falling prices, and widespread bankruptcies for households and companies. Excess debt in the United States alone is about $20 trillion. And the feds think they can pay that off by printing money, in no way is that possible!

Reforms will be forced upon us by nature. Wait and see, it could take a very long time. But Mother Nature is always right.

Finnette (not verified)

at 12:41 on June 25th, 2009

The name of the game is, "Party while you can!" Even while in bankruptcy, AIG continued to reward its' top employees with retreats, hunting parties, and celebrations in general at having duped the US Gov out of so much money. It was "In your face!" arrogance on AIG's part to think that they could spend what they wanted, however they wanted, with absolutely no consequences. Once all of this extravagance was discovered and reported, nothing was done by the US Gov to bring this opulence to a halt! Oh, sure, they gave the appearance that they were deeply concerned and that this type of behavior would not be tolerated, but all it was in the end was a lot of grand-standing. Has anyone from AIG in a position of authority (and there are many) been prosecuted or sent to jail? No! And they never will. I guess the rest of us must be mighty naive. Every company I have ever worked for demanded you show a profit before any bonus was paid out. It's simple; No profit, No bonus!