BREAKING: Cuomo Says 15 Of 20 Top AIG Bonus Recipients Are Giving Them Back

by: phillip anderson

Mon Mar 23, 2009 at 18:03:29 PM EDT

UPDATE: Here we go:

9 Of Top 10 AIG Execs To Give Back Bonuses
In Addition, N.Y. Attorney General Cuomo Announces That 15 Of Top 20 Give Back Funds Equaling $30 Million

The insurance giant came under scrutiny last week after it was revealed that company executives were scheduled to receive more than $165 million in bonuses following a taxpayer bailout.

In all 15 of the top 20 bonus recipients have agreed to give back the money, which equals approximately $30 million.

Come Home America: An Interview With Truth Teller William Greider

by: Intrepid Liberal Journal

Sun Mar 22, 2009 at 18:51:09 PM EDT

The topic below was originally posted on my blog, the Intrepid Liberal Journal.

I first became aware of William Greider after the publication of his 1981 Atlantic Monthly profile of President Reagan's embattled Office of Management and Budget Director ("OMB"), David Stockman. At the time I was just a kid and the Reagan administration insisted they could simultaneously balance the budget, cut taxes and increase defense spending exponentially.

Greider's reporting however exposed that even Stockman, doubted the fiscal prudence of Reaganomics. After the article's publication, Stockman absorbed public humiliation when President Reagan took him "to the woodshed." I trace that article as a seminal moment in my own political awareness.

AIG Coughs Up Bonus Names To Cuomo

by: phillip anderson

Thu Mar 19, 2009 at 17:00:41 PM EDT

I have received the list of AIG FP employees who received retention payouts. Mr. Liddy testified in Congress yesterday that he intended to comply with our subpoena and expressed concern for employee safety. Mr. Liddy has in fact now complied with the subpoena. We are aware of the security concerns of AIG employees, and we will be sensitive to those issues by doing a risk assessment before releasing any individual's name. The Attorney General's Office is a law enforcement agency and is experienced in making these assessments.

As we perform our review, we will simultaneously be working with AIG over the next few days to determine which employees received payments and which chose to return the money they received.

The Attorney General's Office will responsibly balance the public's right to know how their tax dollars are spent with individual security, privacy rights, and corporate prerogative.

At this moment, with emotions running high, it is important that we proceed diligently, with care, reflection, and sober judgment. We thank AIG for their compliance.

And for those looking for the New York political dimension in all this, I think it is simply that our current governor can't compete with this. Cuomo is following in Spitzer's footsteps here, becoming the new sheriff of Wall St. He's getting national attention for taking the least popular people in the world right now to task.

Paterson is stuck trying to craft a budget and save the MTA.

No way Paterson can hang with this.  

NY-20: He's With AIG: Tedisco Lists AIG Asset On Disclosure Form

by: phillip anderson

Thu Mar 19, 2009 at 13:40:38 PM EDT

I have no idea what that asset, valued at $1-$15,000, is. But I do believe that Tedisco doth protest too much, seeing that he's the only candidate in this race that I know for certain is actually doing business with AIG.

AIG "exploited a huge gap in the regulatory system"

by: robinia

Wed Mar 18, 2009 at 21:16:48 PM EDT

Eschaton points us to a Newsweek article that lays out just how closely the insurance side of AIG resembles a house of cards. That's the "sound business" that will pay back the US taxpayer that Liddy was talking about saving at today's congressional hearings.

Monday I wrote about AIG and NYS regulators. The Michael Hirsch article in Newsweek targets reinsurance schemes between various divisions of the company as a source of additional under-priced risk.  This part was not very comforting:

One early sign of trouble came when Christian Milton, AIG's vice president of reinsurance from 1982 to 2005, was convicted last year in federal district court of conspiracy, securities fraud, mail fraud and making false statements to the Securities and Exchange Commission.

Then, this part was even a bit scarier:

Sen. Richard Shelby during hearings last week raised questions about whether AIG's insurance side was as sound as the company maintained it to be. In response, Eric Dinallo, New York state's superintendent of insurance, said he thought "the operating companies of AIG, particularly the property companies, are in excellent condition." But Dinallo admitted he had examined only 25 of the domestic AIG companies and added: "There are problems with state insurance regulation. I've been a proponent of us revisiting it."

Hmm. Convicted criminals in charge, overseen by Albany regulators who admit they are probably not up to the job.  Could be some problems there, ya think?

QOTD

by: phillip anderson

Wed Mar 18, 2009 at 11:53:11 AM EDT

This morning he gets to take a few swings at a pinata named AIG. He just delivered the quote of the day:

If they called credit default swaps 'I can't believe it's not insurance,' nobody would buy it!

Stay tuned, I think he may be just warming up.

Thought For The Day

by: phillip anderson

Wed Mar 18, 2009 at 11:43:10 AM EDT

You Know It's Bad When ...

Insurance companies say they have no choice but to honor contracts, and banks are pleading that their assets will be worth more if you just give them a little time.

For anyone, especially in business, who has tried to make those same arguments to insurers and bankers, to no avail, it's painfully rich.

We live in interesting times.

VIDEO: Massa Demands AIG Execs Pay 100% Tax On Bonuses

by: phillip anderson

Tue Mar 17, 2009 at 17:13:54 PM EDT

Cuomo Describes AIG's Epic Retention FAIL

by: phillip anderson

Tue Mar 17, 2009 at 15:35:57 PM EDT

"A.I.G. made more than 73 millionaires in the unit which lost so much money that it brought the firm to its knees, forcing a taxpayer bailout," Mr. Cuomo wrote in the letter. "Something is deeply wrong with this outcome."

Mr. Cuomo did not name the bonus recipients, but the numbers are eye-popping, given A.I.G.'s fragile state. The highest bonus was $6.4 million, and six other employees received more than $4 million, according to Mr. Cuomo. Fifteen other people received bonuses of more than $2 million, and 51 people received bonuses between $1 million and $2 million, Mr. Cuomo said. Eleven of those who received "retention" bonuses of $1 million or more are no longer working at A.I.G., including one who received $4.6 million, he said.

Emphasis mine.

This is nothing more than simple larceny. Nothing more, nothing less.

AIG and Insurance in NY

by: robinia

Mon Mar 16, 2009 at 21:51:02 PM EDT

That move has Simon wondering here what ever happened to that special deal that Governor Paterson gave AIG just before the first Federal bailout... you remember, the one where they didn't have to abide by the normal regs, and the gambling side of the corp could borrow 20 billion from the side that handles your health insurance?  Anybody got the follow-up file on that?

So, Simon's question got me pondering something even older than that-- a special bill that the NYS Senate passed, without a sponsor, back in the bad old Bruno days.... it would have made it illegal to disclose the names of any parties that were unearthed in an insurance dept. investigation of any wrongdoing.... you know, like, the stuff Andrew is asking for by subpoena would have been illegal to disclose had it become law...

Breaking: Cuomo Subpoenas AIG Over Bonuses

by: phillip anderson

Mon Mar 16, 2009 at 16:44:36 PM EDT

Here we go:

New York Attorney General Andrew Cuomo has issued a subpoena to American International Group Inc. seeking a list with the names of executives receiving bonuses.

"We had given AGI up to 4 o'clock today to provide the information on the latest round of bonuses that they paid out," Cuomo said. "Four o'clock has come and gone."

Andrew Cuomo To AIG: Provide Bonus Info By 4PM Today, Or It's Subpoena Time

by: phillip anderson

Mon Mar 16, 2009 at 13:03:04 PM EDT

Dear Mr. Liddy:

The Office of the New York Attorney General has been investigating compensation arrangements at AIG since last Fall. We were disturbed to learn over the weekend of AIG's plans to pay millions of dollars to members of the Financial Products subsidiary through its Financial Products Retention Plan. Financial Products was, of course, the division of AIG that led to its meltdown and the huge infusion of taxpayer funds to save the firm. Previously, AIG had agreed at our request to make no payments out of its $600 million Financial Products deferred compensation pool.

We have requested the list of individuals who are to receive payments under this retention plan, as well as their positions at the firm, and it is surprising that you have yet to provide this information. Covering up the details of these payments breeds further cynicism and distrust in our already shaken financial system.

In addition, we also now request a description of each individual's job description and performance at AIG Financial Products. Please also provide whatever contracts you now claim obligate you to make these payments. Moreover, you should immediately provide us with a list of who negotiated these contracts and who developed this retention plan so we can begin to investigate the circumstances surrounding these questionable bonus arrangements. Finally, we demand an immediate status report as to whether the payments under the retention plan have been made.

We need this information immediately in order to investigate and determine: (l) whether any of the individuals receiving such payments were involved in the conduct that led to AIG's demise and subsequent bailout; (2) whether, as you claim, such individuals are truly required to unwind AIG Financial Product's positions; (3) whether such contracts may be unenforceable for
fraud or other reasons; and (4) whether any of the retention payments may be considered fraudulent conveyances under New York law.

Taxpayers of this country are now supporting AIG, and they deserve at the very least to know how their money is being spent. And we owe it to the taxpayers to take every possible action to stop unwarranted bonus payments to those who caused the AIG meltdown in the first place.

If you do not provide this information by 4:00 p.m. today, we will issue subpoenas and seek, if necessary, to enforce compliance in court.

Andrew M. Cuomo

Attorney General of the State of New York

Good on Mr. Cuomo. Enough is enough.

UPDATE: Apparently, Cuomo wasn't just blowing smoke. He pulled the trigger on that subpoena.

Quick Question

by: phillip anderson

Sun Mar 15, 2009 at 15:51:25 PM EDT

AIG burning through loans

by: simonstl

Sat Oct 04, 2008 at 00:19:03 AM EDT

AIG seems to have used up $61 billion of its $85 billion federal loan already, raising new issues:

The emergency loan was supposed to buy the company time to sell its troubled assets in an orderly manner. But the sell-off has not yet begun, and now the insurer faces the additional pressure of trying to sell the businesses at a time when potential buyers are having trouble borrowing money.

I'm wondering what this means for the $20 billion Paterson let them borrow from their subsidiaries, effectively insured by the State of New York. Anyone know? I'm not finding much recent news on that front.

AIG Failure, Seward's Complicity In Insurance Company Shenanigans, Barber Demands Answers

by: robinia

Fri Oct 03, 2008 at 09:38:11 AM EDT

This bill, S.8446/A. 11432 would make these documents exempt from freedom of information laws, disclosure under public officers law, or subpoena.

It's passed through the Senate (with no sponsors, which, according to NYPIRG's Blair Horner, "is how you know a bill really stinks")

Robert questioned this move to let insurance companies count on the results of investigations being kept "confidential" (secret).  His post  features this bizarre quote from the bill's "justification"-- that justice will be served by making insurance companies less likely to hide malfeasance from the authorities, by ensuring them that the authorities would keep that malfeasance secret from the public.

Regulated persons and other entities are sometimes reluctant to provide the Superintendent with proprietary or other information with respect to an examination, investigation or inquiry for fear that this information may become publicly available pursuant to FOIL, a subpoena, or some other disclosure method. As a result, the Superintendent`s ability to identify potential problems concerning these regulated persons and entities, and to implement plans of corrective action in response thereto, has been hindered. This bill addresses this concern by making correspondence, memoranda and other documents concerning or arising out of an examination, investigation or inquiry presumptively confidential, unless the Superintendent deems disclosure to be in the interest of the policyholders, shareholders or the public.

Wow.  Roatti called this in another post a "line in the sand."  Righto, Roatti.  Now, with 20-20 hindsight, you have to wonder-- what were they working on covering up about AIG?

Think that they didn't know about it?  Well, back then, when I called the NYS Dept. of Insurance about this bill, the Deputy Commissioner of Insurance assured me that this move toward a different kind of regulation was absolutely necessary to ensure the competitiveness of NYS in keeping large, multinational insurance companies headquartered in NY.  That would be, I assume, AIG.  He also referred to a Blueprint for 21st Century Regulation of Financial Services, what was known at the time as the Paulson Plan, which stressed the need to deregulate financial services to maintain "global competitiveness" of US companies.   Irony, irony.

Who has been dogging this all along?  Don Barber.  Check out his hard-hitting news release on the subject-- and Insurance Committee Chair Seward's complicity-- on the flip.

What'll happen to AIG

by: simonstl

Tue Sep 30, 2008 at 13:33:46 PM EDT

The Times has a short piece on what's actually going to happen to AIG as the Feds take it over.

I have two questions, neither of which the article particularly answers:

• What happens to the $20 billion Governor Paterson let them borrow from subsidiaries? (Maybe it was never actually borrowed? Or just addressed elsewhere?)

• Is this a model worth considering for the future bailouts it seems likely we're going to need? Or was it just a one-off we should avoid from here on out?

I also see that New York is going to regulate credit default swaps - or at least around a fifth of them.

NY-21: Paul Tonko on AIG: Politics of De-Regulation Have Failed

by: Soundpolitic

Wed Sep 17, 2008 at 23:39:54 PM EDT

Democratic candidate for Congress Paul Tonko reiterated his strong words from yesterday on the financial crisis in general, going specific today on the $85 billion bailout of fallen financial giant AIG.  In a nutshell, Tonko says what should be crystal clear by now:  the de-regulations that were supposed to "save" American money trumpeted by conservatives and Republicans have ended up costing us a lot more:

"The bailout of American Insurance Group last night and the resulting market turmoil is further proof that there is a place for regulations that protect consumers and workers from corporate greed and mismanagement.

"Because the American economy as a whole bears so much of the risk of Wall Street firms, it is absolutely necessary that we put responsible regulations in place to prevent these companies from exposing themselves, and us, to unnecessary risk.

"It has now become painfully obvious that the politics of deregulation have, again, failed to serve the best interests of both business and the American people. As a direct result of this crisis, it is becoming more difficult and more expensive for consumers and businesses to get home loans. In order to protect our economic future, we must enact responsible regulations of the financial industry that will prevent the widespread financial malfeasance that lead us to these problems in the first place."

Emphasis added

Yesterday, Tonko faced off in his first forum with his Republican opponent Jim Buhrmaster, who spouted the same old Republican line about that those with the ability to reason realize got us into this mess in the first place:

During questions from chamber members from Bethlehem, Guilderland, Colonie and Schenectady, Buhrmaster peppered his comments with digs at Tonko for what Buhrmaster called "RST" -- plans he says Tonko supports that call for too much regulation, too much spending and too many taxes.

If I had a nickel for everytime a Republican tried to tell me that "too much regulation" was a bad thing, I would have been able to bail out AIG myself.  But Paul Tonko had a better response to the Burgermeister's hooting and hollering:

"You can't always sit there and create drama," said Tonko, who defeated four Democrats in the Sept. 9 primary. "What you really need are results."

So instead of the Republican's "money for nothing, checks for free" plan, Paul Tonko states clearly "That ain't workin'". That's the way you do it.  We need someone in Congress who actually understands the failed politics of de-regulation, not someone who purports the same policies that resulted in these dire straits.

On the Web: Paul Tonko on ActBlue.

We're With AIG - Or We Now Own It At Least

by: phillip anderson

Tue Sep 16, 2008 at 21:29:38 PM EDT

AIG to Get $85 Billion Loan, Give Up 80% Stake

American International Group will get an $85 billion loan from the federal government in exchange for an 80 percent stake in itself, sources have told CNBC.

Sources said the loan, which will allow AIG to avoid bankruptcy, will be secured and include incentives for quick asset-sales by AIG.

Index futures pointed to a higher market open on Wednesday after the news.

Management at the firm, including AIG's CEO Robert B. Willumstad, will be fired as part of the deal, which will also severely dilute existing shares of the company.

Ahhh, capitalmalism.  

Gov's gamble pays off?

by: simonstl

Tue Sep 16, 2008 at 21:19:55 PM EDT

I've been worrying on the one hand that the demise of AIG would wreck markets and the economy for years to come and on the other hand that Governor Paterson's letting them borrow from subsidiaries was a bold but way too risky way to avoid that.

It seems that the Governor's gamble may have paid off. The State of New York doesn't have any way to hand AIG $85 billion, but the Federal Reserve does. (Or do I hear printing presses?)

Hopefully - it's still not clear to me how this will work - the Governor's move bought some time to sort this out, and the results will avoid calamitous problems for AIG's customers or the State's finances.

We'll see...

NY-21: Paul Tonko Weighs In On Financial Crisis

by: Soundpolitic

Tue Sep 16, 2008 at 11:06:32 AM EDT

Paul Tonko Statement on Financial Crisis

"In the last 24 hours we have seen several historic and troubling developments from the financial industry. Lehman Brothers, a firm with a 150-year history, collapsed and filed for bankruptcy on Sunday. Merrill Lynch, which was once one of the largest Wall Street firms, has been sold for only half of what it was worth just a few months ago. The American International Group has requested a $40 billion line of credit from the Federal Reserve to prevent that firm from imminent collapse. This comes only a week after the Federal Government took over Fannie Mae and Freddie Mac, in the largest government takeover in history.

"These developments will have far reaching repercussions that will be felt around the world and especially here in the Capital Region. These firms are a significant source of tax revenue for New York State, much of which goes to pay for education and healthcare. We must, as a matter of prudence, look at these failures in a context that provides insight on how to plan for the future.

"This crisis highlights the importance of forward thinking, responsible regulation that both protects investors and prevents the bankers from burning down their own house. Many are responsible for the current financial meltdown, from the mortgage companies that issued large loans with no proof of income to the financial firms that bundled them into securities to the rating agencies that gave misleadingly high ratings to mortgage backed securities. This is yet another example of how the politics of de-regulation has failed to protect both consumers and business."

During the primary campaign, Paul Tonko had to respond to several charges about the de-regulation process of New York's energy industry while he was Chair of the Assembly Energy Committee.  Now that Democrats are in general election mode, whether one agrees or disagrees with his stance on the energy de-regulation is a moot point; Tonko knows a thing or two about de-regulation, and his experience in this field will go far in Congress.  Also, as 20% of state revenues come from Wall Street, the crunch is likely to hit state workers rather hard, and there are more state workers in the 21st Congressional District than any other district.  

Tonko's Republican opponent Jim Buhrmaster released a laughable chart trumpeting de-regulation, saying Buhrmaster "Will bring real-world business experience and private-sector management principles to Washington to fight for permanent tax relief and less burdensome regulations."  Right...the kind of Bush tax "relief" and de-regulation of businesses that go us into this mess in the first place.  It should also be noted that for all the chatter in the blogosphere about the historic nature of the primary, other more Republican-leaning blogs have said in the past that Republicans are excited about this open seat as well, saying it's the first time in 50 years that Republicans have a chance to recapture this seat...

...and leave us with only one of the big five investment banks, I reckon.

The 21st needs a Democrat who understands this issue, and may end up needing more help than we realize.

On The Web: Paul Tonko's ActBlue Page.