"Toxie" was the name of a toxic mortgage backed security (MBS) bought by two NPR reporters at a 99% discount of its original price (was originally $100,000, but bought by the frugal ones for $1000 - they are NPR reporters, after all, where cheapness is still a virtue). The reporters then used the "tale of Toxie" as a way to comprehend and tell the story of the mortgage meltdown and the various frauds (as in illegal activity) that took our country's financial system down the drain.
Add up a whole supertanker's worth of "Toxies", and we would have enough installed wind turbines in this country to completely power up the USA and dump pollution derived sources of electricity (nukes, coal, natural gas). That would be a mere $2.5 trillion or so, and since it is an investment paid back by a steady stream of dollars paid by consumers of electricity, it behaves differently than a speculation gone sour, like the sum total of those myriad "Toxies". But, that is the road NOT taken....
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.
Our Attorney General is certainly having a busy day. Earlier today he dropped a 132 count indictment against Hank Morris for a massive pay to play scam with the state's pension fund. Now he's got that list of names from AIG detailing who got what and who has or has not given any of it back. Not bad for a day's work. He released this statement a few minutes ago:
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.
The vote was 328 to 93, with 85 Republicans joining 243 Democrats in supporting the tax.
Among New York representatives, most New York House members voted for the bill. The only ones who didn't were Rep. Peter King, a Republican, and Rep. Mike McMahon, a newly elected Democrat in NY-13.
Here is a summary of the bill, which really gives you a great idea of what this tax exactly is:
Imposes an additional income tax on bonuses paid to employees or former employees of covered Troubled Assets Relief Program (TARP) recipients. Defines "covered TARP recipient" to include: (1) entities and their affiliates that received capital infusions under the Emergency Economic Stabilization Act of 2008 exceeding $5 billion; and (2) the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). Exempts entities that repay TARP amounts exceeding a $5 billion threshold.
Sets the rate of such tax at 90% of the lesser of: (1) the bonus amounts paid; or (2) the amount of such taxpayer's adjusted gross income exceeding $250,000 ($125,000 in the case of a married individual filing a separate return). Exempts any employee who irrevocably waives or returns a bonus payment before the close of the taxable year in which such payment is due.
While I am glad that the House has taken action on this, I wonder why they waited so long to address this. This should have been clear from the start and it should have been one of the conditions of the TARP money. Of course, there was a different president then (when the TARP money was passed). But they should have changed the rules as soon as President Barack Obama took office.
This reminds me of Delphi announcing that they might close factories and cut jobs, but quietly attempting to hand out $100 million in so-called "performance bonuses."
And if anyone wants to complain that these are "private entities," as long as they are getting taxpayer funds, they aren't technically private. If we are paying for their firm to stay afloat, we own it. Therefore, we get a say in what goes on with OUR money.
At least 13 firms receiving billions of dollars in bailout money owe a total of more than $220 million in unpaid federal taxes, a key lawmaker said Thursday.
Rep. John Lewis, chairman of a House subcommittee overseeing the federal bailout, said two firms owe more than $100 million apiece.
"This is shameful. It is a disgrace," said Lewis, D-Ga. "We are going to get to the bottom of what is going on here."
The House Ways and Means subcommittee on oversight discovered the delinquent taxes in a review of tax records from 23 of the firms receiving the most money, Lewis said as he opened a hearing on the issue.
"If we looked at all 470 recipients, how much would they owe?" Lewis asked.
He did not name the firms owing back taxes.
Banks and other firms receiving federal money were required to sign contracts stating they had no unpaid taxes, Lewis said. But he said the Treasury Department did not ask them to turn over their tax records.
The revelation is sure to spark outrage on Capitol Hill, where the House is expected to vote Thursday on a bill that would impose steep taxes on employee bonuses at firms that have received bailout money.
To date, the Troubled Asset Relief Program has paid out more than $300 billion to private companies, with billions more on the way.
Emphasis mine.
When do people start going to prison? That's a serious question. These firms flat out lied to get this money. Period.
Sadly, I've no confidence at all that anyone is going to be held accountable in any meaningful way. This game is rigged and it has been from the beginning. I feel ill.
Rep Gary Ackerman is feeling it today. Last month, he got to feast on the hapless SEC foils who couldn't figure out that Bernie Madoff was a crook, even though whistleblowers were banging their door for years.
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!
Bloomberg TV reporting that Attorney General Andrew Cuomo wasn't bluffing, he's just subpoenaed the clueless fools at AIG. MSNBC reporting same. Link when I get it.
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."
Our Attorney General writes a letter and it sounds like he means business.
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.
Back in 2006, I was working on the state Senate campaign of our very own NYBri. One day, I was riding up to SD-41 from NYC with a volunteer and we began to discuss this Keith Olbermann guy. He had just started doing his now mostly unwatchable "special comments" and we both marveled at how truly odd, how so very American, actually, it was that the one guy on national television who seemed to have the guts to say that the Emperor truly had no clothes was a washed up sportscaster on what truly had to be his last chance in the bigs.
Tonight, I watched a comedian shame the entire profession of journalism. It reminded me very much of the afternoon back in the summer of 2004 when that same comedian appeared on the now defunct CNN show "Crossfire." That day, Jon Stewart went on national television, into the very lion's den of hacktacular political theater of the day, and utterly destroyed Tucker Carlson and Paul Begala with simple, unvarnished truth.
Stewart performed such a service to the nation again this evening, reminding professional clown Jim Cramer that:
What it feels like to us, and I'm speaking purely as a layman, it feels like we are capitalizing your adventure by our pensions and our hard earned (money) and that it is a game that you know, that you all know what is going on, but that you go on television as a financial network and pretend isn't happening... I gotta tell ya, ya know, I understand that you want to make finance entertaining, but it's not a f#&@cking game...and when I watch that...I can't tell you how angry that makes me. Because what it says to me is that you all know.
If there is any justice left in the world, Jim Cramer's career as a professional cheerleader for crooks is over and CNBC will have lost whatever last shred of credibility they may have had left.
This is simply stunning. The FDIC now needs a bailout. Why? Because for over a decade, the banksters, the ones we're throwing trillions of dollars at, didn't pay their premiums to the FDIC. No, really.
The federal agency that insures bank deposits, which is asking for emergency powers to borrow up to $500 billion to take over failed banks, is facing a potential major shortfall in part because it collected no insurance premiums from most banks from 1996 to 2006.
The Federal Deposit Insurance Corporation, which insures deposits up to $250,000, tried for years to get congressional authority to collect the premiums in case of a looming crisis. But Congress believed that the fund was so well-capitalized - and that bank failures were so infrequent - that there was no need to collect the premiums for a decade, according to banking officials and analysts.
I'd like to get some car, health, and homeowners insurance like that. I mean, I never have had cancer, have never wrecked my car, and my house has never burned down. Why are they still collecting premiums from me?
You remember John Thain, don't you? He's the thoroughly odious former CEO of Merrill Lynch, the guy who spent $1.2 million bucks redecorating his office as he was laying off employees left and right and driving his once thriving company off the proverbial cliff. He's also the guy who decided to speed up Merill's bonus payment schedule so as to loot what was left of the company before its forced absorption by Bank of America, essentially stealing a whopping $4 billion dollars from you. He's a real piece of work.
Andrew Cuomol rightly decided to look into this naked larceny last month. Apparently, Thain and BoA have decided to tell our Atorney General to stuff it.
New York State Attorney General Andrew Cuomo filed a motion Monday asking former Merrill Lynch Chief Executive John Thain to provide more information about bonuses paid out on the eve of the bank's merger with Bank of America last year.
Cuomo's office alleges that Thain is not answering the questions under instructions from Bank of America, and as a result, the bank is interfering with its investigation of the bonus payments.
In a deposition last week, Thain refused to answer questions about how the bonuses were determined for certain individuals, citing instructions from Bank of America attorneys.
...
Two weeks ago, Cuomo accused Merrill Lynch of "secretly" accelerating bonus payments last year and giving at least $1 million to each of nearly 700 employees, even as the brokerage was amassing billions of dollars in losses.
The bonuses stirred controversy because Merrill's bigger than expected loss prompted Bank of America to seek more government bailout money to complete the acquisition. The government agreed to give Bank of America an additional $20 billion in January to absorb Merrill, which Bank of America agreed to buy last September amid the credit crisis.
Cuomo's office is focusing on allegations that the timetable for the bonus approval was accelerated given the $15 billion fourth-quarter loss at Merrill, sources said.
Meet Aubretia Edick, Wal-Mart employee for 8 years, of Hudson, NY.
"I'll take a sandwich to work and that's about it," says Aubretia Edick, who is 58 and works in the pharmacy department of a Wal-Mart in Hudson, New York. "I drink a lot of tea. Once in a blue moon I'll go into Save-A-Lot and I'll get some meat. Eggs is kinda like a luxury kind of thing."
Edick first landed a $6.40-an-hour gig at Wal-Mart back in 2001, and over time her wages inched upward, reaching $10.50 last year. But with inflation factored in, it isn't that much better than when she first started. To make matters worse, while Edick was technically full time, her manager often slashed her hours due to the slowing economy. In mid-2008, she was grossing roughly $297 a week-$195 after taxes and deductions.
...
Edick's monthly take-home pay-about $800 at the time I visited-doesn't go far either. She lives in a tiny apartment with a broken stove and mostly empty fridge that barely works. Rent and utilities run about $450 a month; when it's cold outside, she often sets the thermostat to 50 degrees to lower her bill. Gas and car insurance cost another $160 or so, depending on prices at the pump. And then there are the doctor visits, covered only after a $1,000 deductible-plus medicines for a thyroid problem, chronic anxiety, and osteoporosis.
To balance the budget, Edick often skimps on food, some weeks spending little more than $10 on groceries, about one-quarter what the federal food stamp program calculates is needed for three "thrifty meals" a day. She patronizes the grimy discount stores whose prices run even lower than Wal-Mart's, and can tick off their notable sales going back for months. "I had some oranges," she recalls with a self-deprecating smile. "A couple of months ago, they had grapes on sale." And, "If it's less than three dollars for a package of six steaks, that looks like a good deal to me." (She tries not to think too hard about the quality of a 50-cent steak.) Her staples include PB&J, canned ham salad, soup: "I'll get chicken noodle or Campbell's Chunky. There's meat in there. You can pour it over noodles and put butter on it. It's like a delicacy."
...
For her part, Edick, unlike many Americans, hasn't resorted to handouts. (An estimated 28 million people were on food stamps as of last April, up from 17 million in 2000.) "There's times I'm hungry, and I'll look in the refrigerator for something-I'll find a snack pudding. Some leftover rice," Edick says softly. "I'm not starving or anything like that."
So Citigroup (C) has proposed that the US taxpayer and other preferred shareholders convert up to $75 billion of preferred stock into common stock, thus bolstering the company's tangible equity and putting it in less desperate need of a complete takeover.
And what will the US taxpayer get for this preferred stock conversion? 40% of the company for some of its $45 billion of preferred, say reports. The reports add that Citigroup's goal here is to keep the US's ownership under 50%, so this won't be a de facto nationalization.
Well, that's nice for Citigroup...and another ream-job for taxpayers.
Citigroup's common equity is currently worth $10 billion. If the US were to convert all $45 billion of its preferred at the current stock price, it should end up with 80% of the company, not 40%.
For the US to convert $45 billion of preferred to common and only get 40% of the company, Citigroup's existing common equity would have to be valued at $65 billion, not $10 billion, and the conversion price would have to be about $10 a share. Or the US would only be able to convert $4 billion of its $45 billion, which wouldn't help Citigroup's tangible equity ratio much.
So is that what Citigroup is trying to do here? Persuade the US goverment to convert to common stock at a price miles above the current trading price, screwing the US taxpayer yet again?
I'm not sure what exactly these two stories have to do with each other -- maybe nothing -- but, I think most people could look at these stories and come to the conclusion that something is most definitely wrong here.
Queens Congressman Gary Ackerman has been on a roll lately. Last week, he launched withering questioning of the hapless SEC regulators who still couldn't uncover the $50 billion dollar ponzi scheme perpetrated by Bernie Madoff, even after having the entire case delivered to them wrapped in a bow several times over a decade. Today, he's got 8 CEOs of the largest banks in the country, banks that have taken well over $125 BILLION dollars in so called "TARP' funds over the last few months, though none of them seem to be lending any of it.
In this video from the folks at TPM, Ackerman asks JP Morgan CEO, Jamie Dimon, "What did you do with (our) $25 billion dollars?" The good stuff begins at about the 3:35 mark.
Dimon's response can be roughly translated as, "We didn't use it for new lending."
I was going to dub the new financial plan TANF 2 - temporary assistance to needy financial institutions, without, you know, any of the means-testing or work requirements involved when poor people get help.
But Jamie Galbraith (private communication) has trumped me; he says it's the Bad Assets Relief Fund.
Some people have taken liberties with both, lumping TARP in with the economic stimulus package and saying that they oppose the economic stimulus package because of TARP. However, TARP was not meant to stimulate anything. TARP's goal was to buy up $700 billion worth of troubled assets. In the House, TARP passed with a 263-171 vote. Of the 263 representatives that supported TARP, 91 were Republicans. And those 91 Republicans included some of the same loud-mouthed Republicans who are dismissing the economic stimulus package. Republicans John Boehner, Eric Cantor, among others.
The only sector TARP helped was the financial sector. There was no stimulation with TARP. The Treasury Department was handed a blank check (with zero accountability) to buy up troubled assets from banks and other financial institutions. The first $350 billion of that money has already been spent, but no one knows where it went. There were a lot of people in Congress who were nervous about releasing the second half of the $700 billion because of the lack of accountability and oversight.
But the economic stimulus package is different - very different. The package passed the House with a 244-188 vote. Zero Republicans supported the stimulus package. The Republicans are quick to point out that there is money for birth control and other things in this bill, but they aren't quick to mention all of the contents of the package.
- $32 billion to update the nation's energy grid
- $16 billion to repair public housing
- $6 billion to weatherize modest-income homes
- $10 billion for science facilities, instrumentation and research
- $6 billion to expand broadband internet access
- $30 billion for highway construction
- $31 billion for modernizing and improving infrastructure that lead to energy cost savings
- $19 billion for clean water, flood control, and environmental restoration investments
- $10 billion for transit and rail to reduce traffic congestion and gas consumption
- $41 billion for local school districts; $13 billion through Title I funding, $13 billion for IDEA, $14 billion for school modernization and repairs and $1 billion for education technology
- $79 billion in state fiscal relief to prevent cuts to education programs
- $15.6 billion to increase Pell grants by $500
- $6 billion for higher education modernization
I included the rest of the summary over the fold. But the list above should give you an idea that this economic stimulus package is intended on stimulating the economy and helping average taxpayers and local and state governments fund programs that need funding.
Let me put it into this context. Among the House Republicans, 91 of them (some of whom aren't around anymore) supported giving a blank check to the banks and backed money that would go strictly to banks and financial institutions. But not a single House Republican would support the economic stimulus package that would give money to your local and state governments and go to projects that would help us in our daily lives.
TARP is something completely different. TARP was to help banks and financial institutions that have suffered due to, among other things, the subprime mortgage crisis. The economic stimulus package is different. This is money that will be invested into environmental initiatives, health care, infrastructure and will also fund $275 billion in tax cuts.
Hopefully it is understood that TARP has its own focus and the economic stimulus package has its own focus. They are two very different things with different missions.
