Is the AIG bonus scandal a red herring?

[garybeck]

Poll question: Is the AIG bonus scandal a red herring?

yes, the AIG bonuses a bad, and we should get them back. And it sucks that our tax money is going to rich people's bonuses. That's pretty much a given.

the media is putting it on the headlines every day.
the politicians are playing it bigtime.

Do you think it is a conscious attempt to divert attention from some of the greater issues of the bailout?

[JI7]

1. it's an example of the unfairness of the system overall

[garybeck]

4. and don't you think it's often portrayed as somewhat of an isolated instance,

when in fact the bailout money was an outright theft and the lack of oversight extends far beyond AIG and it's much bigger than just AIG.

[JI7]

6. it might help us in using this as an example when we try to pass regulation laws

[Hansel]

10. I know I do. n/t

[Sarah Ibarruri]

2. The AIG thing is focused on because people are seeing most rich for what they are

Scummy and greedy.

[MarjorieG]

3. AIG bonus furor by GOP to pin on Geithner and Dems, not for their hands off all regulation history.

[leftstreet]

5. Serious diversion from bailout BILLIONS and no talk of regulation

to prevent the same shit from happening again and again

[BlooInBloo]

7. Gawd. People are STILL too stupid to understand what a catalyst is.

[JDPriestly]

8. We are human. We think in terms of symbols. The bonuses are symbols

of the greed in the financial sector. The bonuses are not just bonuses. They aren't just money. They are the insult added to the injury.

That anyone in the financial sector would consider accepting a bonus from a company that took money from the American taxpayers -- money from children needing healthcare, from the pensions of the elderly, from the teachers who earn a tiny fraction of the salaries of the folks in banks and on Wall Street and who are losing their jobs altogether, from our schools -- is just horrifying.

When I consider that these bank and Wall Street managers and CEOs are taking bonuses, accepting bonuses when people are losing their homes due to the misconduct in the banking sector, I begin to think there is no hope -- that our country may not recover from this crisis. And when I think of Obama and Geithner agreeing to these bonuses, my sense of despair deepens.

[Skink]

9. It's an issue most people relate to.

bonuses for poor performance wait a minute. But the Govenment enacting bailouts probably should be a good thing. I think the public is right to give that a chance.
Hopefully through legal means we'll get to the bottom of what has really happened with AIG and it's rescue. For example, were they just a shell to funnel Government funds through etc.

[Imperialism Inc.]

12. I keep hearing this meme but I have to point out that it makes no sense to ask the question

since we already know the answer. Were they a shell to funnel funds through? Well yeah in a way. Their role in the crisis was to write credit default swaps. CDSs are basically insurance policies someone takes out on their investments. So banks of all kinds took out CDS policies on mortgages and bonds they were holding. Some of the bonds went bad so AIG needs to pay up. That is what the insurance was for. This shouldn't be some surprising thing.

Why it is important that the CDSs be honored is that banks are allowed to consider insured loans as already paid off in essence. In other words, "I gave this loan out but if it goes bad I get the insurance payout so it can't go bad for me." Therefore banks don't have to count the insured items as weighing against their ability to make new loans (i.e. meet their capital requirements). So, if AIG defaults on their CDSs, suddenly, the bank's lending problems become that much more severe.

[metapunditedgy]

13. Early on I was hearing that CDSs were also a way to pad balance sheets.

By getting around accounting principles. Are people still saying that? If so, it may be that our banks weren't very profitable for a long time.

Which in a way, is a good thing; don't want banks to be _too_ profitable.

[Imperialism Inc.]

14. Seems a fair way to describe it. I could be wrong but it sounds like the

same thing I was saying. They pad their balance sheets by pretending a loan that is still outstanding has already been paid back. Works great , unless of course the people you bought the CDS from were just assuming they would never have to pay and didn't actually have the money to do so.

[Imperialism Inc.]

11. I think it is partly for ratings but partly a continuation of the attack on Obama

by the media. The media's job is to protect the corporate interests. Some of those interests are their own with the subsidiaries they own and some are the interests of the people who pay their bills (clients of the advertisers). They realize that Obama could actually accomplish some liberal things like Check Card, health care reform, and combating global warming. This must be stopped at all costs.

They have been trying from day one to pin the crisis on him. The problem is it keeps rolling right off him. He has been smart in pointing out that he inherited the crisis. They need it to stick so they have kept trying to find something. Finally the AIG bonuses gave them something to work with and they won't stop until he is as politically spent as Howard Dean was after the endless replaying of "the scream". The idea is to weakne him to the point where he can't do anything good for the country in other areas.

[FrenchieCat]

16. That's my take as well.....

plus this gives the GOP an issue in 2010, as most of them didn't vote for the bailout nor the stimulus bill....even if they voted on everything that made the bailout and the stimulus bill necessary and while supporting a President who made it all happen. But of course, the media will never point this out.

That's why I was pissed when I posted a thread right before the Bogus Bonus outrage started.....
predicting what would happen, and why. Here's that thread: http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=132x8266149

I was hoping that folks wouldn't get caught up in it here at DU and would be smarter than that, but when the bloggers Jane Hamsher, Greenwald and the others got involved in playing Sherlock Holmes, I knew we had blown it. When the end result of anything is Democrats pitted against Democrats, with Republicans going in for the pile-on, and news readers smiling from ear to ear, you know the shit worked.

The silver lining was Nancy Pelosi getting 1/2 of the House Republicans voting for a 90% tax rate. Grover Norquist ain't too happy about that.

The other silver lining is that the media seemed obvious in attempting to drag Obama into it, and I think the public picked up on that a bit, and that made them decide they were going to be mad at AIG folks instead. They said to themselves, two months? How could we blame this guy. But it wasn't for lack of the media trying! Funny thing is that Gallup has Obama polling two points higher as of last night. He's at 64%. Leno helped, and the Gaffe being blown out of porportion will again just make the media look obvious.

Now the Media/GOP are going to shift from the AIG Bonuses to AIG in general (see if they can play the outrage card again) and the 10 year deficit projections of 9.1 Trillion by the OBM. It is the media/GOP's hopes that folks will get tired of hearing about their money being spent, and will simply shut down and not support anymore items on Obama's agenda. Could work....considering that Democrats don't seem to understand political strategies very well.....and get into the principle thingie at a Tree level, when they should be looking at it on a Forest level. sigh.

[bridgit]

15. AIG & their bonus issues are the pivot point on which teeters the symbol of our failed democracy

at the hands of greed, global corporate pirates & short selling inside traders

[ProSense]

17. AIG lied again

Connecticut AG: AIG paid $218 million in bonuses, more than the $165 million previously disclosed

[AntiFascist]

18. Attention is being diverted from the corruption in Washington DC...

which allowed companies like AIG to become "too big to fail" in the first place. I suspect that there is some international political intrigue behind the insurance business which has yet to be uncovered. Any talking head who pretends to know how to explain the situation is not to be trusted.