Tuesday, March 17, 2009


Another Insane Bailout

My friend Steve Clemons zeroes in on an underreported aspect of the AIG mess -- mega conflicts-of-interest involving the people involved in both the financial mess itself and the bailout "fixes":  

While many are criticizing the gross and wrong AIG taxpayer-funded bonuses of senior executives, the truth is that that kind of corruption is relatively small time -- even at $165 million -- and was predictable. The outrage expressed by Obama, Lawrence Summers and Tim Geithner must be feigned -- or they don't know what they are doing in the positions they have acquired.

But what is serious is that Goldman Sachs executives seem to have lied or at best seriously misled the media and public during the early stages of the AIG financial crisis stating that their firm did not have significant exposure to AIG's collapsing financial position.

But after AIG published its roster of financial distributions, Goldman Sachs comes in on the top of the list at $12.9 billiion.

Treasury Secretary Paulson and former Treasury Secretary Bob Rubin both served as top executives at Goldman Sachs -- and in the end, they wouldn't let Goldman collapse despite allowing Lehman Brothers to die.

Rubin and Paulson have had major conflicts of interest that make Tim Geithner's tax manipulations while an IMF employee look pathetically insignficant. Tom Daschle's rides in a town car, Killifer's failure to pay taxes on domestic help, and others who have avoided government because of the very high hurdles Obama has set for those who join his team simply pale in comparison to what we have learned about Bob Rubin's ties to Citibank, Goldman and the Treasury; Hank Paulson to both Treasury and Goldman -- and which have implications as well for their chief acolytes Lawrence Summersand Timothy Geithner.

AIG and Goldman both lied about their positions last September. And Hank Paulson and other major financial elites involved in the AIG bailout knew it also.

That is the story we should be following -- but few are paying attention.

Because, $165 million is a figure that the average person can get their minds around.  As Rich Lowry points out in his column today.  Those same $165 million bonuses have turned out to be the straws that broke the camel's back in terms of public outrage -- even though the actual cost of bailouts, guarantees, loans, etc. is $11.6 trillion, and counting.  

Monetary figures beginning with "m" are about as high as the human brain can comprehend.  Once things start flowing into the billions and trillions, humans slip into MEGO.  

But Steve's point is a good one:  When do the investigations start on the full relationship between AIG and Goldman Sachs? And are Democrats and Republicans ready to start grilling both Paulson and Rubin on what they knew and when?  

UPDATE:  Goldman's enveloped tentacles -- and specifically as they extend to banks on the otherside of the Pond

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