Wednesday, March 18, 2009

It's Pitchfork Time in America

AIG hires extra security for its New York offices, newspapers and TV anchors talk of torches and pitchforks, and a senior US senator calls for executives to commit suicide.

And America, rather than ask, “Oh my god, what have we become?” instead, on the whole, screams “Hellz yeah!”

Senate Majority leader Harry Reid has vowed to introduce legislation within the next day to recoup those noisome AIG bonuses, and House Financial Services Committee member Brad Sherman is planning a bill to impose a surtax on executive pay for companies receiving federal bailouts. President Obama is asking his Treasury Secretary to pursue every angle to block payment of the AIG bonuses. . . at least the ones to the Financial Products division. There is, it seems, a contest to see who can claim their pound of flesh in more serious and severe tones.

All well and good. . . not the first time leaders have sought to ride the wave of public outrage. . . but where does it get us?

As onerous as the AIG bonuses are—which is very—they are but a tiny symptom of a thoroughly systemic disease. The $165 million in bonuses due this particular group at AIG make up less than one-tenth of one percent of the insurance giant's entire rescue “plan.”

Problem is, what’s needed is not a rescue plan; what’s needed is a complete restructuring plan to ensure that this doesn’t happen again.

When members of the Capital Markets subcommittee of the House Financial Services Committee hold hearings on this bonus battle today (Wednesday), there will no doubt be no shortage of grand and angry words. Executives will be paraded before Congress, and while the seppuku knives will likely stay sheathed, the Representatives will each take turns verbally filleting these Masters of the Universe for all the world—and most of their districts—to see. All, of course, on behalf of the American people, so that these executives can know their—know our—rage.

To which I say: Don’t do me any favors.

If this panel, this committee, this government as a whole wanted to help, they would keep the speechifying to a minimum, and use their time asking tough questions about what was negotiated, who allowed this to happen, and what can be done to prevent this from happening again. "This" being the entire “gives us your money or we blow up your economy” scenario, not just the big bonuses for the architects of our misfortune.

It is believed that the Federal Reserve has doled out something like $1.2 trillion to AIG and a long list of other banks and brokerage houses. It is believed because we don’t know—or, more specifically, we know that the money is gone, but we don’t really know where it went.

It seems almost unfathomable. Almost too big to un-fail. But, if Congress, the President, and opinion leaders are looking for a place to start, perhaps they can start by mustering even a quarter of the outrage they’ve exhibited over the AIG bonuses, and use it to decry the lack of transparency in the TARP and Federal Reserve “rescue” plans. Without that basic knowledge, the way out of this remains a mysterious heap—a heap worthy of anger, fear, angst, outrage, and, for better or worse, pitchforks.

(cross-posted on Firedoglake)

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