After all the weekend uproar over the millions in bonuses, AIG decided to come clean on how their our bailout money was spent:
AIG and the Federal Reserve have been pressured for months by some members of Congress to reveal the names of the banks and other institutions that were paid after the company -- teetering on the brink of failure because of plummeting investments -- received an $85-billion loan from the Fed in September.
AIG's downward spiral was accelerated by losses related to its huge business of insuring high-risk mortgage securities against default, via complex agreements known as credit default swaps. As the housing meltdown worsened last year, AIG's guarantees, which the company had sold to major banks and brokerages in the U.S. and abroad, came back to haunt it.
The federal rescue of the insurer has since doubled in size, and U.S. taxpayers now own 80% of the company.
The company said it shelled out nearly $100 billion in the final few months of the year to satisfy some of the contracts it had outstanding under credit default swaps and other insurance and investment agreements.
The beneficiaries included major foreign banks such as Germany's Deutsche Bank and France's Societe Generale, as well as U.S. titans Goldman Sachs Group and Merrill Lynch & Co.
U.S. municipalities, including some in California, also benefited as AIG settled up payments due under guaranteed investment agreements, under which states, cities and other municipalities temporarily park funds raised from bond sales. California entities received a total of about $1 billion.
Now go read Jane. And Marcy, too!
Dave N: Obama chimed in this morning:
President Barack Obama said Monday the government will try to block millions of dollars in bonuses for American International Group Inc. executives, calling the payments "an outrage to the taxpayers" who bailed out the giant insurer.
"In the last six months, AIG has received substantial sums from the U.S. Treasury. I've asked Secretary Geithner to use that leverage and pursue every legal avenue to block these bonuses and make the American taxpayers whole," Obama said.
... In his remarks, he said AIG _ which has benefited from more than $170 billion in federal rescue funding and is 80 percent owned by taxpayers _ is a company in distress due to "recklessness and greed."
"Under these circumstances, it's hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay. How do they justify this outrage to the taxpayers who are keeping the company afloat?" the president said.
Josh Marshall has it exactly right:
We're collectively taking our country's future in our hands, spending vast sums of money to keep these companies from suffering the consequences of their own folly and (in many cases) criminality. And in return we're receiving cavalier dictates about pay-outs and bonuses from executives who by any reasonable measure work for us -- dictates we promptly accede to. There's a beggars can't be choosers problem there. And the disconnect is so mighty that it fuels the impression that the whole enterprise is not what it seems, not what we've been told, that in addition to picking up the tab we're being played for fools.
At this point, it's time to start demanding that heads roll.
