The Wall St. Journal attempts to burnish Tim Geithner's image with the bankers - and most likely, to keep his oh-so-friendly face at Treasury. Notice how the article lists all the wonderful things Geithner's done for the boys on the street. (I especially like the "this is not Bolivia" cri de coeur.)

Interviews with dozens of government officials show that Mr. Geithner has acted as a brake on administration officials seeking punitive action against big financial firms.

Last year, in a previously unreported move, he resisted efforts to oust Citigroup Chief Executive Vikram Pandit as a condition for more government aid, according to administration officials. He successfully argued against ripping up contracts that controversially allowed millions of dollars in bonuses to be paid to American International Group employees, stating: "This is not Bolivia," according to two people who heard him say it.

Mr. Geithner also has pushed for banks to repay government funds (making them raise private capital instead) in defiance of some lawmakers and government watchdogs who said the firms should remain under Treasury's thumb until they resume lending to help the economy.

"What we achieved in the financial sector was way above expectations," Mr. Geithner said in an interview, pointing out "how quickly we restored confidence" in the financial system. "As long as I believe that we are making good judgments...and fixing stuff that was broken in ways that are going to make a difference, then I can live with the consequences."

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In Eliot Spitzer's first interview since he resigned as New York's governor, he tells Fareed Zakaria that the problem with Wall St. isn't the individuals involved, but a culture that sought greater and greater returns without taking any of the risk. He also says he hopes Barney Frank will look more closely into the payments to Goldman Sachs via the AIG bailout funds:

FAREED ZAKARIA: So, do you think that the problems that AIG got into later on stem from some of the same practices that you were trying to get at?

SPITZER: They stemmed from an effort from the very top to gin up returns whenever, wherever possible, and to push the boundaries in a way that would garner returns almost regardless of risk. And so, to the extent that there is a discussion, did this begin before or after the tenure of Hank Greenberg, it's unambiguous -- unambiguous that the structures and the flaws and the policies began while he was there. That is why the board that he had controlled with an iron fist asked him to leave. It was their decision -- not my decision, their decision -- to ask him to step down, something that was then and is now very unusual.

He has invoked the Fifth Amendment, which, of course, is his right to do. But he was asked to leave by his own board, because they saw the flaws and the problems that have since multiplied and created this monster that can bring down the financial system.

Back then I said to people, AIG is at the center of the web. The financial tentacles of this company stretched to every major investment bank. The web between AIG and Goldman Sachs is something that should be pursued.

And as I have written...

ZAKARIA: Meaning what? Meaning that a lot of the money that we the taxpayers gave AIG has ended up being paid to Goldman Sachs...

SPITZER: Precisely. And...

ZAKARIA: ... and other companies.

SPITZER: The so-called counterparties to these very sophisticated financial transactions.

When AIG initially received $80 billion -- a decision that was the consequence of a very brief meeting of the president of the New York Fed, the secretary of the Treasury, perhaps Chairman Bernanke and arguably, some reports say, the chairman of Goldman Sachs -- $80 billion, virtually all of it flowed out to counterparties, $12.9 billion to Goldman Sachs.

Why did that happen? What questions were asked? Why did we need to pay 100 cents on the dollar on those transactions, if we had to pay anything? What would have happened to the financial system, had it not been paid?

These are the questions that should be pursued. Look, bonus is a real issue. It touches us viscerally. The real money and the real structural issue is the dynamic between AIG and the counterparties.

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Hmm. You know, I don't remember the Washington Post going out on a limb to warn us about the consequences of invading Iraq, or the hazards of deregulation, or anything else that led us into this mess. But suddenly, they're very, very concerned about anything that impedes the ability of those working in the financial services industry to make outrageous profits at our expense.

So now they know what it's like to be on the losing side of the class war, huh?

In New Dilemma, Banks Cite Two Paths to Disaster

Some bank executives warned yesterday that the government is forcing them toward a disastrous choice between accepting restrictions on compensation that could cripple their ability to compete with rivals, or returning billions in federal aid, which could retard lending and damage the economy.

The possibility of a newly weakened banking industry also raised concerns among businesses in the wider economy that already are struggling to find financial firms willing to lend them needed money.

"We're all going to lose on this thing," said an executive at a large bank that took federal aid. He and other bankers expressed shock at the rapid progress of legislation that could impose large pay cuts on thousands of workers, and dismay that the industry is at the mercy of an angry Congress.

Some members of Congress, however, said those concerns were overstated and that limits on pay schemes tied to short-term profits were long overdue.

A wave of public fury, which is driving the bills before the House and Senate, was unleashed over the weekend by reports that American International Group had paid $165 million in retention bonuses to employees at the unit that gutted the company and forced a massive government intervention.

Let's Put Down the Pitchforks:

At the end of the day, the thing to get outraged about is not the $440 million in bonuses at AIG or the $10 million that Citigroup is spending to redesign its shrunken executive suite. These may seem like princely sums, but they are almost insignificant compared with the real outrage: the hundreds of billion dollars of taxpayer funds that have been put at risk to keep AIG and Citi from failing and taking the whole financial system down with them. Let's keep our attention on the elephant rather than the pimples on its behind.

[...] As the financiers see it, there's a big difference between the government that sets tough terms for participation in its financial rescue programs and a government that is a fickle and unreliable partner, that tries to micromanage their businesses and changes the rules of the game with every zig and zag of public opinion. That may be an exaggerated view, but it is the financiers' view and one we need to be mindful of, since at this point we need their money and cooperation as much as they need ours.

A final point on outrage: We need to save some of it for ourselves. While it was Wall Street that got rich by peddling new ways for Americans to live beyond their means, the decision to do so was ours. It was we who ran up the credit card bills, we who drew down the equity in our homes and we who refused to tax ourselves for the government services we demanded. Wall Street bankers may have been the pushers, but it was we Americans who became addicted to the easy credit.

Why, it's not the drug dealers who cause all the problems! It's the people buying the drugs!

Glenn Greenwald sums it up nicely:

There is a major push underway -- engineered by Obama's Treasury officials, enabled by a mindless media, and amplified by the right-wing press -- to blame Chris Dodd for the AIG bonus payments. That would be perfectly fine if it were true. But it's completely false, and the scheme to heap the blame on him for the AIG bonus payments is based on demonstrable falsehoods.

Jane Hamsher (who's really been on fire lately) breaks it all down, step by step. A well-placed leak to the New York Times (who's always oh-so-grateful for any story they don't have to actually investigate) was all it took to finger Dodd as the bad guy.

But, as Glenn says, it's just not true.

It was Dodd who did everything possible -- including writing and advocating for an amendment -- which would have applied the limitations on executive compensation to all bailout-receiving firms, including AIG, and applied it to all future bonus payments without regard to when those payments were promised. But it was Tim Geithner and Larry Summers who openly criticized Dodd's proposal at the time and insisted that those limitations should apply only to future compensation contracts, not ones that already existed. The exemption for already existing compensation agreements -- the exact provision that is now protecting the AIG bonus payments -- was inserted at the White House's insistence and over Dodd's objections. But now that a political scandal has erupted over these payments, the White House is trying to deflect blame from itself and heap it all on Chris Dodd by claiming that it was Dodd who was responsible for that exemption.

From a Feb. 14th article in the Wall St. Journal:

The most stringent pay restriction bars any company receiving funds from paying top earners bonuses equal to more than one-third of their total annual compensation. That could severely crimp pay packages at big banks, where top officials commonly get relatively modest salaries but often huge bonuses.

As word spread Friday about the new and retroactive limit -- inserted by Democratic Sen. Christopher Dodd of Connecticut -- so did consternation on Wall Street and in the Obama administration, which opposed it.

Lots more, go read.

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Wait! Glenn Beck isn't a populist! He says. Today.

Beck brought on his best Wingnut Super Friends, Michelle Malkin and Jonah Goldberg, to whinge on Beck's Fox News show about the horrible torch-bearing mob that has been unleashed in the direction of those poor AIG executives.

Mind you, it only seems peripherally to have come to their attention that the leading pitchfork-bearers are Republicans. The guy who wanted the execs to commit suppuku? Chuck Grassley, a Republican. Indeed, most of the violent populist rhetoric directed at AIG seems to be coming from the right.

And of course, it's obvious that this is all just a pose, a bit of demagogic opportunism for Beck and Friends. What makes it obvious? That the Friends are Malkin and Goldberg.

The ironies of Michelle Malkin in particular decrying others for targeting individuals and holding them up to public ridicule, exposing them to threats in the process, are so rich you almost have to savor it. As you watch her in action in this clip, recall that this is the woman who:

1. Sent her flying-monkey readers after a pair of student protesters in California.
2. Indulged in a long and phony "investigation" into the supposed "nonexistence" of an Iraqi police captain named Jamil Hussein who was reporting news she didn't approve of -- in the process endangering Hussein's life.
3. Harrassed a 12-year-old boy and his family for having the audacity to publicly advocate a liberal policy proposal.
4. More recently, she pulled a similar stunt on a poor black woman who had the audacity to ask a liberal question of President Obama.

Indeed, we're wondering when she's just going to start up her own radio station and call it Radio Rmalkin.

Then there's Jonah Goldberg, author of a book whose entire thesis is that liberals are innately totalitarian fascists who inevitably want to enslave us all. He's also previously written that Joe McCarthy was right.

Beck's Super Friends are in fact the people Most Likely to Lead A Right-Wing Lynch Mob in the wingnutosphere. Obviously, they're just put out that this particular mob isn't one they assembled.

There's something very wrong with our political system, weighted as it is in favor of corporate-friendly candidates and policies. It's not reassuring that the administration didn't see this coming:

WASHINGTON — President Obama and his top economic advisers scrambled to calm a nationwide furor on Monday over bonuses paid at the American International Group, even as administration officials acknowledged they had known about the issue for months.

Which means they didn't see anything wrong with it, right? Talk about tone deaf!

One day after the economic advisers insisted that their hands had been tied by contracts requiring the payments, Mr. Obama ordered the Treasury Department to “pursue every single legal avenue to block these bonuses” and make the American taxpayers whole.

“In the last six months, A.I.G. has received substantial sums from the U.S. Treasury,” Mr. Obama said. “How do they justify this outrage to the taxpayers who are keeping the company afloat?”

Well, Mr. President, as Yoda once said, "What is this 'try'? There is do, and do not."

But as anger from lawmakers escalated and criticism of the retention bonuses overshadowed other news for a second consecutive day, White House and Treasury officials offered only a general sense of how they would carry out Mr. Obama’s order and few explanations for why they had not acted earlier.

White House officials said the Treasury would recapture the bonus money by writing new requirements into a $30 billion installment of government aid scheduled to go soon to the ailing insurance conglomerate. The government has already provided $170 billion in taxpayer assistance to keep A.I.G from failing and now owns nearly 80 percent of the company.

But administration officials conceded that almost all of the most recent round of bonuses, totaling $165 million, had been paid last Friday, one day before the Treasury publicly acknowledged that it had reluctantly approved the payouts. The officials said that people who received the bonuses would probably be able to keep them.

By seeking to link repayment of the bonus money to the coming $30 billion in assistance, the administration seemed to leave open the possibility that the company would effectively be repaying taxpayers with taxpayer money. A Treasury official disputed that taxpayers would be repaying themselves, but could not specify how else the company would give back the money.