WH Bracing for a Bailout Backlash

[babylonsister]

Bracing for a Bailout Backlash

By ADAM NAGOURNEY
Published: March 15, 2009


WASHINGTON — The Obama administration is increasingly concerned about a populist backlash against banks and Wall Street, worried that anger at financial institutions could also end up being directed at Congress and the White House and could complicate President Obama’s agenda.

The administration’s sharp rebuke of the American International Group on Sunday for handing out $165 million in executive bonuses — Lawrence H. Summers, director of the president’s National Economic Council, described it as “outrageous” on “This Week” on ABC — marks the latest effort by the White House to distance itself from abuses that could feed potentially disruptive public anger.

“We’ve got enormous problems that need to be addressed,” David Axelrod, Mr. Obama’s senior adviser, said in an interview. “And it’s hard to address because there’s a lot of anger about the irresponsibility that led us to this point.”

“This has been welling up for a long time,” he said.

Mr. Obama’s aides said any surge of such a sentiment could complicate efforts to win Congressional approval for the additional bailout packages that Mr. Obama has signaled will be necessary to stabilize the banking system.

As it is, there have already been moves in Congress to limit compensation to executives at banks and Wall Street firms that are receiving government help to survive.

Beyond that, a shifting political mood challenges Mr. Obama’s political skills, as he seeks to acknowledge the anger without becoming a target of it. A central question for Mr. Obama is whether his cool style — “in a time of crisis, we cannot afford to govern out of anger,” he said in his address to Congress last month — will prove effective when the country may be feeling more emotional.

more...

http://www.nytimes.com/2009/03/16/us/politics/16assess.html?_r=1

[skooooo]

1. $165 million dollars....

It's wrong, it's wrong, it's wrong. However, in the scope of our problems it's also relatively a small amount of money. Fix the loopholes and move on.

[SammyWinstonJack]

8. $165 million here, $165 million there and pretty soon, we're talking real money.

Where does it end? THANK GOD IT PASSED! x(

[Winterblues]

12. Actually it is closer to $450 million

I could have sworn I heard Obama say this time when money was given to AIG there would be NO bonus' or huge parties such as they had last time the money was given to them. This is very discouraging to say the least.

[KittyWampus]

14. it isn't the money. It's the fact that AIG just said 'Fuck You' to Obama publicaly

and Obama most likely will do nothing.

[DeschutesRiver]

16. 165 million to AIG employees in London; along with the now disclosed list of European bank pay offs

with money taken from our Federal Reserve, behind taxpayer's backs, as they funded AIG so that it could pay counterparties, which were mainly European banks, with a scattering of American investment banks at bottom of the list. More on which foreign banks benefited from our largesse:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x5261562

I sincerely hope Obama has a complete plan of action that he is merely instituting in stages, and that these early actions are necessary evils for setting up a complete clean out and rout of these evil doers.

Because if not, he has lost my support until he does something to regain my trust. I am very angry. And god da** that Larry Summers, stating that our government simply can't turn contract law on its head to abrogate these contracts. Yet they tell us how they plan to abrogate mortgage contracts to protect homeowners. I don't know a thing about this Summers guy, but he is off his rocker think no one notices that the government is more than willing to turn contract law on its head if necessary.

And further, he states that this is just a simple matter of an "excess of fear"? Excuse me but I don't have a stupid sign around my neck, and this guy is making a critical error in judgment to be assuming the public reaction is nothing more than an excessive fear deal.

The public is beginning to have an excess of understanding how the system is working. If that is a problem for this administration, then I can't begin to say how sad that would make me, because it would mean we didn't even remotely vote in change.

[JackRiddler]

18. You are seriously mistaken...

The bonuses is why the dealmakers did what they did. These are men who don't care if cities and nations burn, long as they're getting their share.

It's not unlike the poacher of the elephant. The elephant is highly evolved. It weighs six tons. The tusks weigh about 100 pounds. Yet the poacher kills the elephant and leaves its flesh on the field to rot, just for the tusks.

The bonuses, the personal rewards are why these greedy animals at AIG financial division in London were content to burn the financial world. They're pirates, and as far as they are concerned they are still getting their rewards -- while holding the United States hostage to the bailout, because AIG is "too big to fail," because of the counterparties who will fail in turn.

Management decapitation is the minimum standard for using taxpayer money to bail out the bad bets of the AIG pirates. Anything less means the bad guys win.

Time for a conference of nations in which counterparties are based to decide how to divide up AIG's businesses and liabilities, and especially: how to write down these enormous bogus contracts, which were nothing more than bets on horses the bettors don't actually own.

If I bet you a million dollars that a ballplayer will UNDERperform, and he has a bad season, and you owe me a million dollars that you do not have, the US government won't step in to guarantee the payment to me. Despite our sacred "contract"!

It's also time to haul these pirates into the dock. It's not just the bonuses they should be losing.

[JackRiddler]

19. kick

[FreakinDJ]

2. Will STOP the $Millions in Bonuses

and you might not have some many people pissed off

People are loosing their homes and the FuckWads that cause the whole mess are being rewarded with our tax dollars

You bet were pissed

[stillcool]

7. how do you do that?

does the government have the right to nullify pre-existing contracts? Maybe Congress needs to pass a law making it legal.

[ljm2002]

10. The government can put insolvent institutions into receivership...

...and they do so on a regular basis. And then they can fire the executives, and let the judges figure out who's first in line and what percent they will get on the dollar. In this scenario bonuses become a non-issue.

They did it with the savings and loans during the last large-scale financial debacle. FDR did it on a large scale during the Great Depression.

Our government is pretending we don't have that choice with AIG et al, and they are squawking about the sacrosanct contracts and that we are a "nation of laws" in order to make it seem as though it's set in stone. Meanwhile, we the taxpayers have bought 80% of the damned company but there is no one looking out for our interests -- and apparently, an 80% ownership stake is not enough to have any actual power to determine events there.

Pffft.

[stillcool]

13. In that scenario...

but we aren't in that scenario 'yet', are we? I've read where other institutions that took bail-out money canceled their bonuses. I would think that AIG could be pressured to do the same. Seems to me that this argument is about the bonuses, and not about bankruptcy or other scenario's.

[ljm2002]

17. The bonuses are a catalyzing issue...

...that provide a focal point for the anger a lot of us feel at how all of this is being handled. As such, it is a lot more important than may be indicated by the amount of money involved.

The fact that we own 80% of the company at this point, says loud and clear that the company is insolvent. It also says that we own a controlling interest. In the business world, 51% is considered a controlling interest. So let's just put aside any notion that our "hands are tied".

Please read this article: http://www.salon.com/opinion/greenwald/2009/03/16/aig/ by Glenn Greenwald to see how these contracts can be renegotiated even without insisting the company go into bankruptcy. Just the threat of it ought to bring them to the table, like it did for the UAW.

But that, of course, was union busting, and union busting has a lot more currency for the Beltway crowd than busting the contracts of criminal financial fat cats.

[burythehatchet]

3. IS NY Times considered a credible news source? I know Adam Noogie is not.

And if Obama does not want to be a target of the anger, the first step would be flush Summers, Geithner and Spanky.

[babylonsister]

5. None of them are very credible; you work with what ya got. And I'd

prefer if some banks or bank bigwigs or the idea of bonuses got flushed. This mess didn't start in January 2009.

[burythehatchet]

6. It didn't start in 2009. It started at leat 10 years before, with the same clowns

who are here now in charge of fixing it.

[polichick]

4. If they keep handing out money without nationalizing and kicking out the criminals...

...they'll deserve a good dose of backlash.

[QC]

15. Bingo! This is a very dangerous situation, and at the rate things are going,

the Republicans will soon co-opt the legitimate anger over these abuses and successfully (if falsely) portray themselves as populists and the Democrats as the party of Wall Street.

Dishonest? Sure, but let us not forget that they managed to sell a dissolute son of northeastern old money as a man of the people and Bill Clinton as a fancypants elitist. These people are good at lying, as sociopaths tend to be.

[kentuck]

9. It's coming...

There has been little transparency with this whole bailout business. Obama will pay the price unless he cuts himself loose from the Goldman Sachs connection.

[ljm2002]

11. You are so right!

The mood is turning as we speak, and he better wake up and smell the coffee. This is not theoretical, it is real highway robbery and guess what, the victims (aka the U.S. taxpayers) have finally woken up and see what is happening to them. I give it one month, tops, before Obama owns the situation lock, stock and barrel. If he chooses to keep going down this same path with the Goldman Sachs boys running the show, it could be disastrous for him politically -- a direct result of it being disastrous for the rest of us financially. But that seems to be the plan.