More than foxes in the chicken coup: lunatics running the asylum.
[Niall’s argument wins the day, see below. * ]
Congressman Barney Frank (D-Mass.) told CBS News’ Harry Smith on Face The Nation Sunday that the executive branch ought to use its leverage as a majority shareholder in AIG to sue the company for its wrongful use of retention bonuses.
(So, ah, Barney, the government should sue itself? Novel idea…)
Investor’s Business Daily, 3.24.09
Rep. Barney Frank, the Democrat who sits atop Congress’ efforts to deal with the financial crisis, has enough chutzpah for 100 politicians — which is saying a lot.
In comments before testimony from both Treasury Secretary Tim Geithner and Fed chief Ben Bernanke Tuesday, Frank said he wants to regulate pay on Wall Street — even for companies that aren’t getting bailouts.
And he called retention bonuses — a time-honored practice on Wall Street and elsewhere in America in which key employees are compensated for their enormous value — “extortion” and “bribes.”
Frank, one of the chief architects of the housing mess that’s brought us so low, isn’t satisfied merely with pretending he and his Democratic pals aren’t to blame for all this. No, exploiting voter anger over the now-infamous AIG bonuses, he also wants to dictate to American capitalism what it can earn and what it can’t.
This is the kind of thing that normally happens in Third World countries ruled by tinhorn dictators, or in fascist states, where the democratic rule of law has collapsed. Not the U.S.
Yet, that’s where we find ourselves today, isn’t it? Democrats in Congress, who steadfastly rejected virtually all efforts to reform Fannie Mae and Freddie Mac as they went on the wildest, most irresponsible lending binge in the history of finance, now pose themselves as the saviors of fallen capitalism.
The hypocrisy is nothing short of stunning.
Take Frank. As we’ve written before, he spearheaded congressional Democrats’ efforts in 1992, 2000, 2002, 2003 and 2005 to block reform of Fannie and Freddie.
Those two “government-sponsored enterprises” were the nexus of this crisis, holding $5.4 trillion of the $12 trillion in U.S. mortgages, while originating or funding 90% of the subprime market.
Their failures presaged the subsequent financial meltdown from which we’re still trying to regain our economic footing.
Then there’s Sen. Chris Dodd of Connecticut, another posturing moralist in the flap over AIG bonuses. He turns out to have inserted the bonuses into the bailout legislation in the first place.
An innocent move? Please note Dodd was No. 1 on the list of recipients of AIG’s political contributions. Also that his wife was a former director of IPC Holdings, a company controlled by AIG.
LIST OF AIG CONTRIBUTIONS Obama got $110,000.
Republican hands are not clean either. However, this entire AIG fiasco has occurred on Obama’s watch. Note that John Kerry had $2M invested in AIG stock.
How much did AIG spend on lobbying in the last year alone?
“Insurance company American International Group (AIG) announced that it would stop lobbying after the government took an 80 percent stake in the firm last fall, although it appears the company’s advocacy activity merely slowed. In the fourth quarter, AIG still managed to spend $1.1 million on lobbying, a 41.7 percent decrease from the third quarter. Overall, AIG decreased lobbying spending 15 percent between ’07 and ’08, from $11.4 million to $9.7 million.”
DEBATE ON INTELLIGENCE SQUARED YIELDS VOTE SAYING POLITICIANS MOSTLY TO BLAME:
“Niall Ferguson: Nothing would be easier than to blame everything on the bankers. I blame them for much of what has gone wrong, but I blame the politician more. It’s just too easy to heap opprobrium on Wall Street. And if you noticed, that’s exactly what the politicians do. Could it be that they’re trying to divert our attention away from Washington’s own responsibility for the debacle?
“I invite you to consider the roles played by four institutions in bringing about this financial crisis, and I want you to reflect on the location of those institutions. The first is the Federal Reserve Board. Its role has been to allow a housing bubble to inflate, and burst. Between January of 2001 and June of 2003 the Fed cut its federal funds rate from 6.5 percent to 1 percent. Then over three years it very gradually raised rates to 5.25 percent. In that time, house-price inflation rose from 7 percent to 17 percent a year and it stayed above 15 percent a year right until January of 2006.
“The second is the Securities and Exchange Commission, which under Christopher Cox allowed the leverage in the banking system to spiral out of control, from 12 to 1 to somewhere in the region of 20 to 30 to 1. My third prime suspect is the Congress that wholly failed to supervise Fannie Mae and Freddie Mac, which on the eve of their destruction were leveraged 65 to 1. And that brings me to the White House. “We want everybody in America to own their own home,” declared President George W. Bush, in October of 2002. Everybody in America!
“Bankers are nearly always actuated by greed, and so are many ordinary people too. But it’s the role of government to strike a balance between market forces and stability, and we should blame Washington more than Wall Street for this crisis. In my view Washington sold itself to Wall Street. ”
‘Only capitalism delivers people from poverty: history proves that over and over.’