To get the economy back on track, will President Barack Obama have to break his pledge not to raise taxes on 95 percent of Americans? In a “This Week” exclusive, Treasury Secretary Tim Geithner told me, “We’re going to have to do what’s necessary.”
Geithner was clear that he believes a key component of economic recovery is deficit reduction. When I gave him several opportunities to rule out a middle class tax hike, he wouldn’t do it.
“We have to bring these deficits down very dramatically,” Geithner told me. “And that’s going to require some very hard choices.”
“We will not get this economy back on track, recovery will be not strong and sustained, unless we convince the American people that we are going to have the will to bring these deficits down once recovery is firmly established,” he said.
And according to Larry Summers, the economy is turning around and we need to continue all of Bambi’s economic stimulus plans like the “very successful Cash For Clunkers program”.
I think this is my favorite quote from Larry:
And the Recovery and Reinvestment program is going to gather force over the next six months. People are able to spend more of the extraordinary tax assistance they’ve received.”
WHAT EXTRAORDINARY TAX ASSISTANCE? Extraordinary tax assistance would be a payroll tax holiday for a year to get small business growing again.
Obviously Larry Summers has been smokin’ the same koolaid/crack pipe that most of congress has not taken a break from since the Fascist-In-Charge, (31 czars and counting), was installed in our White House.
Since when does anybody think that Google is the barometer of economic or any other success? Larry, how dumb do you think we are? Stop pretending to be stupid, we know you are not. Also, keep talking down to us and find out where that gets you…
Of all the statistics pouring into the White House every day, top economic adviser Larry Summers highlighted one Friday to make his case that the economic free-fall has ended.
The number of people searching for the term “economic depression” on Google is down to normal levels, Summers said.
Searches for the term were up four-fold when the recession deepened in the earlier part of the year, and the recent shift goes to show consumer confidence is higher, Summers told the Peterson Institute for International Economics.
Summers continued the administration’s push-back against critics of President Barack Obama’s handling of the recession, defending the economic stimulus package against Republicans who have tried to paint the program as a failure because it hasn’t stemmed the unemployment rate.
“We pledged at the time the Recovery Act became law that some of the spending and tax effects would begin almost immediately.,” Summers said in prepared remarks. “We also noted that the impact of the Recovery Act would build up over time, peaking during 2010 with about 70 percent of the total stimulus provided in the first 18 months. Now, five months after the passage, we are on track to meet that timeline. “
And for those of you that want a primer on Larry Summers, try these links out. For those of you just catching up, make sure to look at the education and organizations and you will start to see the pattern the rest of us are completely and totally aware of, and go all the way to the end of this post for another story. The corruption goes well beyond donkeys and elephants.
Gender: Male Race or Ethnicity: White Sexual orientation: Straight Occupation:Economist Party Affiliation: Democratic
Nationality: United States Executive summary: US Treasury Secretary, 1999-2001
Father: Robert Summers (economics professor) Mother: Anita A. Summers (public policy professor) Wife: Victoria Summers (tax attorney, div.) Son: Henry Daughter: Pam (twin) Daughter: Ruth (twin) Wife: Elisa New (Harvard professor, m. 11-Dec-2005)
Why did Goldman Sachs, Citigroup and Morgan Stanley steer millions to a company Larry Summers directed while he administered “stress tests” on them?
Last month, a little-known company where Summers served on the board of directors received a $42 million investment from a group of investors, including three banks that Summers, Obama’s effective “economy czar,” has been doling out billions in bailout money to: Goldman Sachs, Citigroup, and Morgan Stanley. The banks invested into the small startup company, Revolution Money, right at the time when Summers was administering the “stress test” to these same banks.
A month after they invested in Summers’ former company, all three banks came out of the stress test much better than anyone expected — thanks to the fact that the banks themselves were allowed to help decide how bad their problems were (Citigroup “negotiated” down its financial hole from $35 billion to $5.5 billion.)
The fact that the banks invested in the company just a few months after Summers resigned suggests the appearance of corruption, because it suggests to other firms that if you hire Larry Summers onto your board, large banks will want to invest as a favor to a politically-connected director.
Last month, it was revealed that Summers, whom President Obama appointed to essentially run the economy from his perch in the National Economic Council, earned nearly $8 million in 2008 from Wall Street banks, some of which, like Goldman Sachs and Citigroup, were now receiving tens of billions of taxpayer funds from the same Larry Summers. It turns out now that those two banks have continued paying into Summers-related businesses.
Remember when TARP 1 was supposed to be used to ease the credit crunch and free up money for small businesses? Remember when AIG was considered too big to fail? Now that $186 Billion Dollar Fiasco continues.
A timeline is in order, and I ask that you read this until you understand it. It is time to stop skimming and skipping. What is happening to our country is going on because we have told ourselves that the economic aspects of our lives are just too damn complex to understand. We have allowed people outside ourselves to brainwash us into thinking we are “too stupid”. This is one American that is telling you that 2+2=4, and that the bean counters using red crayons are just trying to brainwash you into thinking that you won’t ever “get it”. It’s pretty damn simple, just take the time, make the effort, ask questions! Unless Turbo Tax Timmie’s IQ approaches 160, he is not as smart as most of my readers.
The U.S. government seized control of American International Group Inc. — one of the world’s biggest insurers — in an $85 billion deal that signaled the intensity of its concerns about the danger a collapse could pose to the financial system.
The step marks a dramatic turnabout for the federal government, which had been strongly resisting overtures from AIG for an emergency loan or some intervention that would prevent the insurer from falling into bankruptcy. Just last weekend, the government essentially pulled the plug on Lehman Brothers Holdings Inc., allowing the big investment bank to go under instead of giving it financial support. This time, the government decided AIG truly was too big to fail.
It puts the government in control of a private insurer — a historic development, particularly considering that AIG isn’t directly regulated by the federal government. The Fed took the highly unusual step using legal authority granted in the Federal Reserve Act, which allows it to lend to nonbanks under “unusual and exigent” circumstances, something it invoked when Bear Stearns Cos. was rescued in March.
As part of the deal, Treasury Secretary Henry Paulson insisted that AIG’s chief executive, Robert Willumstad, step aside. Mr. Paulson personally told Mr. Willumstad the news in a phone call on Tuesday, according to a person familiar with the call.
Mr. Willumstad will be succeeded by Edward Liddy, the former head of insurer Allstate Corp. (Make sure to read this article near the end for info on Mr. Liddy.)
The final decision to help AIG came Tuesday as the federal government concluded it would be “catastrophic” to allow the insurer to fail, according to a person familiar with the matter. Over the weekend, federal officials had tried to get the private sector to pony up some funds. But when that effort failed, Fed Chairman Bernanke, New York Fed President Timothy Geithner and Treasury Secretary Paulson concluded that federal assistance was needed to avert an AIG bankruptcy, which they feared could have disastrous repercussions.
Staff from the Federal Reserve and Treasury worked on the plan through Monday night. President George W. Bush was briefed on the rescue Tuesday afternoon during a meeting of the President’s Working Group on Financial Markets.
Now, however, Mr. Willumstad himself will be leaving, after having been asked to step aside by the Treasury’s Mr. Paulson. Mr. Willumstad, who recently took over as AIG’s chief executive to try to turn around the firm, was surprised by the request. “If that’s what you want, I’ll do it,” he said to Mr. Paulson, according to a person familiar with the call. AIG’s board was unhappy with the decision but felt it had no choice but to go along, as the only other option was bankruptcy.
The fate of a corporate chief executive is normally the province of a board of directors. The decision by the Treasure Secretary to essentially oust Mr. Willumstad underscores further the magnitude of the government’s intervention.
Mr. Willumstad’s departure marks the end of a brief, tumultuous run. He joined AIG as a director in early 2006, after leaving the No. 2 post at Citigroup Inc., and became AIG’s chairman later that year. In June, as AIG was reeling from record losses, the board forced out Mr. Willumstad’s predecessor and gave him the top job. He had planned to unveil his own strategy for AIG on Sept. 25.
By tapping Mr. Liddy as AIG’s next CEO, the government is turning to someone with deep experience in the insurance industry, having served as chief executive of Allstate from 1999 to 2006. He stepped down as chairman earlier this year. Allstate is a different type of insurer than AIG, focusing on selling car and home insurance to Americans, whereas AIG sells an array of insurance policies to individuals and businesses world-wide.
Mr. Liddy also has experience pulling apart empires, having helped dismantle Sears, Roebuck & Co. (from which Allstate was spun off) in the 1990s. Before joining Sears, Mr. Liddy worked under Donald Rumsfeld at drug maker G.D. Searle & Co. Mr. Liddy is on the board at Goldman Sachs Group, the investment bank that Mr. Paulson led before becoming Treasury Secretary.
WASHINGTON/NEW YORK (Reuters) – The government restructured its bailout of American International Group Inc, raising the package to a record $150 billion with easier terms, after a smaller rescue plan failed to stabilize the ailing insurance giant.
The Federal Reserve and the Treasury Department announced the new plan on Monday as AIG reported a record third-quarter loss of $24.47 billion, largely from write-downs of investments.
The new package, at least $27 billion more than was previously extended, will leave the government exposed to billions of dollars of potential losses.
Under the new plan, the government will get a $40 billion equity stake in AIG, spend as much as $30 billion on securities underlying the insurer’s credit default swaps, and spend up to $22.5 billion to buy residential mortgage securities.
It will also reduce a previously announced credit line to $60 billion from $85 billion, and lower interest rates on borrowings. AIG will also accept curbs on executive pay,including a freeze of bonuses for its top 70 executives.
The $40 billion equity infusion comes from the $700 billion financial bailout package passed into law last month.
That package was originally intended for banks, and AIG is the first company other than a bank to get money from it. It was created after the government announced the original $85 billion bailout package for AIG on September 16.
“Today’s action was a one-off event,” Neel Kashkari, the Treasury Department’s interim assistant secretary for financial stability, said at a conference in New York. “It is not the start of a new program.”
NEW YORK (Reuters) – Where, oh where, did AIG’s bailout billions go? That question may reverberate even louder through the halls of government in the week ahead now that a partial list of beneficiaries has been published.
The Wall Street Journal reported on Friday that about $50 billion of more than $173 billion that the U.S. government has poured into American International Group Inc since last fall has been paid to at least two dozen U.S. and foreign financial institutions.
The newspaper reported that some of the banks paid by AIG since the insurer started getting taxpayer funds were: Goldman Sachs Group Inc, Deutsche Bank AG, Merrill Lynch, Societe Generale, Calyon, Barclays Plc, Rabobank, Danske, HSBC, Royal Bank of Scotland, Banco Santander, Morgan Stanley, Wachovia, Bank of America, and Lloyds Banking Group. (With a few exceptions, almost every one of these institutions has been here reading the Monster…)
Morgan Stanley and Goldman Sachs declined to comment when contacted by Reuters. Bank of America, Calyon, and Wells Fargo, which has absorbed Wachovia, could not be reached for comment.
The U.S. Federal Reserve has refused to publicize a list of AIG’s derivative counterparties and what they have been paid since the bailout, riling the U.S. Senate Banking Committee.
Federal Reserve Vice Chairman Donald Kohn testified before that committee on Thursday that revealing names risked jeopardizing AIG’s continuing business. Kohn said there were millions of counterparties around the globe, including pension funds and U.S. households.
He said the intention was not to protect AIG or its counterparties, but to prevent the spread of AIG’s infection.
The Wall Street Journal, citing a confidential document and people familiar with the matter, reported that Goldman Sachs and Deutsche Bank each got about $6 billion in payments between the middle of September and December last year.
Once the world’s largest insurer, AIG has been described by the United States as being too extensively intertwined with the global financial system to be allowed to fail.
The Federal Reserve first rode to AIG’s rescue in September with an $85 billion credit line after losses from toxic investments, many of which were mortgage related, and collateral demands from banks, left AIG staring down bankruptcy.
Late last year, the rescue packaged was increased to $150 billion. The bailout was overhauled again a week ago to offer the insurer an additional $30 billion in equity.
AIG was first bailed out shortly after investment bank Lehman Brothers was allowed to fail and brokerage Merrill Lynch sold itself to Bank of America Corp.
Bankruptcy for AIG would have led to complications and losses for financial institutions around the world doing business with the company and policy holders that AIG insured against losses.
Representative Paul Kanjorski told Reuters on Thursday that he had been informed that a large number of AIG’s counterparties were European.
“That’s why we could not allow AIG to fail as we allowed Lehman to fail, because that would have precipitated the failure of the European banking system,” said Kanjorski, a Democrat from Pennsylvania who chairs the House Insurance Subcommittee.
From one Sunday talk show to the next, they tore into the contracts that American International Group asserted had to be honored, to the tune of about $165 million and payable to executives by Sunday — part of a larger total payout reportedly valued at $450 million. The company has benefited from more than $170 billion in a federal rescue.
In a letter to Geithner dated Saturday, Liddy said outside lawyers had informed the company that AIG had contractual obligations to make the bonus payments and could face lawsuits if it did not do so. (What about the ban on bonuses as part of the original bailout in September? Go back to the top for that quote.)
Liddy said in his letter that “quite frankly, AIG’s hands are tied,” although he said that in light of the company’s current situation he found it “distasteful and difficult” to recommend going forward with the payments.
Liddy said the company had entered into the bonus agreements in early 2008 before AIG got into severe financial straits and was forced to obtain a government bailout last fall.
The bulk of the payments at issue cover AIG Financial Products, the unit of the company that sold credit default swaps, the risky contracts that caused massive losses for the insurer.
March 15, 2009: (ARE YOU READY FOR THIS? Do not EVEN try to tell me that the “New World Order Central Bank Theory” is a conspiracy.)
WASHINGTON/NEW YORK (Reuters) – More than half of the taxpayer money spent to rescue insurer AIG was passed on to Goldman Sachs and several European banks, who benefited from more than $90 billion in payments in the first three-and-a-half months of the government bailout, AIG disclosed on Sunday.
The revelation was another public relations nightmare, coming on the same weekend that the Obama administration expressed outrage over American International Group Inc’s plan to pay massive bonuses to the people in the very division that destroyed the company by issuing billions of dollars in derivatives insuring risky assets.
AIG, an embattled insurance giant that has received federal bailouts totaling $173 billion and is now paying $165 million in employee bonuses, is at the heart of a global financial crisis that President Barack Obama is trying to address with plans for trillions of dollars in spending.
As part of those efforts, Obama will announce steps on Monday to make it easier for small business owners to borrow money, officials said. (…and this is what they should have been doing all along!)
But the revelations that billions of U.S. taxpayer dollars were funneled through AIG to Goldman Sachs — one of Wall Street’s most politically connected firms — and to European banks including Deutsche Bank, France’s Societe Generale and the UK’s Barclays was likely to stoke further outrage at the entire U.S. bank bailout.
While the payments were not illegal, the fact that billions of dollars given to prop up giant insurer AIG were then transferred to European banks and Wall Street investment houses could raise new doubts about whether the rescue was really economically necessary. (Ya Think?)
Goldman Sachs, formerly led by Henry Paulson who was treasury secretary at the time of the original AIG bailout, could not immediately be reached for comment. Deutsche Bank and Barclays declined to comment.
As it seeks to ease the credit crunch that was the original target of the Troubled Assets Relief Program (TARP), the Treasury will also offer more details this week about the workings of proposed public-private partnerships to take toxic assets off banks’ books, including a timeframe, a senior department official said on Saturday. (Remember TARP 1 was to ease the credit crunch?)
Through three separate types of transactions, Goldman received an aggregate $12.9 billion. Among European banks, SocGen was the biggest recipient at $11.9 billion, Deutsche got $11.8 billion and Barclays was paid $8.5 billion.
The list of counterparties was made public by AIG amid growing pressure on the insurer to come clean about the true beneficiaries of the bailout ahead of a congressional hearing on Wednesday at which AIG chief executive Edward Liddy is slated to testify.
NEW YORK (AP) — American International Group Inc. used more than $90 billion in federal aid to pay out foreign and domestic banks, some of whom had received their own multibillion-dollar U.S. government bailouts.
The embattled insurer’s disclosure on Sunday came amid outrage on Capitol Hill over its payment of tens of millions in executive bonuses, and followed demands from lawmakers that the names of trading partners who indirectly benefited from federal aid to AIG be made public.
The company, now about 80 percent owned by U.S. taxpayers, has received roughly $170 billion from the government, which feared that its collapse could cause widespread damage to banks and consumers around the globe.
“The ability of AIG to meet its obligations is important to the stability of the U.S. financial system and to getting credit flowing to households and businesses,” Federal Reserve spokeswoman Michelle Smith said.
Some of the biggest recipients of the AIG money were Goldman Sachs at $12.9 billion, and three European banks – France’s Societe Generale at $11.9 billion, Germany’s Deutsche Bank at $11.8 billion, and Britain’s Barclays PLC at $8.5 billion. Merrill Lynch, which also is undergoing federal scrutiny of its bonus plans, received $6.8 billion as of Dec. 31.
The money went to banks to cover their losses on complex mortgage investments, as well as for collateral needed for other transactions.
Other banks receiving between $1 billion and $3 billion from AIG’s securities lending unit include Citigroup Inc., Switzerland’s UBS AG and Morgan Stanley.
Municipalities in certain states, including California, Virginia and Hawaii, received a total of $12.1 billion under guaranteed investment agreements.
Our government and the privately held Federal Reserve Banking Cartel give money to AIG, and they gave it to not only FOREIGN BANKS, but they gave it to other American Banks that already were getting bailed out by us. What are we going to do about it?