Tag Archives: bailout

Finally, the Truth About the A.I.G. Bailout – NYTimes.com

29 Sep

Lincoln talked of government “for the people, of the people, and by the people.” He didn’t say anything about too-big-to-fail banks.

Starr contends that the government could have spent less money on A.I.G. — and therefore imposed less onerous terms on the company — had the bailout’s architects directed some of their tough love at the Goldmans and Deutsche Banks of the world. And Starr is hardly alone in making these claims. Ever since the details of the A.I.G. rescue entered the popular consciousness, everyone from members of Congress to financial commentators to Occupy Wall Street protesters and Tea Party activists have fulminated against the “backdoor bailout” of Goldman et al. By fully litigating the issue, the Starr trial may finally help heal this festering wound.

At the heart of the controversy is the fact that the government has never provided a plausible explanation for why the Federal Reserve Bank of New York, which had enormous leverage over banks like Goldman thanks to its role as their regulator, didn’t lean on them to accept less than 100 cents on the dollar in their payouts from A.I.G.

via Finally, the Truth About the A.I.G. Bailout – NYTimes.com.

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Elizabeth Warren has asked Congress to stop the secret bailout of AIG, and so should you.

16 Mar

The issue is about something called “net operating loss,” which in normal circumstances allows corporations to use losses in one year to offset their future tax bills.

But when companies are taken over, as AIG was when the government spent over $100 billion to keep the company afloat, they are supposed to be barred from using their net operating loss in this way.

Here’s where things become suspect. In 2008 the Treasury issued a special waiver to a handful of companies, including AIG, that allows for their net operating losses to offset taxes owed to the government.

At a time of brutal budget cuts at all levels of government, it would be simply unconscionable for Congress to allow for a multi-billion dollar subsidy to AIG’s shareholders and executives.

Go to the link below and sign the peitition.

via Elizabeth Warren has asked Congress to stop the secret bailout of AIG, and so should you..

The Parable of the Unforgiving Servant

13 Feb

And Its Application to the Current Mortgage Disaster

I’ve been reading David Graeber’s recent book, Debt: The First 5,000 Years. In the chapter, “Cruelty and Redemption,” he recounts the Parable of the Unforgiving Servant (Matthew 18:21-35). As an exercise you might want to read the story as one about the recent mortgage mess in the United States. In this version the king is the Federal Government and the first servant, the unforgiving one, corresponds to the investment bankers who sold those bought, packaged, and sold risky mortgages as fancy derivative instruments. The second servant, then, would be all those homeowners to took out those risky mortgages and are now losing their homes. In this reading, there’s lots more work to be done to fill out the Biblical model.

Here’s the parable as it’s quoted from the World English Bible in the Wikipedia, which also has some useful interpretive remarks:

Then Peter came and said to him, “Lord, how often shall my brother sin against me, and I forgive him? Until seven times?”

Jesus said to him, “I don’t tell you until seven times, but, until seventy times seven. Therefore the Kingdom of Heaven is like a certain king, who wanted to reconcile accounts with his servants. When he had begun to reconcile, one was brought to him who owed him ten thousand talents. But because he couldn’t pay, his lord commanded him to be sold, with his wife, his children, and all that he had, and payment to be made. The servant therefore fell down and knelt before him, saying, ‘Lord, have patience with me, and I will repay you all!’ The lord of that servant, being moved with compassion, released him, and forgave him the debt.

“But that servant went out, and found one of his fellow servants, who owed him one hundred denarii, and he grabbed him, and took him by the throat, saying, ‘Pay me what you owe!’

“So his fellow servant fell down at his feet and begged him, saying, ‘Have patience with me, and I will repay you!’ He would not, but went and cast him into prison, until he should pay back that which was due. So when his fellow servants saw what was done, they were exceedingly sorry, and came and told to their lord all that was done. Then his lord called him in, and said to him, ‘You wicked servant! I forgave you all that debt, because you begged me. Shouldn’t you also have had mercy on your fellow servant, even as I had mercy on you?’ His lord was angry, and delivered him to the tormentors, until he should pay all that was due to him. So my heavenly Father will also do to you, if you don’t each forgive your brother from your hearts for his misdeeds.”