Bailout Report

Are federal bailout programs like a roulette wheel? From the makers of South Park.

Is the furor over AIG bonuses justified or political grandstanding?  Does a 0.01% investment in salaries for the staff overseeing the wind-down of a $1.6 Trillion portfolio justify harikari as Senator Grassley suggested?

Does it take 73 millionaires to wind-down a toxic investment portfolio?

What about the bonuses paid to other Wall Street firms?  Last week Merill  Lynch was in the crosshairs for shotgunning year-end bonuses just prior to the Bank of America takeover.  Is AIG merely the culprits of the week or was the firm’s bonus behavior more egregious than that of other TARP recipients?

Typically, investment banks pay out as much salary as they net in income.  That’s nearly $10,000,000 for banks like Goldman Sachs and Morgan Stanley.  That would buy AIG’s Financial Products staff many tmes over.  On a per employee basis, the investment bank average bonuses are far higher than AIG’s for many job categories.

AIG is no exception to the conduct of other bailout recipients.  It’s employees, however, may be the victim of a slow news cycle.  News of Merril’s bonuses hit while the Madoff scandal was receiving full press news coverage.  Misuse of bailout dollars was indeed in need of a poster child.  That the message turned out to be delivered on a Most Wanted poster is testimony to the growing public outrage.

(Comic captions of Depress-era photos by financial professional Cathleen Ritterreiser.)

AIG Citibank Bailout" src="http://bailout.uslaw.com/wp-content/uploads/2009/03/aig_citibank_pigs.jpg" alt="" width="500" height="375" />

On the same day the federal government announced an additional $30 Billion of aid for insurance giant AIG, the Fed Chariman and Treasury Secretary had this to say about the company in seperate Congressional hearings:

“AIG exploited a huge gap in the regulatory system, there was no oversight of the financial- products division, this was a hedge fund basically that was attached to a large and stable insurance company.”
- Federal Reserve Chairman Ben Bernanke

“AIG is a huge, complex, global insurance company attached to a very complicated investment bank, hedge fund that was allowed to build up without any adult supervision.”
- U.S. Treasury Secretary Timothy Geithner

(Bailout captions of Library of Congress Prints and Photographs by financial professional Cathleen Rittereiser.)

Flags of the Confederacy displayed at movie house playing Gone with the Wind! on Lincoln’s birthday in 1940 Winchester, Virginia.  (Depression Era photographs made current by humorist and financial professional Cathleen Rittereiser.)