Immediate Vault

Outrage Against AIG on Capitol Hill

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Chairman Paul Kanjorski presided over the congressional hearing involving state representatives, the NAIC, the Treasury Department, the Office of Thrift Supervision and Standard & Poor’s.

“We meet today to scrutinize American International Group,” Kanjorski began. He continued, explaining that the reason for the current and future meetings was to discern several things – namely how AIG got to where it is now, how they are using (or misusing) taxpayer bailout funds and how and when the company will pay back its bailout money, plus interest.

Time was then given to the always-outspoken Representative Barney Frank from Massachusetts, who undoubtedly received nods of satisfaction from the viewing audience.

“Something is seriously out of whack and AIG needs to fix it now,” Frank stated. “Many Americans have made personal sacrifices to make it in this difficult time – AIG should do the same.”

Frank then read from the AIG contracts in question, stating the specifics of the bonuses, which said if the company has a net loss for the year, the employees still receive their bonuses.

“This is a problem with compensation structure,” Frank lambasted. “They give themselves contracts that effectively insulate them from losses. We should exercise our rights as owners of this company and bring about lawsuits.” Referring to the breaking of the contracts in question, he made vocal what most Americans are thinking right now: “the magnitude of the losses is so great that we are justified in rescinding the bonuses.”

Representative Spencer Bachus from Alabama blamed Washington, the regulators, and Congress for failing to do their jobs.

“However, the blame game needs to be secondary,” he stated. “Recouping the taxpayer’s money is first and foremost. But will AIG ever return to profitability and will they ever be able to return the money.”

A valid question indeed.

Chairman Kanjorski then turned the questioning to the panel of three individuals representing the NAIC, Standard and Poor’s, the OTS and the Treasury Department. From the insurance regulator perspective- the head of the NAIC claimed that AIG has become the poster child for systemic risk. He then revealed the obvious – that there are “threats on horizon in terms of reputational risk in regards to the insurance division of AIG.”

After two hours of questions and statements, the meeting broke with heckling from some in attendance who held signs reading “honest taxpayer fund.”

You can watch the full video of the hearing here. Another hearing is set for March 24, when Congress will hear from Treasury Secretary Tim Geithner, among others.

Rewarding Failure

AIG created a firestorm over the weekend when it announced it would pay an additional billion in bonuses to its top executives, claiming they are tied to the payouts by contract.

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Americans were furious after learning their taxpayer money would go towards rewarding executives of the insurance giant who were, for the most part, responsible for its fall.

Treasury Secretary Timothy Geithner called AIG Chief Executive Edward Liddy, demanding a slash of the enormous bonuses. In response, Liddy claimed that AIG’s “hands are tied” and the contracts which promise the bonuses are “legal, binding obligations and we must proceed with them.”

But it’s the government – how can they NOT intervene? It’s our money THEY gave to AIG. This is what has outraged not only tax-paying Americans, but various state politicians and Obama’s economic team as well. Christina Romer, chairwoman of the administration’s Council of Economic Advisors, told NBC’s “Meet the Press” that the administration is “pursuing every legal means to deal with this.

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Will the Obama administration be able to stop these completely unearned, taxpayer-fed bonuses from ending up in AIG executive’s bank accounts? It’s doubtful. The most we can hope for is a bonus reduction or postponement, so alas, it seems we, the American taxpayers, will be funding the lucrative bonuses of failed AIG executives.

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And Americans inch closer to COMPLETE lack of confidence not only with America’s top corporations, but with their own government as well.

Tighter Gun Laws?

After 15 people were shot dead in and around a German school campus by a former student, it seems Germany feels no need for stricter gun laws. The country’s Interior Minister, Wolfgang Schaeuble, stated “I can’t see how a change in weapons rules would contribute anything to solving the problem.”

Mr. Schaeuble, are you serious?

True, a combination of mental health problems and societal influences, among others, play a part in reasons behind most school shootings, and all factors should be addressed. However, it is hard to control mental health and society at large. Tim Kretschmer, the 17 year-old shooter who killed 15 before taking his own life, had a history of depression and failed to continuously attend his outpatient therapy sessions. No one had control over helping him, just as no one has control over forcing an individual to continuously take medication for their mental illness. There is no total control over mental health.

Additionally, though attempts have been made, and some ground gained, in protecting influential children against violence and sex in television, films and video games, there will never be strong enough protection. If a 13 year-old wants to play Resident Evil 4 (ranked the #1 most violent video game), the age restriction on its purchase will not stop him. A friend, older brother or even his parents will purchase it for him and within the first minutes of play, that impressionable mind will see the corpse of a woman pinned up on a wall by a pitchfork through her face. There is no total control over societal influences.

There is control over guns. With tighter gun CONTROL laws, access to these killing machines can be greatly restricted. It is naïve to think that stricter gun control laws will put an end to school shootings, but with nothing else to control, we must turn to legislation in hopes of one day getting through a school year shooting-free.

Tighter gun control laws –- it’s a no-brainer, people.

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