Flashback - September 2008 - Bush/Paulson Announce $85 Billion Rescue Of AIG - No Regulations!

[Median Democrat]

The one problem about bonus-gate is that it obscures the fact that the whole AIG fiasco is the culmination of years of hands-off regulation by the Bush administration. The bonus contracts were handed out during the Bush administration. The ponzi scheme that formed the AIG business model was formed during the Bush presidency. The AIG collapse took place under the Bush administration. Yet, these cogent facts are ignored as the media focuses on the bonuses, which constitute less than two percent of the total bailout, and tries to pin this on the Obama administration. Hey, are we forgetting how AIG went bust in the first place? It was due to deregulation, which is continually championed by Republicans even now. Worse, the Bush administration knew about AIG's troubles long before it finally bailed them out in September 2008, but did nothing.

Yet, the media focuses on the bonuses AND their are calls for Tim Geithner to resign? WTF about Paulson and Bernanke who slept walk through the events the lead to the crisis. Where were the calls for resignation by the corporate media back then? Again, the media shows the double standard being applied to Democratic administrations.

http://www.nytimes.com/2008/09/17/business/17insure.html

/snip

WASHINGTON — Fearing a financial crisis worldwide, the Federal Reserve reversed course on Tuesday and agreed to an $85 billion bailout that would give the government control of the troubled insurance giant American International Group.

The decision, only two weeks after the Treasury took over the federally chartered mortgage finance companies Fannie Mae and Freddie Mac, is the most radical intervention in private business in the central bank’s history.

With time running out after A.I.G. failed to get a bank loan to avoid bankruptcy, Treasury Secretary Henry M. Paulson Jr. and the Fed chairman, Ben S. Bernanke, convened a meeting with House and Senate leaders on Capitol Hill about 6:30 p.m. Tuesday to explain the rescue plan. They emerged just after 7:30 p.m. with Mr. Paulson and Mr. Bernanke looking grim, but with top lawmakers initially expressing support for the plan. But the bailout is likely to prove controversial, because it effectively puts taxpayer money at risk while protecting bad investments made by A.I.G. and other institutions it does business with.

What frightened Fed and Treasury officials was not simply the prospect of another giant corporate bankruptcy, but A.I.G.’s role as an enormous provider of esoteric financial insurance contracts to investors who bought complex debt securities. They effectively required A.I.G. to cover losses suffered by the buyers in the event the securities defaulted. It meant A.I.G. was potentially on the hook for billions of dollars’ worth of risky securities that were once considered safe.

If A.I.G. had collapsed — and been unable to pay all of its insurance claims — institutional investors around the world would have been instantly forced to reappraise the value of those securities, and that in turn would have reduced their own capital and the value of their own debt. Small investors, including anyone who owned money market funds with A.I.G. securities, could have been hurt, too. And some insurance policy holders were worried, even though they have some protections.

/snip

[Uzybone]

1. Its shameful and so transparent

The MSM can continue to cry, but their game is clear. Kneecap President Obama before he can change how this shitty game works.

[Median Democrat]

3. The Fundamental Problem Is That The Feds Should Not Be In This Position In The 1st Place!

I know that there is a right wing effort to try to now make political hay out of this, as well as right wing trolls on DU, posing as liberals and attacking the Obama administration on exactly what did Obama know, and trying to manufacture fights amoung Democrats. However, this is all just right wing noise that misses the big fucking picture.

There is no fucking way the federal government can run or oversee AIG, an insurance company. We had to bail them out, because Bush fucked things up so badly that the entire economy depended on AIG's guarantees. It was an amazing unregulated fuck-up. The knee jerk reaction is to say "let them fail," but the problem is that the Bush administration had led AIG grow like a disease where its insurance provided liquidity through numerous levels of financial markets.

The bonuses are a big distraction. The real issue is this fucked-up regulatory regine that allowed AIG to infect the entire U.S. credit market. The U.S. needs to move to simply shut down AIG while protecting its insurance contracts, but in the meantime, you will have these embarassing little fuck-ups, because there simply is no regulations or system in place to oversee AIG. That is why we are in this mess. This is why Obama has repeatedly pushed for tougher regulations.

YET, the Republicans who oppose these regulations will paradoxically use Bush's AIG fuck-up to undermine Obama's efforts to pass new and tougher regulations. Yes, up is down, and because Obama could not stop the AIG bonuses, we should not pass any new regulations.

[Clio the Leo]

2. thanks for another rational post. NT

[terisan]

4. Democrats were in control of Congress. They pushed the legislation through in Fall

of 2008 excoriated Republicans who would not vote in favor. They are fully complicit and took credit for those bailouts---

plus they had, in fact, an obligation of oversight of the banking industry and were in control of Congress for almost 2 years. I would have thought they would have spent those 2 years starting to clean up the mess of a Congressional leadership that blindly followed a lying con man president--instead many of them spent 2 years collecting campaign donations from banks and other big corporations.

Wall Streeters have had rumblings of the big problem coming up for well over a year

....and why indeed did the Dems stampede to do Bush's bidding when they have admitted they he was the very person who lied us into war?

What was the that about......fool me once, can't fool me again?

[sampsonblk]

5. Yep. There appear to be some short memories here

I got cursed out for saying it at the time. But it was the GOP that tried to put the brakes on. It was our party leaders who "stampeded," as you say, to help Bush get this thing done.

[Median Democrat]

8. The GOP? You Are Taking John Boehner's Side? Amazing

It is, of course, very knee jerk to say let them fail. No bail outs. Of course, what happens in an economy without credit. What is the answer? Try to conduct business entirely on cash. The GOP was against it purely for political reasons, because they were trying to avoid responsibility for this mess. Absolutely amazing.

[sampsonblk]

14. I am taking the side of common sense and the truth

I am not siding with Boehner. Get it right.

Stop making excuses for bad legislation. There is no reason on earth to pass a bill that huge and not require strict oversight. Its absurd to do that.

Edit = typo

[Median Democrat]

20. You Know, Hoover Did The Politically Expedient Thing...

He let those irresponsible banks fail. His Treasury Secretary, Mellon, lead populist outrage Santelli style by cheering on the liquidation. Common sense and truth or knee jerk efforts to find a villain when the real villain is the decades of deregulation, as well as a corporate compensation system that rewards incompetence.

The fact of the matter is that everyone fucked up for the past decade by following a Phil Gramm advocated decade long spree of deregulation. Simply calling for the head of members of the Obama administration or saying that banks should fail might make you feel better, and be politically expedient, but it is likely to make things worse, because it ignores the 500 pound gorilla, which is the decade of deregulation that preceded this crisis.

[sampsonblk]

24. Those were not the choices

What you are saying is the same false choice we were presented in the fall. The choice was not between this particular legislation or letting the banks fail. They could have rescued the banks with good legislation instead.

[terisan]

16. Are you saying Democratic Congress people are not responsible for their votes?

We have a bankrupty law that covers businesses. We provide the Democrats in Congress with staff who can reseach issues. If I were to use the term "knee jerk reaction" I would apply it Congress people who were told last Fall that collapse is imminent and you must give us vast authority and allocate immense sums on behalf of your constituents, and you must do it immediately.

Some in Congress resisted; some immediately followed Bush/Paulsen and opted for yoking us to massive debt with few if any controls. A few weeks later many of these same representatives were expressing anger that Paulsen had changed his stated plan and was doing something different.

However it was they who abdicated their responsibility and turned over their powers, granted to them by the Constitution, to a Treasury Secretary.

Why be amazed at logic?

[Median Democrat]

19. Expressions Of Outrage Are Just CYA - The Fact That Deregulation Led To The Mess Is The Real Issue

It is knee jerk to say let them burn. Your neighbor is smoking in his house, and starts a fire. Do you help put out the fire or do you ignore his cries for help, as his house burns, and starts other fires in the neighborhood?

The problem with cable news is that it tends to focus on scandal. The bigger picture is that over a decade, Congress has weakened regulations that allowed AIG to be a hub of the American financial market. Yes, you could let it fail, but what about the consequences? There are very real consequences to simply letting banks fail. That is politically easy to simply let them fail. I agree that more controls should be put in place regarding the administration of the bailout, but the real big damage took place long ago.

The Great Depression began as a financial crisis. Hoover simply let the banks fail. It was then the politically expedient thing to do. Of course, the Great Depression followed, and Hoover is reviled as one of the worst presidents ever. Why? He did what was politically expedient at the time.

The real test of leadership is going to be trying to curb these decade long abuses by reversing deregulation. The Republicans are going to try to narrowly focus on who wrote the checks to take the focus off years of deregulation.

[girl gone mad]

23. There was no good reason that TARP had to be rushed through..

with no debate and no committee hearings.

The Fed and the financial industry made all sorts of dirty maneuvers to hype the crisis, but congress should have known better (and plenty of them did, but still voted to please their corporate masters).

[FrenchieCat]

11. Wow! You are siding with the ones that caused this fucked up shit?

Really? :wow:

Perhaps the GOP voted no, because they don't give a fuck about anything,
other than not ever taking any responsibility about anything.
Do you share that trait with them...cause it sounds like it.

You brothers in harm, why don't you? :puke:

House Vote On Passage: H.R. 1424 <110th>: The list of those who voted NAY!

Alabama
Nay AL-1 Bonner, Jo (R)
Nay AL-2 Everett, Terry (R)
Nay AL-3 Rogers, Michael (R)
Nay AL-4 Aderholt, Robert (R)
Nay AL-6 Bachus, Spencer (R)
Alaska None
Arizona
Not Voting AZ-1 Renzi, Rick (R)
Nay AZ-2 Franks, Trent (R)
Nay AZ-3 Shadegg, John (R)
Nay AZ-6 Flake, Jeff (R)
Arkansas
Nay AR-3 Boozman, John (R)
California
Nay CA-2 Herger, Walter (R)
Nay CA-3 Lungren, Daniel (R)
Nay CA-4 Doolittle, John (R)
Not Voting CA-6 Woolsey, Lynn (D)
Nay CA-19 Radanovich, George (R)
Nay CA-21 Nunes, Devin (R)
Nay CA-22 McCarthy, Kevin (R)
Nay CA-25 McKeon, Howard (R)
Nay CA-26 Dreier, David (R)
Nay CA-40 Royce, Edward (R)
Nay CA-41 Lewis, Jerry (R)
Nay CA-42 Miller, Gary (R)
Nay CA-44 Calvert, Ken (R)
Nay CA-46 Rohrabacher, Dana (R)
Nay CA-48 Campbell, John (R)
Nay CA-49 Issa, Darrell (R)
Nay CA-50 Bilbray, Brian (R)
Nay CA-52 Hunter, Duncan (R)
Colorado
Not Voting CO-4 Musgrave, Marilyn (R)
Nay CO-5 Lamborn, Doug (R)
Nay CO-6 Tancredo, Thomas (R)
Connecticut NONE
Delaware NONE
Florida
Nay FL-1 Miller, Jeff (R)
Nay FL-4 Crenshaw, Ander (R)
Not Voting FL-5 Brown-Waite, Virginia (R)
Nay FL-6 Stearns, Clifford (R)
Nay FL-7 Mica, John (R)
Not Voting FL-8 Keller, Ric (R)
Nay FL-9 Bilirakis, Gus (R)
Nay FL-10 Young, C. W. (R)
Nay FL-12 Putnam, Adam (R)
Nay FL-14 Mack, Connie (R)
Nay FL-15 Weldon, David (R)
Nay FL-24 Feeney, Tom (R)
Georgia
Nay GA-1 Kingston, Jack (R)
Nay GA-3 Westmoreland, Lynn (R)
Nay GA-6 Price, Tom (R)
Nay GA-7 Linder, John (R)
Nay GA-8 Marshall, James (D)
Nay GA-9 Deal, Nathan (R)
Nay GA-10 Broun, Paul (R)
Nay GA-11 Gingrey, John (R)
Hawaii NONE
Idaho
Nay ID-1 Sali, Bill (R)
Nay ID-2 Simpson, Michael (R)
Illinois
Not Voting IL-1 Rush, Bobby (D)
Nay IL-6 Roskam, Peter (R)
Nay IL-16 Manzullo, Donald (R)
Nay IL-19 Shimkus, John (R)
Indiana
Nay IN-3 Souder, Mark (R)
Nay IN-4 Buyer, Stephen (R)
Nay IN-5 Burton, Dan (R)
Nay IN-6 Pence, Mike (R)
Iowa
Nay IA-4 Latham, Thomas (R)
Nay IA-5 King, Steve (R)
Kansas
Nay KS-1 Moran, Jerry (R)
Kentucky
Nay KY-1 Whitfield, Edward (R)
Nay KY-2 Lewis, Ron (R)
Nay KY-4 Davis, Geoff (R)
Nay KY-5 Rogers, Harold (R)
Louisiana
Nay LA-4 McCrery, James (R)
Nay LA-5 Alexander, Rodney (R)
Maine NONE
Maryland
Not Voting MD-4 Wynn, Albert (D)
Nay MD-6 Bartlett, Roscoe (R)
Massachusetts NONE
Michigan
Nay MI-2 Hoekstra, Peter (R)
Nay MI-3 Ehlers, Vernon (R)
Nay MI-4 Camp, David (R)
Not Voting MI-7 Walberg, Timothy (R)
Nay MI-8 Rogers, Michael (R)
Nay MI-11 McCotter, Thaddeus (R)
Minnesota
Nay MN-2 Kline, John (R)
Nay MN-6 Bachmann, Michele (R)
Mississippi NONE
Missouri
Nay MO-2 Akin, W. (R)
Nay MO-6 Graves, Samuel (R)
Nay MO-7 Blunt, Roy (R)
Nay MO-9 Hulshof, Kenny (R)
Montana
Nay MT-0 Rehberg, Dennis (R)
Nebraska
Nay NE-1 Fortenberry, Jeffrey (R)
Nay NE-2 Terry, Lee (R)
Nay NE-3 Smith, Adrian (R)
Nevada
Nay NV-2 Heller, Dean (R)
Nay NV-3 Porter, Jon (R)
New Hampshire NONE
New Jersey
Nay NJ-4 Smith, Christopher (R)
Nay NJ-5 Garrett, Scott (R)
New Mexico
Nay NM-1 Wilson, Heather (R)
Nay NM-2 Pearce, Steven (R)
New York
Not Voting NY-15 Rangel, Charles (D)
Nay NY-26 Reynolds, Thomas (R)
Nay NY-29 Kuhl, John (R)
North Carolina
Nay NC-3 Jones, Walter (R)
Nay NC-5 Foxx, Virginia (R)
Nay NC-6 Coble, Howard (R)
Nay NC-9 Myrick, Sue (R)
Nay NC-10 Mchenry, Patrick (R)
North Dakota NONE
Ohio
Nay OH-1 Chabot, Steven (R)
Nay OH-2 Schmidt, Jean (R)
Nay OH-3 Turner, Michael (R)
Nay OH-4 Jordan, Jim (R)
Nay OH-5 Latta, Robert (R)
Nay OH-8 Boehner, John (R)
Nay OH-12 Tiberi, Patrick (R)
Oklahoma
Nay OK-3 Lucas, Frank (R)
Nay OK-4 Cole, Tom (R)
Nay OK-5 Fallin, Mary (R)
Oregon
Nay OR-2 Walden, Greg (R)
Pennsylvania
Nay PA-5 Peterson, John (R)
Nay PA-9 Shuster, William (R)
Nay PA-16 Pitts, Joseph (R)
Rhode Island NONE
South Carolina
Nay SC-1 Brown, Henry (R)
Nay SC-2 Wilson, Addison (R)
Nay SC-3 Barrett, James (R)
Nay SC-4 Inglis, Bob (R)
South Dakota NONE
Tennessee
Nay TN-1 Davis, David (R)
Nay TN-2 Duncan, John (R)
Nay TN-7 Blackburn, Marsha (R)
Texas
Nay TX-1 Gohmert, Louis (R)
Not Voting TX-2 Poe, Ted (R)
Nay TX-3 Johnson, Samuel (R)
Nay TX-4 Hall, Ralph (R)
Nay TX-5 Hensarling, Jeb (R)
Nay TX-6 Barton, Joe (R)
Nay TX-7 Culberson, John (R)
Nay TX-8 Brady, Kevin (R)
Nay TX-10 McCaul, Michael (R)
Nay TX-11 Conaway, K. (R)
Nay TX-12 Granger, Kay (R)
Nay TX-13 Thornberry, William (R)
Nay TX-14 Paul, Ronald (R)
Nay TX-15 Hinojosa, Rubén (D)
Nay TX-19 Neugebauer, Randy (R)
Not Voting TX-20 Gonzalez, Charles (D)
Nay TX-22 Lampson, Nicholas (D)
Nay TX-24 Marchant, Kenny (R)
Nay TX-26 Burgess, Michael (R)
Not Voting TX-30 Johnson, Eddie (D)
Nay TX-31 Carter, John (R)
Nay TX-32 Sessions, Peter (R)
Utah
Nay UT-1 Bishop, Rob (R)
Nay UT-3 Cannon, Christopher (R)
Vermont
Not Voting VT-0 Welch, Peter (D)
Virginia
Nay VA-1 Wittman, Rob (R)
Nay VA-2 Drake, Thelma (R)
Nay VA-4 Forbes, James (R)
Nay VA-5 Goode, Virgil (R)
Nay VA-6 Goodlatte, Robert (R)
Nay VA-7 Cantor, Eric (R)
Nay VA-10 Wolf, Frank (R)
Washington
Nay WA-4 Hastings, Doc (R)
Nay WA-5 McMorris Rodgers, Cathy (R)
Nay WA-8 Reichert, Dave (R)
West Virginia NONE
Wisconsin
Nay WI-1 Ryan, Paul (R)
Nay WI-6 Petri, Thomas (R)
Wyoming
Nay WY-0 Cubin, Barbara (R)
http://www.govtrack.us/congress/vote.xpd?vote=h2008-101

[sampsonblk]

15. I would have voted NO also

Better to do it right than to do it fast.

That's how we got the Patriot Act. Or perhaps you would have voted for that, for the same reasons you listed above. ?

[SlowDownFast]

7. Someone who gets it, finally.

This isn't about partisan politics.

This is about ALL of our gov't in bed with Corporate America/Wall Street.

Corporations/Wall Street have infiltrated every last bit of our gov't.

This "financial crisis" is the final coup and congress' fake outrage is deflection away from themselves.

[FrenchieCat]

13. This means you've got great Health Care, and no kids in College.

Am I right?

[SlowDownFast]

21. Actually I have no healthcare and don't expect

to be able to pay out-of-pocket for my child's college tuition anytime soon.

Even if I did/could, it still wouldn't change the circumstance of our gov't (Dems included) colluding with/enabling Wall Street with the looting of our country.

Unless I drank Koolaid, of course - which I don't. Hate the stuff.

[terisan]

17. Exactly. Holding them accountable is citizen's duty; Otherwise we are nation of enablers. nt

[vaberella]

6. I mentioned that in a post to someone who started a thread blaming the O admin.

The stupidity is out of control. I saw it as someone who just doesn't like President Obama.
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=132&topic_id=8268181&mesg_id=8268199

[FrenchieCat]

12. There's quite a few here who just don't like President Obama......

and they don't have any problems fucking it up for the rest of us,
just as long as they can say "I told you so", just like the Freeps!

They are hoping Obama fails. :puke:

[ColbertWatcher]

9. I am sorry I missed this thread until now. Kick and rec! n/t

[masuki bance]

10. This could be describing DUers calling for Geithners head.

Like Pavlov's dog.

[Jennicut]

18. Wow. So some are blaming the Dems for this.

Just, I am speechless. Why do we bother as Dems when we eat our own? Its not about closing your eyes but about the fact that this all happened under Bush's watch to begin with...damn Obama and co for not straightening it out in less then 2 months! The Repubs who opposed the bailout could care less about us or where are tax money goes. They did this for purely political reasons. If the bailout had not happened then these companies would collapse and we would pay for it in a different way. No matter what was done we were going to be screwed all along.

[Laelth]

22. Both parties are culpable.

We had to have AIG's participation in the bailout. Both American political parties knew it, and both parties have taken steps to insure it.

AIG and bank executives said they would not participate in the bailout if their bonuses were capped. They blackmailed us. The Federal Government can't let these banks (nor AIG which insured the credit default swaps) fail, because if it did, foreign banks would lose confidence in the U.S. and would not loan the government the $1.5 trillion it needs to keep the government running. Foreign banks finance the U.S. national debt, and AIG insures those banks against losses. AIG held a gun to our head and said, effectively, give us our bonuses or the whole Federal Government collapses because no bank will be willing to lend the U.S. money.

So, Treasury insisted that the bonuses be allowed, and the restriction against them (that Dodd had insisted upon) was removed. Here, Obama did what he felt was best, and I am hesitant to second-guess him on this.

That's what I think happened.

:dem:

-Laelth

cross-posted--seven times now.