Friday, March 20, 2009

Dirty Golden Bears

The news this week is making me think about bears and gold.

In LSJUMB, we used to sing a parody of the Cal (Berkeley) fight song, called “The Dirty Golden Bear”....

The Dirty Golden Bear
Is losing all his hair....

Bear with me as I quote some news items, then your question of the week below.

Item 1: Obama collected a total of $130,000 from AIG in 2008. Chris Dodd (Banking Committee) also got a big check. - ABC News

Other Obama contributors:

Goldman Sachs: $955,473
Citigroup: $653,468
JP Morgan Chase & Co.: $646,058
Morgan Stanley: $485,823
Bank of America: $274,493
Wachovia: $214,151


I just learned that an elderly couple I've known a long time lost almost everything to Madoff. They both worked hard for many years, right up to retirement in their mid-sixties. They weren't rich, certainly not by the standards of Wall Street or Manhattan society. They said they had checked out Madoff with the SEC, which gave him a clean bill of health.

Item 3:
AIG Gave NY Dems $100K Before Historic Loan
March 19, 2009

New York campaign finance records show American International Group donated $100,000 to the state Democratic Committee just before Democratic Gov. David Paterson and his insurance superintendent launched marathon sessions to prop up the embattled insurer.

The contribution was made Aug. 29. Insurance Superintendent Eric Dinallo started negotiating with AIG and federal officials within about two weeks.

On Sept. 16, Paterson announced the “great news” that New York officials helped the giant insurer strike a historic loan deal with the Federal Reserve to keep AIG afloat.

Spokesmen for the state Democratic party, Paterson, Dinallo and AIG had no immediate comment Thursday.

The state’s effort is credited with giving AIG time to survive.

Now Washington lawmakers are blasting AIG for paying more than $160 million in bonuses to employees of a division primarily responsible for the meltdown that led to an $85 billion federal bailout of the company.

It was a big check even for AIG, which showered New York Democrats — and Republicans when they were in the Senate majority — with thousands of dollars in campaign contributions. But since January 2006, the largest single check had been for just $2,500, and most were about $350 or $500.

AIG and Paterson singled Dinallo out for keeping the effort under way, in part by putting together a $20 billion state plan that was supplanted by the federal bailout. The $85 billion federal loan saved thousands of jobs nationwide, protected insurance policy holders, and salved _ if temporarily _ the nation’s hemorrhaging financial markets while protecting New York City’s financial sector.

In Washington, Sen. Chris Dodd, D-Conn., acknowledged Wednesday that his staff agreed to dilute the executive pay provision that would have applied retroactively to recipients of federal aid. However, Dodd said he was not aware of any American International Group Inc. bonuses at the time the change was made.

Over the years, Dodd has been the top recipient of campaign contributions from AIG employees. During 2007-2008, when he ran for president, he received nearly $104,000 from AIG employees and their families, according to the Center for Responsive Politics, a nonpartisan group that monitors money in politics.

(Source: Associated Press)

Item 4 -

Remember how Secretary Paulson (former CEO of Goldman Sachs and the Fed said that we “must” give billions to AIG otherwise we’ll all be sorry.

Now we learned a few days ago that AIG immediately paid these billions to its creditors. Study this list, then read on....

Goldman Sachs ($12.9 billion)
Merrill Lynch ($6.8 billion)
Bank of America ($5.2 billion)
Citigroup ($2.3 billion)
Wachovia ($1.5 billion).
Société Générale ($12 billion)
Deutsche Bank ($12 billion)
Barclays ($8.5 billion)
UBS ($5 billion).

As one blogger put it: “All these firms did business with AIG voluntarily. All these firms knew (or should have known) the risks of doing business with an unregulated firm in an unregulated part of the market. All these firms were willing to take the risk that AIG wouldn't be able to make good on its commitments.”

Congress gave the money. Congress failed to do due diligence. Congress is to blame here, not AIG or business.

Bob Rubin – Current Board member and one-time Chairman of the Board of Citigroup. Served as Secretary of the Treasury during both the first and second Clinton administrations. Before his government service, he spent 26 years at Goldman Sachs. His most prominent post-government role was as Director and Senior Counselor of Citigroup, where he performed ongoing advisory and representational roles for the firm[1]. From November to December 2007, he served temporarily as Chairman of Citigroup.[2][3] On January 9, 2009 Citigroup announced his resignation, after having been criticized for his performance. He received more than $126 million in cash and stock during his eight years at Citigroup. “In 1997, together with then-Federal Reserve chairman Alan Greenspan, Rubin strongly opposed the regulation of derivatives” (Wikipedia). Rubin is co-chair of the Council on Foreign Relations.

Carla Hills, the other co-chair of CFR, sits on the Board of AIG. (David Rockefeller is most famous former chair of the CFR.)

Judith Rodin
– Director of Citicorp and President of Rockefeller Foundation.

Richard Parsons – Chairman of Citicorp – prominent Rockefeller connection: “From the early 1980s through much of the 1990s, Parsons owned a house at Rockefeller family estate in Pocantico Hills, (see Kykuit), where his grandfather was once a groundskeeper. For a brief time he had worked for Nelson at the family office, Room 5600, at Rockefeller Center (he currently has a Time Warner office in Rockefeller Plaza at the Center).” (Wikipedia)

Secretary of Treasury Tim Geithner, a confessed tax-cheat, is a Rubin protégé and also a member of the CFR.

Let’s look at AIG’s board:

Edward M. Liddy
– partner at Clayton, Dubilier & Rice, former board member, Goldman Sachs
Suzanne Nora Johnson - Former Vice Chairman of Goldman Sachs
James Orr - Chairman of the Board, Rockefeller Foundation

And finally, the Federal Reserve Board:

Elizabeth Duke – currently member of the Federal Reserve Board, is a former Executive Vice President at Wachovia Bank. Former Chair of American Bankers Association.

Oh, wait, Blackstone – founded by former CFR Chair Peter Peterson. Blackstone recently sold a large part of their company to the Bank of China, part of their $350 billion ownership of US securities (a third of which are mortgage-backed securities). Blackstone Chairman Steve Schwarzman was George W. Bush’s dorm mate at Yale and has raised millions for the Republican Party.

(source: public records)

OK, here’s your question finally: Since there is evidently nowhere to run and hide from these guys, should one bother being bothered?

This Seinfeld episode is a metaphor for our times...

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