Anderson@Large

Money for Nothing

In the midst of the AIG political circus, it’s easy to lose sight of the fact that business as usual in DC is over.

Before the rise of citizen journalism, the story might have been swept under the rug. The American people’s demand for transparency revealed Sen. Chris Dodd’s and the Obama administration’s complicity in the AIG mess.

Now, both ends of Pennsylvania Avenue are swept up in a whirlwind of populist outrage. The House vote is a transparent exercise in CYA.

Ellen Miller, co-founder of the Sunlight Foundation, observes:

Our fears have materialized about what happens when no one reads legislation. Now we have proof that 13 hours wasn't enough time to read the 1100 page Stimulus Bill. Reports have emerged that Senator Dodd, at the behest of the administration, inserted an unnoticed loophole that allowed AIG employees to receive exorbitant bonuses. I am certain that if Congress had put that legislation online for 72 hours before it was considered -- if they had a chance to read it, or if you did -- someone might have caught that last minute loophole.

Citizen watchdogs are also shining sunlight on the scams run by lobbyists who convince corporations and special interest groups they need a “presence” in Washington.

The Center for Responsive Politics reports:

The résumé and pedigree of Harold Ickes mark him as a Washington power broker, exactly the type you’d hire if you needed a lobbyist to advocate for you with lawmakers. The son of Franklin Roosevelt’s Interior Secretary, Ickes was deputy chief of staff in Bill Clinton’s White House and a top adviser on Hillary Clinton’s presidential campaign. As a lobbyist, Ickes and his partner reported earning $674,000 from their clients last year, but figuring out what they did to earn more than half their fees can be unusually difficult.

Ickes (sounds like icky) was one of the, um, brains behind America Coming Together. So, it was not surprising to see his name on the list. After all, folks are still trying to figure out what he did with the hundreds of millions of dollars he burned through in 2004.

The Center further reports:

A search of federal lobbying reports going back more than a decade reveals that Ickes & Enright is far from the only Washington lobbying firm to file such bare-bones reports with Congress. Reviewing reports filed with the Senate Office of Public Records (SOPR) since 1998, the nonpartisan Center for Responsive Politics found nearly 19,000 reports totaling at least $565 million in payments to lobbying firms for activity that was almost entirely unaccounted for. Last year, more than one in 10 filings were the equivalent of a single page--no issues listed, no lobbyists named, no government agencies contacted.

In an era of transparency, there will be less money for nothing. And since politics is Hollywood for ugly people, it's safe to assume few lobbyists are getting “chicks for free.”

Enough!

In testimony before the House Financial Services Committee, AIG CEO Edward Liddy testified that Federal Reserve Chairman Ben Bernanke signed off on the retention bonuses.

On the other side of the Capitol, Sen. Chris Dodd admitted he slipped the loophole in the stimulus bill that allowed AIG to rip off taxpayers.

Meanwhile, Time magazine reports the Obama administration reportedly knew about the bonuses before they cut a $30 billion check for AIG:

Although Treasury Secretary Timothy Geithner told congressional leaders on Tuesday that he learned of AIG’s impending $160 million bonus payments to members of its troubled financial-products unit on March 10, sources tell TIME that the New York Federal Reserve informed Treasury staff that the payments were imminent on Feb. 28. That is 10 days before Treasury staffers say they first learned “full details” of the bonus plan, and three days before the Administration launched a new $30 billion infusion of cash for AIG.

While politicians play the blame game, a Gallup poll found that 76 percent of Americans want the government to block or recover the bonuses.

Later today, outraged Americans will take to the streets. From Wall Street to Main Street, fired-up citizens will demonstrate in nearly 100 cities to take back the economy. They will voice their anger at the offices of bailed out bunglers, including AIG, Goldman Sachs and Bank of America.

To find an event near you, go here.

AIG Bonus Backlash

It is fitting the AIG story broke during Sunlight Week. It makes your blood boil, but this is what transparency looks like:

The bonuses that the American International Group awarded last week were paid to 418 employees and included $33.6 million for 52 people who have left the failed insurance conglomerate, according to the office of the New York attorney general.

The company paid the bonuses, including more than $1 million each to 73 people, to almost all of the employees in the financial products unit responsible for creating the exotic derivatives that caused A.I.G.’s near collapse and started the government rescue to avoid a global financial crisis.

In a letter to Rep. Barney Frank, chairman of the House Financial Services Committee, New York Attorney General Andrew Cuomo wrote:

AIG now claims that it had no choice but to pay these sums because of the unalterable terms of the plan. However, had the federal government not bailed out AIG with billions in taxpayer funds, the firm likely would have gone bankrupt, and surely no payments would have been made out of the plan. My Office has reviewed the legal opinion that AIG obtained from its own counsel, and it is not at all clear that these lawyers even considered the argument that it is only by the grace of American taxpayers that members of Financial Products even have jobs, let alone a pool of retention bonus money. I hope the Committee will take up this issue at its hearing tomorrow.

And get this:

Furthermore, we know that AIG was able to bargain with its Financial Products employees since these employees have agreed to take salaries of $ I for 2009 in exchange for receiving their retention bonus packages. The fact that AIG engaged in this negotiation flies in the face of AIG’s assertion that it had no choice but to make these lavish multi-million dollar bonus payments. It appears that AIG had far more leverage than they now claim.

Three days ago, Dr. Lawrence Summers, director of the National Economic Council, said “we can’t govern out of anger”:

We are a country of law. There are contracts. The government cannot just abrogate contracts. Every legal step possible to limit those bonuses is being taken by Secretary Geithner and by the Federal Reserve system.

The former Harvard president sounds like an educated fool. In the wake of populist outrage, Summers now says:

What the President’s made clear, what our Administration’s doing is being as creative as we can with a group of lawyers working on this problem, using recoupment authority, employing other means to do everything we can within the law to address this situation.

In the meantime, mark your calendar for April 3 and the national march on Wall Street.

Does anyone know where I can buy a pitchfork in Brooklyn?

Stop the Financial Madness

On Wednesday, the House Financial Services Committee will hold a hearing on the AIG mess. The Committee will examine “how it got into its current situation, why it has received so much federal assistance, and how to move forward.”

During an interview with PBS' NewsHour, Committee Chairman Barney Frank said:

So I do believe the federal government as the -- effect, as the owner can say, "These bonuses may have been promised for performance, but I think we can look at the performance," as the president was quoted in the show was saying, it's hard to argue that this is pay for performance.

Frank continued:

But I do think, as the owner of the company, we can say, "You know what?" And I haven't seen the contract. I want to look at them. But you were going to get a bonus for this or that performance. I mean, even in those companies, you don't get a bonus for breathing. There has to be some performance.

President Barack Obama asked:

How do they justify this outrage to the taxpayers who are keeping the company afloat?

They can’t justify the unearned and unreasonable compensation.

Obama added:

This isn’t just a matter of dollars and cents. It’s about our fundamental values.

All across the country, there are people who work hard and meet their responsibilities every day, without the benefit of government bailouts or multi-million dollar bonuses. And all they ask is that everyone, from Main Street to Wall Street to Washington, play by the same rules.

That is an ethic we must demand.

Our fundamental values include no double standards. If Congress can demand that automakers break union contracts (h/t Glenn Greenwald), it must demand that AIG break its contracts with executives who ran the company into the ground.

As for the advice from “outside counsel” that “these are legal, binding obligations of AIG,” let the “best and brightest talent” sue for their retention bonuses. Where are they going?

Frank rightly observed:

Looking at the record, these do not sound like people I would be that eager to retain.

In a statement, House Speaker Nancy Pelosi said:

AIG has turned on its head the basic principle that bonuses and retention payments are rewards for outstanding performance. No taxpayer funds should be used to pay bonuses or other unjustified compensation to AIG executives whose irresponsible risk-taking brought our financial system to the brink of collapse.

These “Ain’t I Greedy” incompetents are playing taxpayers for fools. Congress must use its subpoena power to get access to the contracts.

The American people are angry and demand accountability. Enough is enough.

Let the Sunshine In

This is Sunshine Week, a time when news organizations and advocacy groups highlight the public’s right to know what’s going on with our government.

A survey by Scripps Howard News Service and Ohio University found that 74 percent consider the federal government to be secretive, up from 62 percent in 2006.

Jerry Miller, director of the Scripps Survey Research Center at Ohio University, said:

Trust in government has been on the decline for some time in the United States. The previous administration’s disclosure policies certainly contributed to public skepticism. People now appear more optimistic, but still guarded, about President Obama and the current administration’s disclosure practices under the Freedom of Information Act.

The American people have every reason to be on guard. The recipient of $170 billion of taxpayers' money, AIG, is "rewarding incompetence."

Federal Reserve Chairman Ben Bernanke told CBS' "60 Minutes":

I understand why the American people are angry. It's absolutely unfair that taxpayer dollars are going to prop up a company that made these terrible bets, that was operating out of the sight of regulators, but which we have no choice but to stabilize, or else risk enormous impact, not just in the financial system, but on the whole U.S. economy.

The bonus boondoggle and bailout of foreign banks make you want to storm their headquarters. After all, we own 80 percent of the all-but bankrupt corporation.

But transparency is about more than ferreting out corporate welfare. It’s also about accountability.

It would be unacceptable for the Obama administration to simply express outrage and wring their hands. It’s past time for Treasury Secretary Timothy Geithner to wring some necks and let some heads roll.

I recently chatted with David Stephenson, author of the forthcoming book, Democratizing Data. I asked David why open government matters:

First of all it’s our lives. That’s the substance of these data… It’s our tax dollars. People have a legitimate distrust and are disillusioned with government. They have to prove the money is well-spent. You rebuild public trust by data transparency.

So, let the sunshine in this week and every week. Only then will the fat cats rats scurry.

Molten Steele

Michael Steele’s erratic performance as chairman of the Republican National Committee brings to mind the wisdom of Uncle Remus: If you try to be something you ain’t, you ain’t.

From throwing the GOP's pro-life plank under the bus to riffing about his love for the “Pack Rat,” it ain’t working. BTW, Mike, baby, it’s the Rat Pack.

Former presidential wannabe Mike Huckabee threw the Platform book at Steele:

Comments attributed to Republican National Committee Chairman Michael Steele are very troubling and despite his clarification today the party stands to lose many of its members and a great deal of its support in the trenches of grassroots politics. Since 1980, our party has been steadfast and principled in believing in the dignity and worth of every human life. We have supported a Constitutional amendment to protect life and the party has taken the position that no one individual has the supreme right to own another person in totality including the right to take that life. For Chairman Steele to even infer that taking a life is totally left up to the individual is not only a reversal of Republican policy and principle, but it's a violation of the most basic of human rights--the right to life, liberty, and the pursuit of happiness. His statement today helps, but doesn't explain why he would ever say what he did in the first place.

Steele’s rival for RNC chairman, Ken Blackwell, threw the Good Book at him:

Chairman Steele, as the leader of America’s Pro-Life conservative party, needs to re-read the Bible, the U.S. Constitution, and the 2008 GOP Platform. He then needs to get to work -- or get out of the way.

In an interview with GQ magazine, Steele said:

I mean, who’da thunk it in 1963 that in 2009 two black men would sit on top of the political world of this country? How friggin’ awesome is that? You cannot look at that and not go, “Wow.”

Wow, baby. You're friggin' off the hook.

A Dream Deferred

The great Langston Hughes asked, “What happens to a dream deferred?” If it’s the American Dream and you’re black, it means you may be facing foreclosure.

Fifty years ago, another black cultural icon, Lorraine Hansberry’s play “A Raisin in the Sun” opened on Broadway. Henry Louis Gates Jr., editor-in-chief of The Root, described the drama as “black America’s first mortgage crisis.”

Gates recently wrote:

What is striking to me now is how very contemporary Raisin’s message is for African Americans in the early 21st century. For, ultimately, A Raisin in the Sun, which opened on March 11, 1959, is about deferred gratification, its merits and its necessity if black America is ever going to catch up economically to the rest of the country and take our rightful place in the larger American middle class. Why talk about an old play in the midst of the greatest economic crisis since the Depression? Because this is precisely the time for us to do some very hard thinking about how the downturn is going to reshape the class structure of black America, and what we—within the race—can do about it. And Raisin holds clues.

While the black community does some long overdue soul searching, Attorney General Eric Holder reportedly plans to go after the soulless schemers who robbed homeowners of their dream.

The New York Times reports:

Spurred by rising public anger, federal and state investigators are preparing for a surge of prosecutions of financial fraud.

Across the country, attorneys general have already begun indicting dozens of loan processors, mortgage brokers and bank officers. Last week alone, there were guilty pleas in Minnesota, Delaware, North Carolina and Connecticut and sentences in Florida and Vermont — all stemming from home loan scams.

With the Obama administration focused on stabilizing the banks and restoring confidence in the stock market, it has said little about federal civil or criminal charges. But its proposed budget contains hints that it will add to this weight of litigation, including money for more F.B.I. agents to investigate mortgage fraud and white-collar crime, and a 13 percent raise for the Securities and Exchange Commission.

If the story is accurate, Americans’ dream of holding these thieves accountable will not dry up like a raisin in the sun.