Tuesday, March 17, 2009

What Do Pensions Have in Common with AIG?

A very clear eyed look at the self-appointed financial elites and what they've done to our country.
Here are a couple snips from naked capitalism:

...Talk about the glue that binds a nation. I agree with Miles Mogulescu of the Huffington Post who writes that the Obama administration must stop bonuses to AIG Ponzi schemers:

It's time for some righteous populist anger from the Obama administration--not just in words, but in deeds--to stop the looting of the Federal Treasury by Wall Street executives using taxpayer money to pay bonuses to the very people who manipulated markets and were instrumental in bringing the international financial system crashing down on the heads of hundreds of millions of people in America and around the world....

...Even first year law students in Contracts 101 learn that there are numerous exceptions to the "sanctity of contracts". As any working lawyer will tell you, contracts are legally abrogated every day--a big part of our court system is given over to litigating disputes over the enforceability of various commercial contract provisions. If Treasury Secretary Geithner is rolling over and passively taking the advice of lawyers hired by AIG's Chairman that there are no legal defenses and counterclaims to paying the executive bonuses, then he's talking to the wrong lawyers. He and President Obama need to bring in the best litigators in the country and give them the mandate to find every available legal argument for not paying the bonuses, and then force every employee of AIG's Financial Products Unit who is unwilling to give up their bonus to hire expensive lawyers to sue for it, and vigorously defend these lawsuits through trial and up the appeals ladder, if necessary, for years, before even considering paying any such claims.

Let's clearly understand what the executives of AIG's Financial Products Unit did: As several commentators have noted, AIG's Financial Products Unit is a hedge fund grafted onto an insurance company. I would go even further--It's all-but a Ponzi Scheme grafted onto an insurance company.

AIG's principal business is selling insurance including casualty, auto and life insurance....MORE