Give Us Free Money Or We'll Shoot This Economy
Pretty much cementing his status as New York State's next governor, Attorney General Andrew Cuomo has clawed back a significant portion of the AIG bonuses. I imagine this takes the Senate and the President off the hook, at least in their mind, to pass the House's bonus tax bill.
The New York State attorney general, Andrew M. Cuomo, said on Monday that he had persuaded nine of the top 10 bonus recipients at the American International Group to give the money back, as the Senate retreated on plans to tax such bonuses.
Mr. Cuomo said he was working his way down a list of A.I.G. employees, ranked by the size of their bonuses, and had already won commitments to pay back $50 million out of the total $165 million awarded this month. But in a reversal of the stand he took last week, he said he did not intend to release any names.
“If the person returns the money, I don’t think there’s a public interest in releasing the names,” Mr. Cuomo said in a conference call with reporters.
In Washington, the Senate majority leader, Harry Reid, said that efforts to recover bonuses like the ones at A.I.G. through punitive taxes would be delayed. Other officials said momentum in Congress had slowed considerably, given misgivings voiced by President Obama.
Cuomo expects something like $80 million to come back to the US government once this is all said and done. Economic problem solved!!!
I hope the larger issue doesn't vanish, that the compensation system on Wall Street distorts outcomes, and the size of the financial sector relative to the economy makes no sense for an industrialized nation. The bonuses, and the particular bonus tax bill, are entirely besides the point.
But this story from the WSJ suggests that the Big Money Boyz got Obama and his team in a room and unfurled a movie screen and played the Kennedy assassination from an angle they've never seen before*.
In recent days, in spite of public furor over huge bonuses paid at American International Group Inc., the administration has concluded that it needs the private sector to play a central role in fixing the economy. So over the weekend, the White House worked to tone down its Wall Street bashing and to win support from top bankers for the bailout plan announced Monday, which will rely on public-private investments to soak up toxic assets.
But weeks of searing criticism by politicians and the public had left bankers leery of working with the government. After brainstorming about what to do about that problem, the White House resolved to try to take control of the debate, according to several administration officials. In weekend television appearances, President Barack Obama and other administration officials tempered their criticisms of the financial sector.
Meanwhile, Treasury Secretary Timothy Geithner and his colleagues worked the phones to try to line up support on Wall Street for the plan announced Monday. They told executives they don't favor using the tax code to retroactively penalize specific individuals who had received bonuses, according to people familiar with the calls. They asked officials to sign on "in pencil, not ink," and to "validate" or "express support" for the plan, these people say.
Some bankers say they turned the conversations into complaints about the antibonus crusade consuming Capitol Hill. Some have begun "slow-walking" the information previously sought by Treasury for stress-testing financial institutions, three bankers say, and considered seeking capital from hedge funds and private-equity funds so they could return federal bailout money, thereby escaping federal restrictions.
The banksters have a gun to the head of the executive branch. There's no other way to say it.
* - h/t to Bill Hicks.
P.S. Maybe those Wall Street tycoons should get themselves to France, where the Parliament has introduced an executive-pay limit law after businesses failed to accept a voluntary agreement. The difference being that French politicians actually pay attention to their citizens.