As featured on p. 218 of "Bloggers on the Bus," under the name "a MyDD blogger."

Friday, April 17, 2009

Making Money Coming And Going

You'll lack surprise when you discover that Edward Liddy, the head of AIG installed after the company imploded, owns a large stake in Goldman Sachs, which has been bailed out by AIG counter-party payments.

Edward M. Liddy, the dollar-a-year chief executive leading the American International Group since its bailout last fall, still owns a significant stake in Goldman Sachs, one of the insurer’s trading partners that was made whole by the government bailout of A.I.G.

Mr. Liddy earned most of his holdings in Goldman, worth more than $3 million total, as compensation for serving on the bank’s board and its audit committee until he stepped down in September to take the job at A.I.G. He moved to A.I.G. at the request of Henry M. Paulson Jr., then the Treasury secretary and a former Goldman director.

I think this has to be the end of Mr. Liddy. When your alibi is that the $3 million is “a small percentage of his total net worth,” you're really grasping at straws. No really, that's his alibi, check the link.

The 100% pass-through of AIG counter-party payments to Goldman and other banks is absolutely insidious, maybe the worst part of this whole thing. This is why Goldman and these other banks can self-righteously claim to be renouncing government help while accepting it through pass-throughs and separate federal aid programs. They'd rather get their payoffs in black bags than in public, that's all they're whining about.

I don't necessarily think that Liddy is only making Goldman whole because of his financial stake; it's more that he's a bankster helping out his other bankster pals. It's the culture of coziness between elites that must be stopped.

Have we completely lost of sense of what is and is not a conflict of interest? Have we really built a system in which greed fully overshadows responsibility? Is it not time for a complete rethink of what constitutes acceptable executive behavior?

One of our country’s leading corporate attorneys made a telling point to me on Wednesday night, “the only way to control executive behavior is to criminalize it,” i.e., civil penalties do not change behavior - the prospect of jail time has to be on the table. His broader point was that antitrust action can make a difference in today’s world, but only if this includes potential criminal charges [...]

Let me be very clear on my position vis-a-vis AIG-Goldman and the broader Washington-Wall Street Corridor. I’m not saying that anyone has broken any laws, but rather that laws need to be changed. I’m not even saying that there have been transgressions against the prevailing code of ethics for executives and politicians - although surely we agree that this code needs to be dragged, kicking and screaming, into the 21st century.

I’m just saying that we have a problem - ultimately, with the belief system that underpins how big finance behaves - and we need to fix it.

...more AIG hilarity: Jake DeSantis, who "resigned" in a letter picked up by the New York Times, still works for the company. What a bunch of WATBs who want to rule the universe in secret like the good old days instead of under public scrutiny.

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