This Saturday a bus filled with about 40 people pulled into a cul-de-sac in Fairfield County, Connecticut where a pastor and a steelworker disembarked and made their way to the front door of one of the large homes in the neighborhood. The protestors did not make it to the door however, as they were met by a security guard working to protect the home’s owner: AIG executive Doug Poling.
The identities of most current and former AIG employees remain private, for now, but for those executives whose names are known, life now includes security guards at their homes, reporters in their driveways, and vehicles invading their neighborhoods. Nobody was hurt and the protest went off without incident, but the event should serve as a dire warning for anyone even thinking about participating in Treasury Secretary Timothy Geithner’s new Public-Private Investment Program.
This latest Geithner plan envisions spending at least $500 billion and up to $1 trillion, 95% of which would come from the government, to remove “legacy assets” from the balance sheets of troubled financial institutions. Private investors, hedge funds and other financial institutions, would manage the assets, but they would receive heavily subsidized government loans and guarantees from the government to cap their losses.
This proposal comes just days after the House of Representatives voted to slap punitive taxes on retention bonuses paid to employees of institutions receiving other TARP funds. Recognizing the threat that the House’s actions posed to their plan, Obama Administration officials fanned out across the Sunday talk shows to reassure potential investors that they would not be subject to these punitive measures. White House economist Christina Romer told Fox News Sunday:
What we’re talking about now are private firms that are kind of doing us a favor, right, coming into this market to help us buy these toxic assets off banks’ balance sheets. I think they understand that the president realizes they’re in a different category. They are firms that are being the good guys here.
But for how long will these firms keep their “good guy” label? What if the investments go south and taxpayers have to bailout these investors too. Does anyone really believe they would then be safe from this Congress? Or what if they are really successful and make billions of dollars with government subsidies? Does anyone really believe this Congress won’t try and take those dollars too?
Laurence Fink, chief executive of the money management company BlackRock, seems ready to take Geithner’s word: “We will be raising money on behalf of our clients. I don’t see how Congress can interfere in this.” Fink better hope everything goes perfectly for him and his clients. Otherwise he’s going to find himself on the business end of a Congressional subpoena. He might also want to remember that the Obama Administration has yet to say they will veto the House clawback bill … and that it was the Obama White House who first promised to take back the AIG bonuses by “every legal means” necessary.
Quick Hits:
- Six weeks after President Barack Obama appointed a blue-ribbon panel to help him dig America out of its economic crisis, the board has yet to hold an official public meeting.
- Energy Secretary Steven Chu has likened his initiation into Washington to being “dumped in the deep end of the pool.”
- Sweden said “no” to bailing out their native auto giant Saab.
- House Judiciary Committee Chairman John Conyers (D-MI) proposed holding hearings on claims the liberal activist group ACORN engaged in a pattern of crimes ranging from voter fraud to a mob-style “protection” racket.
- President Barack Obama’s former choice for Commerce Secretary told CNN that “the practical implications of Obama’s budget is bankruptcy for the United States.”
