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Obama's Vindictiveness Gap


Obama speaking to small business owners yesterday. (Ron Edmonds - AP)

Barack Obama, who rose to power based at least in part on his calm, cerebral and empathetic nature, now risks falling out of sync with the electorate because he's not a vindictive man -- and the nation is in a vindictive mood.

The current wave of public outrage over bonus payments paid by AIG may well recede quickly. But populist anger doesn't play to Obama's strengths -- and at the very least distracts attention from his agenda.

Obama wanted us to be talking yesterday about his plan to help get credit flowing to small businesses. He wanted us to be talking today about his renewed pitch for his budget proposal -- and maybe about his Irish heritage. Instead, all we seem to be able to talk about is AIG.

The whole bank rescue issue is, in fact, something of a political loser for Obama -- as it would be for any president. In the best-case scenario, we spend billions to return the credit markets to how they used to be. In the meantime, the massive dollar amounts, the incredibly complicated landscape and the inevitable compromises involved make him hugely susceptible to attacks from the left, from the right, and from cynics of all persuasions.

Obama is certainly a populist in a lot of ways -- he campaigned as a champion of the little guy, his policies are intended to reverse the recent redistribution of wealth toward the wealthy, and he is making a variety of efforts to stay connected to average Americans.

But this isn't the first time he's been slow to embrace a growing populist anger. You may recall how back in late January, he initially responded quite discreetly to the revelation that executives at Citibank -- who received a $45 billion infusion of tax dollars -- were about to take deliver of a $50 million corporate jet. (He eventually expressed high dudgeon.)

I speculated at the time that he was overly focused on not upsetting Republicans and Wall Street. Now I wonder if it's some combination of other factors, one of them being the overall slowness to anger that, as we've seen in the past, lets him brush off criticism and reach out to even the most antagonistic political opponents. Another possible factor is that he continues to surround himself with economic advisers who come from the Wall Street culture where what the rest of us would consider obscene payments under any circumstance have been rationalized for years now.

In any case, the sequence of events revolving around the AIG bonuses just does not reflect well on his administration, from its initial lack of sufficient outrage to what now appears to be an utterly unpalatable resolution:

Edmund L. Andrews and Jackie Calmes write in the New York Times: "President Obama and his top economic advisers scrambled to calm a nationwide furor on Monday over bonuses paid at the American International Group, even as administration officials acknowledged they had known about the issue for months.

"One day after the economic advisers insisted that their hands had been tied by contracts requiring the payments, Mr. Obama ordered the Treasury Department to 'pursue every single legal avenue to block these bonuses' and make the American taxpayers whole...

"But as anger from lawmakers escalated and criticism of the retention bonuses overshadowed other news for a second consecutive day, White House and Treasury officials offered only a general sense of how they would carry out Mr. Obama's order and few explanations for why they had not acted earlier.

"White House officials said the Treasury would recapture the bonus money by writing new requirements into a $30 billion installment of government aid scheduled to go soon to the ailing insurance conglomerate. The government has already provided $170 billion in taxpayer assistance to keep A.I.G from failing and now owns nearly 80 percent of the company.

"But administration officials conceded that almost all of the most recent round of bonuses, totaling $165 million, had been paid last Friday, one day before the Treasury publicly acknowledged that it had reluctantly approved the payouts. The officials said that people who received the bonuses would probably be able to keep them.

"By seeking to link repayment of the bonus money to the coming $30 billion in assistance, the administration seemed to leave open the possibility that the company would effectively be repaying taxpayers with taxpayer money. A Treasury official disputed that taxpayers would be repaying themselves, but could not specify how else the company would give back the money."

Jonathan Weisman, Sudeep Reddy and Liam Pleven write in the Wall Street Journal: "The confusion that seemed to mark the White House's AIG response Monday illustrates the bind that Mr. Obama finds himself in. He needs to convince Americans he shares their mounting fury over the hundreds of billions of taxpayer dollars being pumped into companies like AIG. At the same time, he needs the executives and employees of those companies to help the government untangle the current financial mess....

"White House aides said that administration officials had been consistent in their statements on the issue over the past few days. But the tone did appear to shift. Appearing Sunday on ABC's 'This Week,' the president's top economic adviser, Lawrence Summers, called the bonuses 'outrageous,' yet left the impression that little could be done. 'The easy thing would be to just say, you know, 'Off with their heads,' and violate the contracts,' he said. 'But you have to think about the consequences of breaking contracts for the overall system of law.'

"A little more than 24 hours later, the president seemed to promise much bolder action. Then by late afternoon Monday, White House and Treasury officials echoed the Summers position that nothing could be done about payments already made."

Here's what Obama had to say about AIG yesterday.

"[I]t's hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay. I mean, how do they justify this outrage to the taxpayers who are keeping the company afloat?...

"I think [AIG CEO Edward] Liddy and certainly everybody involved needs to understand this is not just a matter of dollars and cents. It's about our fundamental values. All across the country, there are people who are working hard and meeting their responsibilities every day, without the benefit of government bailouts or multi-million dollar bonuses. You've got a bunch of small business people here who are struggling just to keep their credit line open -- that they are foregoing pay, as one of our entrepreneurs talked about, they are in some cases mortgaging their homes, and doing a whole host of things just in order to keep things afloat. All they ask is that everyone, from Main Street to Wall Street to Washington, play by the same rules. And that is an ethic that we have to demand."

The words were effective. But his demeanor, and the context, were his undoing.

Dana Milbank writes in his Washington Post column: "Obama was left looking like a pitiful giant as his aides explained that there was absolutely nothing they could do to stop the obscene payouts -- even though the government owns 80 percent of AIG.

"As the president read from his teleprompter yesterday about 'this outrage to the taxpayers who are keeping the company afloat,' he developed a tickle in his throat and tried to clear it. 'Excuse me,' he joked. 'I'm choked up with anger here.'

"But not enough....

"[I]f the president wants to keep ahead of the public fury, he'll need to do more than share the concerns; he'll need to act on them."

Washington Post opinion columnist Eugene Robinson blogs: "When the president was a candidate, his staff referred to him as 'No Drama Obama.' That's the way he is: cool, steady, no histrionics, no distractions, keep your eye on the ball. This is a moment, however, when he ought to get in touch with his anger -- and let everyone witness the encounter.

"Americans are well ahead of their political leaders in their outrage at the greed and irresponsibility of the preening Wall Street 'geniuses' who wrecked the economy. The White House obviously has realized that in order to orchestrate a recovery -- which will surely necessitate another bailout, however it's framed -- the president will have to get out in front of the public's anger and try to channel it in the directions he wants it to flow. Confronted with the egregious AIG bonuses, Obama did the right thing: He came out before the cameras and told everyone how outraged he was.

"But righteous anger doesn't seem to come naturally to him. I happened to read his prepared remarks before he delivered them, and they looked plenty wrathful. When he spoke, though, he sounded… analytical. Unruffled. Reasonable....

"When he coughed and said 'Excuse me, I'm choked up with anger here,' he almost seemed to adopt an air of ironic detachment. Believe me, Americans aren't feeling ironically detached about much of anything right now."

Mike Madden writes for Salon: "If there's any point the bonus brouhaha should drive home, once and for all, inside the Beltway, it's that the financial collapse has gone way past the point of 'shame on you.' Unless the government gets tougher with the banks it now owns huge stakes in, the Obama administration itself may be soon be bellowing 'shame on me.'"

So how serious a political problem is this for Obama? Enormous, according to the front page of the Washington Post.

Under the heading "An Imperiled Agenda", Michael D. Shear and Paul Kane write: "President Obama's apparent inability to block executive bonuses at insurance giant AIG has dealt a sharp blow to his young administration and is threatening to derail both public and congressional support for his ambitious political agenda.

"Politicians in both parties flocked to express outrage over $165 million in bonuses paid out to executives at the company, demanding answers from the president and swamping yesterday's rollout of his efforts to spark lending to small businesses....

"White House aides grasped for actions that could soothe sentiment on Main Street and in the halls of Congress, where the fate of the new president's sweeping agendas on health care, climate change and education will be decided....

"But the damage control did not seem to satisfy incredulous lawmakers in both parties, who said the image of financial executives taking huge bonuses from a taxpayer-funded rescue puts the president in a politically impossible position....

"The Obama administration was already facing a skeptical public and members of Congress critical of the huge sums of money the government has allocated to shoring up the devastated financial system.

"News of the latest AIG bonuses only compounded the political problems that the huge expenditures pose for the president."

It's true that, as Shear and Kane note: "House Minority Leader John A. Boehner (R-Ohio) said the bonus issue added to his belief that there will be almost no Republican support for any expansion of a bank-bailout program that passed Congress last fall with broad bipartisan support." (Although was anyone counting on much GOP support for anything Obama proposed right now?)

And some 79 House Democrats wrote an angry letter to Treasury Secretary Timothy Geithner yesterday asserting that "using taxpayer funds from the Wall Street bailout to pay bonuses completely undercuts the President's goal....

"These kinds of abuses of the public trust will only threaten any future efforts by President Obama's Administration to intervene in the financial markets. For the sake of the President's ability to continue to take the steps that may be necessary to rebuild our economy, there must be a stronger response than simply decrying this development."

But I think this may just be the latest in what Washington Post media critic Howard Kurtz so correctly calls "the daily drumbeat in the punditocracy...that Obama who promised so much hasn't made much headway."

Kurtz explains: "First he was blamed for the plunging stock market, until there was a slight rebound. Then he was roundly criticized for trying to do too much at once, a theme that was reprised Sunday on 'Meet the Press.'

"And now the august chroniclers of the MSM are raising questions about whether our new president knows what the hell he's doing....

"The president is pushing a big agenda that is, of course, fair game. But it seems to me he's stuck in an uncomfortable limbo. He inherited huge problems that forced him to start drafting economic legislation even before taking the oath. He rammed through a huge stimulus plan in record time and unveiled a new bank bailout plan. But even under the best of circumstances, these efforts are going to take time to show results."

Is there anything else Obama could do, regarding AIG?

Andrew Ross Sorkin makes the case in the New York Times that the president has little choice: "A.I.G. built this bomb, and it may be the only outfit that really knows how to defuse it."

But Jim Puzzanghera and Tom Hamburger write in the Los Angeles Times about a more assertive approach: "New York Atty. Gen. Andrew Cuomo, whose office has been investigating AIG's executive compensation packages, is trying another approach in pursuit of the bonus money....He's trying to determine whether AIG committed fraud in agreeing to the bonuses early last year despite growing multibillion-dollar losses that would have prevented them from being paid."

And Roger Lowenstein writes in his Bloomberg opinion column: "The company says it's afraid of being sued. But contrary to what lawyers and legalistic bureaucrats will tell you, there are worse things than lawsuits. Stiffing taxpayers to pay gluttonous derivatives traders -- and in the midst of an economic crisis -- is among them....

"Seven employees will get at least $3 million and one will get $6.5 million....

"Assuming the checks haven't been cashed yet, here is what Geithner should say to Liddy: 'Sorry, Ed. We'll keep track of what we promised, and maybe in a couple or three years, if AIG is earning money, and a pool exists (outside of taxpayer funds) to pay bonuses, then OK.'

"If its traders end up suing to get their full bonuses, the company (and the government) could claim that the promised bonuses were a 'fraudulent conveyance.' This defense is usually employed in bankruptcy cases. Under the theory of fraudulent conveyance, it is illegal to transfer assets that are needed to pay creditors. So, if the owners of a highly leveraged company give themselves a big dividend, leaving the corporation unable to service its debts, the creditors can sue to reclaim the funds."

By Dan Froomkin  |  March 17, 2009; 1:12 PM ET
Categories:  Financial Crisis  
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Comments

The word "bonus" makes everyone angry. One normally thinks of "bonus" as a supplementary payment for successful performance. By this definition, no profit, can't be a bonus. But the word is being used more expansively- the "retention" payments seem to be an amount promised to be paid at the end of a period if you work for the period. I can understand why such a payment (set aside the issue of magnitude) may be necessary even if the company is losing money- that is you may have to pay people to minimize the loss.
I've read statements that say "bonus" payable regardless of performance, it is virtually part of regular salary. This is the part that is mystifying to me- is compensation structured this may for some tax advantage either in US or in UK? This is the way the media seems to be characterizing the AIG bonuses- and it is perplexing- if salary why call it a "bonus"?

Posted by: JohnnyCanuck1 | March 17, 2009 1:59 PM | Report abuse

Obama is certainly not a populist but compared to McCain he's positively proletarian.
Nor is Obama the liberal that people on the right claim. He's very traditional and centrist.

Posted by: bdunn1 | March 17, 2009 2:10 PM | Report abuse

I'm glad to see the outrage at AIG, after 30 years of cooing lovingly at the excesses of the executive caste, America is long overdue for some populist outrage. Since we are bailing out these clowns they should be sacrificing their salaries until they're solvent again, not rewarding bad behavior with seven-figure bonuses.

Posted by: chrisfox8 | March 17, 2009 2:12 PM | Report abuse

Surely President Obama expects there to be a certain amount of "ebb and flow" of his approval ratings, tied to various economic dislocations our economy will be experiencing. My personal take is that he understands that his political capital will have to be, at various times, expended and also renewed.
The visceral response to the more anti-populist portions of the bailouts offer an opportunity to bleed off a portion of the raw anger people feel. Afterwards when a more pragmatic, how do we fix the problem mood takes hold he would find more traction for the reform agenda.

Of course the right will hyper-ventilate over any perceived misstep but there doesn't seem to be any consequential appetite for their bill of fare.

Posted by: PatD1 | March 17, 2009 2:12 PM | Report abuse

Treasury Secretary Timothy Geithner is the problem! He's using the AIG bailout to payoff all the bad bets his old company made. Same with Paulson.

Posted by: obrier2 | March 17, 2009 2:19 PM | Report abuse

George W. excelled at quickly generating and manipulating popular fear and anger. I'll take a slow to anger Pres. any day.

@JohnnyCanuck1: Interesting point. Perhaps they are paid "bonuses" to avoid social security and other taxes?

Posted by: org1 | March 17, 2009 2:22 PM | Report abuse

Good wrap up.

But why no mention of the Pew Poll that shows most Americans are totally behind our President Obama and his policies and budget?

It's amazing what an echo chamber for the Socialist Republicans the beltway media are.

Posted by: WillSeattle | March 17, 2009 2:53 PM | Report abuse

The Media, the White House and the Congress, have all misread the deep seated anger people have over Wall Street and the Governments handling of the crisis.

To call it "Populist" shows just how little respect all the above have for the American people. These people on Wall Street have guaranteed that some people will live in poverty the rest of their lives and the government just can't stop tripping over themselves to give Wall Street even more Tax Payer $$$.

Obama had the opportunity to set us on a path to clearing out the bad banks, support the good ones, and most importantly putting the criminals in JAIL. Instead, for reasons only he knows, he has allowed the lies and robbery to continue. So now, he along with congress and the media, will be blamed. Which is good. It's about time.

Would you call the Boston Tea Party populist anger? I wouldn't. The fuse has been set, just waiting for the spark.

Posted by: mdsinc | March 17, 2009 2:54 PM | Report abuse

I don't care if AIG blows up and we have to sink a trillion dollars into it. NO BONUS PAYMENTS TO THE CRIMINALS WHO DESTROYED OUR ECONOMY...

Posted by: jerkhoff | March 17, 2009 3:06 PM | Report abuse

The word vindictive seems a strange description of people's feelings. If someone steals my car, am I being vindictive to demand it back? I think the President himself has used a better term "Righteous anger", although he seems feeble in applying that term in this situation, perhaps because the administration knew about the bonuses before they were made public and tacitly signed off on them? Now he is about to be made weak looking in comparison to the Congress if they actually pass laws to rectify these outrages. 73 'retention bonuses' of over 1 million each to people who bankrupt a company? You don't have to be vindictive to be outraged by that. And a President can't survive having a strong stink of weakness stuck to him and then lead effectively. Ask Jimmy Carter how his Presidency worked after the Iran Embassy incident. If Congress leads in making "we the people' feel like we still have some control over our country, that mantle of leadership won't soon go back to 1600 Pa. ave. Fair of not, the President now owns the AIG bonus scandal and he had best seize the moment- if he fails to seize it, it will swamp all his other good intentions. If he can't make a bunch of wall street traders tow the line, what chance does he have against the Congress, the Drug Companies or foreign leaders?

Posted by: mgferrebee | March 17, 2009 3:07 PM | Report abuse

We cannot set aside the magnitude of the bonuses when we talk about them. The people receiving these bonuses are already well paid when you look at their base salaries. The bonuses put them into stratospheric levels of compensation.

I've read article after article about auto workers and bank workers who are taking cuts in their base salary in order to keep their jobs. Many unions here in Washington are foregoing the pay raises they fought for in order to help the state balance its budget.

I don't care whether this is a "bonus" in name only. AIG should return to normal levels of compensation as one of its first moves in restoring black ink on the balance sheet of the company. Anyone who would draw millions in salary while the company is bleeding is a simple thief. We don't need people with so little ethics in these companies at all.

Posted by: fletc3her | March 17, 2009 3:12 PM | Report abuse

"But administration officials conceded that almost all of the most recent round of bonuses, totaling $165 million, had been paid last Friday, one day before the Treasury publicly acknowledged that it had reluctantly approved the payouts."

Very disappointing. Whoever made that decision knew exactly what he was doing... holding bad news until it's too late to do anything about it. I expected Republicans to jump on every misstep but I didn't expect this administration to give them so much legitimate material.

Posted by: BigTunaTim | March 17, 2009 3:13 PM | Report abuse

I like Obama's calm and measured demeanor. It is one of his greatest strengths. The media want something to waffle about, but the rest of us just want results over time.

Posted by: gposner | March 17, 2009 3:19 PM | Report abuse

Maybe this episode will cause investors to re-examine the fees they pay investment services. After all, if this meltdown had not occurred, these huge salaries and bonuses would have been paid and nary a work said. However, this money comes from somewhere, and that somewhere is the money NOT paid to the investor.

Posted by: egrichards1 | March 17, 2009 3:23 PM | Report abuse

Populist anger propelled Obama into office so he'd better get used to it. What is the since of talking about change if you are status quo. He now has the power on behalf of those who want action; not talk.

Posted by: SarahBB | March 17, 2009 3:26 PM | Report abuse

Could someone explain something to me? Why is it that credit card companies can "renogotiate" a contract (my credit card agreement with them), without my input and raise my interest rates or lower my credit limit, but the government can't renegotiate the contracts of these clowns, even though the government owns 80 percent of the company?

What we do not need right now from Mr. Summers is a civics lesson in the rule of law. What we need is some solutions on how this travesty is going to be prevented...

Posted by: freddigby | March 17, 2009 3:31 PM | Report abuse

How is it that auto makers' salaries, retired steelworkers' pensions, and all the other "contracts" with the little people turned out to be worth less than the paper they were on, while alleged contracts with bankers are writ in stone?
I am outraged--these are the people who caused the economic meltdown. They should be stripped of their ill-gotten gains and tried for fraud.

Posted by: kstack | March 17, 2009 3:34 PM | Report abuse

As a former Wall Streeter who twenty years ago got fed up with the one dimensional types who populate the securities profession, I left and started my own firm to have better control over our practices, I understand how this all happened. The street is full of MBA types who demean those who actually struggle to make a living, or see no problem in using insider advantages to make money. Suckers are beneath their contempt. Anybody who cares about governance and management is considered a fool. They laughed at my skills as a former credit trained commercial banker; loan a dollar and get it back? Are you kidding? IB types have no management or credit skills. And AIG's derivatives guys are only packaging engineers, with no intention to be around when the music on their products stops.

And they don't consider any parallel between themselves and all the UAW, airline employees, steel industry workers and others who have had their contracts broken and jobs destroyed in order to save the business or shareholders. These cretins are so irresponsible, and the AIG management is so untruthful when they consider them important. Wow, they have trashed the world markets, and now expect big bonuses and don't care if the world's largest insurance company goes down.

Posted by: enough3 | March 17, 2009 3:36 PM | Report abuse

Trust me Froomy. Rahm Emanuel is in charge of vindictiveness and it is happening big time.

Posted by: hz9604 | March 17, 2009 3:41 PM | Report abuse

why is "vindictiveness" a negative term and "vindication" a positive one?

the first is required to attain the second.


or "to be cowed" equals "coward."

Posted by: forestbloggod | March 17, 2009 3:41 PM | Report abuse

This is an inevitable concomitant of having a bailout. AIG is in fact bankrupt. If it were in receivership, there would be no question of honoring the "retention bonus" clauses of these folks' employment contracts. And by the way, isn't that sweet? They get contracts while the rest of us get "Sorry, you're laid off."

But the whole point of turning AIG into a zombie by pumping in taxpayer funds was exactly so that AIG would honor its contractual commitments, all of them, and its legions of policy holders wouldn't all go down the tubes, sending the entire planet straight back to 1929 in a hand basket.

You want an economy? Yes, it stinks, it's rotten to the core, but it's the only economy you've got. Some folks made out like bandits, but we all knew that, right? So grow up and get over it. Better that than to strike at the heart of contract law, which underlies all and makes all else possible.

Posted by: fzdybel | March 17, 2009 3:46 PM | Report abuse

Best thing I've read all day:


AIG Employee: "I have a horrible, horrible, horrible feeling that this is going to end badly."

Posted by Bess Levin, Mar 17, 2009, 11:59am

So, according to reports, the events of the last several days have left AIG scared ****less. The fear emanating from the insurer, and specifically Team Financial Products, is two-fold. The first thing causing them to quake in their boots is you, the American taxpayer. You really get scary when it comes to your money.

A tidal wave of public outrage over bonus payments swamped American International Group yesterday. Hired guards stood watch outside the suburban Connecticut offices of AIG Financial Products, the division whose exotic derivatives brought the insurance giant to the brink of collapse last year. Inside, death threats and angry letters flooded e-mail inboxes. Irate callers lit up the phone lines. Senior managers submitted their resignations. Some employees didn't show up at all.
"It's a mob effect," one senior executive said. "It's putting people's lives in danger."

The second thing causing them to almost comically soil themselves, is the monster they've created with their own two hands which, shockingly, the company is yet to officially speak as candidly about as this guy:


"It's going to blow up," said a senior Financial Products manager, who spoke on condition of anonymity because he was not authorized to speak for the company. "I have a horrible, horrible, horrible feeling that this is going to end badly."

*****************************************

Barney Frank, Chris Dodd, TurboTax Timmy, BS Bernake, and Obama are going to all be included in the blame for not knowing, and not doing, anything about this when they had the chance.

Posted by: mdsinc | March 17, 2009 3:53 PM | Report abuse

Obama has all the calm of your average lobotomy patient. Take away his precious teleprompter and he gets as flustered as a college freshman called out before his peers.

Posted by: zippyspeed | March 17, 2009 4:24 PM | Report abuse

I agree with JohnnyCanuck1. If this is a bonus then past performance should be considered in payment of a "bonus". If this is the standard for a salary payment, then it should not be called a bonus.

I have a neighbor who is trained in computer programming and going to lose his job at Washington Mutual at the end of the year. A job in management of computer programs at the local county government office was offered in the local paper and he wouldn't even consider leaving his resume because he couldn't leave his job before the end of the year because he wouldn't get his "bonus". I said but the bank needed to go the government to get funds and his only response was, "Yeah, I know." I ask myself, "What is wrong with this picture?"

Posted by: sailorflat | March 17, 2009 4:36 PM | Report abuse

My goodness. Now he's too calm? Let's see: he was too black, then not black enough, too smart (egg head), then he had no idea what he was doing, he was not doing enough, then he was doing too much.

We need a calm and reasonable person in charge particulary in times like these. Foaming at the mouth and storming the gates of AIG won't recoup bonuses and won't raise the dow or provide anyone with a job. Let President Obama propose ideas, put them into action and then we must analyze the results.

Most of you need to read a book and enjoy a nice glass of STFU.

Posted by: MrInternational | March 17, 2009 4:36 PM | Report abuse

@fzdybel: "But the whole point of turning AIG into a zombie .. was exactly so that AIG would honor its contractual commitments."

Yes, insofar as those commitments related to its functioning as part of the larger banking system. It stretches the imagination to the breaking point to lump these bonus payments in with that.

"So grow up and get over it."

A necessary precondition of getting over something is that it has STOPPED HAPPENING.

"Better that than to strike at the heart of contract law, which underlies all and makes all else possible."

How would reversing AIG bonuses be "striking at the heart of contract law" any more than the multitude of similar examples out in the wild? Contracts get nullified or busted every day.

This whole situation is another example of the "two Americas" that John Edwards talked about and the Bush admin proved. Only the little people have to abide by contracts. Only they get jail time for obstructing justice.

Posted by: BigTunaTim | March 17, 2009 4:51 PM | Report abuse

That so called small business event was bogus. There was no news made and no important initiative for small business. He added money to a SBA loan program that is difficult to use and most small business people avoid like the plague. And Timmy G. said he was going to ask regulators to have banks report their small business lending. So what?

Posted by: Curmudgeon10 | March 17, 2009 4:54 PM | Report abuse

Piling on, here's an interesting take on the AIG situation. I'm sure it is easier to rip people off if we all just STFU about it, Mr.International, and just let it happen.

http://news.prnewswire.com/DisplayReleaseContent.aspx?ACCT=104&STORY=/www/story/03-17-2009/0004990147&EDATE=

Posted by: SarahBB | March 17, 2009 5:06 PM | Report abuse

Dan has a history of anger for those who do not agree with him. That would be good if he were right all the time. But...

Posted by: GaryEMasters | March 17, 2009 5:36 PM | Report abuse

Dan -- Thanks for pointing out the print option that compiles the day's posts into one file. This gives us the best of both worlds -- the to-go version I usually read plus the more readable, older-to-newer comments when there's time.

Also thanks for the very worthwhile blog. Best to you and yours.

Posted by: Grace5 | March 17, 2009 7:04 PM | Report abuse

I voted for Obama (and would again given the alternative), but the one thing that concerns me is that he's a 'greenhorn'/inexperienced in the shark pit of power. He is very, very smart; and I hope he matures quickly for our country's sake.

Posted by: DMDunkle | March 17, 2009 7:18 PM | Report abuse

"How would reversing AIG bonuses be "striking at the heart of contract law" any more than the multitude of similar examples out in the wild? Contracts get nullified or busted every day."

Contracts get broken when the parties agree to break them, or when a court rules that they are illegal or improperly written (which is why lawyers write these things), or when one of the parties "dies," e.g. goes into receivership.

Sure the government can welsh on the contracts. It cannot expect a favorable review in a court of law. Trying to get around that limitation by an act of Congress or executive fiat would indeed strike at the heart of contract law.

I can appreciate your insouciance in front of this point, after all the US Constitution has been struck in the heart repeatedly and is probably DOA. After that what matter, eh?

Posted by: fzdybel | March 17, 2009 8:17 PM | Report abuse

"A necessary precondition of getting over something is that it has STOPPED HAPPENING."

If it's a rainy day and the kids keep squawking about it I tell them to get over it. That doesn't mean that it stopped raining.

Posted by: fzdybel | March 17, 2009 8:25 PM | Report abuse

I'm willing to leave Obama out of this discussion (mostly), despite the howls swirling around him. I see him as peripheral to the process, and think that ANY president would be. He surely didn't create the problems at AIG, and he surely is not ahead of the curve in solving them. Does he deserve some heat? Sure, but he doesn't deserve more than a small part of it. The "system" deserves the blame.

I hope this shameful episode becomes the straw that breaks the camel's back when it comes to the question of executive compensation. No, I'm not some communist who thinks that people should never get rich, nor do think that we can regulate every aspect of executive compensation. But I think that it's preposterous to believe that anyone does ANYTHING, EVER(!) that merits compensation in the tens-of-millions of dollars, particularly when the laborers (whatever the color of their collars) are losing ground as they have been lately. The idea that the owners of wealth have no responsibility to the persons who helped to produce it is immoral and idiotic.

I'll confess, I don't know how to solve the problem (I'm a musician, not a policy wonk). Someone have INTELLIGENT ideas?

Posted by: post_reader_in_wv | March 17, 2009 9:57 PM | Report abuse

Why is the President turning into the Queen of Hearts over this? 1/10th of 1% of the bailout money gets paid as a retention incentive and Obama's in the East Room waving a pitchfork? What the hell?

Oh, and this 'We didn't know, it's Bush's fault' line from Gibbs is pure BS. Obama's quickly turning into Carter on the economy, constantly caught in the headlights, never able to get out of the way.

No wonder his poll numbers have dropped 10 points in the last couple weeks. He always seems to be behind the 8-ball, attacking Santelli and Limbaugh - who don't matter - then getting caught flat-footed by the economy, which does. And we worried about McCain being able to handle the pressure.

Posted by: mjc350 | March 18, 2009 8:44 AM | Report abuse

The problem is not that Obama is not vindicative enough, it's that his administration is not delivering on the change he promised. Geithner and Summers have shown they want to prop up the rotten financial system, and while Obama gives populist speeches his appointees carry out the will of the fat cats.

Posted by: skeptonomist | March 18, 2009 9:47 AM | Report abuse

At this point, has nothing to lose--Obama's got a strategy:

This financial mess: it's not my fault but the previous administration, but I'll fix it.

Not Fixing the mess (e.g. AIG bonuses): it's not my fault, but my cabinet. I give them orders and they don't fulfill them. But I'll fix it.

Earmarks and if the Stimulus doesn't work: it's not my fault, but Congresses. But I'll fix it.

If he can get healthcare on its right feet: it's not my fault, but the insurance company bad guys. Butt I'll fix it.

About 401K, pensions, and retirement: it's not my fault, but the Reaganomics and greed. But I'll fix it.

Unfortunately, there's a pattern here and no critical solutions in the 'era of new responsibility' paper. Ugh.

At least he's getting the science thing RIGHT. Thank you!

Posted by: recharged95 | March 18, 2009 8:48 PM | Report abuse

Well SarahBB, it's not so easy to get ripped off if you focus on dealing with the important things (trillions of dollars of "worth" on paper that is based on several years of over leveraging and other sleight of hand financial tools) and not the relatively trivial, like bonuses that equal less than 1% of the total bailout funds.

I hope folks have sufficiently vented about this bonus issue. There's real work to be done and real decisions to be made. Should we let the machinist union you linked to make those decisions, SarahBB? No thanks.

Posted by: MrInternational | March 23, 2009 4:00 PM | Report abuse

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