AIG Bonus payouts was NO loophole and NO mistake...

According to an article in this morning's New York Times,

"...Democrats are mostly responsible for the A.I.G. bonus debacle, since Senator Christopher J. Dodd of Connecticut, chairman of the Senate Banking Committee, inserted language in President Obama’s economic stimulus package to exempt bonuses granted by contract before Feb. 11 from general restrictions on bonus payments."

Of course, this has nothing to do with the fact that Christopher Dodd represents Connecticut, the Insurance Industry Capital of the United States.

Schmuck.

UPDATE: (From the NY Daily News)

Gov. Paterson stuck to his guns Saturday, insisting he knew nothing about a $100,000 donation from AIG to the state Democratic Party days before his office helped save the insurance giant.

State Republicans charged the Democrats with stonewalling an investigation into the Aug. 29 donation, uncovered last week by The Associated Press.

In the first week of September, Paterson launched negotiations to save the financially strapped company.

AIG - So what else is new?

On March 9, after the Obama administration announced it would increase the US Taxpayer subsidy of AIG to 80% by pumping in another 30 billion, I wrote in this blog:

"...With all this cash, could AIG actually lose money? Well, friends, they just reported quarterly losses of 61 billion...The appropriate action is to allow AIG to fail, and distribute their clients to well-run companies. There are plenty of healthy, responsible Insurance companies who could and would benefit from taking on AIG's clients..."

Bush and Obama have both been shovelling dollars to AIG. Why? So they could be stabilized in the face of 61 billion losses per quarter? In spite of their best intentions, neither Bush nor Obama "get it." Government intrusion into the Marketplace always creates inefficiencies, always burdens the taxpayer and consumer, and always carries unintended consequences. This time, those consequences were highly visible: Millions of dollars in "bonuses" that were 'contractually mandated.'

Of course, if AIG was allowed to go bankrupt, as I have suggested multiple times before, those contracts would have been voided...and we wouldnt have the mess we have today. But far be it for Obama to listen to an Economist like me....

More Funds for AIG...

The U. S. Treasury Department announced today that another 30 billion dollars would be headed for troubled Insurance giant AIG. This is on top of the 150 billion already sunk into this Insurance Titanic, including 26 billion in loans from the Federal Reserve Bank.

This would put the US Government ownership of AIG at 80%.

It also would convert the stock that the US Government (Read: U S Taxpayers) has in the company from Preferred to Common Stock: and that means that if the company loses money, the U. S. Taxpayer gets socked first.

Now, with all this cash, could AIG actually lose money? Well, friends, they just reported quarterly losses of 61 billion.

The appropriate action is to allow AIG to fail, and distribute their clients to well-run companies. There are plenty of healthy, responsible Insurance companies who could and would benefit from taking on AIG's clients: companies like Guardian Life, New York Life, and the American Financial Group, all of whom have refused taxpayer bailout funds because they have operated their companies responsibly and profitably.

Which are the companies that are taking taxpayer funds?

- Banks that sold and traded in irresponsible sub-prime mortgages (required by Democratic President Carter, to 'help' low-income areas, and strenuously enforced by Democratic President Bill Clinton).

- Insurance Companies that invested in subprime mortgages and irresponsible banks after Banking Deregulation (signed by Democratic President Bill Clinton in 1999) permitted it. (See a pattern here?)

Meanwhile, healthy insurers that should be the focus of the public's purchases are put at competitive disadvantage by having the Irresponsible Government Favorites kept afloat with tax dollars. We are rewarding the inept, and hurting the wise.

Why? Why would Obama want 80% government control of an insurance Company?

Ah, lets just wait for his new Health Plan Initiative Wouldn't it be amazing if AIG suddenly became the US Government-funded Universal Health Insurer?

Hmmmm....