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Good Mornin, Good Mornin! (from Singing in the Rain)



QOTD, T.A. Frank: ... for the record, let me say that I am still tremendously hopeful and enthusiastic about Obama's presidency, even if a recent piece of mine in the Guardian might suggest otherwise. (I didn't pen the headline, incidentally--editors write those.) That said, yes, the White House's squishiness on Wall Street has been troubling. When Zeus gets angry, he doesn't give stern statements to reporters. He hurls lightning bolts.


Hagel and Maddow with a very smart take on an important issue (with special bonus comment on the Cheney interview last weekend). A new Cold War? March 17: Over the weekend Russia was apparently talking to Cuba and Venezuela about possibly putting long-ranged missiles in some of their airfields. Is there a new Cold War brewing? Rachel Maddow is joined by former Sen. Chuck Hagel, R-NE.

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Maddow has been really focused on understanding the issues regarding Afghanistan, and her viewers are fortunate to be able to watch Rachel work through her questions with one serious expert after another. Great stuff. Last night- Afghanistan uncertainty March 17: As the Obama administration readies a new plan in Afghanistan, a new poll shows that 42% of Americans think sending troops to the country was a "mistake." This is the highest number since 2001. What's going on with this war? Rachel Maddow is joined by military strategist David Kilcullen.

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Talking Points Memo is doing great work looking behind the scenes of the AIG story. Thanks to their expert readership, they do what they do better than anyone else - marshall their online, expert community to dig into what happenend.
A few TPM links to get the details:

• A Closer Look, Please "Company auditor Joseph St. Denis became concerned about the Financial Products unit, but Cassano barred him from checking. St. Denis later quoted Cassano as saying, "I have deliberately excluded you ... because I was concerned that you would pollute the process." Kept the auditor from reviewing the books? If that's even close to true, that's a real problem.
• Still More Back when AIG operated on its own funds, it seems they had a different approach to employees who demanded their bonuses: fire them.
• And Still More TPM Reader XX doesn't think it looks good for Mr. Cassano ..." I read the St Denis letter. I am no securities or derivatives expert, but I have worked on some pretty complex cases involving securities fraud and structured investment vehicles (which were miserable cases to work on, but that's neither here nor there). Suffice it to say that based on my experience, it sounds like Cassano has a lot to hide and a lot to be worried about. ... "
  

Sully: As The Anger Fades

Manzi, as usual, is a voice of reason on the AIG bonuses:

Do you really want zero comp at risk for people operating this company in its current state?

Or is it that many people hate the fact that senior employees of AIG Financial Products (i.e., "the same people who almost destroyed the world financial system") are being paid $100 million in retention bonuses to make sure they stay to unwind these positions? I don't like this any more than anybody else. But as a taxpayer, which is to say, partial owner of AIG, I'm not looking for cosmic justice, I want my equity to retain some value.

The aggregate size of AIGFP positions appears to be on the order of $100 billion dollars. $100 million is 0.1% of $100 billion. I don't know if the incremental value that having these guys around to do the unwinding is worth more or less than that, but it's not an inherently crazy idea either. I am confident that Barney Frank is no better a judge of this than I am, even if his incentives were aligned with mine, which they are not.

In the end, what I think this highlights is the need to get the government out of the business of managing risk capital as rapidly as is feasible.

• Josh: Retroactive Retention! Remember, one of the big reasons to give those retention bonuses to the executives at AIG Financial Products division was to keep them and their brain power and experience at the company. But it turns out that a bunch of them who just got the retention bonuses had already left the company.

And how is the msm responding? Think Progress: CNBC hires former Bush flack Tony Fratto.

Earlier today, CNBC discussed a congressional proposal to create a systemic risk regulator for the financial industry. To analyze the feasibility and necessity of such a regulator, CNBC introduced one of its newest “contributors,” Tony Fratto, who most recently served as former President Bush’s Deputy Press Secretary. But rather than comment on the merits of the systemic risk regulatory plan, Fratto simply claimed that Congress is “dangerously” motivated to over regulate by a thirst for “vengeance” stemming from the current financial crisis. Watch it:

Josh: Time to Buy! On CNBC just now, Larry Kudlow just predicting the coming historic rally in bank and financial stocks now that the "jack boot" of regulatory oversight was being lifted.


A look back in time at Kudlow from Christy Hardin Smith. Why Larry Kudlow Is Full Of Crap: Let Me Count The Ways… Move over Ebenezer Scrooge. Kudlow says poor people caused the subprime crisis. Naomi Klein predicted this "ownership society" blame-shifting maneuver in January. Behold! Kudlow says those guileless financial mavericks were forced into this crisis by poor people and "liberal guilt" in Congress. No GOP or corporate responsibility at all! Nosiree! (Stop laughing.) CJR begs to differ: ... ...

dday: Finding A Scapegoat

Good to see that the Treasury Department is so concerned about the AIG bonus babies that they are throwing Chris Dodd to the wolves to deflect criticism.

The administration official said the Treasury Department did its own legal analysis and concluded that those contracts could not be broken. The official noted that even a provision recently pushed through Congress by Senator Christopher J. Dodd, a Connecticut Democrat, had an exemption for such bonus agreements already in place.

That's just not true, as both Jane and Glenn Greenwald explain pretty definitively. Under a Dodd-written amendment, the Senate version of the stimulus bill included executive compensation limits for all recipients of TARP money, only to have the amendment stripped of retroactivity and applied strictly toward future payouts, after negotiations with none other than Tim Geithner and Larry Summers:

The administration is concerned the rules will prompt a wave of banks to return the government's money and forgo future assistance, undermining the aid program's effectiveness. Both Treasury Secretary Timothy Geithner and Lawrence Summers, who heads the National Economic Council, had called Sen. Dodd and asked him to reconsider, these people said.

This wasn't a small behind-the-scenes fight, it was a major contention in the stimulus debate, subject of several articles. Obama's economic team didn't want limits on executive compensation, and Dodd did. The Administration won, and now in the midst of this furor they're trying to rewrite history by putting Dodd and themselves in opposite roles.

Dodd is a threatened incumbent who the right wing has been slandering for months, and now some anonymous official in the Obama Administration has taken the heat off themselves by allowing a firestorm based on a myth....
...
... but unquestionably, there is a rot at the heart of the economic team. This is the first incident that Obama has truly owned, regardless of the deflections. Republicans don't completely have their act together on this - they're too conflicted, having argued for free market fundamentalism for so long that the knee-jerk response is to argue for more. Even their ideas for clawing back the bonuses are crude copies of what the President has already decided. But anyone can plainly sniff out the villains here, and in addition to hyping the bogus Dodd assertion, the GOP is going after Geithner.

Reps. Steven LaTourette (R-OH) and Thaddeus McCotter (R-MI) introduced a resolution of inquiry today that would force Geithner to reveal the full extent of his department's communications with AIG.

The resolution would affect not just talks over bonuses but about the very structure of the Federal Reserve's investment in the company -- which appears to have included built-in limitations on the government's influence over management.

...

No rational Democrat can disagree that we need to know about those communications. Geithner's connections with AIG go all the way back to the initial bailout decision, and are tied to the tens of billions in payments to counterparties, which is the far more damaging element of this - essentially a double-dip for banks who already received government money. While the bonus scandal raises the right-wing phony populist ire, the drumbeat for more investigations into Geithner's contacts with AIG and what he knows about the counterparties and maybe about why the Federal Reserve is injecting billions into foreign central banks and why more than half of the AIG bailout money is leaking over the border and a whole host of other issues which involve Geithner but also the previous Administration. And the very clear potential exists to drown the entire Administration agenda into a day-by-day recitation of whether the President still has faith in his economic advisers, etc.

The President brought this upon himself through his hirings. But if he wants to find a way out, he could stop the practice of his team blaming others and start living up to his own rhetoric.

Yglesias: Will Banks Sink Obama? This BHTV episode with Matt Welch was recorded last week, but the issue in this clip—will an ineffectual response to the financial system crisis sink an otherwise worthwhile Obama administration—remains highly relevant:






Danner and Maddow unwinding the torture story:

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