Part of the problem with the Republican strategy of exploiting the controversy over the AIG bonuses is the party's inability to convince the party's usually-loyal allies. The other part of the problem is the contradiction between the populist rhetoric this week and the opposite rhetoric, rejecting any and all limits on executive compensation, from last month."I really don't want the government to take over these businesses and start telling them everything about what they can do." Minority Leader Mitch McConnell told ABC News in February, when asked about Obama's proposed limits on executive compensation. Senator Jim DeMint, who attacked the original bailout bill as "pure socialism," characterized executive pay caps as a dangerous government intervention. "I think it's a sad day in America when the government starts setting pay, no matter how outlandish they [sic] are," DeMint told the Huffington Post. "This is just a symptom of what happens when the government intervenes and we start controlling all aspects of the economy." DeMint's right-wing compatriot, James Inhofe, also equated limits on compensation with the demise of the American way. "As I was listening to [Obama] make those statements I thought, is this still America? Do we really tell people how to run [a business], and who to pay, and how much to pay?"
A mere six weeks later, DeMint and Inhofe are now attacking the administration for failing to curb these executive payouts. In a long diatribe delivered on the Senate floor on Tuesday, Inhofe abandoned his earlier defense of businesses to make their own decisions about compensation to express his "deep anger" over the pay. "I don't know how someone at AIG giving out or receiving a bonus right now can look at themselves in the mirror," Inhofe thundered on the floor. "You can be sure that we will do all we can to right this wrong and get these bonuses back." DeMint has also found ways to channel his newfound anger against corporate pay. In a letter sent to the Senate Banking Committee yesterday, DeMint, along with David Vitter and Jim Bunning, demanded that AIG contracts be formally subpoenaed to determine why the company was "specifically exempt[ed]" from the executive compensation limits. In other words, DeMint is now asking why AIG hasn't been forced to comply with the conditions that he had so vehemently opposed.
Indeed, DeMint and Inhofe are among the most shameless hypocrites, but they're not alone. Senate Minority Leader Mitch McConnell (R-Ky.) and Senate Banking Committee ranking member Richard Shelby (R-Ala.) have also, all of a sudden, seen the light when it comes to compensation limits, and Rep. Peter King (R-N.Y.) and Sen. Kit Bond (R-Mo.) have also made efforts to switch their positions.
If Republican lawmakers wanted to limit executive pay, they had their chance. For them to complain bitterly now is a little silly.
Benen says Hmmmmm, the GOP, BASE NOT ON THE SAME PAGE....
Republican leaders on the Hill have been in high dudgeon this week over the controversial AIG bonuses. It's not altogether clear what their message is, but they're "outraged" and they'd really appreciate it if we'd all blame Democrats for the whole mess.But as it turns out, there's a small flaw in the strategy: leading far-right activists, usually content to follow the party's instructions, aren't sticking to the script. It's not that Limbaugh, Hannity, & Co. are defending Democrats, but as Greg Sargent noted, they just don't care about the controversy of the week. Indeed, these far-right voices are some of the very few who are tacitly defending AIG.
Rush Limbaugh recently said: "I am all for the AIG bonuses" and attacked the Obama administration for trying to undo them. He also blasted Dem efforts to get the names of the AIG bonus recipients as "McCarthyism."
Fox News followed suit, also comparing Dems to "Joe McCarthy." And Sean Hannity has now derided efforts to tax the execs by saying: "In other words, we're going to just steal their money."
There's not really a direct contradiction between the GOP leaders' professed outrage over the bonuses and the conservative media's condemnation of efforts to recoup them. But the conservative attack on Dems is rooted in free market orthodoxy, which GOP leaders have implicitly ditched in order to get outraged.
This split could muddy the GOP message and even compromise the party's efforts to use AIG to damage Obama.
Indeed, since Greg wrote this, these same conservative characters have been even more vocal on this point. Yesterday afternoon, Hannity continued to support AIG, as did Glenn Beck and Michelle Malkin.
It's an interesting disconnect. By all appearances, the right-wing media figures are, oddly enough, sticking to conservative economic principles, while right-wing lawmakers are simply hoping to exploit public frustration for partisan gain, whether it makes sense or not.
Indeed, rank-and-file Republicans may be leaning in the direction of the media figures. The Gallup poll released yesterday gauging public anger over the AIG bonuses showed that Republican voters are far less "outraged" by the matter than Democrats, and are far less interested in seeing the government try to block or recover the bonus money than Democrats or Independents.
All of this, at a minimum, complicates Republican officials' strategy here.
- About that base, Benen on WHEN THE ACORN OBSESSION GETS SILLY....
District Court Judge David Hamilton of Indiana, President Obama's first nominee for the appeals court bench, is likely to be confirmed. But in the drive to score some cheap points off the nomination, the right has come up a new talking point: Judge Hamilton is "tied" to ACORN. As conservative talking points go, this one's hilarious.
It apparently started with a National Review item from Wendy Long, who wrote on Tuesday, "Hamilton was a fundraiser for ACORN (nice ACORN payback, Mr. President)."
And from there, the race was on to see who could be the most ridiculous.
Hamilton's purported ties to ACORN immediately worked its way into right-wing commentary on the nomination, being highlighted by Newbusters, Powerline, Curt Levey of the Committee for Justice, and the Family Research Council ... twice, which complained that ACORN was getting it very own judge.
The idea that President Obama's nomination of Hamilton was "payback" to ACORN quickly became the right-wing talking point of the day, with people claiming that he was "a big shot at ACORN" and leading to posts like this one written by Matthew Vadum at "The American Spectator" entitled "ACORN's Federal Judge":
"Giving the term judicial activism new meaning, President Obama has nominated an ACORN loyalist to the U.S. Court of Appeals for the Seventh Circuit, the Chicago Tribune reports ... The Judicial Confirmation Network notes that Hamilton previously worked as a fundraiser for ACORN, the radical direct-action group that not only resurrects the dead and gets them to the polls every election but also shakes down banks and pressures them to make home loans to people who can't afford to pay them back."
Ready for the punch-line? Judge Hamilton was a canvasser for ACORN -- in 1979. He spent a grand total of one month helping the group raise money the same year he graduated from college. He was 22 at the time.
National Review's item was wildly misleading and ignored the key detail that makes this a non-story. But Newbusters, Powerline, the Committee for Justice, the Family Research Council and the American Spectator took National Review's word for it, and ended up looking rather foolish.
Again.
Yglesias finds Generals Perturbed By Senators’ Obstruction of Chris Hill
I don’t think I’ve posted yet on John McCain and Lindsey Graham acting to hold up veteran diplomat Christopher Hill’s appointment to serve as Ambassador to Iraq. Hill’s a career foreign service officer whose views are sufficiently compatible with conservative politics that George W. Bush made him Ambassador to Poland, Ambassador to Korea, and Assistant Secretary of State for East Asia. But neocons are mad that in that last role he helped avert a war with North Korea, so they’re holding up his appointment. There’s no real prospect of blocking him, but McCain and Graham are managing to annoy some of their erstwhile friends. Laura Rozen reports:
There’s one as yet unremarked constituency increasingly disturbed by some Republican senators’ efforts to block the confirmation of former North Korea envoy Christopher Hill to be the next U.S. ambassador to Iraq: the U.S. military.
Sources tell The Cable that Centcom commander Gen. David Petraeus, top Iraq commander Gen. Raymond Odierno, and Defense Secretary Robert Gates are frustrated by the delay in getting a U.S. ambassador confirmed and into place in Iraq, and support Hill’s confirmation proceeding swiftly.
That said, the nominal source of opposition to Hill is not his work in North Korea but his lack of experience in the Arab world. I think this is a concern that deserves to be taken seriously, but anyone who’s serious about it would recognize that it’s a systemic issue. One might think that the Foreign Service ought to be organized around regional or cultural areas of specialty. But that’s not generally how our system, which prefers to emphasize a form of generalized diplomatic expertise, works. It may be worth reconsidering this choice as a general matter. But there’s no reason to single out one senior FSO for problems here, and everyone knows that their real issue is Cheneyite opposition to the North Korea policy that Hill, Condoleezza Rice, and Bush followed at the end of the Bush administration.
Roth at TPM-Muckraker asks: Did Cassano And AIG Commit Fraud?
AIG chief Edward Liddy endured his anticipated ritual flaying today by Capitol Hill lawmakers angered by those bonuses. But, as Josh has been writing about over at TPM, there's mounting evidence that some current and former AIG execs could have much more to fear than angry questions from Gary Ackerman when all is said and done.
Since at least June 2008, the Justice Department has been investigating (sub. req.) whether AIG intentionally -- and criminally -- overstated the value of its credit default swaps, hiding its dire position from investors and government regulators. Joseph Cassano -- who during the period at issue ran AIG's financial products unit, AIGFP, which made those disastrous swaps, out of a London office -- has reportedly hired a lawyer in connection with that investigation. Britain's Serious Fraud Office is said to be on the case as well.
So here at TPMmuckraker, we've spent much of today taking a close look at the reams of evidence contained in news reports, documents submitted to congressional investigations, SEC filings, and civil lawsuits filed by AIG shareholders -- one of which charges that Cassano "hid AIGFP's ballooning exposure from public markets and short-circuited alarms within the AIG organization." And from this mass of data, a clear picture emerges in which Cassano -- aided by other AIG execs, who appear to have given his AIGFP unit broad autonomy within the company -- repeatedly downplayed the risks his unit faced, publicly painting a rosy picture that was at odds with reality. Perhaps most egregiously, he actively shut out voices -- primarily those of AIGFP's own internal and external accountants -- that highlighted potential problems at the unit.
Here's a rough, and far-from-comprehensive, timeline of events that begins to suggest a level of deliberate fraud and deception on a level that goes beyond what's generally been acknowledged so far.
- 2004: AIG pays $80 million to settle criminal charges brought by the Justice Department against Cassano's unit, AIGFP. The unit had been charged with securities fraud for allegedly helping PNC Financial improve its reported financial results by shifting about $750 million in assets off PNC's balance sheet, in return for lucrative fees. AIG admits to engaging in transactions that violated accounting rules, and signs a deferred prosecution agreement with DOJ, meaning it has to be on its best behavior to avoid charges. The episode suggests that Cassano and AIGFP were, at best, happy to cut corners in the pursuit of profits. (Wall Street Journal, June 2008)
- Late 2005: AIGFP execs, worried about loosening lending standards in the subprime-mortgage market, decide to stop selling credit protection on certain swaps, partly due to "concerns that the model was not going to be able to handle declining underwriting standards," according to one AIG risk expert. In other words, Cassano and his colleagues were aware of the risk even at this early stage. (Wall Street Journal, October 2008)
- Mid 2007: Cassano is still providing assurances that AIGFP's accounting is on the level. Referring to the PNC episode from 2004, Cassano says publicly: "We made some mistakes in those transactions and we suffered dearly for that ... [T]hat was the only accounting driven transaction we've ever done." Cassano added that AIGFP had instituted new controls to prevent a recurrence of the problem. (Investor lawsuit, found online via Google cache)
- Aug 9, 2007: Referring to credit default swaps, Cassano tells investors: "It is hard for us, and without being flippant, to even see a scenario, within any kind of realm of reason that would see us losing $1 in any of those transactions....we see no issues at all emerging. We see no dollar of loss associated with any of that businesss." (Investor lawsuit)
- Aug 13, 2007: Summarizing those comments, the Wall Street Journal reports: "Exotic financial instruments linked to subprime mortgages are showing huge losses in debt markets and weighing on companies from lenders to banks to insurers. But not at American International Group Inc. -- or so it's executives say." In other words, Cassano's representations to investors achieved their goal of reassuring the press and public that AIG was doing fine. (Wall Street Journal, August 2007)
- August 2007: Cassano berates Joseph St. Denis, AIGFP's in-house accountant, for discovering accounting irregularities in a target company's hedge accounts. St. Denis had been brought in specifically to address problems in AIGFP's accounting cited by an auditor. (Letter from St. Denis to House Oversight committee)
- Sept 2007: Cassano tells St. Denis: "I have deliberately excluded you from the valuation of the Super Seniors [ CDS's] because I was concerned that you would pollute the process." St. Denis later told Congress he had no involvement in the process of valuing the CDS portfolio, because Cassano worked to exclude him from that process. (St. Denis letter.)
- Oct 2007: St. Denis resigns. He would later explain to Congress: "I resigned because on multiple instances beginning in the late summer of 2007, Mr. Cassano took actions that I believed were intended to prevent me from performing the job duties for which I was hired." (St. Denis letter)
- Nov 6, 2007: Michael Roemer, AIG's chief auditor, informs the firm's audit committee of the reasons St Denis gave for his departure. (St. Denis letter)
- Nov 29, 2007: Accountants for PriceWaterhouse Coopers (PWC), AIG's outside accounting firm, inform AIG CEO Martin Sullivan of their belief that the company has material weaknesses related to the credit default swaps, which could result in future errors on income statements or dislcosures. PWC later said that AIG was not interested in fully understanding the impact of the collateral disputes that at this point had been set off with AIG's counter-parties. (Investor lawsuit)
- December 2007: Cassano, preparing for an upcoming presentation to investors about potential losses associated with the credit default swaps, tells PWC accountants not to interfere. (Investor lawsuit)
- Dec 5, 2007: At that meeting, Sullivan and Cassano assure investors that everything's fine. Sullivan: "AIG has accurately identified all areas of exposure to the US residential-housing market ... we are confident in out markets and the reasonableness of our valuation methods. Cassano: "It is very difficult to see how there can be any losses in these portfolios." These statements, in particular, would later be looked by federal investigators as evidence of possible fraud. (Investor lawsuit)
- Jan 2008: In an audit opinion included in an SEC filing, PWC accountants write that AIG did not maintain "effective internal control over financial reporting" related to its credit default swaps. They assert that "there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. (AIG SEC filing).
- Feb 26, 2008 -- In what appears to be an effort to absolve itself of responsibility, PWC accountants declare at an Audit committee meeting, that AIGFP alone conducted the process of valuing 4th quarter assets. (Investor lawsuit)
- Mar 31, 2008: Cassano "retires" with million dollar a month consulting contract and a $34 million golden parachute. According to one investor lawsuit filed in January, Cassano had earned $280 million over the previous 8 years -- more than AIG's CEO. (Investor lawsuit).
- June 13, 2008: In a statement put out in response to news of the DOJ investigation, AIG declares, "As is the case throughout AIG, our colleagues [in the financial-products division] have been rigorously focused on transparency and accuracy in all its disclosures. The goal is clear: make sure the numbers are right, whether it's good news or bad news." (Wall Street Journal, June 2008)
Sully: "A Crime, In Fact"
Scott Horton interviews Mark Danner, who aquired the Red Cross report on torture that has been in the news this week:
The ICRC professionals who prepared it concluded, and wrote explicitly, that the behavior they catalogued included torture, as well as cruel, inhuman, and degrading treatment. They were judging the procedures used in the black sites against the Geneva Conventions (in the enforcement of which they play a formal role), the Convention Against Torture, and a number of other international agreements. Whereas in earlier reports the Red Cross used formulations that nuanced the question somewhat (saying, for instance, that Guantánamo practices were “tantamount to torture”), in this report they spoke bluntly and forcefully, saying that the conduct was torture. That of course is a violation of international law. But it is also a violation of domestic law. It is a crime, in fact.
Why are elected officials above the law?
On Tuesday, I noted that NY City Council Speaker Christine Quinn, one of the most powerful officials in New York City, once again wasn't marching in her city's St. Patrick's Day parade. A group of homophobes run that event and refuse to allow any gay representation. It's archaic.
So, Chris found another venue to celebrate what she said was always a "high holiday in the Quinn household." She was invited to the White House to celebrate with the leaders of Ireland and other famous Irish-Americans. Chris wrote about that event over Huffington:I arrived almost embarrassingly early, fearful of long security lines. I eventually made my way to a reception in the Map Room, where I had the opportunity to speak briefly with the President. I told him and Mrs. Obama that I was the first Irish, first woman, and first openly gay Speaker of the New York City Council.
Very cool.
I told the President how grateful the Irish-American Community is for his strong and continued support of the peace in the North of Ireland. I then expressed my desire that he support issues of full LGBT equality, and suggested that a good early action would be to support a recent federal court ruling in San Francisco, requiring benefits to be extended to the same sex partners of court employees.
Our conversation flowed seamlessly from talk of the struggle for equality in the North of Ireland, to the ongoing fight for LGBT rights. And it set the tone for what would be a night of such interaction. I spoke with leaders from Ireland and openly gay political leaders from the U.S. about the broad struggle for civil rights of which we are all a part.
The event was a picture of inclusivity and the intermingling of cultures: I saw Sinn Fein President Gerry Adams and Deputy First Minister Martin McGuiness, Shaun Woodward, the British Secretary of State for Northern Ireland, and openly gay DNC treasurer Andrew Tobias all celebrating together. President Obama spoke about his own Irish heritage, tracing a great, great, great grandfather back to the same county as Brian Cowen, the Irish Taoiseach, or Prime Minister.
It reminded me that in the past year we've seen our nation elect an African American president, and we've seen peace come to the North of Ireland. It reminded me of how absurd it is that we allow a small number of small minded individuals to tell an entire group of people that they cannot march proudly and openly in their parade. It reminded me that each day we move closer to inclusion and equality. And it made me proud to be Irish, proud to be a member of the LGBT community, and proud to be an American.
You'd think that by now the homophobes who run the NYC parade would notice that people of Ireland are much more progressive and more respectful.
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