Sunday, February 24, 2013

AIG’s former chief Greenberg suing Feds for bailing out his company


from the Washington Post

Posted by Joann Weiner on February 23, 2013 at 9:48 am
Greenberg Feb
A fighter never quits, and if there’s one way to describe Maurice R. “Hank” Greenberg, the former head of the American International Group, it’s as a fighter.
Beginning on D-Day, when he participated in the storming of Omaha Beach as a teenager, continuing through his fight with then-New York Attorney General Eliot Spitzer about an accounting scandal that led him to resign from AIG in 2005, and up to a series of bitter lawsuits against the company he led for nearly 40 years, Greenberg’s been a fighter.
His latest offensive is a $25 billion lawsuit filed against the federal government for, he alleges, forcing AIG to accept an $85 billion bailout at a 14.5 percent interest rate and then taking over the company without providing just compensation in September 2008. Despite having more than $120 billion in revenue in 2007, AIG’s immediate problems nine months later centered on a lack of liquidity:  It didn’t have enough cash to meet $15 billion worth of collateral calls.
“AIG should never have accepted the bailout,” Greenberg said during a talk at the National Press Club in Washington on Feb. 21. Greenberg insisted that the Fed could have figured out a way to get AIG the needed funds without taking over the company. “The company had $800 billion in assets that it could have put up as collateral for the loan,” he said. Greenberg added that if the Fed had given AIG the same type of offer it  had extended to other troubled financial institutions at that time, AIG wouldn’t have needed the bailout.
At age 87, Greenberg, who was in town to promote his book, “The AIG Story,” co-authored with George Washington University law professor Lawrence A. Cunningham, shows no sign of backing down.
Nearly five years later, Greenberg continues to challenge not just the terms of the bailout, but its very purpose. Greenberg argues that the Fed bailed out AIG primarily to save the so-called counterparties to AIG’s insurance-like contracts known as credit default swaps that provided a way for investors to buy insurance protection against default.
“Sixty billion of the $85 billion was a backdoor bailout,” Greenberg said, adding that “Fourteen billion of that amount went to Goldman Sachs.”
He still loathes Spitzer, who resigned as governor of New York in 2008 amid a prostitution scandal. Greenberg condemned Spitzer for essentially convicting him of “murder for a foot fault” relating to a reinsurance transaction. Following Greenberg’s resignation as head of AIG in March 2005, AIG lost its triple-A credit rating and had to post more than $1 billion in collateral.
Despite AIG’s downgrade, AIG ramped up its lucrative credit default swap business. While there’s disagreement over how many of those swaps were written on sub-prime mortgages, with Greenberg insisting that he hadn’t authorized such swaps, there’s no dispute that AIG eventually wrote swaps worth more than half a trillion dollars.
Though Greenberg admits that he led  AIG into the credit default swap business, he won’t admit that his actions may have contributed to AIG’s collapse.
“Just look at the record,” Greenberg said, pointing to AIG’s $1.3 trillion value when he resigned.
When asked whether he knew that AIG’s Financial Products unit had moved into a very risky business of insuring exotic derivative products, Greenberg said, “No, we were at war with each other.” When I asked him whether he thought that Goldman Sachs “pushed AIG over the edge,” as has been asserted, he nodded in agreement.
We’ll never know if Hank Greenberg could have staved off the disaster that struck AIG. But, if he hadn’t been forced out, it’s entirely plausible that AIG wouldn’t have gotten into the financial trouble it did. Greenberg cared a lot, both emotionally and financially, about AIG. He joined the company that later became AIG in 1960 and took it public in 1969. With control of some 300 million shares of AIG that were once worth $21 billion, he had a very strong interest in the company’s financial health. The collapse of AIG drove Greenberg’s personal fortune from the billions down to around $100 million and pushed him off Forbes’ list of the richest Americans for the first time since 1985.
Greenberg is right about one aspect of the bailout. Although it wasn’t public knowledge in September 2008, in March 2009, AIG revealed that it had sent billions of dollars of the Fed’s bailout funds straight to companies, including Goldman Sachs, Merrill Lynch and UBS, that were holding the riskiest derivatives. We also know that AIG had been making collateral payments to Goldman Sachs well before the September rescue.
By now, taxpayers are probably tired of hearing about AIG. The fact that Greenberg asked the company to join him in his lawsuit against the U.S. government led to ridicule and insistence from AIG that it was “grateful” to the government for saving it in 2008 and wouldn’t join the lawsuit.
Given the hysterics that have surrounded AIG, taxpayers would be forgiven for being misinformed about how AIG has helped them. In fact, although Greenberg may not agree, taxpayers have no right to be outraged over the AIG bailout, which eventually grew to more than $180 billion.The government recently sold its stake in the company for a $22.7 billion profit. And that may make the argument about the cost of AIG’s bailout somewhat beside the point.
Joann Weiner teaches economics at The George Washington University. She has written for Bloomberg, Politics Daily, Tax Analysts and worked as an economist at the U.S. Treasury Department. Follow her on Twitter: @DCEcon.


at No comments:

Friday, February 22, 2013

The Bush Years And What A "Lapdog" Press Really Looked Like


from mediamatters.org




Blog ››› ››› ERIC BOEHLERT
Perpetually fuming about President Obama, Sean Hannity widened his rant Wednesday night on Fox News and condemned the "lapdog, kiss ass media" that allegedly lets Obama have his way. Echoing the same attack, Karl Rove wrote in the Wall Street Journal this week that "Mr. Obama is a once-in-a-generation demagogue with a compliant press corps," while the anti-Obama Daily Caller pushed the headline,  "Lapdog Media Seeking Lap To Lie In."
Complaining about the "liberal media," has been a running, four-decade story for conservative activists. But what we're hearing more of lately is the specific allegation that the press has purposefully laid down for the Democratic president, and that it's all part of a master media plan to help Democrats foil Republicans.
The rolling accusation caught my attention since I wrote a book called Lapdogs, which documented the Beltway media's chronic timidity during the previous Republican administration, and particularly with regards to the Iraq War. I found it curious that Hannity and friends are now trying to turn the rhetorical tables with a Democrat in the White House, and I was interested in what proof they had to lodge that accusation against today's press.
It turns out the evidence is quite thin. For instance, onenever-ending partisan cry has been the press has "ignored" the terrorist attacks on the U.S. consulate in Benghazi last year; that they're protecting Obama. Yet theNew York Times and Washington Post have published nearly 800 articles and columns mentioning Benghazi since last September, according to Nexis.  
What the lapdog allegation really seems to revolve around is the fact that conservatives are angry that Obamaremains popular with the public. Rather than acknowledge that reality, partisans increasingly blame the press and insist if only reporters and pundits would tell 'the truth' about Obama, then voters would truly understand how he's out to destroy liberty and freedom and capitalism.
Sorry, but that's not what constitutes a lapdog press corps. And to confuse chronic partisan whining with authentic media criticism is a mistake. The Hannity-led claim also isn't accurate. Studies have shown that during long stretches of his first term, Obama was  hammered with "unrelentingly negative" press coverage.
By contrast, the lapdog era of the Bush years represented nothing short of an institutional collapse of the American newsroom. And it was one that, given the media's integral role in helping to sell the Iraq War, did grave damage to our democracy.
Looking back at his tenure as Washington Post ombudsman, Michael Getler wrote in 2005 that the mainstream media's performance in 2002 and 2003 likely represented the industry's worst failing in nearly half a century. "How did a country on the leading edge of the information age get this so wrong and express so little skepticism and challenge?" Getler asked.
Let's recall some concrete examples of what helped the Bush era press rightfully earn its title of lapdogs so we can understand why today's conservative claims ring so hollow.  
A defining trait of Bush's obsequious press corps was its collective refusal to take seriously anti-war voices prior to the preemptive invasion of Iraq, even voices such as Democratic party stalwart Sen. Ted Kennedy (D-MA). In September 2002, Kennedy made a passionate, provocative, and newsworthy speech raising all sorts of doubts about the war, doubts that would later prove well-founded. The event garnered exactly one sentence -- thirty-six words total -- of coverage from the Post.
The daily was hardly alone in turning away from Kennedy's prescient  speech. The night of his address,  Nightly News devoted just 32 words to it. On ABC's World News Tonight, it received 31 words, and on the CBS Evening News, 40 words.
Kennedy gave that speech on a Friday. Two days later the Sunday talk shows discussed Iraq in detail, but Kennedy's name never came up. For the network pundits, the anti-war speech from one of the nation's political giants basically did not exist. It was irrelevant to the around-the-clock media chatter about a looming war.
Given that tentativeness, it's not surprising that a survey conducted by the liberal media watchdog group Fairness and Accuracy in Reporting found that during the first two weeks of February 2003, when the debate about the war should have been raging on the public airwaves, just 17 percent of the 393 people interviewed on-camera for network news reports expressed "skeptical or critical positions" on Iraq.
Additionally, Media Matters found that while 23 percent of U.S. senators voted to oppose the war in the fall of 2002, only 11 percent of the senators invited to appear on the Sunday morning talk shows prior to the invasion were antiwar.
According to figures from media analyst Andrew Tyndall, of the 414 Iraq stories broadcast on NBC, ABC, and CBS from September 2002 until February 2003, all but 34 -- eight percent of the total -- could be traced back to sources from the White House, the Pentagon, or the State Department. Only 34 stories, or 8 percent or the reports, were of independent origin.
Meanwhile, given its current primetime lineup, sometimes it's hard to recall that in 2003 MSNBC was so nervous about employing a liberal host who opposed Bush's ordered invasion that it fired Phil Donahue preemptively, just weeks before war began. An internal memo warned that Donahue presented "a difficult public face for NBC in a time of war." (He was MSNBC's highest rated host at the time of his firing.)
Months worth of chronic timidity and newsroom bowing-down to the White House's war culture clearly helped pave the way to war.  
Laying out the reasons for an unprecedented invasion during his final, pre-war invasion press conference on March 6, 2003, Bush mentioned al-Qaida and the terrorist attacks of September 11 thirteen times in less than an hour. Not a single journalist that night challenged the presumed connection Bush was making between al-Qaida and Iraq, despite the fact that intelligence sources had publicly questioned any such association.
The egregious, look-the-other-way coverage continued long after the invasion. The U.S. media's collective disinterest in Britain's Downing Street Memo represented a perfect example of dogged lapdog behavior.
Consisting of minutes from a July 23, 2002, meeting attended by then-Prime Minister Tony Blair and his closest advisers, the memo revealed their impression that the Bush administration, eight months before the start of the Iraq war in 2003, had already decided to invade and that American officials seemed more concerned with justifying a war than preventing one.  
The blockbuster memo was leaked to the Times of London, which printed it on May 1, 2005. How did the American press respond?
It yawned.
Between May 1 and June 6, the story received approximately 20 mentions on CNN, Fox News, MSNBC, ABC, CBS, NBC and PBS combined, According to TVEyes. By contrast, during the same five-week period, the same outlets found time to mention more than 260 times the tabloid controversy that erupted when a photograph showing Saddam Hussein in his underwear was leaked to the British press.
In the five weeks following the memo being published in the Times of London, White House spokesman Scott McClellan held 19 daily briefings, at which he has fielded more than 900 questions from reporters, according to the White House's online archives. Exactly two of those 900 questions were about the Downing Street memo and the White House's reported effort to fix prewar intelligence.
That, unfortunately, is what a lapdog press corps looks like. Let's not diminish the significance of that historic failure by pretending today's Beltway press is repeating that catastrophic and unprecedented abdication under Obama. Just because Obama's most strident critics have failed to turn voters against the president doesn't mean the press isn't doing its job.
at No comments:

Wednesday, February 20, 2013

World shares hit 4-1/2-year highs on growth hopes

from Reuters.com

World shares hit 4-1/2-year highs on growth hopes

Traders are pictured at their desks in front of the DAX board at the Frankfurt stock exchange January 4, 2013. REUTERS-Remote-Joachim Herrmann
By Richard Hubbard
LONDON | Wed Feb 20, 2013 9:32am EST
(Reuters) - Signs of an improving global economic recovery lifted world shares to 4-1/2-year highs on Wednesday, while investors waited to see if Federal Reserve minutes would hint at any changes to its support of the U.S. economy.
The minutes from the Fed's most recent meeting, due for publication later, will come alongside key U.S. housing and inflation data and give investors the latest temperature reading on the world's largest economy.
Global equity markets have surged over the last seven months as major central banks have repeatedly delivered support.
After European shares jumped on Tuesday on forecast-beating German sentiment data, it was the turn of the MSCI world share index .MIWD00000PUS on Wednesday, which hit its highest level since June 2008.
"The MSCI world and the S&P 500 are the ones driving up here, although there is nothing really new driving this move other than the general favorable backdrop of economic data and reduced tail risks," said NationalAustralia Bank market strategist Gavin Friend.
Details from the last Bank of England meeting showed its policymakers were more inclined than had been thought for more asset purchases under its quantitative easing (QE) program and had even considered cutting interest rates.
The pound, which has been on a rapid slide in recent weeks, slumped to an 8-1/2-month low against the dollar of $1.5336, while the euro climbed to a near 16-month high of 87.565 pence.
"Today's minutes have made us more comfortable with our view that more QE is likely this year, particularly if GDP growth continues to fall short of the Committee's expectations," said Samuel Tombs, UK economist at Capital Economics.
Britain's main FTSE 100 stock index .FTSE jumped 0.4 percent to 6,402.43 points, a fresh five-year high and above the 6.400 psychological level that some traders said could encourage further moves higher.
The gains offset slightly weaker levels across some other European markets to lift the MSCI World Equity index by 0.25 percent to a 4-1/2 year high of 359.37 percent before dropping back slightly to 358.38 ahead of the open on Wall Street.
ITALY ELECTION JITTERS
Gains in Europe were being held in check by the approach of euro zone flash Purchasing Managers Index reports on Thursday and a German business sentiment survey on Friday that could show whether the region's recovery is taking hold.
Italian elections at the weekend are also creating market uncertainty. Rating firm S&P warned there could be "a loss of momentum on important structural reforms" after the February 25 poll.
The FTSEurofirst 300 index .FTEU3 index of top European shares was down 0.1 percent, though this followed a 1.1 percent rise on Tuesday - its best day for three weeks. Frankfurt's DAX .GDAXIwas up 0.15 percent, while Paris's CAC-40 .FCHI fell 0.2 percent. .EU
"I see no reason why we can't consolidate the gains and possibly move higher," said Michael Hewson, an analyst at CMC Markets.
U.S. stock index futures meanwhile pointed to a steady open when trading resumes later, with the S&P 500 and Dow Jones contracts almost flat.
Data on U.S. new housing starts and building permits confirmed a continued recovery in that market as new permits for construction rose to a 4 1/2-year high.
Attention in U.S. markets is likely to be focused on the minutes from the U.S. Federal Open Market Committee's January meeting, due at 1900 GMT, which may provide clues on how long monetary policy in the U.S. is likely to remain ultra loose.
SAFE HAVENS SLIDE
The recent rise in equities was weighing on assets perceived as safe havens, with German Bund futures down 0.3 percent to 142.32, though news that Spain may be about to issue a U.S. dollar bond helped support sentiment.
Gold was also losing ground from a declining safe-haven appeal, hitting a six month low of $1,597.99 an ounce.
"Fundamentals for gold haven't really changed, but other asset classes have now become more attractive," said Tobias Merath, global head of commodity research at Credit Suisse.
In the currency markets the yen resumed its climb against the dollar after Japanese Prime Minister Shinzo Abe said the need to establish a special fund to buy foreign bonds had receded.
Strategists said Japan was stepping back from some of its more aggressive policy-easing proposals after the Group of 20 nations declared at a meeting in Moscow on Saturday that there would be no global currency war.
Abe's comments came a day after Japan's finance minister also played down talk of such a scheme, which would have helped drive down the value of the yen.
The dollar fell as low as 93.12 yen after Abe's remarks before swinging back into positive territory at 93.62 yen, still some distance from the near three-year high of 94.46 it hit on February 11.
In the commodity markets copper and oil prices were mostly softer after big moves in the previous session.
Having posted the first gain in four days on Tuesday, Brent crude dipped back below $117 a barrel as the prospect of more supply from Saudi Arabia offset optimism about an improving global economy bolstering demand.
Copper prices slipped to a near four-week low of $8,019 a tonne, dragged lower by demand concerns from top consumer China and the recent fall of the euro.
(Additional reporting by Marc Jones and Clara Denina; Editing by Will Waterman)
at No comments:

Tuesday, October 9, 2012

28 Good Questions That The Mainstream Media Should Be Asking


28 Good Questions That The Mainstream Media Should Be Asking

Why is there so little trust in the mainstream media these days?  CNN ratings have been hovering close to record lows over the past few months.  A recent Gallup survey found that 60 percent of all Americans "have little or no trust" in the mainstream media.  That was a record high according to Gallup.  So why is this happening?  Sadly, the truth is that the mainstream media quit telling the truth a long time ago.  The mainstream media has an agenda, and more Americans than ever are beginning to recognize this.  Once upon a time, control of the news in the United States was at least somewhat decentralized.  But now there are just six giant media corporations that control almost everything that we see, hear and watch.  The version of "the news" that they give us is designed to serve the interests of those corporate giants and the other corporate giants that spend billions of dollars to advertise their products through those outlets.  Watching the news on television can be an extremely frustrating experience these days.  Yes, there are little bits and pieces of the truth in there, but you have to wade through an awful lot of "infotainment" to get to those bits and pieces.  That is one of the reasons why the "alternative media" has absolutely exploded in recent years.  The American people are hungry for the truth, and they are increasingly turning to alternative sources of news on the Internet in an attempt to find it.
We live at a time when the world is changing more rapidly than ever before.  Just about everything that can be shaken is being shaken, and anyone with half a brain realizes that we are heading for challenges that previous generations never even could have imagined.
There certainly is no shortage of news, but instead of focusing on the terribly important issues that we are facing, the mainstream media feeds us an endless stream of fluff, scandals and celebrities.
Just check out some of the headlines that I found on the front pages of major mainstream news websites today....
"Man Dies After Roach-Eating Contest"
"Ex-NFL Cheerleader Admits To Sex With Minor"
"Facebook Rolls Out Pinterest-Like Tool For Buying Stuff"
"Grumpy Cat Becomes Internet Sensation"
So what should the mainstream media really be talking about today?
The following are 28 good questions that the mainstream media should be asking....
1. Why is the IMF warning that there is an "alarmingly high" risk of a deeper global economic slowdown?
2. Why is Switzerland preparing for "major civil unrest" throughout Europe?
3. If the Spanish financial system completely collapses, what is that going to mean for the rest of Europe and the rest of the globe?
4. Is Turkey about to drag the rest of NATO (including the United States) into a war with Syria?
5. Why aren't people screaming in outrage about the fact that the U.S. national debt increased by more than a trillion dollars for the fourth straight year in 2012?
6. Should we be concerned that the U.S. government added more to the U.S. national debt on the first day of fiscal year 2013 than it did from 1776 to 1941 combined?
7. If temporary refinery problems can cause some gas stations to shut down and cause gas prices in California to skyrocket to all-time highs, what would a real crisis do?
8. Why are some analysts predicting that a "rapid collapse" is coming for the U.S. dollar?
9. Will the U.S. dollar soon lose its status as the primary reserve currency of the world?
10. Why is Marc Faber warning that the wealthy "may lose up to 50 percent of their total wealth"?
11. By keeping interest rates near zero, is the Federal Reserve crushing the retirement dreams of millions of elderly Americans?
12. Why do Barack Obama, Mitt Romney and most members of Congress continue to stand behind the TSA when nearly 400 TSA employeeshave been fired for stealing from travelers since 2003?
13. Why are nearly half a million employees of the federal government making over $100,000 a year?
14. How in the world can you have a debate about the economy that lasts for an hour and a half and never even mention Ben Bernanke, the Federal Reserve or quantitative easing?
15. Why are Romney campaign signs being smeared with excrement?
16. British taxpayers spent 57.8 million dollars on the royal family in 2011.  U.S. taxpayers spent 1.4 billion dollars on the Obamas that same year.  How in the world can this be justified?
17. Why does the U.S. government treat our military veterans like garbage?  Many of them have given everything for their country.  Shouldn't we treat them with more respect?
18. Why is the mainstream media ignoring a warning that an international gang of cybercriminals plans "to steal money from the online accounts of thousands of consumers at 30 or more major U.S. banks"?
19. The New England Complex Systems Institute in Cambridge, Massachusetts is warning that rapidly rising global food prices could soon lead to massive food riots all over the planet.  Is this something that we should be concerned about?
20. Why is the United Nations pushing to have the authority to impose "global taxes" on all of us?
21. How did we get to the point where sex trafficking is now at epidemic levels all over the United States?
22. Why are so many young people being arrested?  Should we be concerned that 41 percent of all Americans have been arrested by the time they reach the age of 23?
23. Why are most Americans either overweight or obese or severely obese?
24. How was one Baltimore woman able to accumulate 30 free cell phones all paid for by the federal government?
25. Why are nearly 30 percent of all young adults in the 25 to 34 year old age bracket living at home with their parents?
26. Why has the birth rate in the United States fallen to an all-time low?
27. With the race for president incredibly tight right now, will the side that loses end up accusing the other side of using voter fraud to steal the election?
28. Is the U.S. Supreme Court about to make it illegal to resell our own stuff at yard sales, in thrift stores and on eBay?
Do you have any questions to add to this list?
Please feel free to post a comment with your thoughts below....
at No comments:
Subscribe to: Posts (Atom)