AIG’s Bonus Unit Now in IRS’s Sights (WSJ)
“”Some of the same banks that got government-funded payouts to settle contracts with American International Group Inc. also turned to the insurer for help cutting their income taxes in the U.S. and Europe, according to court records and people familiar with the business.
The Internal Revenue Service is challenging some of the tax deals structured by AIG Financial Products Corp., the same unit of the New York company that has caused political ire over $165 million in employee bonuses.
The company paid $61 million last year in disputed taxes stemming from the deals but sued the U.S. government last month in federal court in New York, seeking a refund, according to filings in the case.”
Geithner Finds Government Strength In Oddest of Places (NYT)
To the quote:
“He said it was a “terrible, tragic thing” that the government did not have better tools, such as the power to take over major firms, when the credit crisis accelerated last fall. “Our system basically failed its most fundamental test,” Mr. Geithner told the conference, which was sponsored by The Wall Street Journal. “It was too fragile.”"
I offer that the government’s inability to take over major firms, regardless of the crisis at hand, is precisely what affords our system its strength.
Stiglitz Critical Of Geithner’s PPIP (Reuters)
This is bound to be the academic topic of the year, so it makes sense that we’d have a Nobel-prize winning economist leading the pack. To point: Stiglitz is concerned for the American taxpayer, calling the plan “robbery” (graceful, Stigz) – apparently not a fan of the government propping up 90% of the cash for the recovery efforts.
“The U.S. government is basically using the taxpayer to guarantee against downside risk on the value of these assets, while giving the upside, or potential profits, to private investors, he said.”
Deutsche and Credit Suisse Of To Strong Start (Bloomberg)
In what’s quickly becoming “See, we’re still okay” press releases, I’m sure you’re all overcome with joy to learn DB and CS are still breathing, and really doing pretty well this quarter.
Welcome Back To The 80′s (Bloomberg)
“Wall Street bond trading is heading back to the 1980s, when private partnerships and independent firms dominated the market.”
“Smaller firms are emerging from the wreckage of the world’s largest financial companies, which are conserving capital following more than $1.2 trillion of writedowns and credit losses since the start of 2007. They’re luring traders with a shot at $500,000 commissions for two days’ work as banks that accepted federal bailouts retrench and slash bonuses.
If Goldman Returns Aid, Will Others? (NYT)
Sorkin: “So here’s something else to ponder: Goldman Sachs is planning to give back its TARP money soon. Very soon, actually — ideally within the next month, according to people involved in the process. That’s a much quicker timetable than the end-of-year goal previously set out by Lloyd C. Blankfein, Goldman Sachs’s chief executive. As taxpayers, we should be thrilled that Goldman is going to quickly pay back the $10 billion it was given last October, right?”
Update, 10AM: Bernstein, Rosenberg Plan to Leave Bank of America (Bloomberg)
Richard Bernstein, chief investment strategist, and David Rosenberg, the chief North American economist, plan to leave Bank of America Corp. within two months, a company spokeswoman said.
Bernstein, 50, will start his own money management company after leaving on April 15, and Rosenberg, a native of Canada who plans to leave on May 11, will join Gluskin Sheff & Associates in Toronto, said a person familiar with the decisions. Bank of America spokeswoman Susan McCabe confirmed the departures.
mormon ponzi is the best ponzi
http://www.news10.net/news/local/story.aspx?storyid=56578
The Nobel Prize (Economics and Peace) has become as useful as a DailyKos membership. Whats the point pointing that out?
Stiglitz is a person who is amazingly brilliant and amazingly daft at the same time. He has devoted his life to proving that a ‘pure market based mechanism’ does not result in the most efficient outcome.
It is hard to argue with that. Of course, if there were something perfect (the ‘God regulator’) controlling the market then it would guide the market to more efficient outcomes. Just like there of course exists a better governance system than democracy which leads to more efficient outcomes.
Nonetheless, that ‘perfect regulator’ or ‘perfect system’ is an abstraction because the normal government and normal market interventionists are imperfect and result in more inefficient outcomes than what the free market results in. Somehow Stiglitz is blind to that!
They are all idiots…..
Now I feel better.
Can’t wait til the only people Barney can push around are BAC, C, and AIG. The rest will just laugh at him.
You know Barney Frank does not want this to happen. He does not want to lose his power over these companies. He will look for any way to make sure that they cannot return the money. There will be a tax to return the money as well. I believe this kind of taxing was employed on the simpsons vs hollywood.
So, how long will the rally last before they realize Barry is deliberately setting Timmy and the PPIPs up to fail so he can take it all over like the Bolivarian bastard he is? Jeez, we tried to work with the private sector …
Kudos to GS. Maxine “why do you charge us fees” Waters has been laying somewhat low after the WSJ and NYT articles, but I bet she’ll launch a hearing to get to the bottom of why GS is not paying back the same dollars it took in TARP $$. What do you mean it’s all dollars . . .!?
Bonus outrage has been appeased. Can we move on to the bigger issues?
“Would you give back your bonus if you were an AIG executive? * 2090 responses
Yes
46%
No
44%
Undecided
10% ”
http://www.cnbc.com/id/29839861/page/2/
Faber said they can’t give the money back until they pass the stress test.
Stress tests will be conducted 01/01/10
“They’re luring traders with a shot at $500,000 commissions for two days’ work.”
I guess this is for Geithner’s PPIP auction. How will it play out? Anybody thinks s/he knows?
Now, that’s the kind of work TGFD likes. Compromise one’s principles, put aside one’s outrage, and go for the green.
The Guy from Delaware
@2 To paraphrase Churchill, “Capitalism is the worst economic system, except for all others”
I still don’t understand how the brightest guys in the room were so gamed by the government and accepted this money without any clear exit strategy.
I offer that the government’s inability to take over major firms, regardless of the crisis at hand, is precisely what affords our system its strength.
Wrong, idiot. if we’d had a well thought-out system to handle the bankruptcy of a systemically important insurer, we wouldn’t be dealing with this current mess. The only reason we’re in so much trouble is because the only alternatives in the AIG situation were a disorderly liquidation or huge amounts of subsidies (we chose the latter because we had no better option).
What we need to do is to rethink FDIC and insurance company regulation so that we are able to handle large, global, systemically important firm bankruptcies – or prevent any financial firm from becoming so large in the first place.
“The Obama administration is considering asking Congress to give the Treasury secretary unprecedented powers to initiate the seizure of non-bank financial companies, such as large insurers, investment firms and hedge funds, whose collapse would damage the broader economy, according to an administration document.
The government at present has the authority to seize only banks.”
http://tinyurl.com/cx9qad http://tinyurl.com/brd6c
Barack Hugo Obama, the President of North Venezuela.
@13, Churchill actually said that about democracy–which is sometimes coexistent with capitalism when the proles do what they’re told.