The rankest member of the Financial Services Committee

For several weeks now and even today, we continue to play kind of a game that children used to play, pin the tail on the donkey, trying to put the blame somewhere else. [He leaves that for his wingnut colleague from Georgia, Tom Price, who followed him today.]



And in truth, there's plenty of blame to go around. AIG, the company, engaged in very reckless, risky behavior, and I think we all have the right to be angered that such a fine company at one time has been-- is in the mess that it's in and the effect that it's had on our economy.



That's justified anger. So we could certainly pin the donkey on AIG and those within that company, most all of them long gone who caused that.



Washington, the regulators, they failed to do their job. We ought to blame them. That's justified.



This Congress, some of our policies have contributed to some of that behavior, the failure to regulate, the failure of oversight by this Congress. We're to blame.



The one people who probably aren't to blame, but seem to be paying the tab is the American people. They're paying for all this bad behavior by the company, all this bad behavior by our failure to regulate, all the failure of us to take action in numerous different areas.



We all should bear the blame. But I think, at this point, that anger shouldn't distract us from really the true issue and our goal today, and that's to try to recover as much of the taxpayers' money as we possibly can. That ought to be our motive and the blame game needs to be secondary, because we're all to blame.



Now, the only possible successful outcome to this is to manage our way out of the current problems.



Now, how do we do that? Do you think Congress can manage AIG? I don't think so. Take a walk through the visitor center; three times over budget, five years late. We can't manage AIG.



How about the regulators? There are a lot of empty desks at Treasury. I don't think that the Fed or the Treasury has done a very good job.



How about a poll on TV? Should we just take some poll results and act from there? I don't think so.



As unpopular as it may be, I think the best opportunity that we have is to let that new team at AIG-- and we're all upset over the bonuses. The bonuses were awarded and signed as contracts in 2007, long before Mr. Liddy and the new team was in play, and we're justifiably angry at him for maybe not doing a better job of getting out of it.



But he came in after the collapse of AIG, with a $1 salary, and you can vilify this new management team if it makes you feel better, but resolving a company as large and as complex as AIG is no easy task.



It was in a mess and it will require a lot of good fortunate.. It will require an economic recovery. And that's what they're doing now. They're unraveling the deals. They're shutting down this financial products division that has caused all of us heartbreak and harm, and that's going to take time.



The people who set the policies that brought AIG to the brink of total collapse are gone. We need to give this new management team the time it needs to get the job done.



They were assigned that job in September and when we did it and when the Fed did it, they said it would take two years or three years to do it.



The government trying to get more involved than it is is just going to be a sad experience. We need to let-- as I say, we need to-- and I close by, again, saying the solution here is not government running this company. It's a private team and they're going to need all the help they can get.

The last time Edward Liddy faced a vexing compensation issue, as chief executive of Northbrook-based Allstate Corp., he cut costs with all the finesse of a blunderbuss: He axed 6,000 of Allstate's highest-paid agents.



That was then, this is now. As head of insurance giant AIG, which is 80 percent owned by taxpayers, Liddy seems to be going all wobbly on compensation issues.

In March 2007, just two months after I became the Chairman of the Financial Services Committee for the first time, I moved quickly to forge a bill which would regulate Fannie Mae and Freddie Mac. The bill passed the House in May, with all 223 Democrats voting for it, and 103 Republicans voting against it. President Bush later signed that legislation into law.



Later in 2007, I introduced legislation to restrict subprime mortgages. The bill passed the Financial Services Committee and the House, but it did not pass the Senate, where because of the filibuster rule, the Republican minority actually does have the power to hobble the majority. The bill passed the full House with all 227 Democrats and 64 Republicans voting for it, and 127 Republicans voting against.



Ironically, those Republicans who now attack me most viciously and whose memories are the most impaired were among those who voted against both bills.



Republicans also forget-- or do not understand-- that the present financial crisis has many fathers. The failure to pass any meaningful legislation before 2007 allowed unscrupulous actors to gorge themselves at the public's expense. Unregulated mortgage brokers sold subprime loans including the now infamous NINA (No Income No Assets). Major financial institutions packaged bad mortgages into securities and sold them as low-risk investments. Rating agencies gave stellar grades to toxic assets while being paid by the companies who stood to benefit from their actions. Insurance companies like AIG issued Credit Default Swaps which magically turned toxic assets into gold.



The executives of some of those institutions now seek bonuses for their fine work. Perhaps my Republican colleagues should ask for bonuses too.

The political elite knows where it's bread is buttered-- and at the same time, for a change-- fears the suddenly awakened voters. The Republicans were not stupid to give Alabama reactionary Spencer Bachus the role of defending Liddy today. Bachus has taken more legalized bribes ($914,725) from the finance/insurance/real estate sector than any other Republican in the House other than Ron Paul, Eric Cantor and Mark Kirk. Bachus' central Alabama district-- carefully gerrymandered to exclude Africa-Americans-- is so deeply red (PVI is R+25) that Democrats haven't even run a candidate against him in anyone's memory. Independents ran against him in 2004 and 2002 and Bachus got 99% and 90% of the vote. Since then, no one ran against him. Earlier today CQPolitics did a cute story-- similar to the oneran on March 1st about the district that gave Obama the least amount of support in November. It was the all white, very backward Texas panhandle hellhole (TX-13) represented by Mac Thornberry. Turns out Bachus' district actually tied TX-13... at 23%. He can do anything, short of saying he disagrees with Rush Limbaugh about something, and never worry about losing an election. Let's take a look at how he helped open today's House Financial Services Committee hearing: What makes it a "fine" company? All the campaign contributions it's given to the political elite? The "very reckless, risky behavior" Bachus mentioned about AIG in passing? Is it a fine company in the same sense that Enron was the finest company George Bush had ever dealt with-- before their chairman-- and his campaign financial director-- went from "Kenny-boy" to "Ken who?"Bachus says anger towards "Washington, the regulators" is justified; Congress too... "the failure to regulate, the failure of oversight by this Congress." If I recall correctly, Bachus has not only supported every single anti-regulatory initiative that's ever been brought before Congress since he was elected in 1992, he led the way on many of the worst of them! His party (+ the Blue Dog Democrats) led the anti-regulatory mania that is more at fault for this catastrophe than any other single factor other, perhaps, than the unmitigated avarice (the reason we need regulatory agencies) of the predatory parasites at the heart of outlaw companies like AIG. Bachus talks about how the American people are stuck with the tab-- the gargantuan tab-- because of "all this bad behavior by our failure to regulate." That's correct. Why didn't he stand up before the camera and take Chuck Grassley's advice? Why don't all the Republicans and all the Blue Dogs commit mass ritual suicide as a way of atoning for this disaster? Who would argue-- other than Bill O'Reilly-- that the country wouldn't be a far better place for it?And then that charade about who's going to run it-- the government or Congress? No, Rep. Bachus; but how about some honest executives-- ones, unlike Liddy, who aren't career criminals and congenital liars ? Liddy has a reputation, a much-admired one, in the corporate world for his relentless cost cutting prowess. That means he fires employees with great ruthlessness. And it wasn't just the 60% of the workforce at Searle that he and Don Rumsfeld axed prior to selling the company to Monsanto. Today'sbrings up an incident from his days running Allstate, another bandit corporation, where he didn't care quite so much about the "sanctity" of contracts:In rural Alabama, where they seem perfectly happy to re-elect a crustacean as their congressman 8 times, they'll buy into the revelation that we better not run a big complicated company like AIG through public polling or by a much-disliked and inept Congress. He thinks the "new team" at AIG needs to be given a chance.team? "The people who set the policies that brought AIG to the brink of total collapse are gone," fibbed Bachus. "We need to give this new management team the time it needs to get the job done." Who got the $165 million inbonuses if this is the new team? One guy got $6.5 million. Had they just hired him the week before? He must be good. Watch Bachus sing for his supper-- and earn every cent of the $914,725 in corporate bribes from finance/insurance/real estate he's been given:I'm sure Chairman Frank and ranking member Bachus make herculean efforts to get along, even if Barney seems a little macho for an ankle-grabber like Bachus. Today at Huffington Post , Barney addresses the question of selective/collective Republican amnesia. Gentleman that he is, he never mentions Rep. Bachus' name.

Labels: AIG, Alabama, Edward Liddy, Spencer Bachus