March 17, 2009
The U.S. government should take control of AIG, abrogate its employee compensation contracts, and suspend all payments on credit default swaps until information concerning these matters is made available to the public and a judgment can be made whether any further bailouts are necessary, the Consumer Education Foundation (CEF) said today.
Two weeks ago, CEF, along with Essential Information, published a 231-page report detailing the federal policies that led to the current debacle and how they were greased by $5 billion in political donations and lobbying by the Money Industry. The report, “Sold Out: Sold Out: How Wall Street and Washington Betrayed America,” is available online at: http://www.wallstreetwatch.org/soldoutreport.htm.
“It’s time for Washington to get tough with the Wall Street speculators who have pillaged our economy,” said consumer advocate Harvey Rosenfield, CEF president.
CEF urged the following plan:
- Seize control. Americans own AIG — but, apparently in order not to offend Wall Street, we do not control the company. This charade has got to stop. The federal government should take over AIG through eminent domain.
- Abrogate employment contracts. No one knows the terms of the compensation contracts between the company and its executives, including the speculators who now demand to be paid $165 million in bonuses, not to mention $600 million in “retention pay.” The government should abrogate all such compensation contracts, not just bonus deals. Let these individuals sue the United States for their money and let a jury decide whether their catastrophic mistakes deserve compensation.
- Suspend payments for credit default swaps. Until we know the details, no more public money should be transferred to or from AIG. Treasury has committed $170 billion of public money to AIG, without disclosing to the public what AIG is doing with it. We now know that former Treasury Secretary Paulson’s firm got over $10 billion, but we still don’t have the complete list of recipients. We have no way to judge whether we have to continue to bail out AIG in order to avoid a collapse of the entire system, as Treasury Secretary Geithner has argued. Once in control of AIG, the federal government should publish the complete list of “counter-parties” — the “insurance” buyers on the other end of AIG’s swaps.