“I think we need a change. I believe that we need a leader that’s pro-individual, that’s pro-business, and recognizes that there’s no free lunch anywhere. There has never been anyone in history that has proven a free lunch works.”
~Bob Benmosche, CEO of AIG
Bob Benmosche became the CEO of AIG in 2009 after the Bush economic crisis. This particular CEO thinks government is holding AIG back; it isn’t that he suddenly developed amnesia about the HUGE bailouts (PLURAL) that AIG received from American taxpayers … it’s just that he doesn’t care. He is a supporter of Ayn Rand who believes the solution to Social Security is to just make seniors work longer.
This is the same AIG that was the epicenter of the Bush economic crisis. The same AIG that received $68 BILLION in taxpayer funds via TARP. The same AIG that received an additional $72 BILLION in loans via the Federal Reserve in September of 2008 (source). The same AIG that received a $208 million tax refund paid for by the American taxpayer by gaming the system (source) and (source). The same AIG that paid out $165 million in bonuses to 400 people who were responsible for the entire financial collapse to begin with (source).
The entire reason the housing market sank into oblivion and took the rest of the world’s economy with it was due to one major banking clusterfuck. Right before the Bush economic crisis hit …. AIG was sitting on $600 Billion in credit default swaps. Credit default swaps are the exact same thing as insurance except insurance is highly regulated … so a bunch of Wall Street geniuses decided to create an insurance product and call it “credit default swap” and presto – Wall Street wasn’t required to maintain cash reserves to protect against potential defaults like the highly regulated insurance markets were.
Had credit default swaps been treated like insurance – AIG never would have been able to write $600 billion in credit default swaps and the rest of the market would have been a much, much smaller market. The American economy wouldn’t have imploded and there would have never been the need for a bailout. For all of the problems with the American economy under Bush – the one thing that set the implosion in motion was the rule that allowed Wall Street to treat insurance products like credit default swaps under rules different than insurance markets. Deregulation of financial markets created this mess and AIG is the catalyst of incalculable human suffering for hundreds of millions – maybe 1 billion people in this world.
Consider all that when you read this MUST READ by the New Yorker HERE:
“Who are you going to vote for this year, Bob?,” which is a question I pose to him in August.
“Let’s put it this way,” he says finally. “I think we need a change. I believe that we need a leader that’s pro-individual, that’s pro-business, and recognizes that there’s no free lunch anywhere. There has never been anyone in history that has proven a free lunch works.”
After the U.S. government took a majority ownership in AIG, everyone expected it to stay that way, possibly forever. But in August, the company paid back the money it received from the Federal Reserve. And while we are sitting in Benmosche’s villa in Croatia, the Treasury is making plans to sell off the majority of its stake, reducing it to 16 percent. By next year, the government estimates it will have earned a $20 billion profit on its “investment” and will be entirely rid of its AIG problem. Or, as Benmosche might put it, AIG will be rid of its government problem. The entire reason I’ve been invited to Croatia for four days is to hear about how this free lunch did work.
“But it wasn’t a free lunch,” Benmosche insists. It’s a point of view that I am apparently not the first to fail to appreciate. “Everybody said it’s just not going to happen, they’ll never pay it off,” he goes on. “SIGTARP, Elizabeth Warren, Gretchen Whatshername in the New YorkTimes. The fact is we now have succeeded in getting the Fed back all of their money, and we’re just close to getting the Treasury paid back. And do you know,” he adds, an indignant note creeping into his voice, “neither of them have ever said ‘Thank you’? We have done all the right things. Somebody should say, ‘By golly, those AIG people made a promise and they are living up to a promise!’ We’re left with a major part of the economy in America; they’re going to make a profit on top of everything else they’ve got,” he finishes, settling back into his chair. “God bless America. And God bless AIG. And God bless Tiny Tim.”
My response to this man is Go F-CK yourself. The American people don’t need to say thank you for having the pleasure of giving $160+ Billion in taxpayer money to this institution only for the now CEO to say government involvement in their business is stifling. Businesses who borrow billions from taxpayers don’t have ANY right to independence from government; government was THE creditor. Government was THE shareholder. And when that stops being the case – then AIG will have the ability to run rampant in the free markets again. Meanwhile – this guy is making millions flying in private jets and taxpayers are still trying to just catch their breath.
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