The AIG controversy is one for the ages, for it starkly reveals who is really running our economic system, and to what end.
In an effort to please to irreconcilable groups— average Americans versus the financial elite— Obama has lately resembled a tightrope walker on a tattered rope. The AIG debate has now unsettled this delicate balance: it will no longer be so easy to give billions to Wall Street while fake-rage is hurled against this same group.
The spectacle of AIG executives receiving millions of dollars in bonuses— all of it taxpayer money— aroused a deep anger across the country. Somehow, a company in which taxpayers own 80% was shelling out millions to the same executives that ran the company into the ground.
Instead of the government forcing AIG executives into the unemployment office, it was recently revealed that Democratic politicians secretly enabled them to receive million-dollar bonuses through Obama’s stimulus bill.
When the public outcry began, Obama weakly replied that “all legal avenues were being pursued”, meaning, that nothing would actually be done.
When the outcry intensified, Obama resorted to angry rhetoric— but this time words weren’t enough.
The House of Representatives realized that the public’s accumulated rage over bank bailouts was being focused on the AIG executives. Rather than further exposing themselves as Wall Street’s accomplices, congress thought it better to scapegoat AIG and select others. Better to let a few drown than the ship itself sink.
No one expected such blowback.
The House’s bill to tax executive pay only affected institutions that received over 5 billion in bailout funds, the list includes: AIG, Fannie May and Freddie Mac, Citigroup, JPMorgan Chase, Wells Fargo, Bank of America, Goldman Sachs, Morgan Stanley, PNC, US Bancorp, and General Motors.
Congress soon learned that ‘punishing’ this group wasn’t going to be so easy. Phone calls were made, lobbyists worked furiously, and now Obama is discouraging the bill from being passed in the Senate. Obama’s tightrope was severed.
The reason Obama is cowering before the pressure of the financial oligarchy is that his economic recovery plan is completely reliant on their cooperation. Obama’s “public-private” partnership aims to give taxpayer money to private firms who will then buy the toxic-assets hampering bank’s balance sheets. This way, the banks get paid in full for their worthless assets, and the buyers – hedge funds and other banks— get guaranteed a profit via billions in taxpayer money.
Obama was forced to use this ridiculous approach — itself created by Wall Street insiders— because the alternative terrified them: nationalizing the insolvent banks and other bankrupt companies. The myth that capitalism—private ownership producing for a market— was the only possible system would thus be destroyed read article