“Considerable leverage?” What leverage?

The Fed had already proved to the entire world that AIG wouldn’t be permitted to fail. So, what kind of “considerable leverage” was available to the Fed?

Interesting and thought provoking analysis of the whole saga here:
http://economicsofcontempt.blogspot.com/2009/10/janet-tavakoli-all-bark-no-bite.html
http://economicsofcontempt.blogspot.com/2009/11/geithner-vindicated-in-tarp-watchdog.html

Similarly Bloomberg reported on the AIG bonuses of which Geithner claimed he was unaware. It got to be so ludicrous that Geithner had to recalibrate his lies in front of Congress and claim that he first learned of the bonuses when staff members showed him the Bloomberg story months after it was released.

The gov is populated by fraudsters. Obama is no different.

My reasons.

Cash bonuses at this point in the fragile recovery of our economy are not wise. They are too risky for the banks and too risky for the economy. Preserving this capital reduces any future need to raise capital. Capital that would be far more costly if it had to be raised out of necessity at a time of weakness.

Stock options would demonstrate that the bankers are in the game for the long haul along with the rest of us. This would show America that the investment banks are part of the team, that they are working to make the economy stronger, that they are not just the greedy, selfish (fill in the blank’ers) that they have been portrayed as by the media.

Banks should volunteer to do this, but if they cannot, will not or need political cover, then the Federal Treasury should mandate it. If Hank Paulson could force a shotgun wedding between Bank of American and Merrill, surely Tim Geithner can get these banks to agree to similar stock option bonus terms.

Perhaps a better analogy: If Hank Paulson could get these same banks to agree to accept TARP money so as to not single out those in greatest need, then Tim Geithner can get them to agree to the same rules on stock option based bonuses so as not to single out those at greatest risk of future taxpayer bailouts. Geithner can argue that retaining this cash is necessary to accelerate the repayment of TARP funds and reduce the federal deficit and that requiring everyone to take the same approach is necessary for employee stability.

This is the minimum the banks should agree to do given the billions of dollars of taxpayer subsidies they all have received in one form or another. Crap at $140 billion in stock option awards, they can even create a large new market trading in future employee stock option awards. (sarcasm)

The story then disappeared and then became big news earlier this year.

Similarly Bloomberg reported on the AIG bailouts of which Geithner claimed he was unaware. It got to be so ludicrous that Geithner had to recalibrate his lies in front of Congress and claim that he first learned of the bonuses when staff members showed him the Bloomberg story months after it was released.

The gov is populated by fraudsters. Obama is no different.