Diary

Is AIG the New Enron?

Does the name Enron ring a bell? Enron was the energy trading firm that filed for bankruptcy on December 2, 2001, one of the biggest business failures in American history.

 

The media blamed our capitalist system and George Bush for Enron’s collapse, when in fact virtually all of Enron’s dirty deeds were done during the Clinton years and then were prosecuted under Bush. Enron chief Ken Lay had ties to Bill Clinton and to the environmental movement since Enron dealt in natural gas, the favorite fossil fuel of the enviro left.

 

Today we have a new Enron. It is called AIG, the insurance company, and it is the new whipping boy for Wall Street abuse. But before blowing a gasket over AIG, it is important for us all to know what happened there, and to look at the fact that AIG really is yet another Democrat outfit. In 2008, the two biggest recipients of AIG campaign contributions were Democrat US senator Christopher Dodd of Connecticut and… Barack Obama.

 

How did AIG, the world’s largest insurance company, fail in the first place?

 

It started 4 years ago. On March 15, 2005, AIG’s board forced company founder Maurice “Hank” Greenberg to resign as chairman and CEO. Greenberg, a very liberal and very wealthy and highly competent New York businessman, was under scrutiny from a relentless campaign against him by ultra-liberal Eliot Spitzer who was serving the last two years of his 8-year term as attorney general of New York state. Spitzer went on to become New York governor in January 2007 and then resigned that post in a March 2008 prostitution scandal.

 

On May 26, 2005, as part of a series of persecutions of big New York business figures, Spitzer filed a complaint against Greenberg and AIG over fraudulent business practices, securities fraud, common law fraud, and other violations of insurance statutes and securities laws. Greenberg maintained his innocence, and suggested that Spitzer was involved in a political witch hunt in order to further his political career. Many other Wall Street figures fell victim to the ‘Spitzer treatment’ and agreed with Greenberg.

 

Eventually all criminal charges were dropped against Greenberg and he has appeared many times in the media to protest the way that Spitzer acted, although never angry and always a gentleman. From all appearances, Greenberg is a legitimate figure.

 

So AIG really failed because the man who founded the company and knew exactly how to run it was forced out. Meanwhile, Greenberg has charged that the new AIG CEO Edward Liddy “doesn’t have a clue” about how to run AIG, and thus the company is floundering. 

 

On March 16, AIG again resurfaced in the news. After receiving more than $170 billion in federal bailout cash – money that never would have been necessary if Spitzer had left Greenberg alone – AIG is reported to have given its executives $160 million in bonuses. Never did the government attach any strings to the bailout money and thus the bonuses are not illegal. But Obama and the Democrats are using the bonuses as yet another attack on “Wall Street greed” and to undermine confidence in the private capitalist system. And after decades of taxing Americans heavily and transferring trillions in wealth to nonproductive people, Obama suddenly is ooking out for taxpayers’ dollars. This is all political fakery. In the big picture that $160 million is economic crumbs.

 

Now after Democrats Dodd and Obama received the most AIG contributions of any politicians in America, and after Democrat Spitzer forced Greenberg out, you start to see a pattern. And it is this: Democrats have caused this financial collapse. There is hardly a Republican involved anywhere.

 

Lawrence Summers, Obama director of the National Economic Council, said Treasury secretary Timothy Geithner had negotiated with AIG and had done all that was “legally permissible” to limit the bonus payments. But that rings hollow. Either the payments were limited or they were not. And who says Geithner is competent anyway? He couldn’t even pay his own taxes.

 

Yet where were all these howling AIG critics when another Democrat – Clinton-era budget director Franklin Raines, who went on to head the government agency Federal National Mortgage Association (Fannie Mae) – cooked the books at Fannie Mae  and walked away with more than $90 million from the agency that then collapsed.

 

Speaking about AIG, Democrat US representative Barney Frank of Massachusetts, chairman of the House financial services committee, said that the company was “abusing the system” and that the government needs to find out what payments are “legally recoverable.” 

 

But here’s Barney Frank as recently as July 14, 2008, talking about Fannie Mae and Freddie Mac:

 

 “I think this is a case where Freddie Mac and Fannie Mae are fundamentally sound. They’re not in danger of going under. They’re not the best investment these days from a long term standpoint going back. I think they are in good shape going forward. They’re in the housing market. I do think their prospects going forward are very solid.

 

Meanwhile John McCain and George Bush both warned about the condition of Fannie Mae as far back as 2005. Fannie Mae is a big Democrat institution founded in the depression of the 1930s.

 

On September 7, 2008,  Fannie Mae and its sister agency Freddie Mac were placed into conservatorship. As of 2008, Fannie Mae and Freddie Mac owned or guaranteed about half of the $12 trillion US mortgage market.

 

How did Fannie Mae’s collapse start? The die was cast when the Clinton administration sought to expand mortgage loans to low- and moderate-income borrowers who did not have good credit. Fannie Mae in 1999 eased credit requirements on the mortgages it was willing to purchase, enabling loans to be made to subprime borrowers at interest rates higher than conventional loans.

 

And who in the Clinton administration was behind all this?

 

Here’s an excerpt from the pro-Democrat Village Voice of August 5, 2008:

 

Andrew Cuomo, the youngest Housing and Urban Development secretary in history, made a series of decisions between 1997 and 2001 that gave birth to the country’s current crisis. He took actions that—in combination with many other factors—helped plunge Fannie and Freddie into the subprime markets without putting in place the means to monitor their increasingly risky investments. He turned the Federal Housing Administration mortgage program into a sweetheart lender with sky-high loan ceilings and no money down, and he legalized what a federal judge has branded “kickbacks” to brokers that have fueled the sale of overpriced and unsupportable loans. Three to four million families are now facing foreclosure, and Cuomo is one of the reasons why.

 

And what is Andrew Cuomo doing as of March 2009?

 

He is the attorney general of New York state…

 

Democrat House speaker Nancy Pelosi called the AIG bonuses  “unconscionable” and said that Congress would try to recover taxpayer funds of companies that “abuse the privilege of taxpayer assistance.”

 

“I call upon the executives at AIG to right the wrong they have done to American taxpayers, who are footing the bill for the most expensive government rescue in history. They should renounce the bonuses and refuse the excessive retention pay they previously agreed to,” Pelosi said. 

 

Perhaps Pelosi and all Democrats should look at the policies of their own party which have foisted trillions in debt on the taxpayers and then, on top of that, have caused the current economic collapse. Otherwise their feigned outrage is just another party show trial that the voters should know about just in time for the 2010 elections.

 

Please visit my website at www.nikitas3.com for more. You can print out for free my book, Right Is Right, which explains why only conservatism can maintain our freedom and prosperity.