by Deb Cupples | A little background: on September 16, insurance giant AIG secured an $85 billion taxpayer-funded bailout after its executives apparently drove the company toward ruin. The day before that, finance giant Lehman Brothers filed for bankruptcy protection after its execs apparently drove that company toward ruin.
Yes, a theme does seem do be emerging, and both companies' ( apparently self-inflicted) woes have gravely threatened our nation's economy.
Naturally, the House Oversight Committee launched investigations to discover just how those two companies executives managed to wreak havoc on their shareholders' portfolios and on our economy.
I say that "executives" wreaked havoc, because corporations can do nothing except what their employees make them do -- the same way that cars cannot drive themselves -- and executives tell lower employees what to do.
On September 18, Oversight Committee Chairman Henry Waxman sent letters to AIG's and Lehman's CEOs, asking each to voluntarily send the Committee 1) copies of executives' communications over the last six months, and 2) information on pay packages for the CEO and board members.
Frankly, I think the Committee should ask about pay packages for all executives (not just CEOs), because that would give us taxpayers some clue about the part that employees' draining of shareholder dollars (partly as a reward for pumping up stock values) played in causing our nation's current economic disasters.
The information from AIG and Lehman was due on or before September 25, meaning that the CEOs had about a week to comply.
Given the huge number of employees who work for AIG's and Lehman's CEOs (and the lightening-ish speed of computer microprocessors), you'd think that the two companies would have no trouble complying with the Oversight Committees' requests.
Given that they've already "lawyered up," you'd think that the two companies would realize that the Committee can (relatively quickly) issue subpoenas if company representatives fail to comply with the Committee's requests.
I'm not sure whether AIG's CEO has complied yet, but Lehman CEO Richard Fuld reportedly failed to turn over a single document before the September 25 deadline.
Quite sensibly, Rep. Waxman zipped off another letter to Mr. Fuld, in which Waxman recites Mr. Fuld's (or his lawyers') so-called "reasons" for the failure to hand over documents.
Below are a few of the seemingly convenient obstacles that Mr. Fuld has reportedly encountered:
- Mr. Fuld did not use email much over the past 6 months
- Lehman's lawyers simply do not want to turn over hard-copy communications among Lehman execs
- Lehman's execs do not even want to identify which high-level execs had sent hard-copy communications to Lehman's CEO over the last 6 months
Understandably, Congressman Waxman felt and expressed confusion:
"It is difficult to understand how Lehman Brothers is unable to produce a single internal document that went to or from the CEO' s office over the past six months. It is also difficult to understand why there is no log, file, or other record documenting where these internal documents went."
Yes, that really is confusing. Consequently, the CEO's failure to comply with the Oversight Committee's requests gives the impression that all Lehman's execs and board members simply do not want certain information to end up in newspapers -- or in a federal prosecutor's files.
Meanwhile, the Bush Administration still wants to funnel 700+ billion tax dollars -- all at once -- to Wall Street firms whose executives drove our nation's economy toward the cliff's edge.
Both parties in Congress seem to be resisting the Republican Administration -- so they're all negotiating and fighting. Even Newt Gingrich is against the Administration's plan -- though, he's also involved in some bizarre political posturing.
Unfortunately, Congress doesn't seem to be doing a good job protecting our tax dollars. According to the Wall Street Journal, congressional leaders and Bush Administration folks have reached an agreement on the massive bailout:
"The $700 billion would be available in phases. The first $250 billion will be 'immediately available' to the Treasury Secretary, and $100 billion available 'upon report to Congress,' and $350 billion 'available only upon Congressional action,' according to a summary from the office of House Minority Whip Roy Blunt (R., Mo.), the No. 2 House Republican who was at negotiations."
I love the idea of phases, but why a full $250 billion up front?
Last week, at a Senate Banking Committee hearing, Sen. Chuck Schumer asked Treasury Secretary Henry Paulson how he came up with the $700+ billion figure. Paulson said that he'd guessed that the Treasury would give out $50 billion a month.
To that, Schumer asked the $550 billion question: why shouldn't Congress give only $150 now and come back in three months and give more IF THE BAILOUT is working?
I liked Schumer's idea and am horribly disappointed that the first cash-drop will likely be a full quarter-of-a-trillion dollars.
I can't help wondering if the Bush Administration used the old sales technique called "Door in the Face": ask for an outrageously huge price (expecting the sucker to slam the door in the salesman's face), then come back with a lower price (expecting the sucker to feel relieved and accept the deal).
Though smaller than $700 billion, $250 billion is still a TON OF MONEY. It's almost 9% of our nation's entire annual budget. And our government officials want to funnel that cash into the pockets of Wall Street execs who helped create our nation's enormous mess?
Shouldn't our taxpayer-funded political officials proceed with caution? Memeorandum has commentary.
Other Buck Naked Politics Posts:
* Wall Street Execs Got Billions While Driving Economy Toward Cliff
* Lehman Declares Bankruptcy: what it Might Not Mean
* AIG's $85 Billion Bailout: See What Anti-Regulation-ism Can Do?
* Executives Skate out of Economic Disaster with Millions
* Bailout: Ignore the Sales Pitch -- Bush Plan is Not the Only Option
* What Could we do with $700 Billion (Instead of bailing out Crooks)?
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Posted by: satria | September 28, 2008 at 03:27 PM