Lloyd Blankfein Refuses To Resign; AIG Dumps Goldman Sachs

Visit msnbc.com for breaking news, world news, and news about the economy

AIG DUMPS Goldman Sachs As Its Top Adviser


As its legal troubles mount, Goldman Sachs is losing a big corporate client: the American International Group.

A.I.G., the insurance giant that planned to retain Goldman to help reorganize its businesses, has replaced Goldman as its main corporate adviser, according to three people with knowledge of the matter, which was not intended to be public. Instead, the insurer is turning to Citigroup and Bank of America.

The move is the first in what some analysts warn could be a series of defections among Goldman’s clients after accusations — vigorously denied by Goldman — that it defrauded customers in a complex mortgage investment. A Goldman spokesman declined to comment.

As Goldman’s legal problems have escalated — first with a civil fraud suit filed by the Securities and Exchange Commission, and then with a federal criminal investigation — some investors have grown increasingly anxious about the potential damage to Goldman’s reputation and business.

A.I.G.’s decision leaves Goldman out of the mix at a pivotal moment for the insurance company and breaks a traditionally close relationship. A.I.G., which has yet to repay billions of dollars of federal aid, helped to insure billions of dollars of Goldman’s mortgage securities, including seven deals like the one involved in the securities fraud case filed last month by the S.E.C.

The news comes as Goldman executives prepare to meet with shareholders on Friday at the bank’s annual meeting. Goldman’s chairman and chief executive, Lloyd C. Blankfein, will confront shareholders who are anxious over the S.E.C. case and a continuing criminal investigation into the bank’s mortgage trading unit.

In what some characterize as a referendum on Mr. Blankfein, shareholders will also vote whether to separate the roles of chairman and chief executive. Many corporations, including major banks, have separated those roles to improve corporate governance.

While A.I.G. is the first company that is known to have canceled major work with Goldman, European officials and some local officials in the United States have also said they are reconsidering their relationships with the bank. Several shareholders have filed suits against Goldman and its board and executives, saying they should have disclosed the S.E.C. investigation earlier.

Goldman executives have told analysts that the bank’s business has not suffered since the case. The bank’s most recent quarterly profit — $3.3 billion — was a huge success by almost any standard, and Goldman officials said the results were proof that they were doing right by their clients.

Still, Goldman’s share price has fallen about 20 percent since the S.E.C. complaint was announced.

An A.I.G. spokeswoman declined to comment. Bank of America and Citigroup did not immediately respond to requests for comment.

A.I.G. met with its two new advisers on Thursday, according to the people with knowledge of the situation. The issue at hand is how A.I.G. can sell off parts of its business to help it return government bailout money while still preserving valuable units that will be part of a surviving company. Once involved in practically every insurance business, A.I.G. is trying to redefine its role in the industry.

The company’s relationship with Goldman dates back decades. A.I.G.’s former chief executive, Maurice R. Greenberg, had a long relationship with Goldman’s leaders. A.I.G. and Goldman briefly considered merging, in the late 1990s.

But this relationship proved disastrous for A.I.G. in the mortgage crisis. A.I.G. insured some $20 billion of mortgage securities for Goldman, including seven similar to the deal at the center of the S.E.C. case, known as Abacus 2007-AC1, though it did not insure that specific deal.

In 2007, Goldman put on a negative bet against housing — what its chief financial officer, David A. Viniar, called “the big short” — and the bank issued aggressive demands for A.I.G. to put up collateral for some of its trades with Goldman. Those demands from Goldman and later other banks contributed to A.I.G.’s liquidity crisis and eventually led to a government bailout.

After the government stepped in, Goldman was among the largest recipients of money from A.I.G. when the insurance company paid its counterparties 100 cents on the dollar to end contracts tied to mortgage investments.

A.I.G. has been through a series of executive changes since its collateral battle with Goldman, and the insurance giant continued to hire Goldman for certain assignments, like its recent sales of its Asian unit, A.I.A., as well as Alico, its overseas life and health insurance business.

Earlier this year, A.I.G. heard pitches from various banks on its overall strategy. It indicated to several parties that Goldman had won that business. Goldman had not begun significant work on A.I.G.’s strategy.

Citigroup also worked with A.I.G. on its sales of A.I.A. and Alico, and Bank of America has been helping the insurance company with some financing. But the change last week was a step up in both of their roles to fill the gap left by Goldman.

Goldman’s employees, top to bottom, have been reassuring clients in recent weeks to try to retain their business. On Wednesday, Mr. Blankfein held a conference call with wealthy individual clients whose savings are managed by the bank.

Still, last week the Teachers’ Retirement System of Oklahoma warned Goldman’s asset management division that it was “on alert” and that the state pension might stop working with Goldman because of the S.E.C. accusations.


View Larger Map


Sources: CNBC, NY Times, Google Maps

Geithner Gets Fiesty On "The Hill", Encouraged To Resign

Visit msnbc.com for breaking news, world news, and news about the economy

Visit msnbc.com for breaking news, world news, and news about the economy

Visit msnbc.com for breaking news, world news, and news about the economy

Geithner Defends Fed Actions On AIG Bailout


Democrats and Republicans alike pummeled Treasury Secretary Timothy Geithner on Wednesday over his role in the $180 billion bailout of insurance giant AIG Inc., venting public anger over Wall Street's return to prosperity while 10 percent of Americans are still jobless.

Geithner, one of the original architects of the government's 2008 response to the financial crisis as president of the Federal Reserve Bank of New York, defended the use of taxpayer money as necessary to head off "potentially catastrophic damage to the economy."

But members of the House Committee on Oversight and Government Reform hammered away at why regulators allowed American International Group to pass on billions of the bailout money to big Wall Street banks that were business partners.

"In effect, the taxpayers were propping up the hollow shells of AIG by stuffing it with money. And the rest of Wall Street came by and looted the corpse," committee chairman Edolphus Towns, D-N.Y., told Geithner.

Geithner clearly was getting no cover from committee Democrats on the day that President Barack Obama was to give a State of the Union address intended to assure Americans he shares their economic priorities.

Rep. Marcy Kaptur, D-Ohio, suggested Geithner was more beholden to banking interests than to taxpayers at the New York Fed and cut him off abruptly when he tried to deny it.

Kaptur later called Geithner's performance weak and said it showed that "he shouldn't have been appointed in the first place." She said in an interview that he should leave the administration "but removing him would be an empty change without eliminating the revolving door between Washington and Wall Street."

Both Geithner and Federal Reserve Chairman Ben Bernanke have recently found themselves on the defensive, both targets of political discontent and rising voter anger sweeping the nation.

Bernanke had to scramble for support for confirmation for a second term. And Geithner faced speculation over whether his influence was fading after Obama reset his economic priorities to go with a far more aggressive attack on Wall Street and large banks and began paying more attention to advice from former Fed Chairman Paul Volcker.

But if Geithner risked being hung out to dry by the administration, it was not obvious in his testimony, in which he tied to deflect repeated congressional criticism and vigorously defended his record.

"Deciding to support AIG was one of the most difficult choices I have ever been involved in, in over 20 years of public service. The steps that were taken were motivated solely by what we believed to be in the public interest," Geithner said.

He also repeated an insistence that he played no direct role in AIG deals with business partners or in withholding information about them from the public.

When Obama picked him for the Treasury post on November 24, 2008, "I withdrew from monetary policy decisions ... and day to day management of the New York Fed," Geithner testified. "I don't think there was a better alternative available."

AIG eventually received an aid package from the government of more than $180 billion. At issue is the part of this money to repay banks that were its business partners, known as counterparties, and alleged efforts to cover up details of the payments.

The committee subpoenaed 250,000 pages of documents from the Fed.

Lawmakers are concerned with revelations about efforts to keep details of the AIG deals secret. Officials from the Treasury Department and the New York Fed worked to keep the public from learning details about those deals and other AIG decisions.

"I played no role in those decisions," Geithner said. "I will take complete responsibility for decisions I played a role in shaping," he said.

But lawmakers expressed skepticism.

"Many people, including people of this committee, have a hard time believing Secretary Geithner entered into an absolute cone of silence," California Rep. Darrell Issa, the committee's top Republican, said. Issa said he had "lost confidence" in Geithner.

Democrats and Republicans took turns lambasting the Treasury secretary.

"Either you made a bad decision there, or there was the attempt to cover up one of the biggest bailouts, backdoor bailouts, in history," Rep. John Mica, R-Fla., told him.

Recalling the early controversy over Geithner's failure to pay some personal income taxes, Mica said: "You gave lame excuses then, you are giving lame excuses now. Why shouldn't we ask for your resignation as secretary of the Treasury?"

"You have a right to your opinion," Geithner said.

Rep. Stephen Lynch, D-Mass., told Geithner: "It just stinks to the high heaven what happened here."

Lynch said later that Geithner's reputation "has been hurt greatly."

Bernanke also said Wednesday he was "not directly involved in negotiations" involving payments from AIG to its business partners including Goldman Sachs and other Wall Street firms. Those negotiations were handled primarily by the staff of the New York Fed, he said.

Bernanke made the comments in written responses to questions posed by Issa.

Although Bernanke and Geithner have taken the most heat, the government's bank rescue effort began under former President George W. Bush and Henry Paulson, his Treasury secretary.

Paulson, who followed Geithner at Wednesday's hearing, defended his own role. "An AIG failure would have been devastating to the financial system and the economy," he said. "AIG could not be effectively wound down."

Rep. Elijah Cummings, D-Md., asked Paulson if he didn't realize how angry people were at wealthy bankers and Wall Street barons who he said play golf together and are always "looking out for themselves" while the rest of the country suffers.

"I'm not a golfer but I sure know that's how people feel. Congressman, you've got it. People are very, very angry. And rightfully so ... They don't recognize that what was done wasn't done for the banks" but to save the nation's financial system and economy.


Sources: MSNBC, CNBC

Did Geithner Conspire With SEC To Hide AIG Bailout?

Visit msnbc.com for breaking news, world news, and news about the economy

View Larger Map


Sources: MSNBC, AP, Google Maps

U.S. House Subpoenas Tim Geithner To Testify On AIG Bailout Cover Up

Geithner Will Testify On Secretive Bailout Deals



Treasury Secretary Timothy Geithner is set to testify before a House probe into his role in deals that sent billions of bailout dollars to Goldman Sachs Group Inc. and other big banks.

Staffers for the House Committee on Oversight and Government Reform say Geithner is confirmed to appear at a hearing Jan. 27 on the bailout of American International Group Inc.

The committee wants to know why the Federal Reserve Bank of New York paid banks to cancel their contracts with AIG and didn't demand concessions. The deals might have cost taxpayers billions more than necessary.

An earlier watchdog report said Geithner approved the decisions as president of the New York Fed.

The staffers spoke anonymously because they are not authorized to discuss Geithner's plans.


Sources: AP, MSNBC, Youtube

"Slick" Tim Geithner Wanted On Capitol Hill Again

Visit msnbc.com for breaking news, world news, and news about the economy

Fed Advice to A.I.G. Scrutinized


New revelations that the government stopped the American International Group from revealing information about its bailout had securities lawyers and policy makers buzzing on Thursday about whether the information had to be disclosed under federal securities law, and if so, what to do about the lack of compliance.

Joel Seligman, a historian of the Securities and Exchange Commission, said the disclosure rules were supposed to apply to all public companies, with only a few narrow exceptions for things like trade secrets and national security. There was no exception for “too big to fail” companies on federal life support, he said. Companies are supposed to disclose all information that could be material, though that term is not clearly defined.

“When an organization is troubled, it actually makes disclosures of this kind more important,” Mr. Seligman said.

Others disagreed, saying that bank and insurance regulators normally keep their discussions with struggling financial institutions private, to keep from inciting runs. There has always been tension, one securities lawyer said, between banking regulators, who want to resolve problems behind closed doors, and the federal securities laws, which compel disclosure.

The latest concerns that the government was suppressing important information about A.I.G. arose on Thursday after Representative Darrell Issa, a Republican of California, obtained e-mail messages between the insurer and the Federal Reserve Bank of New York, in which a Fed lawyer told A.I.G. “there should be no discussion” of certain details of the bailout in a regulatory filing.

The e-mail messages dealt with one of the most controversial aspects of A.I.G.’s bailout: that the Fed was paying the insurer’s trading partners 100 cents on the dollar for their soured investments. A.I.G. cited this fact, but the lawyer crossed the reference out.

The Fed also struck a paragraph about other investments that could not be unwound.

The New York Fed said on Thursday that it was offering advice, not orders, and that the second reference was irrelevant and did not apply to the transaction that A.I.G. was describing in its regulatory filing.

Securities requirements aside, Mr. Issa said this secretiveness flew in the face of good public policy and said he wanted to bring the Treasury secretary, Timothy F. Geithner, to Capitol Hill “to get every side of the story and understand what the motive and intent was of these actions.”

Mr. Geithner was president of the New York Fed at the time of the e-mail exchange. The contents of the messages were first reported by Bloomberg News.

As part of its bailout, the government took a 79.9 percent stake in A.I.G., and Mr. Issa said he thought taxpayers had the right to know the details of the company’s finances.

Meg Reilly, a spokeswoman for the Treasury, said that Mr. Geithner “played no role in these decisions and indeed, by Nov. 24, he was recused from working on issues involving specific companies, including A.I.G.”

The messages showed that in December 2008, A.I.G. was preparing a filing to explain how it had eliminated a portfolio of derivatives, known as credit-default swaps, through an entity created with the Fed called Maiden Lane III.

The swaps served as insurance on debt securities held by financial institutions around the world. Maiden Lane III bought up the debts, making the financial institutions whole and allowing A.I.G. to tear up the swaps.

One troublesome set of swaps, worth about $10 billion, could not be torn up, because they did not insure debts that could be bought by Maiden Lane III — they insured amorphous bundles of derivatives. A.I.G. has never found a way to cancel them, and they are still in force.

The existence of these particular swaps has been controversial, because they suggest that A.I.G. and its trading partners were dealing not just in newfangled insurance, but in highly speculative bets on the real estate markets.

The Fed’s lawyer, Ethan T. James, of Davis Polk & Wardwell, deleted all references to the $10 billion in swaps that could not be torn up. He wrote in the margin: “There should be no discussion or suggestion that A.I.G. and the N.Y. Fed are working to structure anything else at this point.”

After receiving his instructions, A.I.G. deleted the reference to the $10 billion derivatives problem from its filing.

An official of the New York Fed said its reasons for telling A.I.G. not to mention the $10 billion of special swaps were innocuous. The New York Fed issued a statement by its general counsel, Thomas C. Baxter, saying it was “appropriate” to have given A.I.G. guidance on what to say in the S.E.C. filing, because the New York Fed had helped create Maiden Lane III.

“Our focus was on ensuring accuracy and protecting the taxpayers’ interests, during a time of severe economic distress,” Mr. Baxter said. “All information was in fact disclosed that was required to be disclosed by the company, showing that the counterparties received par value. There was no effort to mislead the public.”

Mr. Baxter, the general counsel, also said that while the New York Fed had offered its opinions about the filing, “the final decision rested with A.I.G. and its external securities counsel.”

Mark Herr, a spokesman for A.I.G., said that the company would not comment on the matter.

Mr. Issa, the senior Republican on the House oversight committee, said he was writing to the committee chairman, Edolphus Towns of New York, about including the questions of disclosure in the committee’s inquiry into the bailout.

Thursday’s controversy follows other disputes over whether the Federal Reserve was suppressing information about A.I.G. that the public had a right to know. Early in the bailout, the company and the Fed refused to name the financial institutions that were counterparties to the company’s derivatives.

The Federal Reserve’s vice chairman, Donald L. Kohn, told angry senators in a hearing that the Fed thought A.I.G. would lose customers if such information were made public, and any such loss would only hurt the taxpayers.

But the senators warned that unless the names were revealed, no more bailout money would be forthcoming, and not long after that, the names were made public.

The inspector general for the bailout, Neil Barofsky, said in an audit of A.I.G. that the arguments against transparency simply did not withstand scrutiny. “Notwithstanding the Federal Reserve’s warnings, the sky did not fall,” he wrote in November.

More recently, attempts by the New York Fed and A.I.G. executives to soften pay restrictions included references to the company’s condition that some thought should have been disclosed to shareholders.

The officials argued that the executives would resign if they were paid in company stock, citing projections showing that the stock might be worthless — something the taxpayers, as shareholders, might like to know — according to people with knowledge of the analysis.

Those discussions were disclosed on Sunday in an article in The New York Times Magazine.

A.I.G. did not comment. Others said that its regulatory filings stated that the company expected to be viable for more than 12 months only if the government continued its support, and that well captured the level of investor risk.



Sources: NY Times, MSNBC, The Daily Beast

AIG Reneges On Promise To Return Bonuses...Where Geithner?

AIG Executives' Promises To Return Bonuses Have Gone Largely Unfulfilled


When word spread earlier this year that American International Group had paid more than $165 million in retention bonuses at the division that had precipitated the company's downfall, outrage erupted, with employees getting death threats and President Obama urging that every legal avenue be pursued to block the payments.

New York Attorney General Andrew M. Cuomo threatened to publicize the recipients' names, prompting executives at AIG Financial Products to hastily agree to return about $45 million in bonuses by the end of the year.

But as the final days of 2009 tick away, a majority of that money remains unpaid. Only about $19 million has been given back, according to a report by the special inspector general for the government's bailout program.

Some of the employees who had offered to return their bonuses have instead left the company, taking their cash with them.

Others remain at Financial Products but are also holding on to their money until they see what Kenneth R. Feinberg, the Obama administration's "compensation czar," decides about whether they should get future bonus payments they have also been promised. Feinberg, AIG and government officials have been involved in ongoing negotiations over the status of past and future bonuses at the insurance giant.

Dozens of employees have hired lawyers, bracing for a fight if AIG or government officials try to block the payments.

Cuomo has said little publicly in recent months about the AIG bonuses. On Tuesday, his office had no comment when asked about the payments.

When the controversy erupted in March, Cuomo agreed to keep the employees' identities secret as long as a significant share of the money was returned to the company. Some of them said his demand amounted to blackmail. But AIG officials said at the time that at least 18 of firm's top 25 executives had agreed to return at least some of their bonus money. "We are deeply gratified that a vast majority of FP's senior leadership have expressed a willingness to forsake their recent retention payments," the company said.

But now, the government, AIG and the employees are on a collision course. Everyone is keenly aware that another round of retention payments at Financial Products is due soon, threatening to draw public attention to the issue once again. AIG is scheduled to pay out an additional $198 million to employees in March.

"They have a contractual right to be paid this money. They put in their time, and they have performed all their obligations successfully." said Andrew Goodstadt, a New York lawyer who represents more than a dozen Financial Products employees. "They're willing to assert their contractual rights in a court of law. They have extremely strong claims."

Goodstadt said his clients include computer systems specialists, mathematicians and other employees who did not have a hand in the risky credit derivatives that brought the firm down. Rather, he said, many employees who remain at Financial Products have worked to unwind the troubled trades on its books and protect the massive taxpayer investment in AIG, whose total rescue package peaked at more than $180 billion in capital and loans.

They stuck around, he said, in large part because of the company's promise of the retention payments. In addition, Goodstadt emphasized that the company told employees in March that their offers to return bonus payments were voluntary and nonbinding.

One former Financial Products executive said some of his colleagues had stayed with the company only because they expected to receive bonus payments this coming March. After that, he said, they will have "no reason at all" to stay. "There's no more carrot," he said.

A resolution to the bonus controversy has been bedeviled by a growing lack of trust between AIG employees and the government.

Financial Products employees say they were on the brink of an agreement earlier this year that would reduce the total amount of money due in 2010 and spread those payments out over time to avoid the scrutiny that would come with a large, lump-sum payment. But they claim Feinberg scrapped that plan after he was appointed in June and urged AIG to find a way to significantly scale back the upcoming bonus payments.

People familiar with recent discussions between Feinberg and executives at AIG, including face-to-face talks with chief executive Robert H. Benmosche, said Feinberg has insisted that Financial Products employees return the money they said they would before he signs off on any deal involving 2010 compensation.

"Feinberg is adamant those pledges be honored," said one of the people. "It's non-negotiable."

They also said he has continued to urge that the amount of money due in March 2010 be reduced.

"I don't know how they resolve it now. There's no trust there," said one Financial Products executive, who, like others, spoke on the condition of anonymity because of the sensitivity of the payments. "In order to negotiate, there has to be good faith and trust, and the government has shown those two things don't exist with them."

AIG declined to provide official comment, but company officials have previously argued that it is essential to keep employees at Financial Products. While the most disastrous and risky deals have been purged from the books, AIG officials say a mass exodus of employees from the division could still wreak havoc and end up harming the government's nearly 80 percent stake in the company.

AIG said in an October statement that it was working through various compensation issues with Feinberg, "including future payments to employees of AIG Financial Products." The company noted that Financial Products employees "have until the end of the year to fulfill their commitments to return a portion of their March 2009 payment. We expect FP employees will honor their commitments."



View Larger Map


Sources: Washington Post, AIG, Wikipedia, Google Maps

Spitzer To AIG: "Show Us Company Ponzi Scheme E-mails!"

Show Us the E-Mails

(NY Times Op-Ed By ELIOT SPITZER, FRANK PARTNOY and WILLIAM BLACK)



We end this extraordinary financial year with news that the Treasury is in discussions with American International Group about selling the taxpayers’ 80 percent ownership stake in that company. The government recently permitted several banks to break free of its potential oversight by repaying loans made during the rescue. But with respect to A.I.G., the Treasury should not move so fast. There is one job left to do.

A.I.G. was at the center of the web of bad business judgments, opaque financial derivatives, failed economics and questionable political relationships that set off the economic cataclysm of the past two years. When A.I.G.’s financial products division collapsed — ultimately requiring a federal bailout of $180 billion — those who had been prospering from A.I.G.’s schemes scurried for taxpayer cover. Yet, more than a year after the rescue began, crucial questions remain unanswered. Who knew what, and when? Who benefited, and by exactly how much? Would A.I.G.’s counterparties have failed without taxpayer support?

The three of us, as experienced investigators and prosecutors of financial fraud, cannot answer these questions now. But we know where the answers are. They are in the trove of e-mail messages still backed up on A.I.G. servers, as well as in the key internal accounting documents and financial models generated by A.I.G. during the past decade. Before releasing its regulatory clutches, the government should insist that the company immediately make these materials public. By putting the evidence online, the government could establish a new form of “open source” investigation.

Once the documents are available for everyone to inspect, a thousand journalistic flowers can bloom, as reporters, victims and angry citizens have a chance to piece together the story. In past cases of financial fraud — from the complex swaps that Bankers Trust sold to Procter & Gamble in the early 1990s to the I.P.O. kickback schemes of the late 1990s to the fall of Enron — e-mail messages and internal documents became the central exhibits in our collective understanding of what happened, and why.

So far, prosecutors and regulators have been unable to build such evidence into anything resembling a persuasive case against any financial institution. Most recently, a jury acquitted Bear Stearns employees of fraud related to the collapse of the subprime mortgage market, in part because available e-mail messages suggested the employees had done nothing wrong.

Perhaps A.I.G.’s employees would also be judged not guilty. But we would like to see the record to find out. As fraud investigators, we would like to examine the trading patterns of A.I.G.’s financial products division, and its communications with Goldman Sachs and other bank counterparties who benefited from the bailout. We would like to understand whether the leaders of A.I.G. understood that they were approaching a financial Armageddon, and whether they alerted their counterparties, regulators and shareholders to the impending calamity.

We would like to see how A.I.G. was able to pay huge bonuses to its officers based on the short-term income they received from counterparties for selling guarantees that, lacking adequate loss reserves, the companies would never be able to honor. We would also like to know what regulators knew, and what they did with the information they had obtained.

Congress wants answers, too. This month, during hearings on Ben Bernanke’s nomination to a second term as chairman of the Federal Reserve, several senators fumed about being denied access to his A.I.G.-related documents.

No doubt, some of the e-mail messages contain privileged conversations among lawyers. Others probably include private information that is irrelevant to A.I.G.’s role in the crisis. But the vast majority of these documents could be made public without legal concern. So why haven’t the Treasury and the Federal Reserve already made sure the public could see this information? Do they want to protect A.I.G., or do they worry about shining too much sunlight on their own performance leading up to and during the crisis?

A.I.G.’s board of directors, a distinguished group of senior business executives, holds the power to decide whether to publish the e-mail messages and other documents. But those directors serve at the behest of A.I.G.’s shareholders. And while small shareholders of public corporations generally do not have the right to force publication of internal documents, in this case one shareholder — the taxpayer — holds an 80 percent stake. Anyone with such substantial ownership has effective control over corporate decisions, even if the corporation is a large public one.

Our stake is held by something called the A.I.G. Credit Facility Trust, whose three trustees are Jill M. Considine, a former chairman of the Depository Trust Company and a former director of the Federal Reserve Bank of New York; Chester B. Feldberg, a former New York Fed official who was chairman of Barclays Americas from 2000 to 2008; and Douglas L. Foshee, chief executive of the El Paso Corporation and chairman of the Houston branch of the Federal Reserve Bank of Dallas.

Ultimately, these three trustees wield all the power at A.I.G., and have the right to vote out the 11 directors if the directors are unwilling to publish the e-mail messages. In other words, if these three people ask A.I.G.’s board to post the messages and other documents, the board will have no choice but to comply. Ms. Considine, Mr. Feldberg and Mr. Foshee have the opportunity to be among the most effective and influential investor advocates in history. Before A.I.G. escapes, they should demand the evidence.

The longer it remains hidden, the less likely we will be to answer many questions about the A.I.G. collapse and the larger economic crisis — including the most important one: how do we prevent a repeat? Time is the enemy of effective investigation; records disappear, memories fade. The documents should be released — without excuses, or delay.



View Larger Map


Sources: NY Times, Huffington Post, AP, Google Maps

Obama's Pay Czar Continues Slashing Exec Pay...More Politics

Regulating banker pay. Robert Miller, professor of the Tepper School of Businesss at Carnegie Mellon, and James Batson, an attorney at Liddle & Robinson, argue against the Pay Czar's new compensation regulations.

Visit msnbc.com for breaking news, world news, and news about the economy

"Pay Czar" Kenneth Feinberg caps pay of mid level executives


The nation’s “pay czar” is at it again Friday, and this time, midlevel executives at bailed-out firms are getting a pay cut.

Fewer than 10 of 450 employees will be allowed to earn more than $500,000 per year, according to a source familiar with the plan, which covers six firms that received federal bailout funds.

Kenneth Feinberg, the special master for TARP executive compensation, will release the next phase of his determinations about pay for those executives Friday, and he’s expected to take a tough stance.

In October, Feinberg slashed pay for the first 25 most highly compensated employees at the TARP firms, prompting complaints from critics that the companies were being put at a competitive disadvantage for attracting and keeping top talent. Now Feinberg will issue pay rulings on employees 26 through 100 at the six companies

The source said executives who wanted to earn more than a half-million dollars had to demonstrate to the special master that there was an exceptional reason for the pay. But it’s likely that employees in the 26-100 group at Chrysler and Chrysler Financial will be exempt from the latest round of salary cuts because none of them earned more than $500,000.

Negotiations over the stringent pay measures may be one reason why several banks have been eager in recent days to pay back the government and free themselves from Feinberg’s authority. Bank of America sent the federal government a check for $45 billion this week, completing its withdrawal from the TARP program. And Citigroup is in negotiations with government officials over how it will be allowed to exit as well.

Feinberg, a Washington attorney best known for his work deciding compensation for victims of the Sept. 11 attacks, was appointed earlier this year by the Obama administration.

The new rules apply to six companies: Citigroup, American International Group, General Motors, Chrysler, Chrysler Financial and GMAC. Under the Emergency Economic and Stabilization Act, the special master has a mandate to review all forms of compensation for the top 100 highly compensated employees at the firms that received “exceptional” TARP assistance.


Sources: Politico, CNBC