I am, admittedly, not the world’s most financially literate person. I have a basic grasp of how the market is meant to function, I have read Keynes in the original (though I will profess to finding him rather dry), and I do think that government intervention is at least part of the solution in the current economic crisis we find ourselves in. I do not think government alone can solve the problem, because after all, the market functions on the capricious confidence of the traders, which can swing wildly on the slightest change of events, and humans are not rational creatures, so the idea that the government alone can restore the confidence of market traders is a bit absurd to me. It’s a fascinating intersection between economics and psychology, a burgeoning field of research, but it’s absurd to expect that the government can change the status quo of the moment by pumping large sums of money into failing companies.
Still, money is needed, I think, to help shore up these companies, but with that money should have come strict strings. Obscene quantities of taxpayer money are being handed out left, right and center to companies such as AIG, and it seems as though the Obama administration has done a rather poor job of making sure that money is used for its intended purpose. I appreciate the fact that it was the previous administration that gave out the original money under the TARP program, and that there is little that could be done to change the language of that handout, but it makes me upset and irks me to see the Obama administration washing their hands of responsibility for not overseeing matters more closely while simultaneously saying that if people are upset, the buck stops with the President.
There is no logical way I can think of to reconcile those two statements, especially since it was the Obama administration that created the subsequent cash inflows to AIG, not the Bush one. It especially makes little sense upon learning that the Obama administration pushed for a change in the language of the bill that allowed for taxpayer monies to be used to pay the substantial bonuses of AIG officials who were involved in the riskiest insurance areas that landed the company in this mess in the first place.
I admire President Obama. I think he is doing a pretty decent job given everything that is happening right now. But his “anger” at the bonuses paid to AIG and his statements that “We didn’t draft these contracts. We’ve got a lot on our plate. But it is appropriate when you’re in charge to make sure stuff doesn’t happen like this” ring more than a little hollow if his officials pushed for the change in language to allow the pre-existing contracts to be honored.
I am also disappointed in my senator, Sen. Dodd of Connecticut, who has been made to take the fall for inserting the language (at the administration’s request). I am disappointed because he has allowed himself to be made the fall guy, it would seem, for doing as he was asked to do, but I am also disappointed that he lacks the integrity to take responsibility for the changes. Quotes like “”I agreed reluctantly… I was changing the amendment because others were insistent” scream of trying to shamefully distance himself from his own actions, to deny his own agency in authoring the bill.
I am more disturbed, however, by his claims that he thought this grandfather clause language “”seemed like innocent modifications.” This I definitely cannot wrap my head around. You insert a provision into a bill that will authorize the payment of bonuses to people who are legally guaranteed them (regardless of the fact that they have done nothing to deserve them), and don’t stop to think that people will be rightly outraged that you are allowing their money to be used to pay people who don’t deserve the money EXTRA money even though their company is sinking ever deeper into the ground? And then members of Congress and the President have the temerity to come out sounding aggrieved, striking all the right populist notes?
I’m sorry, it doesn’t work like that. Someone in the administration had to know that the senators on the banking committee were being pressured to change the language to allow for bonuses to be paid because they were more worried about protecting themselves legally. It is admirable for President Obama to admit that he should have been keeping a closer eye on things and to say that he is ultimately responsible, but the populist anger comes across like a cheap charade and it’s all just a little too late.
Illusions of Me 