Monday, November 10, 2008

Another Sweetheart Deal for Paulson's Former Company

A deal is a deal, except when your former boss happens to be the Secretary of Treasury, in which case normal rules that apply to you and me, such as repaying loans even if you regret the terms of the original agreement are waived for another sweetheart deal. Read Washington Post, Government Again Expands AIG Rescue Plan and The New York Times, A.I.G. Secures $150 Billion Assistance Package and U.S. Provides More Aid to Big Insurer.

You might remember that over a month ago I recognized the apparent conflict of interest in allowing Treasury Secretary Henry M. Paulson Jr. to bailout his former firm Goldman Sachs. Paulson 'earned' over $650 million as CEO of Goldman Sachs, including stock options and the special treatment of AIG is designed to save Goldman Sachs 10s of billions of dollars. From an article in September:

"Although it was not widely known, Goldman, a Wall Street stalwart that had seemed immune to its rivals’ woes, was A.I.G.’s largest trading partner, according to six people close to the insurer who requested anonymity because of confidentiality agreements. A collapse of the insurer threatened to leave a hole of as much as $20 billion in Goldman’s side, several of these people said.

Days later, federal officials, who had let Lehman die and initially balked at tossing a lifeline to A.I.G., ended up bailing out the insurer for $85 billion."

Can you say conflict of interest. Don't forget that in the first draft Paulson demanded that Congress forbid judicial review of his decisions on use of the money in the bailout. Not only would his decisions have been beyond review but so would the actions of his pals in the banking world.

Good money is being wasted to save Paulson's former company.

This is nothing less than corrupt, but some people get special treatment. (Just ask former University of Alabama and famous NFL quarterback Kenny Stabler, who was acquited of DUI after an Alabama judge ruled that evidence that the former football star refused to take a breath test was inadmissible.)

Paulson should be removed from office, the money he 'earned' as CEO should be forfeited, and AIG should be forced into bankruptcy to save taxpayers further expense.

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