Chaos at AIG

[snoopy369]

Best as I can tell, these are interest-free loans to the counterparties. I wonder what the schedule is for paying the money back to AIG.

Good one, Dan. Good one.

[The Mad Monk]

House passes bill taxing AIG and other bonuses

Mar 19 01:46 PM US/Eastern
By STEPHEN OHLEMACHER
Associated Press Writer

WASHINGTON (AP) - Acting with lightning speed, the Democratic-led House has approved a bill to slap punishing taxes on big employee bonuses from firms bailed out by taxpayers.
The vote was 328-93.

Said House Speaker Nancy Pelosi: "We want our money back and we want our money back now for the taxpayers."

Republicans called it a legally questionable ploy to paper over Obama administration missteps.

Minority Leader John Boehner, R-Ohio, said the bill was "a political circus" diverting attention from why the administration hadn't done more to block the bonuses before they were paid.

The bonuses, totaling $165 million, were paid to employees of troubled insurer American International Group, including to traders in the unit that nearly brought about the company's collapse.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

WASHINGTON (AP)—Democrats pressed for quick action Thursday on a bill to slap punishing taxes on big employee bonuses from firms bailed out by taxpayers. Republicans called it a legally questionable ploy to paper over Obama administration missteps.

"The American people demand protection and that's what we're doing today," said Rep. Charles Rangel, D-N.Y., chairman of the tax-writing House Ways and Means Committee.

But Minority Leader John Boehner, R-Ohio, called the bill "a political circus" diverting attention from why the administration hadn't done more to block the bonuses before they were paid.

The bonuses, totaling $165 million, were paid to employees of troubled insurer American International Group over the weekend, including to traders in the unit that nearly brought about the company's collapse.

Democratic leaders rushed the bill to the floor under a procedure that requires a two-thirds majority for passage. The numerous Republican complaints about the measure during Thursday's debate raised questions on whether it would pass.

"The Democratic bill brought to the floor today is constitutionally questionable," said Rep. Mike Pence, R-Ind. "It's obviously a transparent attempt to divert attention away from the truth that Democrats in Congress and this administration made these bonus payments possible."

The bill would levy a 90 percent tax on bonuses paid to employees with family incomes above $250,000 at companies that have received at least $5 billion in government bailout money.

"We figured that the local and state governments would take care of the other 10 percent," said Rangel.

Rangel said the bill would apply to mortgage giants Fannie Mae and Freddie Mac, among others, while excluding community banks and other smaller companies that have received less bailout money.

A tax expert said there is plenty of precedent for levying punitive taxes on behavior that lawmakers find objectionable. Robert Willens, a corporate tax lawyer in New York, cited the steep excise taxes levied on money paid to firms to keep them from launching hostile takeover bids, known as "greenmail."

"You can write very narrowly tailored laws," Willens said. "And they can do it for bonuses already paid."

House Democratic leaders unveiled the bill Wednesday as the head of embattled American International Group Inc., which has received $182 billion in bailout money, testified about $165 million in bonuses paid out in the past week to about 400 employees in its Financial Products unit.

Edward Liddy, who was brought in last year by the government to run AIG, told a House subcommittee that the company was contractually obligated to pay the bonuses but that some of the recipients have begun returning all or part of them.

Liddy said that on Tuesday, he had "asked those who have received retention payments in excess of $100,000 or more to return at least half of those payments." Some have "already stepped forward and returned 100 percent," he added.

In the Senate, the top two members of the Finance Committee on Tuesday announced a bill that would impose a 35 percent excise tax on the companies paying the bonuses and a 35 percent excise tax on the employees receiving them. The taxes would apply to all companies receiving government bailout money, but they are clearly geared toward AIG.

President Barack Obama, who took office just under two months ago, told reporters Wednesday that his administration was not responsible for a lack of federal supervision of AIG that preceded the company's demise.

But Obama added, "The buck stops with me."

___

The bill is HR 1586.
Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

http://www.breitbart.com/article.php?id=D971964O1&show_article=1

Yay.

[The Mad Monk]

Meanwhile, back at BoA...

WHAAAAAT? Bailed Out Bank Of America Paying Consumers To See Hollywood Film

This is unbelievable. Though I suppose it was just a matter of time before the Hollywood moguls figured out a way to get their hands on some of that U.S. goverment bailout money, albeit indirectly. But why in the world are American taxpayers helping foot the bill to promote a big-budget 3-D DreamWorks Animation movie? Well, it appears the reason is because the president of the Jeffrey Katzenberg-led Hollywood animation studio just happens to be Bank of America's former Vice Chairman and CFO.

It took respected media analyst Rich Greenfield of Pali Research to uncover this staggering scheme (registration required). He found out that Bank of America was helping families to see Monsters vs Aliens in 3-D rather than 2-D at no additional cost when it starts playing in theaters on Friday, March 27th. (The promotion is here.) And at the same time helping out the box office grosses of Katzenberg's DreamWorks Animation, a publicly traded company.

"Why Bank of America?," Greenfield asks in a report posted this morning. "We have not seen any formal announcement about the Bank of America/[DWA] promotion beyond an increasing number of consumers discussing the promotion link on Twitter. However, we find it odd that a bank that just received $45 bn [billion] in government aid is paying for consumers across the US to see a movie in 3-D vs. 2-D at no extra cost. We also wonder whether the presence of DWA’s President, Lew Coleman, helped DWA convince Bank of America to enter into the promotion, as Coleman is a former Vice Chairman and CFO of Bank of America."

Greenfield found a .pdf for next weekend's Bank of America offer which says it is limited to its customers (credit card, banking, etc). But he also discovered that the online system allows anybody to participate as long as they have an e-mail address. Consumers can receive up to 4 certificates per e-mail address to upgrade from 2-D to 3-D via the online registration form. However, Imax and AMC theaters are excluded from the promo.

"If MvA [Monsters vs Aliens] skews heavily toward 3D tickets due to Bank of America subsidizing the incremental 3-D cost (only valid on opening weekend), we believe the odds are increasing that MvA will outperform our opening weekend box office expectation of $55 mm [million]." Greenfield predicts.

This week, Pali Research calculated that Dreamworks Animation is getting an average 3-D upcharge of $3.18 for Monsters vs. Aliens as opposed to the cost of an average 2-D ticket. "While the 3-D premium was less than DWA management expected, we believe the real driver of the effective premium will be driven by the percentage of attendees who pay to see the movie in 3-D vs. 2-D (as we presume the 2,000 3D screens will be in greater demand than the 5,000+ 2-D screens)," Greenfield writes. "We are increasingly confident that there will be a significantly higher percentage of MvA attendees at 3-D screens, as Bank of America has apparently agreed to fund the incremental cost of a 3-D ticket."

According to Greenfield, the reward certificate provides a $2-$5 value, but he couldn't find a premium above $4.

What's incredible here is that DreamWorks Animation has been spending a fortune to market Monsters vs Aliens. The campaign included a widely seen 3-D tie-in with NBC during the Super Bowl broadcast on that network. I was told that DWA footed $9 million of the cost of that spot what with the cost of the NBC ad, the 3-D glasses, the technology, etc. I wrote back in January that it was a colossal waste of money. Because the movie looked like a mess.

But now it'll be U.S. taxpayers who'll give thumbs up or thumbs down to this deal.

By Nikki Finke on Thu, Mar 19th, 2009 at 06:54AM

http://www.deadlinehollywooddaily.com/whaaat-bailed-out-bank-of-america-paying-for-consumers-to-see-hollywood-toon/

I clicked the link, and got the coupon. I do not bank at BoA.

[Kuciwalker]

Wow, that's one of the stupider news articles I've read in a while. Thanks

[The Mad Monk]

It's what I do.

[snoopy369]

That was a reposted Onion article, right? Please tell me yes.

[DinoDoc]

You're assuming that Barack went down to the SEC and read AIG's filing and that the yokels at the Fed. Reserve and Treasury, read the letters, understood them, took them seriously, and passed the info onto Barack.

You are correct. I am assuming that the man and his team are competent and would be able to foresee plainly obvious problems down the road. After all he does have a man on his team who was the architect of the AIG bailout. However, you maybe right and I'm simply expecting too much hoping that someone there would see the writing on the wall and take steps to prevent a situation that could derail his plans to this extent.

Still, last night, Barack said, "I'm the President. Blame me." He seems much more interested in fixing the problem than in running around trying to figure out who to blame.

If only he was as interested in preventing that as he is in making his Final 4 picks.

[Ben Kenobi]

Wow, so the congress can just take away anyone's benefits, and can break contracts at will?

Why would anyone trust congress now to abide by inconvenient contracts.

[DaShi]

The government can also hold you indefinitely under suspicion of terrorism.

[TCO]

should have (still should) let it go tits up. Euro banks made a bad bet. So what. We are not their to give them risk free investments. Plus best way to teach them not to **** up is to let them take a haircut. Best way to encourage more ****ing up is for us to cover their bad bets. Taxpayers are not responsible for covering bad bets of speculators. Unwind the motherfvckers. And let the stuff go belly up so bankers lose some management jobs.

[Zkribbler]

Wow, so the congress can just take away anyone's benefits, and can break contracts at will?

Why would anyone trust congress now to abide by inconvenient contracts.

They're not breaking contracts. They're letting the contracts go through and then taxing the proceeds.

The joke is, of course, is that the default-swap unit is located in London. So just how effective will a U.S. tax be??

[notyoueither]

That's what I've been wondering.

[DinoDoc]

They're not breaking contracts. They're letting the contracts go through and then taxing the proceeds.

Seems more like a bill of attainder.

[Zkribbler]

Guess again.

A bill of attainder (also known as an act or writ of attainder) is an act of legislature declaring a person or group of persons guilty of some crime and punishing them without benefit of a trial. Bills of attainder are forbidden by Article I, section 9, clause 3 of the United States Constitution.

[DinoDoc]

Yes, that's what aroused my suspicion.