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March 19th, 2009
11:00 AM ET

Minding Your Business

 CNN Business Correspondent Christine Romans is Minding Your Business everyday here on amFIX

CNN Business Correspondent Christine Romans is Minding Your Business everyday here on amFIX

The sound and fury from the AIG bonus story doesn’t cease. The underwater volcano eruption from Tonga overnight was matched only by the smoke and ash spewing from a House chamber yesterday as members pounded AIG CEO Edward Liddy. It didn’t seem to matter that Liddy came on board only last fall and has a one dollar a year salary.

A few members thanked him for his service, but most blamed him for the bonus controversy. In the midst of all of it, murky timelines of who knew what about the bonuses, when. And a mystery surrounding who finagled language at the last minute during the crafting of the stimulus bill, language that essentially paved the way for AIG to pay the bonuses. (Thanks to CNN’s Dana Bash, we now know Sen. Chris Dodd was responsible for that. At the urging, he says, of the Obama Treasury department.)

The question now: is the outrage over $165 million in bonuses distracting from the hard work under way at the Fed and Treasury to stabilize AIG, and for that matter, the entire financial system? $165 million is, as money manager Stephen Leeb points out, “not even a rounding error” in all the money committed to save the financial system. Economists for months have been telling me there may be more money needed for banks, for AIG, maybe even for more stimulus of some sort. (Japan had 8 or 10 stimulus measures during its long ten years of no growth…)

Has this entire AIG mess killed any political will for more tough choice (and more money for the system) ahead? Further, this must be a huge distraction for the Geithner Treasury department. He still needs to get a full complement of deputies ready, even as he undertakes the toughest environment for a Treasury Secretary in our lifetime.

Meanwhile, for those keeping score: the same Congress that passed a stimulus with language that allowed AIG to pay out the bonuses … now wants to pass a law imposing taxes on those AIG employees who go the bonuses.

As for the work being done by the folks at Treasury and the Fed: the Fed didn’t need Congress or the president’s permission to pump $1.2 trillion into the system by buying up securities, a move that instantly goosed mortgage rates. According to Zillow.com, the 30-year fixed rate for people with good credit fell to 4.68 percent. Translation: The bonus controversy swirls, but the thing that matters today for your money, is what the Fed is doing.


Filed under: Minding Your Business
soundoff (15 Responses)
  1. Fred E Wilkes

    Well !!! AIG sure done the worst of the worst by giving out bonuses and let everyone know it. Now you know that everyone will stay away from doing business with them, why should we bail them out when we know there going to go down the tubes now. You'll think they got the disease. Its all over but the crying.

    March 20, 2009 at 7:26 pm |
  2. Larry W Smith

    I'm sick of the whining about rich people. One woman on your ireports said they should be ashamed. Ashamed of what? Working hard and smart and making a huge amount of money or the huge amount they give to charity. The jobs they create and the people who take them or the huge amount of taxes they pay. Remember 40% of working people don’t pay taxes or get more back than they have withheld.

    Come on. She was probably one of many people who didn't care about exec pay while her 401K was doing great. It was OK if they were making money for her. Bet she thought Bill Gates was a great guy for giving a ton of his money to charity but would have liked him more if he had given her some.

    I listened to the AIG CEO at the house hearing. I'm I alone in thinking his plan was reasonable. It's working to the tune of 1.5 trillion. Retention bonuses to people who are effectively working themselves out of a job, doesn't seem crazy to me. The US Army gives retention bonuses to people the need to keep. I also heard him say the people who caused the AIG problems were gone. The ones still there are trying to fix the mess.

    If Mr. Frank publishes the names of these people, I hope he is held responsible if something bad happens to them. It's also unfair and dangerous to use the tax code, the courts and the IRS to target people or companies they don't like. Ask a smoker. The AIG CEO is a better man than me. I’d have told congress to go to hell, resigned and went home. The same thing if I were the Treasury Sec.

    It's a sad day when success is punished and mediocrity is rewarded. That’s not the American way.

    I am not rich by any means. I served in the US Army for 20 plus years and worked for 48 of my 60 years. I came from nothing and am comfortable now. This is a great country.

    March 20, 2009 at 4:58 pm |
  3. dawn flynn

    FLLW UP...AIG I previously asked CNN which politicians benefited the most (money donations) from AIG last year? Then we will know who slipped the bonus amendment bill by us. I am so tired of hearing the the obamma adm. states they were afraid of losing wall str. talent... where would we lose them? WALMART?????

    March 20, 2009 at 12:19 pm |
  4. dawn flynn

    This is not to bash our President, but Please report the politicians that benefited most with AIG monies last year. The answer will inform the country of why the bonus bill was passed. END OF STORY!!!!

    March 20, 2009 at 12:09 pm |
  5. dawn flynn

    ...love cnn - just on Surplus for North Dakota!!! Nice, how many prison are in the state of North Dakota? With the huge increase of its census, they better well have a surplus of monies.

    March 20, 2009 at 12:07 pm |
  6. LIN

    Pat you have expressed something that I almost wrote this morning myself. CNN and all the other news media are really working this over and I am honestly tired of listening to the crap. I have stopped watching them on the TV and will log out of here after this posting. But there is no good news anywhere so I am going to spend more time outside in my garden and with my dogs! They are peaceful and never complain. 🙂

    March 20, 2009 at 9:19 am |
  7. Chris

    I have a question: What have you heard of mitigation funding groups that help people get better loans or keep their homes by mitigating with the banks.?

    March 20, 2009 at 8:49 am |
  8. Patricia Edie

    Dear Cnn:
    I have been watching you in the mornings and any time I need the news for many years.....but you are losing a costumer here...and fast! (well, actually several costumers)

    I understand that getting peoples' opinion is very important and you want to get more viewers, especially the ones with a great need to shout their points of view in people's faces. But it is getting VERY BORING to see every few minutes the picture or the voice or the email of someone complaining for the same things...................it is just so much we can take, it is enough to hear the politicians insulting and blaming each other. I got to the point that I DON'T CARE
    to listen to the problems with Mr. Smith's home or Mrs. Johnson's bank account or someone griping for the hundredth time about AIG.
    Unfortunately it seems that that is the way to go for all CNN programming, we cannot avoid this regardless of the time or the day or the program that we watch in CNN.

    Soooo, I am watching now channel 4 or 2 or 7 or whatever……(in Michigan) where the regular morning programs now seem a breath of fresh air. This is the opinion of my big family and I was the "designated" writer for today.

    Thanks,
    Pat Edie

    March 20, 2009 at 8:46 am |
  9. Kenneth Stow

    Simple question: why not just audit the people getting bonus at AIG, or anywhere else. Lots will come out and just watch overpay stop.

    March 20, 2009 at 8:41 am |
  10. Linda, NC

    I find it very interesting how folks want to blame one administration or another for this mess. If we look into history we can pull Mr Clinton into some of this as well, after all, he was the one in the White House that got NAFTA passed. How can any country remain financially healthy with all the jobs sent overseas??? It was a matter of time before we ended up right where we are today.

    We Americans need to stop buying foreign goods! Hard to do since that is all available on the shelves of American businesses. China killed many animals in America with the tainted dog food a few years back and if we are not really careful with buying their products, it is only a matter of time before that stuff they are sending over here begins to kill people. But we will be the last ones to know of course! Just another example of sending all the jobs for producing the goods overseas.

    I know I have heard all the arguments about free trade, but think about this, "how are you going to pay ANY of your bills and maintain any sort of life if there are nothing but service jobs left in this country within the next 20 years?". It is coming if the American people don't begin to do something to change the tide.

    And now look at what Mexico is threatening on new tariffs for goods brought in from there! Get real, we send the jobs over there, they send there people over here to live and work and send money back to Mexico, and now they will tax what is shipped back because the US government has stopped the trucks from moving back and forth freely across the border!!!!!!!

    Wake up folks, AIG is only a very small portion of this problem.

    March 20, 2009 at 8:18 am |
  11. Richard

    Why people in high offices in AIG were not fired? They need to be put out on the street and now. I am sure others have let go for doing less. This is clearly inept skills at its highest level. This is a very bad message to send to anyone looking for a job. What is the point of trying to do a good job when you see people who caused huge failures are paid into the millions? Personally, I think they need to be shot in the ass and it must be done in public. Anyone in a position of Director and up must be fired for incompetence. This is what happens when you allow the “Peter Principle” to go unnoticed. The bonuses are distracting you from what is actually happening right in front of us. These people still have a job and making more than 10 people currently out of work. How about a fair exchange, get rid of them and put someone in place that really cares what happens to company and owns up to their actions.

    March 20, 2009 at 7:26 am |
  12. Christine E. Jones

    I am wondering when President Obama is going to make it mandatory that minority small businesses receive some of the financial support he's given out? Not only am I a minority (african-american and female) but I have a disability as well. Despite having many good ideas that will make money and help the economy (paying tax dollars in itself, does that), I don't have any financial support to get my business moving forward. I have been trying since Feb. 2005 to come up with the money to purchase copyrights, licenses, patents, trademarks, certifications, etc., etc. Yet, it is not hard when I am paying ALL my own hospital bills (Medicare and Medicaid won't pay anything and my income is not high at all), trying to fix things on my credit report from when I was too sick to work at all (took sick in late 2000 and was diagnosed with a brain tumor in October 2001). Basically, I think I deserve some help as well. Here's a suggestion: Since companies like AIG, the auto industries top dogs, and others were given billions of dollars (if they were making so much profits and not at risk, then why did they receive the money)–why not make it mandatory for minority small businesses to receive a loan up to $50,000 with no collateral involved? As I said before, you can treat the loan like you do eduational Stafford Loans where checks would be garnished, etc., etc. if business owner defaulted.

    I would like to see something done for the minority small business (DISABLED) owners who make significant contributions to society. I don't have anything to use for collateral and I don't have a cosigner. But I am a hard, dependable and honest worker who had some tough breaks and need help to help myself. Since I cannot get a job outside my home–with all my degrees and talents, I am striving hard to create my own way...

    -Christine E. Jones

    March 20, 2009 at 4:05 am |
  13. Tony G.

    What exactly is the big difference between a greedy Congress running the country into the ground stealing tax dollars giving themselves bonuses/cost of living increases and greedy AIG executives running their company into the ground stealing tax dollars giving themselves bonuses

    March 19, 2009 at 4:31 pm |
  14. Lisa McGrain

    Hi, I watch CNN daily, cannot live without your news, its the best, so thank you for always giving us the truth. On today's show Thursday Mach 19th, there was a website giving by Jeri about home mortages that the government opened up today to the public. Is there anyway you can post it or send it to me.

    Thank you and have a great day.

    Your loyal fan
    Lisa

    March 19, 2009 at 3:19 pm |
  15. Sharon Cohen

    Hello, Is anyone looking into how the economic mess got started? How much impact did the Bush administration's de-regulations and crusade to allow businesses to monitor themselves have on our economic crisis? Aren't we forgetting where to lay some of this blame?

    March 19, 2009 at 12:58 pm |