The AIG Bailout Plan Foreshadows a Fascist Nation. Governments Using Taxpayers Money to Take Hold of Corporations, Fuses Interests of State With Interests of Wealthy Elites.

The AIG bailout plan hit its latest snag in mid March when it became public the floundering insurance firm was enacting a plan to pay $160 million in retention bonuses. It’s a good thing taxpayers have plenty of money to lend.

Beneficiaries of these alleged, previously existing contractual obligations included ex-employees, thus defying the logic of the retention justification.

New York State’s Attorney General, Andrew Cuomo, deserves credit in apparently launching a serious investigation while the Obama White House launched a serious effort to pathetically control the negative spin.

American International Group (AIG), the nation’s largest insurer, had a history of bad business prior to the bailout. Under its long time CEO, Hank Greenberg, it revised its statements on earnings in 2005 for the previous 5 years.

Four billion dollars in profits over those same years disappeared, as bookkeeping errors or false reports were re-written. Recent concerns on past management flaws and the use of the bailout funds were eclipsed by the March 15 revelations of the massive bonuses for the executives at the company.

Roughly 1/3 of the beneficiaries have promised to pay back the money while congress has discussed legislating a 90% tax on these executives who are seen as responsible for the ruin of the insurance behemoth.

Poor Kicked Into Street

The AIG bailout plan ignores that debts are non-payable to AIG and to other banks.

The government is the new big owner of AIG, essentially seeking to protect the gamblers by keeping the debts alive, but removing them from the balances of the finance institutions.

The debtors are the homeowners who are still being charged debts that they cannot pay and being forced out of their homes.

These homeowners will be sacrificed to keep big salaries at AIG and the other financial institutions. Who does the US Government actually represent?

Obama’s Administration Knew

The AIG bailout plan and the AIG bonus scandal expose, that the general economy and the public at large, are undermined by the speculation of the banking sector.

It exposes just how big a distance exists between Wall Street and Main Street, and that said distance cannot be closed without radically changing the nature of the Wall Street Banks.

It also exposes the contradiction of the role of Treasure Secretary Timothy Geithner.

Geithner claimed to have only found out about big bonuses at AIG in the second week of March.

But these bonuses were clearly laid out within the financial plans disclosed by this company, which is 80% owned by the Government and Treasury’s responsibility.

Geithner, a Wall Street banker himself, was either lying or simply trusting his friends at AIG to exercise austere financial controls.

In either case, Geithner was clearly not doing his job as should be on behalf of the public.

Groundwork for Socialism

The AIG bailout plan has continued to become more difficult to defend, as on the weekend of March 21-22 it was clarified how the bulk of the bailout funds had been spent so far.

The initial $85 billion was paid out to European banks while later, $75 billion in taxpayer loans went to a slew of US banks and finance institutions, including Merrill Lynch, Citigroup and Goldman Sachs.

Other recipients were municipalities in Hawaii, Ohio, Virginia and California to which it had insurance obligations.

While these were all contractual debts AIG had, they were clearly well beyond their ability to pay.

Technically it should be arguable that the gamble AIG committed was in fact fraud, as they never could have paid off their insurance commitments on the sub-prime loans.

This should be obvious to Geithner and the White House economic team.

Yet the Obama Administration continues to act outraged, while allowing the foxes to still hold the keys to the henhouse.