Obama: Aig Can'T Justify 'Outrage' Of Exec Bonuses

(My Original Blog Post: http://ping.fm/yLD73)

WASHINGTON - President Barack Obama declared Monday that insurance giant American International Group is in financial straits because of "recklessness and greed" and said he intends to stop it from paying out millions in executive bonuses.

"It's hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay," Obama said at the outset of an appearance to announce help for small businesses hurt by the deep recession.

"How do they justify this outrage to the taxpayers who are keeping the company afloat," the president said.

Obama spoke out in the wake of reports that surfaced over the weekend saying that financially strapped American International Group Inc. was paying substantial bonuses to executives.

Noting that AIG has "received substantial sums" of federal aid from the federal government, Obama said he has asked Treasury Secretary Timothy Geithner "to use that leverage and pursue every legal avenue to block these bonuses and make the American taxpayers whole."

Said Obama: "All across the country, there are people who work hard and meet their responsibilities every day, without the benefit of government bailouts or multimillion-dollar bonuses. And all they ask is that everyone, from Main Street to Wall Street to Washington, play by the same rules."

"This isn't just a matter of dollars and cents," he added. "It's about our fundamental values."

The $165 million was payable to executives by Sunday and was part of a larger total payout reportedly valued at $450 million. The company has benefited from more than $170 billion in a federal rescue.

AIG reported this month that it had lost $61.7 billion for the fourth quarter of last year, the largest corporate loss in history. The bulk of the payments at issue cover AIG Financial Products, the unit of the company that sold credit default swaps, the risky contracts that caused massive losses for the insurer.

Rep. Barney Frank, chairman of the House Financial Services Committee, earlier Monday charged that the move to pay bonuses amounted to "rewarding incompetence."

"These people may have a right to their bonuses. They don't have a right to their jobs forever," said Frank, a Massachusetts Democrat.

Frank noted that the Federal Reserve Board, using a Depression-era statute, was the institution that gave AIG its initial government bailout, before Congress passed legislation providing for additional assistance and said that no enough safeguards were built into the deal.

It also was revealed over the weekend that American International Group Inc. used more than $90 billion in federal aid to pay out foreign and domestic banks, some of whom had received their own multibillion-dollar U.S. government bailouts.

Some of the biggest recipients of the AIG money were Goldman Sachs at $12.9 billion, and three European banks - France's Societe Generale at $11.9 billion, Germany's Deutsche Bank at $11.8 billion, and Britain's Barclays PLC at $8.5 billion. Merrill Lynch, which also is undergoing federal scrutiny of its bonus plans, received $6.8 billion as of Dec. 31.

The money went to banks to cover their losses on complex mortgage investments, as well as for collateral needed for other transactions.

"We ought to explore everything that we can through the government to make sure that this money is not wasted," said Sen. Richard Shelby, R-Ala. "These people brought this on themselves. Now you're rewarding failure. A lot of these people should be fired, not awarded bonuses. This is horrible. It's outrageous."

Frank said he was disgusted, asserting that "these bonuses are going to people who screwed this thing up enormously."

"Maybe it's time to fire some people," he said. "We can't keep them from getting bonuses but we can keep them from having their jobs. ... In high school, they wouldn't have gotten retention (bonuses), they would have gotten detention."

AIG has agreed to Obama administration requests to restrain future payments. Geithner had pressed the president's case with AIG's chairman, Edward Liddy, last week.

"He stepped in and berated them, got them to reduce the bonuses following every legal means he has to do this," said Austan Goolsbee, staff director of President Barack Obama's Economic Recovery Advisory Board.

Obama did note in his remarks Monday that Liddy "came on board after the contracts that led to these bonuses were agr3eed to last year."

In an interview that aired Sunday on CBS' "60 Minutes," Federal Reserve Chairman Ben Bernanke did not address the bonuses but expressed his frustration with the AIG intervention.

"It makes me angry. I slammed the phone more than a few times on discussing AIG," Bernanke said. "It's - it's just absolutely - I understand why the American people are angry."

In a letter to Geithner dated Saturday, Liddy said outside lawyers had informed the company that AIG had contractual obligations to make the bonus payments and could face lawsuits if it did not do so.  (http://104Inc.com)

The Obama Family and Family Values

(My Original Blog Post: http://ping.fm/nZNgY)

In a recent letter to his girls, President Barack Obama wrote: "I want you to grow up in a world with no limits on your dreams and no achievements beyond your reach......" Now that's a strong message from a father to his daughters.

Some say that the Obamas are the kind of family they would like to be. Michelle has a healthy attitude about parenting that resonates for those with strong family values. And she has talked about her personal struggle of juggling work and kids, not that different from any other ordinary American working mother. More than we might expect, given her training and high-powered career, the division of labor in the marriage has been fairly traditional. Michelle is an involved mom and has said that the wellbeing of her girls comes first.

In their personal relationship, if she's hard on her husband, it's because her expectations of everyone are high. But she's also a realist. When Michelle mentions Barack's flaws, it's to make a larger point - not to put the president on a pedestal when no one can fulfill all our fantasies. Both of them think that having one person in control of a problem can only cause more of the same. They see that leadership model as not the way to run a family - or a country. In discussions, Obama is not the only boss. He welcomes engagement and wants to be challenged. And that comes across in the role that Michelle plays.

As Barack tells it, all the men in his life were fragile, but the women could always be relied upon. In his wife, he sees a lot of his grandmother - the practical, no-nonsense woman who raised him. He likes that Michelle insists he be the kind of father he never had. And just as she is a reflection of his values, their partnership is a good indication of the character strengths and listening skills he brings to the White House.

No family always runs smoothly. And there can be problems that aren't that easy to fix. As you evaluate the kind of support and strategies you need, keep the following tips in mind:

1. Keep your expectations realistic. You may have very clear ideas about how you want your family to be. But realize that every member will have their own way of handling challenges, conflicts and disappointments. Don't think that what's a priority for you will be the same for everyone. And remember that the present state of affairs won't last.

2. Be willing to compromise. With a situation you can't agree on in a family relationship that matters a lot, take the time to understand both sides of the issue. Validate everyone's feelings and try to withhold blame. It's not necessary to excuse bad behavior, but show support for what they're going through. If in the past you have gone underground and then exploded later, don't let these feelings fester. Acknowledge the part that you play in the conflict and deal with it. Negotiating an agreement that both of you can live with is often the best way to move on.

3. Set long-range goals about what you want to accomplish as well as short-term objectives that will help you reach them. These concrete plans provide the basic foundation and parameters for change in your partner, your children, your parents and yourself. As you successfully move forward, step by step, your self-confidence will grow. Ongoing action and a positive attitude will motivate you to stay on track and ultimately reach your family goals.

4. Look at your situation and decide what works for you. If you need some time by yourself, be sure to fit that into your plans. When you want to reconnect with your teenagers, plan outings that will appeal to both of you. If your parents are up to it, invite them on a family vacation. Your children will benefit from spending quality time with their grandparents. And it will give you free time and the chance for you and your partner to catch up without distractions.

5. Do what is necessary to maintain familiarity and continuity. If you nurture your family and stabilize their environment, they will feel more secure. The structure in their lives and the support you give them will relieve feelings of anxiety or stress. Children are resilient and, as you model positive thinking and hope, they will thrive. The rewards can be immeasurable for the whole family.

In this administration, with a protective mom in chief, one major focus on the home-front will be the first daughters. The goal of these devoted parents is to help the girls find their way in their new environment. And Michelle's mom is moving in for now, to provide a constant presence and keep the girls grounded. When asked about the relationship with his mother-in-law, the president, among other things, said: "I don't tell my mother-in-law what to do." Doesn't it sound like our new president is off to a really good start?

© 2009, Her Mentor Center

Phyllis Goldberg, Ph.D. & Rosemary Lichtman, Ph.D. are co-founders of www.HerMentorCenter.com, a website for midlife women and www.NourishingRelationships.blogspot.com, a blog for the sandwich generation. They are authors of a forthcoming book about family relationships and publish a free newsletter, Stepping Stones, through their website. As psychotherapists, they have over 40 years of collective private practice experience.

Is the Financial Advantage for Senator Obama Too Huge?

(My Original Blog Post: http://www.addicting-flash-game.com/is-the-financial-advantage-for-senator-obama-too-huge)

 

Senator Barack Obama has opted out of the public financing system in his contest for the U.S Presidency, and John McCain has decided to stay in the system. It appears that Obama may have about $250 million to invest in the months of September and October, and McCain may have only about $85 million.

Should McCain be afraid? No and Yes.

No, because I do not think that Obama's financial edge will do much for him in advertising (traditional and non-traditional) for his candidacy and causes. The reason is simple -- time is short, and there will be galore free publicity. Here are some ways that Obama may use his financial resources to increase the scale and scope of advertising. Let us look at various elements of this advertising.

First, Obama can and will probably advertise in almost all the 50 states -- even as his campaign will concede that several states like Alaska have not voted for a Democratic candidate for a very long time. The goal of this exercise to merely scare up McCain's campaign and force him to spend some of his valuable resources -- money and time -- in some of those states lest he should lose. Will this be effective? I rate the effectiveness about 3 on a 1-10 scale (10 being most effective) because when push comes to shove McCain will not divert his resources (he cannot afford to) and thus would call the bluff (not out of choice but out of necessity.)

Second, Obama can use micro-segmenting and try and use different media for diffusing his image. Money provides that luxury. Obama can also try non-traditional approaches and media.

Will be this an effective strategy? Better than the 50-states strategy but not overwhelmingly so. I would rate this strategy to be about 5. The reason is simple. The Presidential race will get plenty of free media coverage from networks, cable channels, print media, blogs, u-tube productions and those Presidential debates. Additional reach -- over and above these -- is likely to have marginal impact. Further, the content/message of the candidate does matter.

The message will determine the basic positioning of the candidate, and no amount of volume of reach can necessarily change that positioning. Two examples of this are: one, though Barack Obama invested thrice as much as Hillary Clinton in Pennsylvania Democratic primary and twice as much in Ohio, the ultimate preference numbers did not change from the forecasts three weeks before the actual voting; two, with less than $1 million investment the 'Swift Boat' advertisement against John Kerry was devastatingly effective. In the first case, the message was the same but in the second case, the message was sharply different and new (whether that was true or not is besides the point -- further, since Senator Kerry did not effectively and immediately repudiate the attacks the message assumed a level of truthfulness as a default.)

Final aspect of this element is that Obama is likely to receive somewhat of a negative coverage from the mainstream media for his rejection of public financing -- this is not huge but one cannot ignore the word-of-mouth value of major networks and newspapers. In this case, the word-of-mouth effect would be negative.

Yes, because Obama might gain a very substantial advantage in voter registration, and mobilization with paid staff and localized promotion and patronage. It takes almost one-on-one to persuade a voter to register, and then actually vote on the election day. The upside of such voter mobilization is monumental. Particularly when the enthusiasm for McCain's candidacy is somewhat muted thus far. For example, in the recent USA Today-Gall Up survey 61% of Democrats said they were more enthusiastic than usual about voting in this year's election, while just 35% of Republicans said that.

Obama can employ this vast resource to mobilizing voters through registering new voters and individual contacts -- paid staff (and volunteers) knocking on the doors, telephonic calls, mobilization on the day of the election. Here, the resources can make a very big impact. I would rate the potential effectiveness of this approach about 7. There is substantially higher marginal benefit to be achieved here.

For illustration, let us examine Ohio (20 electoral votes.) In 2000, Al Gore lost the state only by about 350,000 votes even without any campaign investment. In 2004, John Kerry lost Ohio by less than 120,000 votes. If only Kerry had mobilized 10 extra votes in every precinct in Ohio, he would have won Ohio and the Presidency. Obama can pour his resources in the ground game in Ohio and quite possibly win it given the current sour political climate. Similarly, Kerry lost New Mexico and Iowa by less than 20,000 votes each -- and that can be easily overcome with strong election-day mobilization. In a state like Georgia where about 600,000 African-Americans have not registered to vote are rich Obama-votes. If they can be mobilized to register to vote and actually turn up to vote, Obama can put Georgia in play. In Florida, more than half a million black registered voters stayed home in 2004. Hundreds of thousands more African Americans are eligible to vote but not registered.