Barney Frank: It’s ‘Nonsensical’ To Retain AIG Employees To Undo The Mess They Created

[ProSense]

Barney Frank: It’s ‘Nonsensical’ To Retain AIG Employees To Undo The Mess They Created

On the front page of the New York Times’ business section today, economic writer Andrew Sorkin argued in favor of paying out the AIG bonuses. He cited “the sanctity of contracts” to warn that “the business community” would panic if the government started “abrogating contracts left and right.” He also claimed that the bonuses were necessary to retain AIG employees, who are needed to turn the economy around: “A.I.G. built this bomb, and it may be the only outfit that really knows how to defuse it.”

This morning, ThinkProgress sat down with Rep. Barney Frank (D-MA), who chairs the House Financial Services Committee and has called for the firing of AIG executives. When asked to respond to Sorkin’s claim that only AIG employees can navigate the economy out of the mess they created, Frank dismissed it as “nonsensical”:

That’s nonsensical. It’s clear they made a lot of mistakes and we need to undo what they did. If they really understood what they did in the first place, seriously, they probably wouldn’t have done much of it. Secondly, when you are trying to undo something, it is often not the case that the people who did it are the ones to put in place. People are sometimes committed to not admitting mistakes. … So that argument I think is in fact almost counter, because the argument that you take the people who made the mistake and put them in charge of undoing the mistake goes against the human impulse not to admit a mistake.

Watch it:

(http://thinkprogress.org/2009/03/17/frank-aig-retention-nonsensical/">Frank: 'Nonsensical' To Retain AIG Employees To Undo Mess They Created)

Sorkin also effectively endorsed AIG executives holding the American taxpayer hostage, saying that if they are fired, they “might simply turn around and trade against A.I.G.’s book”:

So as unpalatable as it seems, taxpayers need to keep some of these brainiacs in their seats, if only to prevent them from turning against the company. In the end, we may actually be better off if they can figure out how to unwind these tricky investments.

Though Sorkin seems to have no problem with such a hostage situation, it is clearly part of the “perverse incentives” he discussed with Rachel Maddow last night: “If a deal makes money for the company, they make extra money. But if it loses money they don’t lose anything.” Apparently the New York Times’ chief financial journalist has no problem with this perversity.

[AngryAmish]

1. of course it is, Barney

[LiberalFighter]

2. How much payola does Andrew Sorkin receive from the likes of AIG?

[LiberalFighter]

3. Andrew Ross Sorkin? Who had not graduated from high school yet in 1995?

That would make the nutbag about 31?

[alcibiades_mystery]

4. Anyone involved at a high level with the financial products dvision should be terminated with cause

Which will likely affect their contracts.

[Bluenorthwest]

5. Failures in finance MUST be rewarded and retained!

Teachers on the other hand best be ready to prove their worth or be fired.
The irony of the demands for something called 'merit pay' while we the taxpayers are paying for historic, perhaps criminal failures to be lavishly rewarded is too much.

[hugo_from_TN]

6. It's also nonsensical to retain the head of House Financial Services Committee

The whole committee should step down and be replaced.

[ProSense]

7. Unlike the head of AIG and its greedy executives, the members of the committee were elected

and a majority of the public is happy with the Democratic Congress. The public, as 80% owners of AIG, didn't get to elect Liddy.

Still, why should Frank step down?

[hugo_from_TN]

8. Because the Financial Services Committee did a horrendous job of overseeing

the financial services industry?

[ProSense]

10. It's Franks fault that AIG, UBS and the other banks are corrupt?

Are you confusing oversight with the internal operations of a bank?

[hugo_from_TN]

17. Here is their charter

Heck of a job, they've been doing...

The Committee oversees all components of the nation's housing and financial services sectors including banking, insurance, real estate, public and assisted housing, and securities. The Committee continually reviews the laws and programs relating to the U.S. Department of Housing and Urban Development, the Federal Reserve Bank, the Federal Deposit Insurance Corporation, Fannie Mae and Freddie Mac, and international development and finance agencies such as the World Bank and the International Monetary Fund. The Committee also ensures enforcement of housing and consumer protection laws such as the U.S. Housing Act, the Truth In Lending Act, the Housing and Community Development Act, the Fair Credit Reporting Act, the Real Estate Settlement Procedures Act, the Community Reinvestment Act, and financial privacy laws.

[TahitiNut]

12. You seem to be a bit confused regarding the roles of regulation and oversight.

Congress' job of "oversight" applies to the various Executive Branch functions of regulation and enforcement, to ensure that the laws are properly reflected in the regulations and properly enforced. Please note that regulation and enforcement are typically separate Executive Branch functions, under the management control principle of "separation of powers." Congress does NOT 'oversee' the regulated industries directly.

The 'deregulation' forces have been at work for about 30 years, like termites in the foundation of governance. If you want to see the poster children of this merry band of regulatory termites, look at Phil and Wendy Gramm.

[stillcool]

21. Did the financial services industry..

do anything illegal? When you make it lawful for an entire industry to rape and pillage what do you expect the cops to do?

[stklurker]

9. FSC

Well.. because the Financial Services Committee at the very least dropped the ball big time... and we are all crying for accountability everywhere else..??

[ProSense]

11. Another confused person. n/t

[stklurker]

13. nope, not confused at all

Nope, not confused.. I want accountability, plain and simple.


Main Entry:
over·sight Listen to the pronunciation of oversight
Pronunciation:
\ˈō-vər-ˌsīt\
Function:
noun
Date:
15th century

a: watchful and responsible care
b: regulatory supervision <congressional oversight>

[ProSense]

14. You posted a definition? No, you're confused.

Ever heard of a guy named Bush and his administration? Economic policy?

Congressional oversight doesn't mean directly overseeing the financial services industry. That is why we have an executive branch, the SEC and other regulatory agencies.

[stklurker]

15. yep

Yes... but did the committee EVER give a heads up, and warn that the regulations we were proceeding under, would lead to this kind of scenario... That is what they are supposed to do.. right? And while * did a lot of @#@#$ up stuff, this one goes way back.. what I cannot believe is that this committee had NO INKLING this was coming.. none.. if you are supposed to oversee a daycare center and they put an interstate next door.. you might mention that you might need a fence...

[ProSense]

18. "but did the committee EVER give a heads up" Are you joking?

Where the hell have you been? Did you miss the debates on all of Bush's failed policies? Did you miss the last eight years and Republican obstructionism?

[stklurker]

19. committee

dont lump this in with 'all the policies'.. I am talking about THIS committee, THIS responsibility, that's what we were discussing. When did this committee, who is the supposed to represent the people for oversight, give a forewarning.

[stillcool]

20. You want 'accountability' now?

where were you when Reagan pushed through all the 'de-regulation'? Where were you when Bush accelerated it? What do you expect a Committee to do when it is 'legal' for these financial institutions to do whatever the fuck they want? What a joke.

[vaberella]

16. Thanks for posting Prosense. I'm totally anti-Sorkin's plan.

It just doesn't make sense to hope the people who broke it can fix what they broke.

[spanone]

22. love barney frank