What we're missing beyond AIG
The $165 million in bonuses going to AIG employees has caused an uproar across the nation. But what are we missing while being distracted by those bonuses? Steve Henn reports.
Edward Liddy, chairman and CEO of the American International Group, testifies during a House Financial Services Committee hearing on Capitol Hill in Washington, D.C. (Chip Somodevilla/Getty Images)
More on America's Financial Crisis
TEXT OF STORY
Kai Ryssdal: Today might have been the most high-profile hearing the House Financial Services subcommittee on capital markets ever did have. But when you've got the guy at the center of the storm in the witness chair that does tend to focus the mind. AIG CEO Ed Liddy did what he could both to defend the bonuses and to dodge Congressional anger.
But away from the television cameras and political point-scoring, there is still that matter of a multi-trillion-dollar financial crisis to deal with. From Washington, Marketplace's Steve Henn reports now on worries we're taking our eye off the ball.
STEVE HENN: Collectively, Americans have lost more than $6 trillion in housing wealth in two years and more than $8 trillion in the stock markets. Our largest banks are teetering.
And Dean Baker at the Center for Economic Policy Research says before this is over we may need another stimulus package plus more aid for banks.
DEAN BAKER: Clearly we are looking at a much bigger bailout than we've seen to date, and it could involve hundreds of billions, and quite possibly over a trillion dollars of the public's money.
But Simon Johnson at MIT says what happened over the weekend at AIG could make that impossible.
SIMON JOHNSON: Good luck persuading Congress. I think it's over. I don't think there is any more money available for bailouts of any kind.
If Congress doesn't appropriate the money to save the banks, the Fed may have to print it, even if that means inflation.
JOHNSON: My greatest fear is the consequence of that -- that we get too much inflation now, that inflation runs out of control.
And it's not just the U.S. banking system that needs help.
C. Fred Bergsten: This is a global crisis.
C. Fred Bergsten at the Peterson Institute says it requires a global response. He says Europe and some other countries needs to spend more on stimulus packages at home and then join with the U.S.
Bergsten: To provide lots of money for the International Monetary Fund to help poorer rescue poorer countries who are themselves being clobbered by the crisis. That's very much in our interest.
Because developing countries account for half the global economy. But more foreign aid isn't likely to top Congress's to-do list.
In Washington, I'm Steve Henn for Marketplace.
Comments
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From Summit, NJ, 03/19/2009
Outrage! Outrage! Outrage!!
These retention bonuses are one-tenth of one percent of Government's giveaway of our money to AIG.... one-tenth of one percent!
How on earth could Government be so totally ignorant as to give away so much of our money, yours and mine, without as much as a minute of due diligence?
I lend my neighbor $100 overnight for an anniversary gift and perform more due diligence than Government did giving away well over a hundred billion dollars of our money.
Of course politicians are expressing anger, and hoping the public joins the chorus. That way, we will all be distracted from the gross incompetence displayed by our elected representatives.
Don't belive it? Replay the House Finance Committee's questioning of the CEOs of the country's major banks about the current economic situation. Their questions aren't worthy of a first-year college-level economic classroom.
Government is broken and needs to be replaced immediately before this acute "crisis" quickly becomes chronic, giving the world a new, low standard of living.
From burnaby B.C., BC, 03/18/2009
I think obama has the right idea go
after the slobs tax them bring their
names let everybody know who they are.
Their are to many people loseing their
homes while they set in homes that cost
a million plus dollars.Also people
loseing their savings so that they live
to spend more or all of what they
saved for.
T.S.Sveinson
From VA, 03/18/2009
Let's not forget about all the congressman and senator's raises they received. On these bad times they should give these back.
I heard somewhere and have no reason to believe that they averaged almost $100,000 each. With the number of people this would add up to a large amount of our needed money.
From livermore, CA, 03/18/2009
Well the world today expose how the european banks are cleaning their books! they dump it on AIG. Basically the american tax payer gets screwed again. So we are not only bailing US banks but world banks.
Then we pay the execs. millions for job well done? we need to stop paying taxes until they clean the system.
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