Robert Reich says that the bailouts demonstrate that our democracy is broken.
Robert Reich’s Blog: The Real Scandal of AIG,
The scandal is that even at this late date, even in a new administration dedicated to doing it all differently, Americans still have so little say over what is happening with our money.
[. . .] This sordid story of government helplessness in the face of massive taxpayer commitments illustrates better than anything to date why the government should take over any institution that’s “too big to fail” and which has cost taxpayers dearly. Such institutions are no longer within the capitalist system because they are no longer accountable to the market. To whom should they be accountable? As long as taxpayers effectively own a large portion of them, they should be accountable to the government.
But if our very own Secretary of the Treasury doesn’t even learn of the bonuses until months after AIG has decided to pay them, and cannot make stick his decision that they should not be paid, AIG is not even accountable to the government. That means AIG’s executives — using $170 billion of our money, so far — are accountable to no one.
Reich also posted at Huffington Post, where he added a final line:
Our democracy is seriously broken.
Jane Hamsher goes on at Firedoglake, (click through for links and the rest)
As Glenn Greenwald notes, this argument is patently absurd. We forced auto workers to break their contracts with the US automakers and accept wage cuts as a condition of receiving TARP funds. Yet when it came time to limit executive bonuses at bailed out banks, the American Recovery and Reinvestment Act only stipulated that bonuses would be prohibited for TARP recipients in employment contracts written after February 11, 2009. AIG was quick to note this in their white paper offering the legal justification for paying out these bonuses, which FDL obtained yesterday.
Unlike the auto workers, nobody insisted that the AIG bankers who wrote half a trillion in credit default swaps take a pay cut as a condition of receiving TARP funds. But this was the deal with the auto makers. And as economist Peter Morrici notes, “The Obama Treasury, headed by Tim Geithner, is forcing the terms of that deal on the United Autoworkers.”