Bailouts

For the second day in a row, CNBC "Squawk on the Street" co-host Mark Haines took on a Democratic congressman over the issue that American International Group (AIG) paid out too much in bonuses for a company that received federal bailout money.

On March 19, Haines took on alleged tax cheat Charles Rangel, questioning whether or not he should be dictating tax policy while the House Ethics Committee investigates him for his tax problems.  On CNBC's March 20 "Squawk on the Street," Haines took on Rep. Brad Sherman, D-Calif. on the issue.

Sherman contended the 90-percent tax on bonuses exceeding $250,000 that the House passed 328-93 didn't go far enough. He said a government receivership would have been the proper way to handle AIG, and not the bailout method the federal government employed. 

Afraid that the AIG executive bonus bailout just may be the demise of the Democratic Party, MSNBC’s Chief White House Correspondent Chuck Todd trivialized the death of Terry Schiavo by suggesting the fight over Schiavo’s life was the demise of the Republican party.

Host Andrea Mitchell, Gene Robinson, and Chuck Todd were discussing Treasury Secretary Tim Geithner’s survival of the AIG scandal on Mitchell’s March 20 show MSNBC Live when Todd inserted this bit of political wisdom:

 “An… Andrea? Really fast? You never know, you never know, when you know, this could turn into a Schiavo moment. And remember how the Terry Schiavo thing ended up being the beginning of the end for the Republican Party and their control. You just never know when one of these stories just catches wildfire in the popul…, in sort of the populist front. Sometimes you can’t stop it no matter which party you are.”

Two March 19 editorials on Obama's failure to create post-partisanship in D.C., both from lefties, can't be farther apart from each other in their conclusions. Marc Dunkelman's in U.S. News blames everyone but Obama for the failure to invent that mythic bipartisan Washington while Mort Kondracke's Real Clear Politics piece lays the fault squarely at Obama's door step.

But, the differences in the two are not just in conclusion but in the journey it took to get there. Sadly, the journey the Dunkelman piece took to get to its conclusion went through Obamamania, into the Obamagobsmacked tunnel, then it took The One turnpike, and ended up parked squarely in Obama's southern port... if you know what I mean? In other words, it was based solely on a sycophantic love affair with the Obammessiah instead of on solid political analysis.

Did you know that AIG, aka American International Group, is an American company?

Well, on NBC's "Tonight Show" Wednesday, Jay Leno didn't, and the supposedly brilliant Keith Olbermann wasn't sure.

Imagine that.

A company that has been a hot topic in the news for at least the past six months, and these guys not only didn't know it was American, but also thought its initials stood for American "Insurance" Group (video embedded below the fold, relevant section at 3:50):

In the wake of the American International Group (AIG) bonus controversy, some have called the plans of congressional leaders to tax those bonuses at a rate of 90-100 percent "legislating with a vengeance."

However, Chairman of the House Ways and Means Committee Rep. Charles Rangel, D-N.Y., insists that doing this is a necessity, despite the premise that retroactively taxing anything is a dangerous precedent. In an interview with CNBC "Squawk on the Street" co-hosts Mark Haines and Erin Burnett on March 19, he explained different rules apply in these extraordinary circumstances.

"When you violate the public trust, different rules apply - the same thing we have in charitable organizations, 501(c)3 when they have excessive payment in certain areas that we're able to penalize them for," Rangel said.

But Haines, referring to a Sept. 9, 2008 New York Times article that alleges Rangel hasn't paid taxes on some of properties, questioned the New York congressman's moral authority.

While there has been a lot of outrage over taxpayer money being used to fund $165 million in bonuses paid out to American International Group (AIG) executives propagated by the media, Fox Business "Happy Hour" co-host Cody Willard suggested the bailout money is going to something far worse - terrorism, specifically al-Qaida.

On March 18, The Wall Street Journal reported that some of the money the U.S. government paid out to AIG might be benefiting hedge funds that bet on a failing housing market. According to the report, investment banks like Goldman Sachs (NYSE:GS) and Deutsche Bank (NYSE:DB) sold financial instruments to hedge funds betting defaults would increase.

"AIG bailout funds terrorism," Willard said. "This is what it's all about guys, it's the most politically well-connected. AIG aid is not going just to AIG shareholders, but more of the point is that it's going to Goldman Sachs, Deutsche Bank and these other banks, whose customers are yes - these giant hedge funds."

At the top of Wednesday’s CBS Early Show, co-host Maggie Rodriguez interviewed Democratic Congressman Barney Frank about upcoming hearings on bonuses AIG gave to top executives after receiving government bailout money: "And who in the government didn't vet this company well enough before it gave the money to address the issue of bonuses...So who's responsible here in government? You said the Federal Reserve did this." Frank replied: "In September, Mr. Bernanke, as the head of the Federal Reserve, came to us and said 'we think we have a terrible problem here, we are going to provide $85 billion to AIG. That's -- that was the decision it wasn't anything that Congress had any say over."

Rodriguez did not challenge Frank’s assertion that the Democratic Congress was not involved, failing to ask the Massachusetts Congressman about the role his Senate colleague, Connecticut Democrat Chris Dodd, played in allowing AIG executives to keep their bonus money. On Tuesday, Fox Business reported: "While the Senate was constructing the $787 billion stimulus last month, Dodd added an executive-compensation restriction to the bill. The provision, now called ‘the Dodd Amendment’ by the Obama Administration provides an 'exception for contractually obligated bonuses agreed on before Feb. 11, 2009' -- which exempts the very AIG bonuses Dodd and others are now seeking to tax."

The anger and outrage over $165 million in bonuses paid out to American International Group (AIG) executives has many upset and outraged, but it also has some scratching their head wondering where that same emotion is over the entire government spending/bailout culture that has encapsulated Washington, D.C.

Earlier on March 17, CNBC reporter Rick Santelli suggested on CNBC's "Squawk Box" some of this outrage could be purely political. However, liberal talk radio host Ed Schultz said on MSNBC's March 17 "1600 Pennsylvania Avenue," host by David Shuster, this "outrage" is welcomed by President Barack Obama.

"David, I think the Obama administration wants this public outrage," Schultz said. "It's an issue of timing right now. They couldn't have stopped the money to AIG."

Since his now-famous Chicago Tea Party outburst from the floor of the Chicago Mercantile Exchange in February, CNBC's Rick Santelli had seemingly disappeared from the spotlight.

However, on CNBC's March 17 "Squawk Box," Santelli, using similar theatrics, noted that the Obama administration as been very concerned about $165 million in bonuses paid out to American International Group (AIG) executives, even though they were recipients of bailout money from the Troubled Asset Relief Program (TARP).

"Well, I mean it seems as though the administration really hit this one head on. They're not happy about it, right?" Santelli said.

In a speech on March 16, President Barack Obama called it an "outrage" and said Treasury Secretary Timothy Geithner was pursuing "legal avenues" to block the bonuses. In Santelli's view, Obama seemed to be worrying about millions, instead of the billions and trillions.

The Obama administration is just flummoxed by the burdens of power, ABC's George Stephanopoulos fretted on Monday's World News. Discussing the public backlash over how AIG used bailout funds to pay bonuses, Stephanopoulos related that the White House feels “caught in a bind” between “populist anger” and appeasing the business community which only causes negative public reaction. “It's a tough dilemma,” he concluded.

Stephanopoulos lamented:

They feel caught in a bind. When they respond to this populist anger, they feel they get a very negative reaction from the business community and the stock market. When they try to appease the business community and the stock market, the public rises up. It's a tough dilemma.

All the current outrage and attention to bonuses paid out to employees of institutions that received federal bailout money is misplaced, according to an analyst that appeared on CNBC Asia on March 16. 

The media is making much of the news that American International Group (AIG) executives are receiving compensation in the form of bonuses. But Kirby Daley, senior strategist at the Newedge Group explained how the focus was in the wrong place. Although some say allowing Lehman Brothers to fail in September 2008 was a mistake, it prevented the problem of taxpayer money being used for executive compensation.

"I'm not so sure that was a mistake," Daley said. "And what I mean by that is, look I had dozens of friends there. It's very painful and to see an institution like that go down, one that I have followed for years - it hurts."

The lesson according to Daley - either allow the institutions to have the same fate as Lehman Brothers, or just outright nationalize them.

At the top of Monday’s CBS Early Show, co-host Julie Chen declared: "Optimism offensive. An upbeat Ben Bernanke tells '60 Minutes' the economy could turn around within nine months." Chen later introduced the segment on the Obama administration’s new economic optimism: "...from bleak to bright. The Obama administration has switched its tone and is now saying the economy is on the road to recovery."

Correspondent Bill Plante reported: "... the administration's attempt to restore public confidence in the financial system, which is seen as weak both at home and abroad...The response, led by President Obama, is an offense of optimism." Plante focused entirely on the administration’s new tone, providing little substance or criticism. Also lacking, was any mention of John McCain’s efforts to instill economic confidence during the presidential campaign, for which he was derided.

Instead, Plante simply cited the new upbeat message being put out by Obama staffers: "Even though stimulus funds are just beginning to be spent, and the bank rescue details have yet to be announced, the message from administration officials is confidence." A clip was played of economic advisor Lawrence Summers exclaiming: "Don’t panic." That was followed by White House advisor Christina Romer declaring: "The stimulus package, the financial rescue plan, the housing plan, we think it's the right medicine, and we think it will work."

Barney Frank was allowed, by NBC's Meredith Vieira, to go on a tear against AIG for wasting bailout money on corporate bonuses, on Monday's "Today" show, yet Vieira never once interrupted Frank to point out his own wasteful stimulus spending on earmarks going to Frank's home district, including $1 million for scallop research. Vieira also didn't interject when Frank blamed the Bush administration for failed economic oversight, even though it was Frank who blocked reforms of Fannie Mae and Freddie Mac, something former Vice President Dick Cheney brought up on this Sunday's "State of the Union," on CNN.

Vieira never asked a challenging question throughout the whole interview, instead choosing to let Frank rant: "The time has come for the federal government to put some people in charge...When we were asked by the Bush administration and the Federal Reserve last fall, to do these things, they resisted some of the conditions we wanted to put on."

The following is a complete transcript of the interview with Frank as it was aired on the March 16, "Today" show:

Since CNBC's Rick Santelli first suggested a Chicago Tea Party to protest President Obama's plans to "stimulate" the economy and bailout homeowners through unrestrained government spending, organized demonstrations have been occurring across the fruited plain.

In fact, as Glenn Reynolds reported moments ago, there's one happening today in Cincinnati. 

Unfortunately, unless you frequent conservative websites, you'd have no idea that such events were being staged. 

Despite their lack of coverage, as Knoxnews.com revealed Sunday, these Tea Parties are springing up all over the country (image courtesy Geldpress):

As much as the 2008 presidential election was a battle between socialism and capitalism in America, so too is the highly-publicized feud between Comedy Central's Jon Stewart and CNBC's Jim Cramer.

Even their last names begin with the same letters as the economic philosophies they're defending.

Of course, the press coverage of the main event -- Cramer appearing on "The Daily Show" Thursday to face his accuser -- is also emblematic of this war with the liberal media cheering for Stewart, and those on the right clearly in the "Mad Money" host's corner.

On March 6, in response to New York Times reporters' questions, President Barack Obama told the paper that he is not a socialist. He or his advisers were apparently so bothered by the questions that Obama later called the Times reporters involved in an attempt to .... well, I'm not sure, because he had already supposedly denied the charge.

The best guess is that Obama and his peeps felt he needed to get in some gratuitous digs at former president George W. Bush.

Part of Obama's phone call back to the Times including the following relative to the Troubled Assets Relief Program (TARP) under then-Treasury Secretary Henry Paulson:

I did think it might be useful to point out that it wasn’t under me that we started buying a bunch of shares of banks.

..... I just think it’s clear by the time we got here, there already had been an enormous infusion of taxpayer money into the financial system.

There seems to be a wall of silence surrounding the sudden withdrawal of H. Rodgin Cohen (pictured at right) from consideration for the Number 2 job at the Treasury Department.

The party line, according to ABC's This Week host and former Clinton administration adviser George Stephanopoulos, is that "an issue arose in the final stages of the vetting process." David Cho at the Washington Post reports that "two sources familiar with the matter" confirmed this, but that they "declined to identify the reason."

Perhaps the press is not really interested in finding out that reason, or reasons. Or worse, they've got a pretty good idea, and they'd rather not dig; because if they don't dig, they won't have to tell us. Stephanopoulos appears to be giving away that he knows more than he's willing to reveal when he writes that "Cohen has been a counsel to just about every major player on Wall Street, which perhaps complicated his nomination."

"Perhaps"? A review of some of Cohen's known history makes it clear that he carries quite a bit of potentially heavy baggage.

All I had to do is a Googe Web search on "Rodgin Cohen" (in quotes) to find these two items at the sixth and seventh listings:

Too bad this particular report didn't include an expert that was railing against the TARP (Troubled Asset Relief Program) bailout before it was passed last October. They could have said, "I told you so."

Global banks lending money to other countries including "the playground of the Middle East" may have angered Congressmen, but Lisa Myers investigation didn't point out that those critics of how the banks lent money voted for TARP (Troubled Asset Relief Program) in the first place. 

In a segment on March 11 "NBC Nightly News," Myers, NBC's senior investigative correspondent, probed into why three particular banks - Citigroup (NYSE:C), Bank of America (NYSE:BAC) and JPMorgan Chase (NYSE:JPM) - made loans to overseas institutions, but supposedly neglected domestic institutions.

The good folks in the Obama administration and in the media took on the wrong foe with Jim Cramer, for the outspoken CNBC personality struck back at his ill-informed and economically-challenged critics Monday in a fashion those that have watched him for years have grown to expect.

In his self-titled "Cramer Takes on the White House, Frank Rich and Jon Stewart," the "Mad Money" host: referred to the current White House as "exacerbating the crisis with its budget and policies"; accurately exposed the New York Times' Frank Rich and comedian Jon Stewart for cherry-picking snippets of his on-air recommendations in order to discredit him, and; complimented the civility of folks on the right declaring, "I always love anyone from Fox on the team because they are fierce in their defense with much less gratuitous slamming."

How delicious. Here are some of the highlights:

In The New York Times today appears "The President Is on the Line to Follow Up on Socialism," by Jeff Zeleny.  The article's first three paragraphs:

Less than 90 minutes after Air Force One landed, the telephone rang. President Obama was on the line, wanting to add one more point to a response he gave during an interview with The New York Times.

On a flight from Ohio to Washington on Friday, Mr. Obama was asked whether his domestic policies suggested that he was a socialist, as some conservatives have implied.

“The answer would be no,” he said, laughing for a moment before defending his administration for “making some very tough choices” on the budget.

Obama's protestation aside, the article should have been balanced with an acknowledgment that implications the new president is a socialist are hardly limited to some conservatives.

Less than a decade ago, for example, the Chicago affiliate of the Democratic Socialists of America endorsed Obama for the state senate.  They admiringly quoted him: "Few are thinking of harnessing the internal productive capacities, both in terms of money and people, that already exist in communities."

Coverage of "tea party" protests in various cities around the country (this March 4 Pajamas Media press release, HT to FreeRepublic, cited 22 locations on February 27 and seven this weekend) has been sparse to non-existent, especially at major establishment media outlets.

Most notably, based on a seach on "tea party" (not in quotes) at its ap.org home page at about 10:00 a.m., there has been no coverage of this weekend's or last weekend's protests by the Associated Press, the self-described "essential global news network":

On Friday, NewsBusters asked, "When Will Media Blame Economy and Bear Market on Obama?"

Don't expect Bill Clinton's former labor secretary Robert Reich to ever do so, for in an article published at Salon Thursday, the UC-Berkeley professor claimed "every major policy that led to this collapse occurred under George W.'s watch."

Not only that, but the man who recently told Congress that jobs created by the economic stimulus package shouldn't only go to "white male construction workers" also declared, "Angry right-wing populism lurks just below the surface of the terrible American economy, ready to be launched not only at Obama but also at liberals, intellectuals, gays, blacks, Jews, the mainstream media, coastal elites, crypto socialists, and any other potential target of paranoid opportunity."

Readers are warned to proceed with caution before going any further, for Reich was loaded for conservatives and wasn't taking prisoners:

A consistent media meme since Election Day has been that Barack Obama was inheriting a recession that some believe began as far back as December 2007.

Since then, despite various rescue plans from his Administration, and the passage of a $787 billion stimulus package, the stock market has continued to plummet while employers shed payrolls in a fashion rarely seen in history.

This all raises an important question: will media ever blame current economic conditions on Obama, or will they continue to point fingers at George W. Bush despite his residence being in Texas?

Consider that as was reported by Bloomberg Friday, Obama now does indeed have his own bear market (image by Martin Kozlowski courtesy Wall Street Journal):

An early review of press coverage relating to this morning's warning by General Motors that "there is substantial doubt about our ability to continue as a going concern" shows no coverage of the reason why, despite $13.4 billion in taxpayer money (NOT counting bailout money going to GMAC), things have gotten so much worse so quickly.

The reason is that sales in the two full months since the Bush-approved, Obama-cheered bailout took place have tanked (see graphic at this NB post yesterday):

• December 2008 (last [mostly] pre-bailout month) — down 31.2%
• January 2009 (first full bailout month) — down 48.9%
• February 2009 (second full bailout month — down 53.1%

Press reports I have seen are saying nothing about this frightening decay in the past 60 days:

As part of a continuation of his "COMЯADE UPDATE" segment he started near the beginning of his show, which became a YouTube sensation, Fox News host Glenn Beck is picking up right where he left off.

Beck, on his March 4 program took on a couple new targets, UK Prime Minister Gordon Brown and union labor.

"Comrades! Comrades, there is good news from the Western front," Beck said. "Our glorious revolution is starting to take hold on a global scale. Just listen as Comrade Brown pounded our propaganda into the minds of the clueless capitalist pigs today. Listen up."

Beck played a clip from Brown's address of a joint session of Congress, where the prime minister lobbied for the "world" to work together.

For the second month in a row, taxpayer-bailout beneficiary General Motors fared worse than every one of its non-bailed-out competitors.

The Associated Press's Tom Krisher and Bree Fowler didn't totally hide that fact, but it took them until the 22nd paragraph of their report, which was supposedly about the February performance of the entire auto industry ("Auto sales slump persists as consumers stay scared"), to mention the specifics of the sales declines at Toyota, Honda, and Nissan. Those declines "just happened" to be smaller than those at General Motors, fellow bailout bud Chrysler, and non-bailout recipient Ford. The AP pair stated in an early paragraph that "Japanese makers fared only slightly better." Readers will, I believe, question Krisher's/Fowler's definition of "slightly."

Also not emphasized, and illustrated in a chart below: The share of the US auto market held by Detroit's so-called Big Three has fallen significantly since the government bailouts of GM and Chrysler in December.

Here are excerpts from the AP pair's report yesterday:

In February, in the build up to the ultimate passage of President Barack Obama's $787-billion stimulus package, there was a lot of discussion about how much the stimulus was going to help the ailing economy. And to promote the bill, Obama visited a Caterpillar plant in Peoria, Ill.

Rep. Aaron Schock, R-Ill., who represents the 18th Congressional District of Illinois, where the Caterpillar plant is located, described Obama's visit and how he used it to lobby him to vote for the bill. It was another side of the story that went unreported by the media.

Obama singled out Schock in his Feb. 12 appearance, telling his audience to visit with the Illinois congressman and encouraged him "to do the right thing for the people of Peoria."

But despite the president's rhetoric, leading up to the bill passage and being signed into law, Schock told a group assembled at the Heritage Foundation's Blogger's Briefing on March 3 he did not hear from a single Caterpillar (NYSE:CAT) employee urging him to vote for the stimulus bill, while hearing from 1,400 self-identified Caterpillar employees telling him not to vote for it. It eventually passed in the House by a 244-188 margin, without a single Republican vote.

Here we go again - another Obama administration/media personality feud in the works.

White House Press Secretary Robert Gibbs has no problem addressing media critics of President Barack Obama - even on an individual basis. Since Obama was sworn in as president, Gibbs has addressed criticism from conservative radio host Rush Limbaugh, CNBC mercantile exchange floor reporter Rick Santelli and now CNBC "Mad Money" host Jim Cramer.

During the March 3 White House press briefing, Tom Costello of NBC News asked Gibbs to respond to remarks from Cramer, who was described as "not a conservative," made on NBC's March 3 "Today" show that he "thought the president's policies, his agenda had contributed to the greatest wealth destruction he's ever seen by a president."

Although an admitted Barack Obama supporter during last year's campaign, CNBC's Jim Cramer has certainly changed his view concerning our 44th president.

On Tuesday's "Today" show, the outspoken "Mad Money" host said: we have "an agenda in this country now that I would regard as being a radical agenda";  Obama's just announced budget "put a level of fear in this country that I have not seen ever in my life," and; "This is the most, greatest wealth destruction I've seen by a president."

He also called Timothy Geithner "an invisible treasury secretary," and expressed hope that the next time he goes to Capitol Hill "he doesn't throw the drowning man the anvil like he did the last time he spoke" (video and transcript below the fold, file photo):

It was news media conventional wisdom during the 2008 presidential campaign: the worse the economy, the better it was for Democrat candidate prospects. But now that they have the legislative and executive branches and the burden of actually governing, that advantage is slowly being chipped away.

CNBC "Mad Money" host Jim Cramer, who first starting connecting that perhaps a Democrat-controlled federal government might not be the best thing for the United States earlier this year, gave something of a downbeat rant on Feb. 2 about Obama's handling of the economy so far.

"Until the Obama administration starts listening, until they start paying attention to what you're watching - to the stock market, until they realize that their agenda is destroying the life savings of millions of Americans - then all I can give you is caution," Cramer said on his March 2 broadcast.