Congress Taxing AIG Bonuses | 03/23/2009 10:20 am

Geithner's New Toxic Asset Plan Calls on Hedge Fund Help

By The Staff at wowOwow.com

Yes, President Obama and others at the White House are angry over those big AIG bonuses, but that doesn’t mean they’re going to support taxing them to high heaven.

Some of Obama’s most trusted economic advisers are so far keeping a distance from a Congressional plan to reclaim bonus cash with 90 percent tax targeted toward the financial firms. One advisor even told The Washington Post that this route may be a "dangerous way to go." Obama himself told "60 Minutes" over the weekend that he can’t "govern out of anger," and wouldn’t commit to signing the bill. "We’re gonna take a look at this legislation," Obama said. "We’ve got to make sure people aren’t rewarded for failure with taxpayer money … [but] I think as a general proposition, you don’t want to be passing laws that are just targeting a handful of individuals. You certainly don’t want to use the tax code to punish people."

Meanwhile, Treasury Secretary Tim Geithner on Monday unveiled his plan — which could cost up to $1 trillion — to help get the toxic assets off of banks’ balance sheets, but said hedge funds, private-equity firms, and others in the private sector have to be willing to take on some of the risk .
It calls for those entities to buy up $500 billion to $1 trillion of assets in exchange for low-interest loans and risk-sharing with the federal government.

"This is not something that shields the private sector from risk," a senior administration official told ABC News. "If they do well, we will do well. If we do poorly, they will do poorly as well. So it avoids what’s been so wrong in the past where you’ve had, as the president has said, ‘Heads I win. Tails the taxpayer loses.’"

And, on an even better note, stocks surged on the news.

70 Reader Comments (so far…) Sign In or Register to comment

They should have paid those bonuses in Toxic Asset Bonds or with AIG stock!

By S.J. Morgan on 03/23/2009 10:42 am

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And this guy ran the fed? Oh boy!

By Beth Cornell on 03/23/2009 11:42 am

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Yea..lets encourage the very behavior that got us into this mess to begin with!

What incentive is there to purchase these??…..it is like buying carbon credits to absolve your gluttenous guilt!

By S.J. Morgan on 03/23/2009 11:57 am

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Let me see if I understand this correctly. Toxic assets equals = bad, uncollectable debt. (foreclosures) We are encouraging private investors to invest their money on purchasing these debts and the federal government will make up the difference which equals = taxpayers make up the difference. If the investors are lucky and the value goes up on these properties and they sell the property, then the investor and the government make money. Not the taxpayer. No return on their investment. They just need to find pleasure in their taxes going up to facilitate the government who facilitated the investor.

Higher taxes….change you can believe in. Bring in the clowns!

What if we cannot find willing investors to invest in this toxic waste, I mean stock? What’s next, Geithner?

By deber B on 03/23/2009 12:21 pm

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deber: What’s next, Geithner?

I posted this excerpt somewhere yesterday. It is written by Peter Cohan of the Daily Finance:

President Obama: It’s not too late to cancel the plan you’re floating to use taxpayer debt and a sliver of private money to buy $1 trillion in toxic waste from banks. Why cancel it? Because it won’t solve the problem and it will waste more taxpayer money. I know nothing about politics, but my hunch is that people won’t be too happy when they find out that more of their money is going to enrich further hedge funds and private equity firms whose partners make bigger bucks — one of them made $3.7 billion in 2007 alone — than the bankers who got $16 billion in bonuses from taxpayer pockets in 2008.

Cohan estimates that there are $13 Trillion worth of toxic assets. This is a beginning, and the stock market was happy about it, (probably because the see a profit in it for their own) but it’s not enough. Geithner will have to come back for more trillions. I can’t see where America can take on anymore debt. The debt is fast becoming hideous.

By Marjorie C. on 03/24/2009 6:41 am

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Marjorie, it might look like eutopia now for the White House but it has "sea legs." It will bounce all over the place. Taxpayers are being used again and we are just getting started. I’m glad the stock market rallied and I’m glad the housing market is recovering on its OWN without help from the government. Goes back to the study on recessions from 1948 which proves this historical fact. The Obama administration is "tampering" with a natural process and the debt that goes along with that is breathtaking. I’m counting the days to 2010.

By deber B on 03/24/2009 7:49 am

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What getting those assets off the books ( mark to market) does is allow the banks to show liquidity and ability to loan money to cusomers. That is why the stock market is rallying.

The big question is who till buy those assets and what deal are they being given for incentive???? Tax credits????

By S.J. Morgan on 03/23/2009 1:05 pm

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All we can do is sit back and wait.

By deber B on 03/23/2009 5:29 pm

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Interesting…seems this plan was another thing they inherited from Bush administration..if it works will they give him credit?

nytimes.com:

Over the weekend The Times and other newspapers reported leaked details about the Obama administration’s bank rescue plan, which is to be officially released this week. If the reports are correct, Tim Geithner, the Treasury secretary, has persuaded President Obama to recycle Bush administration policy — specifically, the "cash for trash" plan proposed, then abandoned, six months ago by then-Treasury Secretary Henry Paulson.

By S.J. Morgan on 03/23/2009 1:36 pm

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Interesting, S. J., but I can tell you now that the Bush administration doesn’t get credit for ANYTHING. Oh, to be a fly on the wall in the Oval Office!

By deber B on 03/23/2009 1:44 pm

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Lets be honest there isn’t too much to give the Bush admin credit for….seeing as some of their policies are partly to blame for the mess we are in now!! Wearing those rose colored glasses all the time will make your eyes ache after a while…where have you been for the past 8 years as this country was going into decline….long before Obama came on the scene. Putting Bush up as some kind of hero when all around him was spiralling downward and the country was going to hell in a hand basket?

By caj p on 03/23/2009 1:55 pm

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Wasn’t Obama a voting member of Congress those last two years?? Oh thats right he was "present" in body only! Same as he seems to be here..when he is in town!

By S.J. Morgan on 03/23/2009 2:03 pm

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Oh here we go again back to the old talking points of yester year!!!! Is there nothing new to bring up or are we running out of current things to say? It would have been nice to see Bush spend more time in town instead of being down on the farm away from reality…sorry you can’t stand it that this President is such a force to be reckoned with. I must admit though, Bush did his best work when he kept his mouth shut and away from the cameras and reporters!!

By caj p on 03/23/2009 4:41 pm

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Here we go again…you sound like a broken record…you libs keep saying "the last 8 years with Bush", "the last 8 years with Bush", "the last 8 years with Bush"….do you ever get tired of saying that day in and day out??? Just askin’!!!

By Libra Lady on 03/23/2009 7:43 pm

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No not really because it is a fact that most on the right want to ignore. Who else was in power for the past 8 years? Do you want me to call him another name because I’m sure I could come up with plenty but none of them would be printable on here?

By caj p on 03/23/2009 7:57 pm