Comments on: Bait and Switch http://www.blurtdaily.com/2009/03/24/bait-and-switch/ | opinion and more opinion | Fri, 10 Sep 2010 18:29:30 +0000 http://wordpress.org/?v=2.6.5 By: Eric B. http://www.blurtdaily.com/2009/03/24/bait-and-switch/#comment-2468 Eric B. Thu, 26 Mar 2009 03:55:00 +0000 http://www.blurtdaily.com/?p=745#comment-2468 Couldn't agree more Jason. The bonuses paid (although now it looks like it was closer to $235M, instead of the $165M AIG told everyone) are less than 0.1% of the amounts they used to settle their contract obligations. No wonder that Goldman and other recipients of TARP funds say they may be in a position to pay back the Treasury...the were double collateralized, first by the Treasury, then by AIG! This highlights the problem of removing the "failure consequence." When the government chooses winners whose only option is success, all rationality goes out the window. Since it appears, Bernanke and Geinther are requesting additional authority to seize banks now, it seems this problem will just become bigger. Couldn’t agree more Jason. The bonuses paid (although now it looks like it was closer to $235M, instead of the $165M AIG told everyone) are less than 0.1% of the amounts they used to settle their contract obligations.

No wonder that Goldman and other recipients of TARP funds say they may be in a position to pay back the Treasury…the were double collateralized, first by the Treasury, then by AIG!

This highlights the problem of removing the “failure consequence.” When the government chooses winners whose only option is success, all rationality goes out the window. Since it appears, Bernanke and Geinther are requesting additional authority to seize banks now, it seems this problem will just become bigger.

]]> By: Eric http://www.blurtdaily.com/2009/03/24/bait-and-switch/#comment-2371 Eric Tue, 24 Mar 2009 14:51:23 +0000 http://www.blurtdaily.com/?p=745#comment-2371 That's a really good point. The cost would have been so much less. The $200 million bonuses are easy for the media and the general public to understand since most people earn a wage. Not many people are involved in huge insurance contracts with banks. I think Congress and the president knew they messed up and wanted to lay the blame on someone else. AIG was an easy target. That’s a really good point. The cost would have been so much less. The $200 million bonuses are easy for the media and the general public to understand since most people earn a wage. Not many people are involved in huge insurance contracts with banks. I think Congress and the president knew they messed up and wanted to lay the blame on someone else. AIG was an easy target.

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