We bailed you out, and now you want what!?!
June 7, 2015 7:43 AM   Subscribe

Americans were angry when Wall Street’s greedy and risky behavior triggered a global financial crisis in 2008. They were angrier still when the government had to borrow and spend hundreds of billions of dollars to rescue mortgage giants Fannie Mae and Freddie Mac, the largest banks and the insurance company AIG. They were outraged when they found out that executives at those enterprises were continuing to receive big salaries and bonuses.

So just imagine how it outrageous it would be if some Wall Street sharpies went to court to argue that they didn’t benefit enough from the bailouts and that taxpayers should pay them tens of billions of dollars more. In fact, they did. And, according to legal observers, they just might prevail.


The Washington Post's Steven Pearlstein analyzes the pending lawsuits.
posted by Johnny Wallflower (113 comments total) 31 users marked this as a favorite
 
What is known, however, is that when Greenberg was in charge, he ran the company “as if it were a feudal state . . . disdainful of modern concepts of internal controls and regulatory compliance,” according to one person with intimate knowledge of the company’s management. After his firing, AIG paid $1.6 billion to settle multiple counts of accounting fraud brought by the SEC.

When you set up a system that is rigged to reward those who have no boundaries, then that's the blowback you get back.

We tell kids to stand up to bullies on the playground, but never take our own advice.
posted by Alexandra Kitty at 7:54 AM on June 7, 2015 [23 favorites]


Obligatory Matt Levine post on the matter.
posted by jpe at 7:55 AM on June 7, 2015 [2 favorites]


We tell kids to stand up to bullies on the playground because we wish we could stand up to bullies ourselves and are projecting this desire on our children.
posted by I-Write-Essays at 7:59 AM on June 7, 2015 [43 favorites]


Fuck Wallstreet. We wouldn't let an independent business operate this way but for some reason Wallstreet is consistently given a pass because of lobbyists and friends in Congress. Disgraceful.
posted by Fizz at 8:10 AM on June 7, 2015 [6 favorites]


Give Wall Street a hand, they want the other. But going across both arms and shoulders.
posted by lmfsilva at 8:20 AM on June 7, 2015 [1 favorite]


No one tells children to stand up to bullies anymore. You could get sued. School won't help. Just like Congress and the banksters.
posted by Katjusa Roquette at 8:25 AM on June 7, 2015 [12 favorites]


If you give a banker a bail-out, he'll probably want some milk another billion dollars.
posted by filthy light thief at 8:26 AM on June 7, 2015 [13 favorites]


AIG got the exact same deal from the feds that they were offering their clients a week before. And now they're claiming they were robbed? Really, fuck these guys. Sideways.
posted by Benny Andajetz at 8:32 AM on June 7, 2015 [3 favorites]


Welp, there's two lessons from this:

1) never bail them out again.
2) mass executions maybe not a bad idea.
posted by Artw at 8:47 AM on June 7, 2015 [45 favorites]


3) Thunderdome
posted by Fizz at 8:53 AM on June 7, 2015 [15 favorites]


3) Thunderdome

BUST A DEAL, GET SLOPPY BLOWJOBS FROM THE GOVERNME wait shit what happened here
posted by Pope Guilty at 8:57 AM on June 7, 2015 [10 favorites]


Don't worry, Obama is going to fix all this.
posted by Legomancer at 9:01 AM on June 7, 2015 [5 favorites]


I don't understand what the big deal is. Americans insisted on equity in exchange for any bailout, and (according to these guys) got more than they paid for. They have a remedy, so why not pursue it? You can question the wisdom of the bailouts but this is just a red herring.
posted by anewnadir at 9:02 AM on June 7, 2015 [2 favorites]


Folks, I know the whole "kill 'em all!" rhetoric is kinda funny, but it's been popping up constantly in comments on stories about rich folks doing awful things for the last 5+ years. Can we put an end to it? Calling for the death of other human beings, even when being ironic or tongue in cheek, is uncalled for.
posted by Philipschall at 9:03 AM on June 7, 2015 [49 favorites]


What, you mean actually just do it?

Increasingly tempting.
posted by Artw at 9:06 AM on June 7, 2015 [56 favorites]


Though seriously if you wanted to hurt these people with a pain worse than death what you'd actually do is take back all the money from them.

Also a pipe dream.
posted by Artw at 9:07 AM on June 7, 2015 [10 favorites]


We tell kids to stand up to bullies on the playground because we wish we could stand up to bullies ourselves and are projecting this desire on our children.

We can stand up to them. The vast majority of tactics bullies use are smoke and mirrors. Rules are made up hypothetical constructs and if just one thousand people marched into that courtroom and just stared at that judge instead of their smartphone, this would just go away.

People don't stand up to bullies because that would mean admitting there is a problem and they are victims in a dynamic and then they couldn't brag.

Bullies are weak and thump their chests to hide the fact they are nothing. They are persistent and if everyone else was just as persistent, they'd be exposed as weak. You can only bluff for so long.

I have been standing up to bullies all my life and I will until my dying breath. This case is an outrage on every level. If it prevails, there will be no end to it.
posted by Alexandra Kitty at 9:12 AM on June 7, 2015 [5 favorites]


As always, the problem is not so much the specific wealthy bastards at the top. They will grow old, they will die, there will be a new batch of wealthy bastards to replace them.

The main problem is that a huge chunk of Americans have been carefully trained to think that, with a break or two going their way, THEY TOO will be part of the 1% and thus it is in their best interest to elect only representatives who back the wealthy over the little guys every time.

That, and it's HARD to gather packs of feral Girl Scouts and train them to creep from McMansion to McMansion in the dead of night dispensing justice with nightsticks, butane torches, and candy necklaces wedged in places where they were never meant to be.
posted by delfin at 9:14 AM on June 7, 2015 [24 favorites]


Folks, I know the whole "kill 'em all!" rhetoric is kinda funny, but it's been popping up constantly in comments on stories about rich folks doing awful things for the last 5+ years. Can we put an end to it? Calling for the death of other human beings, even when being ironic or tongue in cheek, is uncalled for.

I'd settle for prosecuting crimes and handing out prison sentences, but that doesn't appear to be in the cards.

I'm honestly surprised there haven't been vigilantes murdering these fucks, after what they've gotten away with, with zero consequence.
posted by odinsdream at 9:18 AM on June 7, 2015 [29 favorites]


Everybody knows the fight is fixed
The poor stay poor, the rich get rich
That's how it goes
Everybody knows
posted by dashDashDot at 9:20 AM on June 7, 2015 [19 favorites]


I'm honestly surprised there haven't been vigilantes murdering these fucks, after what they've gotten away with, with zero consequence.

That's the other principle at work -- the uberrich can afford better and more heavily armed security, and the cops will back them up.

But you get to the place
Where the real slavedrivers live
It's walled off by the riot squad
Aiming guns right at your head
So you turn right around
And play right into their hands
And set your own neighborhood
Burning to the ground instead

posted by delfin at 9:24 AM on June 7, 2015 [4 favorites]


Calling for the death of other human beings, even when being ironic or tongue in cheek, is uncalled for.

It is the result of people feeling that they have no power to change the situation. And they don't. The biggest political donors give almost equally to both parties. That way, if some progressive legislation does manage to pass, big business will be overly compensated for any inconvenience. Case in point, HillaryCare failed in the 90's after intense ad campaigns from the insurance companies. ObamaCare passed, but it was written by a former Wellpoint VP, who then left for a senior-level position leading 'global health policy' at Johnson & Johnson's government affairs and policy group."
See also: Google — known for championing progressive policies like gay marriage, immigration reform, and reducing greenhouse gases — has been quietly courting the GOP and funding an array of conservative groups, The Wall Street Journal reported Thursday.
The Silicon Valley superpower is now evenly splitting its political-action committee donations between the GOP and Democrats, which it had traditionally favored, The Journal said.

posted by 445supermag at 9:32 AM on June 7, 2015 [23 favorites]


A billion dollars is a lot of money. It's enough to set up hundreds for life, or to save thousands. Taking it out of any social program is almost guaranteed to cause a damn sight more than one death, and a lot of suffering besides. Of real human beings.
posted by Zalzidrax at 9:35 AM on June 7, 2015 [22 favorites]


Calling for the death of other human beings, even when being ironic or tongue in cheek, is uncalled for.

I think that's a result of many politicians advocating the death penalty as an appropriate response to despicable behavior. It's widely popular in the States, and it arguably has religious origins ("an eye for an eye" etc.) I guess you could also call it a "death cult".

Also, I'm not so sure those comments are meant to be ironic or tongue in cheek.
posted by sour cream at 9:36 AM on June 7, 2015 [5 favorites]


Folks, I know the whole "kill 'em all!" rhetoric is kinda funny, but it's been popping up constantly in comments on stories about rich folks doing awful things for the last 5+ years. Can we put an end to it? Calling for the death of other human beings, even when being ironic or tongue in cheek, is uncalled for.

It seems to me that you can only institute this rule once the US has abolished capital punishment. Until then it is on the legitimate menu of options for massive social crimes in America.
posted by srboisvert at 9:39 AM on June 7, 2015 [19 favorites]


Capital punishment? i'd be happy if the Obama administration would just put the same effort into prosecuting these criminals as his FBI put into pursuing FIFA officials. Where there is a will, there is a way.
posted by three blind mice at 9:42 AM on June 7, 2015 [10 favorites]


Well, these seem to be irredeemably destructive personalities with little or no regard or reciprocation of others' well being.

I don't think people honestly wish death over a solution that simply removes these dangerous, irreparable elements from society where they can no longer harm the common good. If only we had an institution designed to reliably accomplish something like that...
posted by Johann Georg Faust at 9:42 AM on June 7, 2015 [2 favorites]


Just make them an offer they can't refuse: criminal charges and life without parole, or drop the civil suit.
posted by monotreme at 9:43 AM on June 7, 2015


Also, I'm not so sure those comments are meant to be ironic or tongue in cheek.

They aren't.
I think it's the result of the powerlessness of the masses to change anything. We've come to a point in society where the wealthy corporations can pretty much act with impunity in the march for ever-increasing profit. There is, effectively, nothing people can do about it. And, the people running these corporations are, themselves, utterly removed from the effects of their actions (beyond increasing their own wealth, of course.) It just seems that we've come to a point where the only vulnerability of our economic lords is their actual physical being, as reprehensible as that thought may be.

I know it's wrong to talk that way (and, I'll admit to doing so in here) but...honest to god, I'm not sure what else is left for regular folks. Voting sure as shit doesn't work anymore. Shit like Occupy went nowhere. Cops will shoot people just for looking at them crossways. People really do feel hopeless.
posted by Thorzdad at 9:47 AM on June 7, 2015 [52 favorites]


>Just make them an offer they can't refuse: whatever they want, and then whatever they want again later, whenever they want it.

FTFY
posted by Sing Or Swim at 9:47 AM on June 7, 2015 [2 favorites]


If you don't like hearing calls for the death of the people who run these companies, how about calls to kill the companies? They should be condemned like a house that's falling down. Corporations should exist for the public good as much as for the private investor. These companies are so crooked they're like the crooked man's house. Tear 'em down and make way for safer construction.
posted by irisclara at 9:48 AM on June 7, 2015 [13 favorites]


[Folks, probably better to (a) avoid violent rhetoric on Metafilter just as a general thing and (b) not turn this thread into an argument one way or another about the justifiability of it.]
posted by cortex at 9:48 AM on June 7, 2015 [15 favorites]


I don't think people honestly wish death over a solution that simply removes these dangerous, irreparable elements from society where they can no longer harm the common good.

America is a vast collection of dangerous, irreparable elements. Anyone who says otherwise is selling something.
posted by delfin at 9:48 AM on June 7, 2015 [3 favorites]


Folks, I know the whole "kill 'em all!" rhetoric is kinda funny, but it's been popping up constantly in comments on stories about rich folks doing awful things for the last 5+ years. Can we put an end to it? Calling for the death of other human beings, even when being ironic or tongue in cheek, is uncalled for.

I've thought for a while now that the reason we get so upset at mass shootings is generally the victims are sympathetic. Schools and shopping malls and post offices. These incidents aren't going anywhere any time soon. It's the price we've agreed to pay to have insane gun laws. We've accepted there's a price to pay and that's the occasional school shooting and the occasional mad gunman.

I've become mostly inured to shootings. They're just too common to note anymore. Hell, Chicago papers don't even bother covering most shootings. They just tally the weekend score. Sort of like how smaller cities treat car accidents.

So while calling for the death of bankers might seem like extreme rhetoric, personally, I find it amazing it hasn't happened on a large scale.
posted by cjorgensen at 9:56 AM on June 7, 2015 [3 favorites]


Their morals seem quite hazardous.
posted by fullerine at 10:04 AM on June 7, 2015 [3 favorites]


I like to think of myself as a utilitarian, and I get that that's not how the USA works, but it seems to me that the opportunity cost of the billions that these wankers steal/appropriate/whatever is, in lives, likely far greater than their count.

At least, if you sorted them by theft, descending, there'd be a point at which you could draw a line.
posted by pompomtom at 10:15 AM on June 7, 2015 [1 favorite]


I should clarify. I'm speaking from my own idealism (not grounded in much reality) when asking for the cessation of death threats. I'm an American, I get how capital punishment works (not a fan). I am VERY FAMILIAR with how awfully skewed things are against the large majority of folks here. I get how attractive the idea is of beheading someone who's gaming the system beyond belief while many people can barely keep food in their own mouth, let alone their kids'. I see the MASSIVE amount of wealth the country's coffers and some of its citizens have, and the horrible, stupid, wasteful things done with that money. But still, calling for someone's death is a bit much.

I understand how mob death sends a message that a slap on the wrist or jail time can't. How the quickest route to social change is usually paved in blood. But I still find something really unnerving about folks calling for murder. I know that my own feelings should be put aside when in debates like this, but I can't help it.

Maybe it's my own softening. I remember walking in occupy with a sign that read "Feed the poor, eat the rich." I really romanticized some sort of armed popular social revolution that would bring the U.S into the egalitarian, socially mobile paradise it had always promised to be. But the more I looked around, the more I saw that the large majority of people were angry but not pitchforks angry. Basic needs were mostly being met, they had access to media and information and no one was being kidnapped by the government or sent to labor camps or prison for arbitrary reasons. Things aren't fantastic, but they aren't revolution-level terrible either.

Which makes the whole "Kill the rich" sentiment seem slightly off-key and alienating. That's why I dropped it. I'm all for stripping these bastards of all their money, jailing them for a while, and making sure they NEVER get anywhere near finance again. It's idealistic, but it seems to better match the system at hand. If the rich were sending out death squads to overthrow the U.S. (yes, I know about Smedly butler and the capitalist plot against FDR, that was 80 years ago), then murder would seem the more appropriate response.

(Sorry, didn't see the mod post. This'll be the last I'll speak on this)
posted by Philipschall at 10:17 AM on June 7, 2015 [8 favorites]


the opportunity cost of the billions that these wankers steal/appropriate/whatever is, in lives, likely far greater than their count.
Depends what value you assign to the lives really.
posted by fullerine at 10:17 AM on June 7, 2015 [1 favorite]


Don't hate on Obama. Bin Laden is dead and General Motors is alive.
posted by Cool Papa Bell at 10:18 AM on June 7, 2015 [1 favorite]


I'm honestly surprised there haven't been vigilantes murdering these fucks, after what they've gotten away with, with zero consequence.

It's because all of the politicians they have in their pockets have spent many many years convincing the average american that the real problem is the dirty poors and their "entitlements".
posted by poffin boffin at 10:19 AM on June 7, 2015 [8 favorites]


If corporations are people, would it be possible to reform criminal code to apply criminal charges to the top X executives of said corporation? If gross negligence on the part of a corporation results in deaths (see West Fertilizer as an example), shouldn't the government criminally procecute the executives responsible for murder? I mean, if you have the benefits of corporate personhood, shouldn't the same liabilities applied to actual people be applied too?
posted by ensign_ricky at 10:20 AM on June 7, 2015 [9 favorites]



Depends what value you assign to the lives really.


Absolutely, and I don't have the information to give a quick answer. But, if a life is a life, you could make a rough estimate based on the various stories of bastardry in the for-profit medical system, for example.
posted by pompomtom at 10:24 AM on June 7, 2015


The solution to the byzantine and ridiculous-on-its-face legality of corporate personhood is not more byzantine and ridiculous-on-its-face versions of "If they were people, then..."
posted by Etrigan at 10:24 AM on June 7, 2015 [2 favorites]


If you wanted to be extreme, there'd be an easy enough measure in the tiny amount of dosh it takes to prevent deaths due to crappy water supplies or whatever. I'm not suggesting I have a plan.
posted by pompomtom at 10:27 AM on June 7, 2015


Alright, getting back to the actual article, the line of argument of the plaintiffs is this:

When AIG etc. were bailed out by the government, the government got an 80% share. Now AIG says that those 80% were too much.

That's a good argument. Except, if 80% was too much, then why didn't AIG go to any of those other investors, hedge funds and other assorted market players that were lining up outside their door too bail them out for less then 80%?
Because there was noone there! Because at that time, the bailout was worth exactly 80% of their company, because that was by definition the going market rate! That's how the market works, you stupid dumbasses!

I don't exactly think that they should be hung up in trees, but being laughed out of court with a big side dish of public ridicule looks quite appropriate to me.
posted by sour cream at 10:31 AM on June 7, 2015 [24 favorites]


That's a good argument. Except, if 80% was too much, then why didn't AIG go to any of those other investors, hedge funds and other assorted market players that were lining up outside their door too bail them out for less then 80%?
Because there was noone there! Because at that time, the bailout was worth exactly 80% of their company, because that was by definition the going market rate! That's how the market works, you stupid dumbasses!


Counterpoint.
posted by Drinky Die at 10:36 AM on June 7, 2015


Calling for the death of other human beings, even when being ironic or tongue in cheek, is uncalled for.

I dunno...worked for France.
posted by sexyrobot at 10:51 AM on June 7, 2015 [12 favorites]


One of the major issues here (which the article fails to just come out and say, preferring to talk around it) is that both of the lawsuits contain legitimate legal claims, and both have been / are being argued by absolute powerhouse private litigators. The AIG trial in particular went disastrously for the government because the government lawyers made big (and flat-out stupid) mistakes.

To me, it continues to boil down to the fact that the system should never have gotten to such a breaking point in the first place, because mistakes are bound to happen in emergency and novel situations. When there are billions of dollars at stake, mistakes are costly and they are litigated rather than forgiven.
posted by sallybrown at 10:51 AM on June 7, 2015 [4 favorites]


> Calling for the death of other human beings, even when being ironic or tongue in cheek, is uncalled for.

You might want to think why decent people make suggestions like this.

Simple answer - their actions kill a lot of us, they profit from it, they mock us, and as the original article and many others show, there seems to be no way to work within the system to take them down.

The World Bank, hardly a hotbed of radicalism, estimates that at least 50,000 people died because of the global financial crisis - in the first two years alone. Now we see the very architects of that crisis arguing that the money that they were given during that time was not enough.

I get a lot of flak in Metafilter for being a pacifist, for being unrealistic as a result. Violence is always the last thing I or any civilized human should advocate for. We should be using all legal means to protect the 99% from the predation of these tiny numbers of psychopaths.

But we are failing and we are failing miserably. And the psychopaths are unremitting in their arrogant and brazen assaults on society.

A reminder that we are approaching the limits of what any society should possibly tolerate, that there are levels of abuse that we cannot accept - this is an absolutely reasonable tactic. If some of these criminals are kept awake at night worrying that their crimes might lead to actual consequences, this is exactly the point of the exercise.
posted by lupus_yonderboy at 10:57 AM on June 7, 2015 [51 favorites]


Things aren't fantastic, but they aren't revolution-level terrible either.

And just how bad are they supposed to get before you change this opinion?
posted by Noisy Pink Bubbles at 10:59 AM on June 7, 2015 [6 favorites]


Sallybrown, you're complicating things by drawing attention to the details of the situation and offering reasons why these lawsuits are red herrings that distract from the real structural issues facing our economic and political system. If no one person or group can be blamed for all of our problems, we can't joyously call for the violent and extrajudicial killing of people we don't like!
posted by anewnadir at 11:01 AM on June 7, 2015 [1 favorite]


Folks, I know the whole "kill 'em all!" rhetoric is kinda funny, but it's been popping up constantly in comments on stories about rich folks doing awful things for the last 5+ years. Can we put an end to it? Calling for the death of other human beings, even when being ironic or tongue in cheek, is uncalled for.

Umm, no? Concern trolling is uncalled for.
posted by aydeejones at 11:02 AM on June 7, 2015 [16 favorites]


Things aren't fantastic, but they aren't revolution-level terrible either.

I would consider a revolution in America when we are no longer a country that can change leadership simply by voting. And even then, the choice between tyranny and civil war isn't simple. Syria is an example of what a mess revolution can turn in to. If the people want a government more hostile to bankers we can have it now if we vote for it, we don't need terrorist attacks against bankers (Yes, that is what people are calling for when they talk about using threats of violence to keep people awake at night) or revolution to do it.
posted by Drinky Die at 11:04 AM on June 7, 2015 [4 favorites]


The thing is, we might be "frogs in a pot" but so are the uber wealthy. They think they can keep raising the temperature and nothing will happen. They are trying to find the ideal setting. They need some feedback, in the form of angry and violent rhetoric, before the actual violence sets in.
posted by aydeejones at 11:07 AM on June 7, 2015 [2 favorites]


> If no one person or group can be blamed for all of our problems

Few systemic problems can be blamed on one person or group. But when it comes to the global financial crisis, there are specific criminals we can point to.

When I say, "criminals" I'm not being hyperbolic. Just to pick one bad apple, HSBC admitted to committing thousands of felonies - and yet top management served not one day in jail. In many of the other cases where there were few or no actual charges - like AIG - there was obvious, massive law-breaking and it seems inconceivable to old Wall Street people like myself that there was any way that individuals weren't committing multiple, serious crimes.

If your company declares massive profits for years and pays huge bonuses, and then it turns out you're billions in the hole and all your assets are worthless, this isn't just an "Ooops", it's a series of massive violations of the Securities Act of 1934 and (probably) Sarbanes-Oxley (which is after my time and I don't know as well).

Gibbets and ravens pecking at bankers' eyes is a last resort, no matter how heart-warming an image it might be. We should work together to make sure that such extreme measures are not needed.

I would note that only one announced Presidential candidate so far has favored a hard-line with Wall Street, and that's Bernie Sanders. Send him a few dollars, why doncha?
posted by lupus_yonderboy at 11:16 AM on June 7, 2015 [13 favorites]


Thsi is what we get for coming in with bailouts, instead of criminal prosecutions.

Thanks, Obama.
posted by T.D. Strange at 11:17 AM on June 7, 2015 [5 favorites]


> If the people want a government more hostile to bankers we can have it now if we vote for it,

Assuming that the Metafilter consensus on the next candidates is correct, are you suggesting we vote for Ms. Clinton or the Republicans to get the "hostile to bankers" administration?
posted by lupus_yonderboy at 11:18 AM on June 7, 2015 [2 favorites]


And yes - if I sound angry, it's because I am. One of these evil men is demanding $23 billion dollars - that's $70 for every man, woman and child in America. Imagine how angry you'd be if someone held you up and took $70 out of your wallet - this man is trying to do that to a third of a billion people, 99.99+% of whom are poorer than he is.
posted by lupus_yonderboy at 11:31 AM on June 7, 2015 [21 favorites]


I dunno...worked for France.

Not for very long. Monarchy was re-established within a couple of decades, and the rich just kept on richin'
posted by feckless fecal fear mongering at 11:37 AM on June 7, 2015 [1 favorite]


Few systemic problems can be blamed on one person or group. But when it comes to the global financial crisis, there are specific criminals we can point to.

When a family of four go underwater on a $100,000 loans due to bad financial management, it's a tragedy.

When banks go underwater on billion-dollar loans due to bad financial management, it's a crime.
posted by CBrachyrhynchos at 11:44 AM on June 7, 2015


The bank bailouts occurred under George Bush's administration. There is no telling how an alternate history would have played out, but Obama's handling of GM is one possibility.

1. Allow the failing companies to file bankruptcy.
2. The government takes them over as the only viable investor.
3. Wipe out all of the shareholders equity.
4. Give the bondholders a haircut.
5. Replace all of the top management.
6. Sell the company back to the public.

All of the criminal bankers like Dimon at JP Morgan, Blankfein at Goldman Sachs and Greenberg at AIG would be gone. By allowing the banks to continue without bankruptcy, it allowed the bankers to come back with claims of ownership. Bankruptcy would have eliminated ownership claims.
posted by JackFlash at 11:54 AM on June 7, 2015 [12 favorites]


Give a man a bank, and he banks for a day.
Teach a man how to bank, and boy are the rest of us fucked.
posted by chavenet at 11:56 AM on June 7, 2015 [7 favorites]


Community service should be the punishment. Total up the damages and find federal infrastructure, education, healthcare, anti-poverty and various other projects out there that don't have the resources to get off the ground, and those companies are now in the business of doing or bankrolling those jobs until they're done or every cent has been worked/paid off. The judicial branch sets the dollar amount of the damages, and the executive is in charge of directing the company's funds and/or labor to pay those off, basically giving them a discretionary fund untouchable by the legislative branch, which incentivizes the legislators to push for stronger financial regulations to prevent financial crimes getting to a large enough scale to give the executive a windfall if they don't want the executive to do an end run around their power of the purse.
posted by jason_steakums at 12:00 PM on June 7, 2015 [3 favorites]




3) Thunderdome

Sounds like a good idea to me. What, what did you think I was going to say?
posted by JHarris at 12:03 PM on June 7, 2015


if they don't want the executive to do an end run around their power of the purse.

That's an 'if' that has been disproved by recent history. Legislators know what side their bread is buttered on; they know if they go after the criminals the money spigot runs dry. And they lose their post-political (and/or during) access to the same end runs.
posted by feckless fecal fear mongering at 12:15 PM on June 7, 2015


Banking is a utility and should be regulated as such.
posted by LastOfHisKind at 12:32 PM on June 7, 2015 [8 favorites]


I dunno...worked for France.

Actually, the vast majority of people executed in the french Revolution were not nobility or wealthy. " 8% were aristocrats, 6% clergy, 14% middle class, and 72% were workers or peasants."

So, if we follow the French plan, you'll be able to execute some wealthy people. And then you'll start killing poor people, people who comment that online that maybe it's not a good idea to kill people, and of course people in competing revolutionary factions. And then after a few years of absolute chaos, a military dictatorship will take over, and we'll invade Canada and Mexico.

So yeah, sounds fun. Let's do it!
posted by happyroach at 12:37 PM on June 7, 2015 [6 favorites]


um no please don't we have our own problems
posted by feckless fecal fear mongering at 12:38 PM on June 7, 2015


death to banking!

see you can persecute the wrongdoers, but banks and banking will still be there. to 'win' you have to understand its purpose, why it went wrong and shut it down and replace it with something better and that won't take everyone down with it; not an easy task :P

thankfully pseudonymous authors* 'Jonathan McMillan' have written a great, short to-the-point book about it called _The End of Banking_, which in my eyes is more of a pamphlet along the lines of Thomas Paine's Common Sense; here's a quick tour:

-Why banking got out of control in the digital age
-Silicon Valley might kill banks but not banking

anyway, the gist of it is in establishing a systemic solvency rule: "This reading highlights that companies have to back assets that are someone else's liability with their own funds, that is, equity. Companies cannot finance credit with someone else's credit."
It starts with an accounting distinction. Bank assets would be classified either as real, in other words claims on physical or distinct immaterial objects; or as financial, assets which appear as liabilities on the balance sheet of some other institution.

Next, regulators would ensure that financial assets were 100 percent-backed by common equity. And lastly, in a combined regulatory and accounting change, the value of a company’s real assets would have to be greater or equal to the value of the total of its liabilities.

This final fix is where the book goes beyond previous proposals to mend finance through concepts such as narrow- or limited-purpose banking. The implication of McMillan’s recommendation is that many derivatives, for which a counterparty’s losses could be infinite, would be banned. What’s more, the intended application to financial and non-financial companies alike would include shadow banking, addressing the so-called “boundary problem” of regulation that other approaches to improve the system fail to solve.
*poof*

central banks (a whole 'nother problem) can then be used to reassert control over the money supply!

also re: corporate personhood/death sentences, Robert Reich in Supercapitalism: "calls for an end to the legal fiction that corporations are citizens, as well as the illusion that corporations can be 'socially responsible' until laws define social needs. Reich explains why we must stop treating companies as if they were people -- and must therefore abolish the corporate income tax and levy it on shareholders instead, hold individuals rather than corporations guilty of criminal conduct, and not expect companies to be 'patriotic'. For, as Reich says, only people can be citizens, and only citizens should be allowed to participate in democratic decision making."

---
*because i can imagine the blowback (and really they need to get with the OWS alternative banking group stat ;)
posted by kliuless at 1:01 PM on June 7, 2015 [6 favorites]


It seems possible to me that the government might have harmed some rich people bailing out other rich people.

Fannie and Freddie Mac, though, better pay for those guarantees we're giving them somehow. So you can't point at the 2008 deal as the end of the discussion.
posted by anotherpanacea at 1:03 PM on June 7, 2015


I hope they all choke on pretzels, and I don't feel at all bad about saying so.
posted by feralscientist at 1:18 PM on June 7, 2015 [2 favorites]


Calling for the death of other human beings, even when being ironic or tongue in cheek, is uncalled for.

They'll do it to you first if you don't. Your choice.
posted by colie at 2:04 PM on June 7, 2015 [7 favorites]


AIG has some consumer-facing products, like life insurance, right? That means they are vulnerable to a consumer boycott, which depends on us spreading this story far and wide over the Internet.
posted by Triplanetary at 2:45 PM on June 7, 2015


> That means they are vulnerable to a consumer boycott,

The people who looted the company are long gone. And "damaging future sales by some small percent" really isn't the correct punishment for billion-dollar crimes.
posted by lupus_yonderboy at 3:06 PM on June 7, 2015


I assume everyone calling for heads to roll here is a member of a credit union.
posted by Cosine at 3:59 PM on June 7, 2015 [1 favorite]


I assume everyone decrying chicken torture in factory farms has never swallowed a gnat. Cuz I like to assume, and what it does.
posted by Potomac Avenue at 4:13 PM on June 7, 2015 [4 favorites]


These lawsuits seem entirely reasonable against government overreach. Remember, it's important to protect principles and precedents even when the immediate beneficiaries are people you think are assholes.
posted by corb at 4:47 PM on June 7, 2015 [2 favorites]


No one tells children to stand up to bullies anymore. You could get sued. School won't help. Just like Congress and the banksters.

Yep. Start em young teaching them that you can't fight back. "You can't have a fight without two fighters", zero tolerance punishing both parties, etc. You learn from a young age now that if you try and fight back, you'll get punished just as bad as the bully and in fact worse since you get shit on by the bully AND punished, whereas the bully only gets whatever the token punishment is.

Violence, social or physical, is taught as being something that is only punished as severely as whatever will be enacted on its victim.

This is a powerful, and fucked lesson. "Roll over or else". You have to punch your own face if you want to punch up.
posted by emptythought at 4:59 PM on June 7, 2015 [7 favorites]


These lawsuits seem entirely reasonable against government overreach. Remember, it's important to protect principles and precedents even when the immediate beneficiaries are people you think are assholes.

Exactly what government overreach are you referring to? The one in which incompetent businessmen were given billions in taxpayer dollars by the government in order to prevent them from feeling any pain for their failures?

And which principles and precedents are you referring to? The principle that bankers can never be allowed to fail and the precedent that they can never be jailed for their crimes?
posted by JackFlash at 5:21 PM on June 7, 2015 [12 favorites]


Thanks, JackFlash. I couldn't think of how to respond. And besides, the government offered them a deal and they took it. No backsies.
posted by tommyD at 5:34 PM on June 7, 2015 [2 favorites]


Right? I'm kind of confused as to why this isn't a simple contract law case, but I don't know from lawyerin'. They agreed to the terms.
posted by jason_steakums at 5:35 PM on June 7, 2015


AIG, Fannie and Freddie have each taken the government's side in these cases. The cases were brought by dissident common and preferred shareholders.
posted by MattD at 5:43 PM on June 7, 2015 [2 favorites]


The cases were brought by dissident common and preferred shareholders.

These are not the original shareholders. These are vulture hedge funds. They buy up stock that the market has decided is near worthless, has a value of a few pennies on the dollar and then hope that they can make a killing through a taxpayer bailout. It is a pure corporate welfare play. If the expected bailout is not forthcoming, they squeal like stuck pigs and run to the courts for relief.
posted by JackFlash at 5:58 PM on June 7, 2015 [4 favorites]


how about calls to kill the companies? They should be condemned like a house that's falling down.

Amusingly, AIG itself got into difficulty because they were writing the equivalent of life insurance policies for companies. Eventually they'd written so many insurance contracts that to everyone else, companies were more valuable dead than alive.

Equally seriously, killing companies is a genuine problem. Lehman Brothers was allowed to go bankrupt, and that caused a lot of consternation. Lehman's shitty portfolio going on sale meant other banks had to mark their own shitty portfolio to the new market value instead of what their models predicted. And it called into question AIG's own AAA credit rating, which had allowed them to write trillions of dollars in insurance without holding a dime in collateral.

That's the sort of entanglement that society was facing in 2007. Allowing shitty companies to die would cause other shitty companies to die, and which might even take down several non-shitty ones. Theoretically, the lessons we learned are that large banks need a plan to orderly proceed through bankruptcy, that credit default swaps should really be limited to insurable interests, and that we should not be basing contract or legal investment policies on credit agencies who are under no legal obligation to behave ethically.
posted by pwnguin at 6:44 PM on June 7, 2015 [3 favorites]


Maurice Greenberg is not a hedge fund who bought AIG shares at a discount. He is (effectively) the founder of the modern AIG and has held some of his stock for decades.

A meaningful number of the Fannie and Freddie plaintiffs are pre crisis holders.
posted by MattD at 7:24 PM on June 7, 2015 [1 favorite]


"No backsies" in the case of Fannie/Freddie is actually why the shareholders are suing: the gov't rewrote the deal long after the crisis was over. They're suing to get back the original deal.
posted by anotherpanacea at 7:53 PM on June 7, 2015 [3 favorites]


Yeah, you don't want "Pray I do not alter it further" when it's the government.
posted by corb at 8:18 PM on June 7, 2015


Remember, it's important to protect principles and precedents even when the immediate beneficiaries are people you think are assholes
That ship has not only sailed, it was sunk by the people who are suing.
posted by fullerine at 1:54 AM on June 8, 2015 [4 favorites]


Yeah, you don't want "Pray I do not alter it further" when it's the government.

But, "We reserve the right to change the terms and conditions of this agreement without notice" is a time-honored and hallowed part of contracts corporations hold over consumers. It seems only fair that corporations (including banks) get held to the same conditions. Goose/gander. Run it like a business. Etc.
posted by Thorzdad at 7:11 AM on June 8, 2015 [8 favorites]


Thanks, Obama.

Obama took office in January of 2009...

...the financial crisis had been in full swing since September 2008...

As "usual", the outgoing republicans made a giant mess and then punted it over to the incoming democrats to resolve.

This has been standard operating procedure (i.e. party playbook) for them since the 80's. Run up a lot of debt, start a war, miss-manage a financial crisis - and boom, hand it over in a giant crap pile for their incoming enemy to solve. At the very least, it will take the bulk of the first term to sort things out, and any pro-active initiatives they wanted to implement will have to wait...

... over... and ... over... and... over again...
posted by jkaczor at 7:45 AM on June 8, 2015 [6 favorites]


"No backsies" in the case of Fannie/Freddie is actually why the shareholders are suing: the gov't rewrote the deal long after the crisis was over. They're suing to get back the original deal.

At least that's what the plaintiffs claim.
posted by Mental Wimp at 9:40 AM on June 8, 2015


We tell kids to stand up to bullies on the playground because we wish we could stand up to bullies ourselves and are projecting this desire on our children.

What I've learned from trying to stand up to bullies: They'll manage to make you look like the bully every time by the time the teacher's looking. And then everybody gets the knives out for you and the bully just laughs.

This is not what I want to teach my children, though, it's just the truth.

This stuff's not surprising to me. There's hardly any resistance anymore to big companies abusing the law to bully less powerful people. There seems to be a sort of perverse embrace of various new variations on the idea that "might makes right" in a lot of the culture as a result. Painful to watch it taking hold more and more widely, even among some of the more liberally inclined among us.
posted by saulgoodman at 9:45 AM on June 8, 2015 [2 favorites]


I'm not sure which is more adorable... the idea that the American public gets outraged enough over anything anymore to actually affect any real change, or the idea that bullying in the 21st century occurs on playgrounds.
posted by prepmonkey at 9:50 AM on June 8, 2015


> Obama took office in January of 2009...

> ...the financial crisis had been in full swing since September 2008...

And it's now 2015 and Mr. Obama has worked tirelessly to protect the bankers from their consequences of their crimes, and one result is depicted in TFA.

Mr. Obama has been head-and-shoulders better than Bush, but he's also been deeply disappointing in many areas, and one of the very greatest disappointments is his "we must look forward not back" attitude - which only extends to powerful criminals who committed large-scale crimes for their own profit, and absolutely not to whistleblowers who exposed wrong-doing for purely altruistic reasons.

This guarantees a lot fewer selfless whistleblowers and a lot more grand financial criminals in the future, and it's very hard to believe that Mr. Obama is so naïve as not to have understood this as the inevitable result.
posted by lupus_yonderboy at 9:58 AM on June 8, 2015 [4 favorites]


There is this thing called congress, you know. I have a theory that a Americans paying attention to it might help change things for the better.
posted by Artw at 10:22 AM on June 8, 2015


No backsies" in the case of Fannie/Freddie is actually why the shareholders are suing: the gov't rewrote the deal long after the crisis was over. They're suing to get back the original deal.

Backsies aren't the issue. The vulture hedge funds bought their shares long after the conservatorship was renegotiated. They were never part of the original deal.

The hedge funds bought the shares on speculation that they could convince a judge to throw them a bone. They rolled the dice and lost. Now they are whining that Wall Street mavens simply should never be allowed to lose, even if they make lousy bets.
posted by JackFlash at 10:42 AM on June 8, 2015 [3 favorites]


<>But, "We reserve the right to change the terms and conditions of this agreement without notice" is a time-honored and hallowed part of contracts corporations hold over consumers. It seems only fair that corporations (including banks) get held to the same conditions. Goose/gander. Run it like a business. Etc.
Well that's essentially what the lawsuit is. If the contact included that clause. Treasury thinks it did. I do as well for what it's worth.
posted by JPD at 4:37 PM on June 8, 2015


We reserve the right to change the terms and conditions of this agreement without notice -- well that's essentially what the lawsuit is.

Not really. The government bailout was not a loan. It was a takeover in which the government was issued preferred shares senior to all other shares. The original equity was entirely wiped out. Fannie was leveraged at more than 30 to 1 which means that any mortgage default rate greater than 3% meant that the company was insolvent and all equity was gone, and that is exactly what happened. The original shares were worthless.

There was never any doubt about the government's ownership of Fannie and Freddie and intent to shut it down. It was embedded in the law that Congress passed for the bailout. That is the way politicians and lawyers understood it at the time. The government owned Fannie and Freddie. The other shareholders were wiped out.

The original deal in 2008 was that the government would get preferred shares that would require payment of an annual dividend of 10%. But even by 2012, it still appeared that Fannie and Freddie would not be able to pay that dividend and would default again. So in order to prevent a second bailout, the agreement was modified so that they did not have to pay any dividend when the companies had losses and but would pay all of their profits as dividends when they had surpluses.

At the time, 2012, this modification was considered to be more lenient terms than the original agreement which mandated payouts no matter what. The new agreement only required dividends if profitable, which wasn't at all clear at the time. It is only in retrospect that the second agreement turned out to be more lucrative for the government, but that wasn't the view at the time.

The hedge funds knew all about the change in terms before they bought their shares which were assumed to be worthless by everyone. It is only when things turned out better than anyone expected that they jumped in claiming a piece of the action. The government's position is that the original shareholders had been wiped out in the original bailout. The government and taxpayers took all the risks and they are entitled to all of the profits.

The hedge funds paid less than a nickel on the dollar for their shares, a 20-to-1 long shot that they could somewhere find a Bush judge (Sweeney, check) who would see things their way and hand over a taxpayer windfall.
posted by JackFlash at 6:01 PM on June 8, 2015 [7 favorites]


Yeah, but I hear some bastard defaulted on his student loans.
That's the guy we gotta go after.

Look, the rich in the U.S. don't need death squads.
Sure, Gen. Butler is my patron saint, but I'll address this because, in part, it's my metier, but mostly because there isn't a whole lot of info on how these things work.

The only time you need death squads are during periods of instability. No matter how bad things are, if society is stable, you don't really need them.
One can argue the various merits of oppressive surveillance and intimidation - obviously done (in retrospect) during the instability in the 1960s - regardless of debating what constitutes a 'death squad' per se (Fred Hamption? MLK? The Moores? Malcolm X?) and what's a result of social environment.
And of course Rwanda is instructive in the latter in terms of propaganda, etc.

*avoiding eludication here in favor of brevity*
So, two things, one, if there were domestic death squads, given the technological and social sophistication and given a scope limited to only high level/influential and very radical individuals - how would you know? And two - why would the U.S. government need to be involved at all given the capabilities of private security firms?

I mean - egotism aside. Guys like Blowtorch Bob might kill people like Oscar Romero in a very public way but no one needs to do that in the U.S.
Look at Las Vegas. Organized crime techniques look laughably rudimentary compared to the sophistication employed now.
And nary a whisper of scandal. Of any kind. Did Floyd Mayweather sexually assault someone? *shrug*

Death squads are amateur night in Dixie.
Las Vegas pulls in about $7 billion a year.
Wall Street trades 20 times that in a day.

People aren't going to get killed over that kind of money? Who's being naive here?

Think bankers and capitalists are less dangerous and sophisticated than they were 80 years ago?

I'm more personally dangerous than Smedley Butler could ever dream of by simple virtue of advances in technology and tactics. But the disparity between his adversaries and their modern equivalents are like apes to fifth generation fighter aircraft.

They made damn sure long ago someone like Gen. Butler would never show up again.

So... that said:
Violence as a response is fairly well outmoded. All things being as they are.

And Solzhenitsyn comes to mind: "To do evil a human being must first of all believe that what he’s doing is good...that was how the agents of the Inquisition fortified their wills: by invoking Christianity; the conquerors of foreign lands, by extolling the grandeur of their Motherland; the colonizers, by civilization; the Nazis by race; and the Jacobins (early and late), by equality, brotherhood, and the happiness of future generations."

And:"If only it were all so simple! If only there were evil people somewhere insidiously committing evil deeds, and it were necessary only to separate them from the rest of us and destroy them. But the line dividing good and evil cuts through the heart of every human being. And who is willing to destroy a piece of his own heart?"


Seek revenge, you gotta dig two graves. Even if you physically survive, the second one is for your ideals. Because congratulations, you're the new boss.

So yeah, as a violence afficianado I'm hardly a blushing virgin. But no, it's not going to be as easy as pulling the trigger on some people. Even a few thousand of the right people. Even if you're absolutely sure.

Their power is not in their bodies but in the lie. The big lie.
Part of the lie is that violence has the power to change things.
S'why we keep having wars on conceptual entities.

I mean we don't need economics degrees or advanced political theory or a stint at the Kennedy Irregular Warfare center.
Hell, read 'Lord of the Rings.' There are enough geeks here. No one pulled that lesson out of there? Bomb the crap out of Sauron, nothing's gonna happen.

Give the bondholders a haircut.
Man, I'd like to give a bondholder a haircut. Use the clippers. Some Wildroot hair tonic. That'd be sweet.
posted by Smedleyman at 6:50 PM on June 8, 2015 [1 favorite]


JackFlash the problem us that while Treasury economically wiped out the common (or thought they did) they didn't legally wipe out the common. And the terms of the actual senior preferred itself didn't say the terms were changeable on the order of treasury so the pleading is that when the conservator switched from the coupon to the net worth sweep he was violating his fiduciary duty to the common. My reading of the rules surrounding the conservatorship is that the conservator only had a fiduciary relationship with treasury. But obviously there are lots of guys who bill 900/hour who disagree.

Just like all of the other bailout lawsuits this seems to be an unintentional side effect of the sloppiness of the emergency structuring of everything.
posted by JPD at 4:31 AM on June 9, 2015 [1 favorite]


The new agreement only required dividends if profitable,

Yes but it also required them to take down more equity if they couldn't pay the divvy.
Not only that but unlike the original note it couldnt be paid out of retained earnings/ cash on the b/s.
The change was not seen as more friendly
posted by JPD at 4:36 AM on June 9, 2015


The government's position is that the original shareholders had been wiped out in the original bailout.

I mean, that may be the government's position, but if so, it's an especially egregious one.
posted by corb at 6:06 AM on June 9, 2015


huh? Why? They told people the common had no value. If they hadn't bailed them out it also had no value.
posted by JPD at 7:21 AM on June 9, 2015


There's a difference between saying something has close to no value economically, and legally taking that something from someone.
posted by corb at 7:23 AM on June 9, 2015


For the hedge fund, there's a price at which it's worth pursuing this case and losing, if it pumps the stock price up on hopes of future profitability. I don't know if that's what's going on here, or if they're honestly hoping to win. I can't imagine the latter: after all, Treasury can simply withdraw the guarantee at any time and FHLMC will fall apart.

I much prefer these companies as nationalized entitites. But there's both a legal question and a political question whether that's sustainable. It almost certainly comes down to some hastily written jargon and who controls Treasury, so I don't see why anyone would assume (without careful review and a crystal ball) that the outcome is obvious.
posted by anotherpanacea at 8:40 AM on June 9, 2015 [1 favorite]


There's a difference between saying something has close to no value economically, and legally taking that something from someone.

except the terms of the federal charter (And really any regulated entity) permit them to take the equity if it is sufficiently impaired.
posted by JPD at 10:11 AM on June 9, 2015


How about instead of giving them more money, we just throw them in jail permanently?
posted by flug at 5:06 PM on June 9, 2015 [1 favorite]


The definition of the proper role of the central bank is probably the most important economic question of our times: " 'solvency' is a state of affairs that exists only as long as the bank has access to central bank support..."
posted by kliuless at 9:45 PM on June 10, 2015


Court tells government it was wrong to seize AIG, but awards no money to billionaire ex-CEO

In what can only be described as a Solomonic ruling, a federal court has ruled that the Federal Reserve exceeded its powers in temporarily nationalizing insurance giant American International Group during the financial crisis of 2008, but by doing so caused no harm to AIG shareholders who had demanded as much as $38 billion dollars in compensation.
posted by Johnny Wallflower at 4:44 PM on June 15, 2015 [2 favorites]


That's a pretty stupid headline. The government didn't seize anything. It bought AIG with the agreement of AIG's board of directors.

This judge, a Bush appointee, says that the Federal Reserve did not have authorization to make such a purchase. Others would argue that the Federal Reserve has that authorization by implication from its Congressional charter.
posted by JackFlash at 5:10 PM on June 15, 2015


The Fed's charter precludes it from holding shares in private entities. and the Fed doesn't regulate insurance companies so couldn't compel them to recapitalize the way it could for a bank.
posted by JPD at 10:43 AM on June 16, 2015


"Put another way, the Fed is not Superman, but Batman. It will break the rules to protect Gotham, no matter what."*
posted by kliuless at 7:49 PM on June 16, 2015 [1 favorite]


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