By PAUL KRUGMAN
On Monday March 27, Lawrence Summers, the head of the National Economic Council, responded to criticisms of the Obama administration’s plan to subsidize private purchases of toxic assets. “I don’t know of any economist,” he declared, “who doesn’t believe that better functioning capital markets in which assets can be traded are a good idea.”
Leave aside for a moment the question of whether a market in which buyers have to be bribed to participate can really be described as “better functioning.” Even so, Mr. Summers needs to get out more. Quite a few economists have reconsidered their favorable opinion of capital markets and asset trading in the light of the current crisis.
But it has become increasingly clear over the past few days that top officials in the Obama administration are still in the grip of the market mystique. They still believe in the magic of the financial marketplace and in the prowess of the wizards who perform that magic.
The market mystique didn’t always rule financial policy. America emerged from the Great Depression with a tightly regulated banking system, which made finance a staid, even boring business. Banks attracted depositors by providing convenient branch locations and maybe a free toaster or two; they used the money thus attracted to make loans, and that was that.
And the financial system wasn’t just boring. It was also, by today’s standards, small. Even during the “go-go years,” the bull market of the 1960s, finance and insurance together accounted for less than 4 percent of G.D.P. The relative unimportance of finance was reflected in the list of stocks making up the Dow Jones Industrial Average, which until 1982 contained not a single financial company.
It all sounds primitive by today’s standards. Yet that boring, primitive financial system serviced an economy that doubled living standards over the course of a generation.
After 1980, of course, a very different financial system emerged. In the deregulation-minded Reagan era, old-fashioned banking was increasingly replaced by wheeling and dealing on a grand scale. The new system was much bigger than the old regime: On the eve of the current crisis, finance and insurance accounted for 8 percent of G.D.P., more than twice their share in the 1960s. By early last year, the Dow contained five financial companies — giants like A.I.G., Citigroup and Bank of America.
And finance became anything but boring. It attracted many of our sharpest minds and made a select few immensely rich.
Underlying the glamorous new world of finance was the process of securitization. Loans no longer stayed with the lender. Instead, they were sold on to others, who sliced, diced and puréed individual debts to synthesize new assets. Subprime mortgages, credit card debts, car loans — all went into the financial system’s juicer. Out the other end, supposedly, came sweet-tasting AAA investments. And financial wizards were lavishly rewarded for overseeing the process.
But the wizards were frauds, whether they knew it or not, and their magic turned out to be no more than a collection of cheap stage tricks. Above all, the key promise of securitization — that it would make the financial system more robust by spreading risk more widely — turned out to be a lie. Banks used securitization to increase their risk, not reduce it, and in the process they made the economy more, not less, vulnerable to financial disruption.
Sooner or later, things were bound to go wrong, and eventually they did. Bear Stearns failed; Lehman failed; but most of all, securitization failed.
Which brings us back to the Obama administration’s approach to the financial crisis.
Much discussion of the toxic-asset plan has focused on the details and the arithmetic, and rightly so. Beyond that, however, what’s striking is the vision expressed both in the content of the financial plan and in statements by administration officials. In essence, the administration seems to believe that once investors calm down, securitization — and the business of finance — can resume where it left off a year or two ago.
To be fair, officials are calling for more regulation. Indeed, on Thursday Tim Geithner, the Treasury secretary, laid out plans for enhanced regulation that would have been considered radical not long ago.
But the underlying vision remains that of a financial system more or less the same as it was two years ago, albeit somewhat tamed by new rules.
As you can guess, I don’t share that vision. I don’t think this is just a financial panic; I believe that it represents the failure of a whole model of banking, of an overgrown financial sector that did more harm than good. I don’t think the Obama administration can bring securitization back to life, and I don’t believe it should try.
http://www.nytimes.com/2009/03/27/opinion/27krugman.html?pagewanted=print
Copyright 2009 The New York Times Company
Saturday, March 28, 2009
U.S. Rounding Up Investors to Buy Bad Assets
By ANDREW ROSS SORKIN, ERIC DASH and RACHEL L. SWARNS
This article is by Andrew Ross Sorkin, Eric Dash and Rachel L. Swarns.
WASHINGTON — Obama administration officials worked Sunday to persuade reluctant private investors to buy as much as $1 trillion in troubled mortgages and related assets from banks, with government help.
The talks came a day before the Treasury secretary, Timothy F. Geithner, planned to unveil the details of the administration’s long-awaited plan to purchase troubled assets, meant to remove them from the balance sheets of banks and, in turn, spur banks to lend more money to consumers and companies.
The plan relies on private investors to team up with the government to relieve banks of assets tied to loans and mortgage-linked securities of unknown value. There have been virtually no buyers of these assets because of their uncertain risk.
As part of the program, the government plans to offer subsidies, in the form of low-interest loans, to coax private funds to form partnerships with the government to buy troubled assets from banks.
But some executives at private equity firms and hedge funds, who were briefed on the plan Sunday afternoon, are anxious about the recent uproar over millions of dollars in bonus payments made to executives of the American International Group.
Some of them have told administration officials that they would participate only if the government guaranteed that it would not set compensation limits on the firms, according to people briefed on the conversations. The executives also expressed worries about whether disclosure and governance rules could be added retroactively to the program by Congress, these people said.
A spokeswoman for the Treasury declined to comment on the conversations over the weekend.
Administration officials took to the airwaves Sunday to reassure investors that the public would distinguish between companies like A.I.G., which are taking government bailout money, and private investment groups that, under this latest plan, would be helping the government take troubled assets off the books of some of the country’s biggest banks.
“What we’re talking about now are private firms that are kind of doing us a favor, right, coming into this market to help us buy these toxic assets off banks’ balance sheets,” Christina D. Romer, the White House’s chief economist, said in an interview on “Fox News Sunday.”
“I think they understand that the president realizes they’re in a different category,” she said, adding, “They are firms that are being the good guys here.”
Last week, the House passed a bill that would impose a 90 percent tax on bonuses paid since Jan. 1 by companies that owe the government at least $5 billion in bailout loans. This week, the administration is planning to call for increased oversight of executive pay at all banks and Wall Street firms.
Private equity firms and hedge funds have historically been only lightly regulated and have not been subjected to the same disclosure requirements that are applied to banks and trading companies.
Mr. Geithner faces a highly charged and politicized audience when he introduces the troubled-assets plan on Monday, after a week filled with vitriolic attacks over his handling of A.I.G. bonus payments.
Mr. Geithner and the Federal Reserve chairman, Ben S. Bernanke, are scheduled to testify to the House Financial Services Committee on Tuesday about the bonus payments.
Given that private equity firms, hedge funds and sovereign wealth funds are perhaps the only institutions with cash to invest in such a program, the administration went on the offensive on Sunday in an effort to win them over.
In phone conversations, the administration gave some of these prospective investors a preview of the program, the people briefed on the conversations said.
Three chiefs of investment firms said in interviews that they were impressed with the terms of the program — which would have the government lend nearly 95 percent of the money for any investment — but remained reluctant to participate because of the potential for future regulation.
“The deal is good, but it’s not worth it if I’m buying myself into a retroactive tax or a Congressional hearing,” the chief executive of a major investment firm said, insisting on anonymity because he did not want to seem at odds with the Treasury Department in the event that his firm ends up participating.
Despite the reluctance of some investors, others voiced optimism about the plan. Laurence D. Fink, chief executive of BlackRock, a money management company, said his firm planned to participate in the program.
“We will be raising money on behalf of our clients,” he said, adding that he was not worried about government intervening in his business. “I don’t see how Congress can interfere in this.”
Pimco, a large bond fund, also was expected to participate.
Still, a big stumbling block remained: how to place a value on mortgage-related assets that have not been traded for months.
Executives briefed on the plan said it did not address the central question of how to bridge the divide between what the banks want to sell the assets for and what investors are willing to pay for them. The government hopes that the subsidies it provides to investors are so rich that they will be willing to risk overpaying somewhat for the assets.
The White House plan is intended to leverage the dwindling resources of the Treasury Department’s bailout program with money from private investors to buy as many toxic assets as possible and free the banks to resume more normal lending.
Austan Goolsbee, staff director of the president’s Economic Recovery Advisory Board, said on Sunday that his discussions with private investors led him to believe that they would participate.
“What we have seen in our discussions with people is that if you lay out clear rules that are responsible, people want to participate if there’s a business reason to participate,” Mr. Goolsbee said on CBS’s “Face the Nation.”
“In this circumstance, where we’re trying to encourage the private sector to participate, that’s going to be treated totally differently than companies like A.I.G. or Fannie Mae, where they are only in business because the government saved them,” he said.
At least one administration official also seemed to signal that the 90 percent tax on bonuses passed by the House might not become law.
Vice President Joseph R. Biden’s senior economic adviser, Jared Bernstein, said on “This Week” on ABC that he thought President Obama might be concerned about “using the tax code to surgically punish a small group of people.”
Eric Dash and Rachel L. Swarns reported from Washington, and Andrew Ross Sorkin from New York.
http://www.nytimes.com/2009/03/23/business/economy/23toxic.html?_r=1&emc=eta1&pagewanted=print
Copyright 2009 The New York Times Company
This article is by Andrew Ross Sorkin, Eric Dash and Rachel L. Swarns.
WASHINGTON — Obama administration officials worked Sunday to persuade reluctant private investors to buy as much as $1 trillion in troubled mortgages and related assets from banks, with government help.
The talks came a day before the Treasury secretary, Timothy F. Geithner, planned to unveil the details of the administration’s long-awaited plan to purchase troubled assets, meant to remove them from the balance sheets of banks and, in turn, spur banks to lend more money to consumers and companies.
The plan relies on private investors to team up with the government to relieve banks of assets tied to loans and mortgage-linked securities of unknown value. There have been virtually no buyers of these assets because of their uncertain risk.
As part of the program, the government plans to offer subsidies, in the form of low-interest loans, to coax private funds to form partnerships with the government to buy troubled assets from banks.
But some executives at private equity firms and hedge funds, who were briefed on the plan Sunday afternoon, are anxious about the recent uproar over millions of dollars in bonus payments made to executives of the American International Group.
Some of them have told administration officials that they would participate only if the government guaranteed that it would not set compensation limits on the firms, according to people briefed on the conversations. The executives also expressed worries about whether disclosure and governance rules could be added retroactively to the program by Congress, these people said.
A spokeswoman for the Treasury declined to comment on the conversations over the weekend.
Administration officials took to the airwaves Sunday to reassure investors that the public would distinguish between companies like A.I.G., which are taking government bailout money, and private investment groups that, under this latest plan, would be helping the government take troubled assets off the books of some of the country’s biggest banks.
“What we’re talking about now are private firms that are kind of doing us a favor, right, coming into this market to help us buy these toxic assets off banks’ balance sheets,” Christina D. Romer, the White House’s chief economist, said in an interview on “Fox News Sunday.”
“I think they understand that the president realizes they’re in a different category,” she said, adding, “They are firms that are being the good guys here.”
Last week, the House passed a bill that would impose a 90 percent tax on bonuses paid since Jan. 1 by companies that owe the government at least $5 billion in bailout loans. This week, the administration is planning to call for increased oversight of executive pay at all banks and Wall Street firms.
Private equity firms and hedge funds have historically been only lightly regulated and have not been subjected to the same disclosure requirements that are applied to banks and trading companies.
Mr. Geithner faces a highly charged and politicized audience when he introduces the troubled-assets plan on Monday, after a week filled with vitriolic attacks over his handling of A.I.G. bonus payments.
Mr. Geithner and the Federal Reserve chairman, Ben S. Bernanke, are scheduled to testify to the House Financial Services Committee on Tuesday about the bonus payments.
Given that private equity firms, hedge funds and sovereign wealth funds are perhaps the only institutions with cash to invest in such a program, the administration went on the offensive on Sunday in an effort to win them over.
In phone conversations, the administration gave some of these prospective investors a preview of the program, the people briefed on the conversations said.
Three chiefs of investment firms said in interviews that they were impressed with the terms of the program — which would have the government lend nearly 95 percent of the money for any investment — but remained reluctant to participate because of the potential for future regulation.
“The deal is good, but it’s not worth it if I’m buying myself into a retroactive tax or a Congressional hearing,” the chief executive of a major investment firm said, insisting on anonymity because he did not want to seem at odds with the Treasury Department in the event that his firm ends up participating.
Despite the reluctance of some investors, others voiced optimism about the plan. Laurence D. Fink, chief executive of BlackRock, a money management company, said his firm planned to participate in the program.
“We will be raising money on behalf of our clients,” he said, adding that he was not worried about government intervening in his business. “I don’t see how Congress can interfere in this.”
Pimco, a large bond fund, also was expected to participate.
Still, a big stumbling block remained: how to place a value on mortgage-related assets that have not been traded for months.
Executives briefed on the plan said it did not address the central question of how to bridge the divide between what the banks want to sell the assets for and what investors are willing to pay for them. The government hopes that the subsidies it provides to investors are so rich that they will be willing to risk overpaying somewhat for the assets.
The White House plan is intended to leverage the dwindling resources of the Treasury Department’s bailout program with money from private investors to buy as many toxic assets as possible and free the banks to resume more normal lending.
Austan Goolsbee, staff director of the president’s Economic Recovery Advisory Board, said on Sunday that his discussions with private investors led him to believe that they would participate.
“What we have seen in our discussions with people is that if you lay out clear rules that are responsible, people want to participate if there’s a business reason to participate,” Mr. Goolsbee said on CBS’s “Face the Nation.”
“In this circumstance, where we’re trying to encourage the private sector to participate, that’s going to be treated totally differently than companies like A.I.G. or Fannie Mae, where they are only in business because the government saved them,” he said.
At least one administration official also seemed to signal that the 90 percent tax on bonuses passed by the House might not become law.
Vice President Joseph R. Biden’s senior economic adviser, Jared Bernstein, said on “This Week” on ABC that he thought President Obama might be concerned about “using the tax code to surgically punish a small group of people.”
Eric Dash and Rachel L. Swarns reported from Washington, and Andrew Ross Sorkin from New York.
http://www.nytimes.com/2009/03/23/business/economy/23toxic.html?_r=1&emc=eta1&pagewanted=print
Copyright 2009 The New York Times Company
Tuesday, March 24, 2009
Workers feel the brunt of health insurance woes
By RICARDO ALONSO-ZALDIVAR, Associated Press Writer
Tue Mar 24, 12:20 am ETWASHINGTON – American workers — whose taxes pay for massive government health programs — are getting squeezed like no other group by private health insurance premiums that are rising much faster than their wages.
While just about all retirees are covered, and nearly 90 percent of children have health insurance, workers now are at significantly higher risk of being uninsured than in the 1990s, the last time lawmakers attempted a health care overhaul, according to a study to be released Tuesday.
The study for the Robert Wood Johnson Foundation found that nearly 1 in 5 workers is uninsured, a statistically significant increase from fewer than 1 in 7 during the mid-1990s.
The problem is cost. Total premiums for employer plans have risen six to eight times faster than wages, depending on whether individual or family coverage is picked, the study found.
"The thing I think is interesting is how many workers are newly uninsured," said Lynn Blewett, director of the State Health Access Data Assistance Center at the University of Minnesota, which conducted the research. "In the last couple of years we've seen a deterioration of private health insurance."
About 20.7 million workers were uninsured in the mid-1990s. A decade later, it was 26.9 million, an increase of about 6 million, the study found.
In the 1990s, there were eight states with 20 percent or more of the working age population uninsured. Now there are 14: Alaska, Arizona, Arkansas, California, Florida, Georgia, Louisiana, Mississippi, New Mexico, North Carolina, Oklahoma, Oregon, South Carolina and Texas.
Yet workers continue to pay the bill for covering others. Their payroll taxes help support Medicare, which covers the elderly. Income taxes and other federal and state levies pay for covering the poor and the children of low-income working parents. But government provides little direct assistance to help cover workers themselves.
"There really aren't safety-net programs for adults," Blewett said.
The study comes as the Obama administration is scrambling to maintain support for a health care overhaul this year in the face of record federal deficits. A program like President Barack Obama's, which would commit the nation to coverage for all, is estimated to cost about $1.5 trillion over 10 years. Yet the U.S. health care system, already the world's costliest, is also considered one of the most wasteful.
"I don't think we can delay action beyond this year," said Dr. Risa Lavizzo-Mourey, president of the Robert Wood Johnson Foundation, which sponsored the study and provides extensive financing for health care research. "It's clear that we are at the brink."
For the Ramer family of Denver, Iowa, it's already too late. Husband Jim, a truck driver for a road-building company, died of a heart attack in 2005 at the age of 59. He was uninsured and trying to cope with diabetes, a chronic disease that requires prescription drugs and follow-up medical care to keep under control.
His wife, Cindy, 58, works full time caring for mentally disabled people as a certified nursing assistant. But the nursing home that employs her canceled its medical coverage several years ago because it had become too expensive. Ramer is now uninsured and hasn't had a regular checkup in about three years. Instead, she goes to health fairs for bone-density measurements and other screening tests.
"I don't think it's fair that I'm caring for people and helping them with their health care, and I don't have adequate, affordable health care of my own," said Ramer. "I'm not asking for a handout. I'm just asking for something I can afford, and won't have all these restrictions that they'll cover this and won't cover that." Ramer says she can afford to pay about $100 to $150 a month.
If anything, the situation for workers appears to be worse than is reflected in the report. It analyzed Census data through 2007, the latest year available. But that before the economy tumbled into recession.
___
On the Net:
Robert Wood Johnson Foundation: http://www.rwjf.org
Tue Mar 24, 12:20 am ETWASHINGTON – American workers — whose taxes pay for massive government health programs — are getting squeezed like no other group by private health insurance premiums that are rising much faster than their wages.
While just about all retirees are covered, and nearly 90 percent of children have health insurance, workers now are at significantly higher risk of being uninsured than in the 1990s, the last time lawmakers attempted a health care overhaul, according to a study to be released Tuesday.
The study for the Robert Wood Johnson Foundation found that nearly 1 in 5 workers is uninsured, a statistically significant increase from fewer than 1 in 7 during the mid-1990s.
The problem is cost. Total premiums for employer plans have risen six to eight times faster than wages, depending on whether individual or family coverage is picked, the study found.
"The thing I think is interesting is how many workers are newly uninsured," said Lynn Blewett, director of the State Health Access Data Assistance Center at the University of Minnesota, which conducted the research. "In the last couple of years we've seen a deterioration of private health insurance."
About 20.7 million workers were uninsured in the mid-1990s. A decade later, it was 26.9 million, an increase of about 6 million, the study found.
In the 1990s, there were eight states with 20 percent or more of the working age population uninsured. Now there are 14: Alaska, Arizona, Arkansas, California, Florida, Georgia, Louisiana, Mississippi, New Mexico, North Carolina, Oklahoma, Oregon, South Carolina and Texas.
Yet workers continue to pay the bill for covering others. Their payroll taxes help support Medicare, which covers the elderly. Income taxes and other federal and state levies pay for covering the poor and the children of low-income working parents. But government provides little direct assistance to help cover workers themselves.
"There really aren't safety-net programs for adults," Blewett said.
The study comes as the Obama administration is scrambling to maintain support for a health care overhaul this year in the face of record federal deficits. A program like President Barack Obama's, which would commit the nation to coverage for all, is estimated to cost about $1.5 trillion over 10 years. Yet the U.S. health care system, already the world's costliest, is also considered one of the most wasteful.
"I don't think we can delay action beyond this year," said Dr. Risa Lavizzo-Mourey, president of the Robert Wood Johnson Foundation, which sponsored the study and provides extensive financing for health care research. "It's clear that we are at the brink."
For the Ramer family of Denver, Iowa, it's already too late. Husband Jim, a truck driver for a road-building company, died of a heart attack in 2005 at the age of 59. He was uninsured and trying to cope with diabetes, a chronic disease that requires prescription drugs and follow-up medical care to keep under control.
His wife, Cindy, 58, works full time caring for mentally disabled people as a certified nursing assistant. But the nursing home that employs her canceled its medical coverage several years ago because it had become too expensive. Ramer is now uninsured and hasn't had a regular checkup in about three years. Instead, she goes to health fairs for bone-density measurements and other screening tests.
"I don't think it's fair that I'm caring for people and helping them with their health care, and I don't have adequate, affordable health care of my own," said Ramer. "I'm not asking for a handout. I'm just asking for something I can afford, and won't have all these restrictions that they'll cover this and won't cover that." Ramer says she can afford to pay about $100 to $150 a month.
If anything, the situation for workers appears to be worse than is reflected in the report. It analyzed Census data through 2007, the latest year available. But that before the economy tumbled into recession.
___
On the Net:
Robert Wood Johnson Foundation: http://www.rwjf.org
Friday, March 20, 2009
Former AIG head denies he started exec bonuses
WASHINGTON – Former AIG chief executive officer Hank Greenberg said the company under his leadership never had the kind of retention bonus system that has subjected it to withering criticism.
"When I was there, nobody had a contract with the company, including me," Greenberg said in a nationally broadcast interview Friday. "If you didn't do the job, you didn't deserve to be there. We had a bonus plan based on performance."
Greenberg's interview was broadcast on CBS's "The Early Show" a day after the Democratic-led House approved a bill that would impose punitive taxes on big employee bonuses from AIG and other firms bailed out by taxpayers.
"We want our money back and we want our money back now for the taxpayers," declared House Speaker Nancy Pelosi, D-Calif.
The bonuses, totaling $165 million, were paid to employees of the troubled insurer, including to traders in the financial unit that nearly caused the company's collapse.
"Mr. Greenberg is again trying to re-write history in order to distance himself from the Financial Products group he personally created and oversaw," AIG spokesman Mark Herr said in an e-mail Friday. "The fact is that, under his watch, guaranteed compensation arrangements for (Financial Products group) employees were put in place."
On Wednesday, the current chairman and CEO of AIG, Edward Liddy, told Congress under oath that his predecessor was responsible for the financial problems the company now is experiencing, saying mistakes had been made on a scale few could have imagined.
There have been two other executives at the top of AIG since Greenberg left and Liddy took charge.
Martin Sullivan, a native of England who had worked with AIG for 37 years, replaced Greenberg as CEO in March 2005, when Greenberg was forced out amid accusations from then-New York State Attorney General Eliot Spitzer of fraudulent accounting.
Former Citigroup Inc. executive Robert Willumstad took over from Sullivan in June, and was succeeded in September by Liddy, former chairman of Allstate Corp.
In his CBS appearance Friday, Greenberg was asked directly if he would have paid out the retention bonuses had he still been at the helm of the company. "Absolutely not," he told the interviewer.
Greenberg also said he didn't think Liddy was qualified to run the company, but stopped short of calling for his firing.
"I think he should be replaced," he said. "You can call it what you want."
Greenberg has sued AIG, saying the company that he led for 38 years misled investors about its exposure to subprime mortgages and ruined his fortune by lying about its financial health.
The lawsuit filed earlier this month says Greenberg was the New York-based company's largest non-institutional shareholder. The company has said the suit is without merit.
Greenberg said that AIG once was "the greatest company in history." It had been the world's largest insurer with clients all over the globe.
"Was there fraud? Was there whatever. I think it's stupidity. Well, do you punish stupidity," he said.
The bill was passed on a 328-93 margin despite sharp Republican attacks calling it a legally questionable ploy to cover up Obama administration missteps on this issue.
House Minority Leader John Boehner, R-Ohio, said the bill was "a political circus" diverting attention from why the administration hadn't done more to block the bonuses before they were paid.
Although a number of Republicans cast "no" votes against the measure at first, there was a heavy GOP migration to the "yes" side in the closing moments. The bill now goes to the Senate.
Copyright © 2009 The Associated Press
http://news.yahoo.com/s/ap/20090320/ap_on_bi_ge/aig/print
"When I was there, nobody had a contract with the company, including me," Greenberg said in a nationally broadcast interview Friday. "If you didn't do the job, you didn't deserve to be there. We had a bonus plan based on performance."
Greenberg's interview was broadcast on CBS's "The Early Show" a day after the Democratic-led House approved a bill that would impose punitive taxes on big employee bonuses from AIG and other firms bailed out by taxpayers.
"We want our money back and we want our money back now for the taxpayers," declared House Speaker Nancy Pelosi, D-Calif.
The bonuses, totaling $165 million, were paid to employees of the troubled insurer, including to traders in the financial unit that nearly caused the company's collapse.
"Mr. Greenberg is again trying to re-write history in order to distance himself from the Financial Products group he personally created and oversaw," AIG spokesman Mark Herr said in an e-mail Friday. "The fact is that, under his watch, guaranteed compensation arrangements for (Financial Products group) employees were put in place."
On Wednesday, the current chairman and CEO of AIG, Edward Liddy, told Congress under oath that his predecessor was responsible for the financial problems the company now is experiencing, saying mistakes had been made on a scale few could have imagined.
There have been two other executives at the top of AIG since Greenberg left and Liddy took charge.
Martin Sullivan, a native of England who had worked with AIG for 37 years, replaced Greenberg as CEO in March 2005, when Greenberg was forced out amid accusations from then-New York State Attorney General Eliot Spitzer of fraudulent accounting.
Former Citigroup Inc. executive Robert Willumstad took over from Sullivan in June, and was succeeded in September by Liddy, former chairman of Allstate Corp.
In his CBS appearance Friday, Greenberg was asked directly if he would have paid out the retention bonuses had he still been at the helm of the company. "Absolutely not," he told the interviewer.
Greenberg also said he didn't think Liddy was qualified to run the company, but stopped short of calling for his firing.
"I think he should be replaced," he said. "You can call it what you want."
Greenberg has sued AIG, saying the company that he led for 38 years misled investors about its exposure to subprime mortgages and ruined his fortune by lying about its financial health.
The lawsuit filed earlier this month says Greenberg was the New York-based company's largest non-institutional shareholder. The company has said the suit is without merit.
Greenberg said that AIG once was "the greatest company in history." It had been the world's largest insurer with clients all over the globe.
"Was there fraud? Was there whatever. I think it's stupidity. Well, do you punish stupidity," he said.
The bill was passed on a 328-93 margin despite sharp Republican attacks calling it a legally questionable ploy to cover up Obama administration missteps on this issue.
House Minority Leader John Boehner, R-Ohio, said the bill was "a political circus" diverting attention from why the administration hadn't done more to block the bonuses before they were paid.
Although a number of Republicans cast "no" votes against the measure at first, there was a heavy GOP migration to the "yes" side in the closing moments. The bill now goes to the Senate.
Copyright © 2009 The Associated Press
http://news.yahoo.com/s/ap/20090320/ap_on_bi_ge/aig/print
Wednesday, March 18, 2009
ECONOMY
A Pain In The AIG
One of the main reasons the federal government had to intervene and use billions of taxpayer dollars to prop up the nation's financial institutions is that they were considered to be "too big to fail." In other words, these companies had become so massive that their collapse would send shockwaves throughout the U.S. and global economies. No company has come to symbolize this problem more than insurance giant AIG, in which taxpayers now have an 80 percent stake after the federal government committed $170 billion to rescue it from bankruptcy. "Given the systemic risk AIG continues to pose and the fragility of markets today, the potential cost to the economy and the taxpayer of government inaction would be extremely high," wrote the Treasury and Federal Reserve in a joint statement on March 2. As New York Times columnist Paul Krugman has explained, "AIG is in trouble because it wrote many credit default swaps, in effect guaranteeing others against losses it lacked the resources to cover. We, the taxpayers, are now covering those losses. ... But this means that US taxpayers have now assumed the downside risks for all of AIG's counterparties." AIG has proved to be in no rush to repay this favor, highlighting the risk in the government's current strategy.
BONUS OUTRAGE: On Saturday, AIG revealed that it still planned to pay $165 million in bonuses to executives in its financial products unit, the same unit "that brought the company to the brink of collapse last year." As the New York Times pointed out, these awards "are in addition to $121 million in previously scheduled bonuses for the company's senior executives and 6,400 employees." After finding out about the scheduled payments, Geithner called AIG chief Edward Liddy to tell him that they were "unacceptable and had to be renegotiated." In a letter on Saturday, Liddy replied that AIG was legally bound to "proceed" with the bonuses, and he did not want employees to "believe that their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury." This response set off a wave of outrage from Obama administration officials, even though many of them have opposed tougher restrictions on CEO pay. Yesterday on ABC's This Week, National Economic Council Chairman Lawrence Summers said, "There are a lot of terrible things that have happened in the last 18 months, but what's happened at AIG is the most outrageous." House Financial Services Committee Chairman Barney Frank (D-MA) also said that AIG was "abusing the system."
FINDING OUT WHERE THE MONEY IS GOING: Yesterday, AIG also revealed the names of dozens of the big banks it has paid off with the bailout money. The Washington Post reports, "The disclosure, which the company said was made after consulting the Federal Reserve, revealed that AIG paid more than $75 billion in the final months of 2008 to numerous domestic and foreign banks, as well as to various U.S. municipalities." Major recipients included Goldman Sachs, Deutsche Bank, Merrill Lynch, Morgan Stanley, and Bank of America. Approximately $12 billion also "went to pay off municipalities in dozens of states for whom the firm had created complex investment agreements." The disclosure was an "about-face" for AIG, which had been resisting lawmakers' calls for increased transparency. In fact, all firms that have received money under the Troubled Assets Relief Program (TARP) have been able to escape with inadequate oversight. Bailed-out CEOs have retained their corporate jets and refused to answer questions about how they are spending taxpayer money. Just last week, a House oversight subcommittee grilled TARP watchdog Neil Barofsky on questionable investments made by bailed-out firms and what influence lobbyists have exerted. Barofsky promised officials that he would provide that information when he releases his report.
THE RATIONALIZATION FOR NATIONALIZATION: What this weekend's disclosures highlight is the shortcomings of the Treasury's current strategy to prop up the financial system. Basically, the federal government continues to pump billions of dollars into these institutions without receiving full control over how taxpayer dollars are spent in return. Bank nationalization has been floated by people such as Krugman and NYU economist Nouriel Roubini, to former Fed chairman Alan Greenspan and Sen. Lindsey Graham (R-SC). Geithner, however, has so far refused to say that nationalization is on the table. But it should be. "The American taxpayer would be ill-served to receive anything less for putting in the vast amount of money needed to restructure and recapitalize [the banks]," explained Adam Posen, Deputy Director of the Peterson Institute for International Economics. "And the American taxpayer, just like any acquirer of distressed assets, deserves to reap the upside from their eventual resale." Geithner has put forward a plan to subject the country's 20 biggest banks to "stress tests," in order to assess whether they have the resources to survive. Krugman has explained that these tests could be the key for an administration move toward nationalization, by "not hid[ing] the results when a bank fails the test, making a takeover necessary." As the Wonk Room's Pat Garofalo has written, "Geithner's public-private investment fund may get toxic assets off the banks' books," but it also depends on Wall Street "being willing to buy the junk currently clogging up the banks. And the longer nationalization is delayed, the longer the solvency of the entire banking system will be in question. Thus, more good banks will get dragged down into the mud with the bad."
IRAQ -- POLL: IRAQIS OPTIMISTIC, STRONGLY FAVOR U.S. TROOP WITHDRAWAL: According to a new ABC News/BBC/NHK poll, "Dramatic advances in public attitudes are sweeping Iraq." The poll's key findings include increasingly optimistic attitudes regarding personal safety, a democratic government, and President Obama's plan to withdraw U.S. troops from the country. "Eighty-four percent of Iraqis now rate security in their own area positively, nearly double its August 2007 level," and "seventy-eight percent say their protection from crime is good, more than double its low," the poll reveals. Moreover, "the number of Iraqis who call security the single biggest problem in their own lives has dropped from 48 percent in March 2007 to 20 percent now." The poll also shows rising support for a democratic government in Iraq, as "a new high, 64 percent of Iraqis, now call democracy their preferred form of government." Additionally, Iraqis say they strongly support President Obama's troop withdrawal plan: "81 percent either support the current timetable for withdrawal of U.S. forces by 2011" or say it should be sped up.
NATIONAL SECURITY -- CHENEY INSISTS OBAMA'S CHOICES 'RAISE THE RISK...OF ANOTHER ATTACK': In an interview with CNN's John King yesterday, former vice president Cheney declared that President Obama's decisions to close Guantanamo and end torture, among other policies, "raise the risk to the American people of another attack." When King asked whether Cheney thought Obama "has made Americans less safe," Cheney replied, "I do." He defended the Bush administration's torture and detention policies as "essential to the success we enjoyed of being able to collect the intelligence that" prevented new attacks after 9/11. "And now he [Obama] is making some choices that, in my mind, will, in fact, raise the risk to the American people of another attack," Cheney said. In February, Cheney told Politico that Obama's refusal to use torture meant "there's a high probability" of a nuclear attack on America, and he accused Obama of being "more concerned about reading the rights to an Al Qaeda terrorist than they are with protecting the United States." In reality, torture made Americans -- both at home and those serving overseas -- less safe. Former FBI special agent Jack Cloonan testified that the Bush-Cheney policies had convinced him that "revenge in the form of a catastrophic attack on the homeland is coming."
CONGRESS -- WHEN ASKED FOR GOP ALTERNATIVES TO OBAMA'S BUDGET, McCONNELL COMPLAINS WE'RE 'GETTING DOWN IN THE WEEDS': Since President Obama unveiled his budget last month, Republicans have been relentlessly attacking his comprehensive proposals. Yesterday on ABC's This Week, Senate Minority Leader Mitch McConnell (R-KY) kept up the drumbeat, saying in reference to Obama's budget proposal, "It taxes too much, it spends too much, it borrows too much." Host George Stephanopoulos repeatedly pressed McConnell for a comprehensive Republican alternative budget. Yet each time, McConnell simply attacked Obama's plan. He said that he and his colleagues would be offering amendments to "reframe" what the Democrats have proposed but will likely not be offering a comprehensive plan. Stephanopoulos asked McConnell, "But shouldn't you have a comprehensive approach that lays out the trade-offs?" "Well, we’re just sort of getting down in the weeds here about procedure," McConnell complained. As the New York Times has pointed out, by not offering a full counterproposal, Republicans have made a decision "that will spare them from outlining potentially painful decisions required to bring federal books more in line with their call to hold down spending, cut taxes and reduce the deficit." In many ways, the GOP's strategy is a repeat of it did during the economic recovery package debate -- opposing Obama's plan for political reasons and picking out small provisions as excuses to block the entire bill.
"The Progress Report"
One of the main reasons the federal government had to intervene and use billions of taxpayer dollars to prop up the nation's financial institutions is that they were considered to be "too big to fail." In other words, these companies had become so massive that their collapse would send shockwaves throughout the U.S. and global economies. No company has come to symbolize this problem more than insurance giant AIG, in which taxpayers now have an 80 percent stake after the federal government committed $170 billion to rescue it from bankruptcy. "Given the systemic risk AIG continues to pose and the fragility of markets today, the potential cost to the economy and the taxpayer of government inaction would be extremely high," wrote the Treasury and Federal Reserve in a joint statement on March 2. As New York Times columnist Paul Krugman has explained, "AIG is in trouble because it wrote many credit default swaps, in effect guaranteeing others against losses it lacked the resources to cover. We, the taxpayers, are now covering those losses. ... But this means that US taxpayers have now assumed the downside risks for all of AIG's counterparties." AIG has proved to be in no rush to repay this favor, highlighting the risk in the government's current strategy.
BONUS OUTRAGE: On Saturday, AIG revealed that it still planned to pay $165 million in bonuses to executives in its financial products unit, the same unit "that brought the company to the brink of collapse last year." As the New York Times pointed out, these awards "are in addition to $121 million in previously scheduled bonuses for the company's senior executives and 6,400 employees." After finding out about the scheduled payments, Geithner called AIG chief Edward Liddy to tell him that they were "unacceptable and had to be renegotiated." In a letter on Saturday, Liddy replied that AIG was legally bound to "proceed" with the bonuses, and he did not want employees to "believe that their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury." This response set off a wave of outrage from Obama administration officials, even though many of them have opposed tougher restrictions on CEO pay. Yesterday on ABC's This Week, National Economic Council Chairman Lawrence Summers said, "There are a lot of terrible things that have happened in the last 18 months, but what's happened at AIG is the most outrageous." House Financial Services Committee Chairman Barney Frank (D-MA) also said that AIG was "abusing the system."
FINDING OUT WHERE THE MONEY IS GOING: Yesterday, AIG also revealed the names of dozens of the big banks it has paid off with the bailout money. The Washington Post reports, "The disclosure, which the company said was made after consulting the Federal Reserve, revealed that AIG paid more than $75 billion in the final months of 2008 to numerous domestic and foreign banks, as well as to various U.S. municipalities." Major recipients included Goldman Sachs, Deutsche Bank, Merrill Lynch, Morgan Stanley, and Bank of America. Approximately $12 billion also "went to pay off municipalities in dozens of states for whom the firm had created complex investment agreements." The disclosure was an "about-face" for AIG, which had been resisting lawmakers' calls for increased transparency. In fact, all firms that have received money under the Troubled Assets Relief Program (TARP) have been able to escape with inadequate oversight. Bailed-out CEOs have retained their corporate jets and refused to answer questions about how they are spending taxpayer money. Just last week, a House oversight subcommittee grilled TARP watchdog Neil Barofsky on questionable investments made by bailed-out firms and what influence lobbyists have exerted. Barofsky promised officials that he would provide that information when he releases his report.
THE RATIONALIZATION FOR NATIONALIZATION: What this weekend's disclosures highlight is the shortcomings of the Treasury's current strategy to prop up the financial system. Basically, the federal government continues to pump billions of dollars into these institutions without receiving full control over how taxpayer dollars are spent in return. Bank nationalization has been floated by people such as Krugman and NYU economist Nouriel Roubini, to former Fed chairman Alan Greenspan and Sen. Lindsey Graham (R-SC). Geithner, however, has so far refused to say that nationalization is on the table. But it should be. "The American taxpayer would be ill-served to receive anything less for putting in the vast amount of money needed to restructure and recapitalize [the banks]," explained Adam Posen, Deputy Director of the Peterson Institute for International Economics. "And the American taxpayer, just like any acquirer of distressed assets, deserves to reap the upside from their eventual resale." Geithner has put forward a plan to subject the country's 20 biggest banks to "stress tests," in order to assess whether they have the resources to survive. Krugman has explained that these tests could be the key for an administration move toward nationalization, by "not hid[ing] the results when a bank fails the test, making a takeover necessary." As the Wonk Room's Pat Garofalo has written, "Geithner's public-private investment fund may get toxic assets off the banks' books," but it also depends on Wall Street "being willing to buy the junk currently clogging up the banks. And the longer nationalization is delayed, the longer the solvency of the entire banking system will be in question. Thus, more good banks will get dragged down into the mud with the bad."
IRAQ -- POLL: IRAQIS OPTIMISTIC, STRONGLY FAVOR U.S. TROOP WITHDRAWAL: According to a new ABC News/BBC/NHK poll, "Dramatic advances in public attitudes are sweeping Iraq." The poll's key findings include increasingly optimistic attitudes regarding personal safety, a democratic government, and President Obama's plan to withdraw U.S. troops from the country. "Eighty-four percent of Iraqis now rate security in their own area positively, nearly double its August 2007 level," and "seventy-eight percent say their protection from crime is good, more than double its low," the poll reveals. Moreover, "the number of Iraqis who call security the single biggest problem in their own lives has dropped from 48 percent in March 2007 to 20 percent now." The poll also shows rising support for a democratic government in Iraq, as "a new high, 64 percent of Iraqis, now call democracy their preferred form of government." Additionally, Iraqis say they strongly support President Obama's troop withdrawal plan: "81 percent either support the current timetable for withdrawal of U.S. forces by 2011" or say it should be sped up.
NATIONAL SECURITY -- CHENEY INSISTS OBAMA'S CHOICES 'RAISE THE RISK...OF ANOTHER ATTACK': In an interview with CNN's John King yesterday, former vice president Cheney declared that President Obama's decisions to close Guantanamo and end torture, among other policies, "raise the risk to the American people of another attack." When King asked whether Cheney thought Obama "has made Americans less safe," Cheney replied, "I do." He defended the Bush administration's torture and detention policies as "essential to the success we enjoyed of being able to collect the intelligence that" prevented new attacks after 9/11. "And now he [Obama] is making some choices that, in my mind, will, in fact, raise the risk to the American people of another attack," Cheney said. In February, Cheney told Politico that Obama's refusal to use torture meant "there's a high probability" of a nuclear attack on America, and he accused Obama of being "more concerned about reading the rights to an Al Qaeda terrorist than they are with protecting the United States." In reality, torture made Americans -- both at home and those serving overseas -- less safe. Former FBI special agent Jack Cloonan testified that the Bush-Cheney policies had convinced him that "revenge in the form of a catastrophic attack on the homeland is coming."
CONGRESS -- WHEN ASKED FOR GOP ALTERNATIVES TO OBAMA'S BUDGET, McCONNELL COMPLAINS WE'RE 'GETTING DOWN IN THE WEEDS': Since President Obama unveiled his budget last month, Republicans have been relentlessly attacking his comprehensive proposals. Yesterday on ABC's This Week, Senate Minority Leader Mitch McConnell (R-KY) kept up the drumbeat, saying in reference to Obama's budget proposal, "It taxes too much, it spends too much, it borrows too much." Host George Stephanopoulos repeatedly pressed McConnell for a comprehensive Republican alternative budget. Yet each time, McConnell simply attacked Obama's plan. He said that he and his colleagues would be offering amendments to "reframe" what the Democrats have proposed but will likely not be offering a comprehensive plan. Stephanopoulos asked McConnell, "But shouldn't you have a comprehensive approach that lays out the trade-offs?" "Well, we’re just sort of getting down in the weeds here about procedure," McConnell complained. As the New York Times has pointed out, by not offering a full counterproposal, Republicans have made a decision "that will spare them from outlining potentially painful decisions required to bring federal books more in line with their call to hold down spending, cut taxes and reduce the deficit." In many ways, the GOP's strategy is a repeat of it did during the economic recovery package debate -- opposing Obama's plan for political reasons and picking out small provisions as excuses to block the entire bill.
"The Progress Report"
Sunday, March 15, 2009
Fixing the economy
Fixing the economy is like making sausage. Don’t worry about the ingredients, just enjoy the finished product.
Saturday, March 14, 2009
What We Don't Know About Iraq
By Philip Bennett
What do Iraqis call the war that is now entering its seventh year?
If you can't answer that question, it's not because you haven't been paying attention. In this country, the Iraq war has been an American story. It was born inside the Beltway. Its costs in suffering have been most visible to us at gravesides across the United States, or in the wards of Walter Reed. A growing library of histories of the war chronicles battle after bitter battle between factions of official Washington, skirmishing over ideas, strategy, about how we got in and how to get out.
As the war has gone on, Iraqis' stories have been overshadowed by the towering drama of our own experience. The imbalance struck me as I recently read and revisited some of the best books to grow out of American journalism on Iraq since the invasion began on March 19, 2003. They are rich in raw, unblinking dispatches from alongside U.S. troops and investigative digging into the thinking of U.S. leaders -- overall, a remarkable record of a continuing conflict. But they also reflect how frustration and isolation, including the isolation of journalists, have reduced Iraqis to a narrow cast of supporting roles: ungrateful partners, untrustworthy supplicants, invisible enemies and unreadable victims.
With U.S. forces set to withdraw from Iraq over the next 18 months, does it matter that we know so little about how Iraqis have understood and lived through the war? The invisible connection between the overlapping experiences of Americans and Iraqis -- and the blame, estrangement and hatred that has choked the air between them -- impairs our ability to see what will happen next. It also means that as U.S. officials apply the lessons of the Iraq war to strategy in Afghanistan, they risk missing a central part of the story.
Tom Ricks's new book, "The Gamble," shows how difficult it is to line up Iraqi and American views of the conflict, and of each other. In a sequel to his best-selling "Fiasco," Ricks, formerly The Post's chief Pentagon reporter, provides an inside account of how Gen. David H. Petraeus resurrected the Iraq war from a seemingly lost cause in 2006 and made it the more stable military situation it is today. At the heart of Petraeus's success against insurgents, Ricks writes, is the general's determination, with the help of 30,000 additional U.S. troops, to win over the Iraqi population, to demonstrate that "the people are the prize."
It's a powerful case. Yet there are scarcely any Iraqis at the center of Petraeus's world (or in "The Gamble," whose "cast of characters" lists just two: Prime Minister Nouri al-Maliki and the Shiite cleric Moqtada al-Sadr). The general's "eclectic" brain trust includes a British pacifist and an Australian counterinsurgency ace -- but no Iraqis. (His translator and personal liaison to the Iraqi government is Sadi Othman, a Palestinian born in Brazil and raised in Jordan). The tribal leaders who are converted from enemies to allies -- and lend their 100,000 fighters to the anti-al-Qaeda cause -- are presented as unknowable archetypes. U.S. commanders and soldiers report a warming of Iraqi hearts and minds and credit the change to the U.S. approach, but we have to take their word for the depth of this transformation. We don't know firsthand what Iraqis ultimately make of the surge and whether the stability it has brought will help build a new nation or just an express lane for the American exit.
There's nothing unusual about American journalists focusing on Americans at war, especially on military and civilian leaders weighing truths and consequences for millions of lives. You have to read deep into the Library of America's 1,700-page anthology, "Reporting Vietnam," before Vietnamese civilians or insurgents step out of the chorus and become individual subjects. In Iraq, chasms of language and culture have affected those chronicling the war as much as those fighting it. At the same time, there have been strong incentives to excavate the facts about the Washington end of the war. Not least has been some reporters' and editors' motivation to go back and do the job of holding the government accountable in ways that were missing, and might have mattered, before the war started.
The depth and drama of several journalists' books about Washington at war have given them heightened impact, beyond the good reporting in newspapers and magazines that preceded them. Bob Woodward's trilogy on the Bush White House, followed last year by a fourth book, "The War Within," extracted from the secretive administration scene after damning scene of a government's rush to disaster. Copies of "Fiasco" and "Cobra II," by Michael Gordon and Bernard Trainor, seemed to be standard issue in officers' quarters across Iraq. In "Imperial Life in the Emerald City," his devastating 2006 portrait of the Green Zone, The Post's Rajiv Chandrasekaran wrote the definitive account of the early phase of the occupation, corrupted by ideology, incompetence and arrogance.
From the first days of the invasion, however, correspondents struggled to construct a common narrative for Iraqis and Americans. "The most important struggles were the ones going on inside the minds of Iraqis and Americans alike," wrote George Packer of the New Yorker in "The Assassins' Gate," published in 2005. "The war's meaning would be the sum of all the ways that all of them understood one another and the events that had thrust them together." Packer's book, reported mostly in 2003 and 2004, shows how the story might have looked. His accounts of Iraqis reveal the things they carried, including their "psychological demolition" under Saddam Hussein's tyranny and their disorientation after the invasion. He got close to some Iraqis who professed a "middle level of mind" -- a moderate space between religious and secular certainties -- that seemed to promise an alternative national identity. But it was not a hope, or line of inquiry, that would hold.
It's now clear that we owe an enormous gap in our understanding of Iraq to the violence unleashed in early 2004, when kidnappings and beheadings, hundreds of suicide bombings and street fighting forced Western reporters to end the serendipitous daily contact with Iraqis that had produced the most telling stories. As The Post's foreign editor at the time, I started asking fewer questions about our coverage and constant questions about our reporters' safety. The media withdrew into armed convoys and hid behind blast walls, or abandoned the country altogether. (The Post and others stayed.) As Dexter Filkins of the New York Times, who emerged in those years as the premier combat journalist of his generation, wrote: "Iraq disappeared for us then, and it never came back."
In his 2008 book, "The Forever War," Filkins writes that there "were always two conversations in Iraq, the one Iraqis were having with the Americans and the one they were having with themselves." The exceptions in nearly every book are the conversations -- complex, edgy, intimate -- between correspondents and their Iraqi translators, drivers and guards. These relationships aren't simple; they are layered with suspicions, conflicting loyalties and the tension that comes from putting your life in the hands of someone you don't completely understand. But they also carry the mutual debt of shared experience. And, for the most part, they work.
For Filkins, most Iraqis lived in "the world we never saw." What he saw more closely than other reporters was the jagged end of the mission. He was present in Fallujah during the 2005 assault by 6,000 soldiers and Marines, and his brutal writing on this and other battles burns through the barriers of language that protect us from the truth of combat -- that nothing is more senseless, or more meaningful. Filkins reports about more than fighting. But his book is an example of how much of Iraq comes to us by way of American soldiers. The view they provide is emotionally draining and provocative, inspiring, banal, funny, heroic and tragic all at once. In her 2007 book, "The Long Road Home," Martha Raddatz of ABC News reconstructs almost minute by minute the 2004 battle for Sadr City that marked U.S. forces' baptism into the muck of counterinsurgency. In last year's "Big Boy Rules," Steve Fainaru of The Post uncovers the abuses inflicted by and upon the forgotten American fighters, the private security contractors who have done the work of an understaffed military while living beyond even the war's legal and moral horizon.
But in these impressive tales of sacrifice, the closer we get to the Americans, the farther we are from the Iraqis. U.S. troops under fire in Sadr City struggle to distinguish "good Iraqis" from "bad Iraqis" before blasting away at everyone to save their own lives. If seduction was a theme of the Vietnam tragedy, in Iraq it seems replaced by repugnance, with an acrid distaste seeping into encounters between Americans and Iraqis. For the Iraqis, the abuse of prisoners at Abu Ghraib seems to have been part of a national humiliation; Petraeus saw the scandal as a significant strategic setback that needed to be reversed. Over and over, Americans have seen themselves paying with blood to give the Iraqis "a chance to do the right thing," as one colonel tells Filkins. Over and over, the Iraqis disappoint. As Ricks reports, many soldiers view "the biggest threat to American aspirations" in Iraq as being "the Iraqis themselves."
Today, Iraqis are the anonymous authors of their own history. As the U.S. withdraws, the course of "Iraqification" will depend partly on how Iraqis reveal and resolve their own versions of the last six years. American journalists should once again take up the mission of reporting their stories as increasing security makes that possible. Public interest in these stories may have disappeared, but their importance hasn't. The lessons of the Iraq war, including making "the people the prize," are now migrating under Petraeus's command to Afghanistan, another country of strangers.
Anthony Shadid, The Post's Baghdad correspondent, tells me that Iraqis have called the war by different names over the past six years: ghazu or "invasion"; sometimes "the events"; occasionally "sectarian war"; and most often, and most hauntingly, suqut -- simply "the collapse."
Shadid's 2005 book, "Night Draws Near," remains the richest attempt I've read to track the journeys of Shiite and Sunni Iraqis, farmers and doctors, insurgents and agnostics through the ambiguous terrain of their internal conflicts and the war outside. (It's also the only book in my stack that has a photograph of an Iraqi on the cover.) Shadid is back in Iraq after several years away; I hope he revisits these people.
The defining quotation of the Iraq war -- "Tell me how this ends" -- was posed by David Petraeus to Rick Atkinson of The Post on the road to Baghdad during the invasion. Years later, it has acquired a connotation that Petraeus perhaps didn't intend: Tell me how this ends for us, for the Americans. Re-reading Shadid's book, I came across the Iraqi coda, written on almost the same day in the diary of a 14-year-old girl named Amal Salman: "What's going to be the future of Iraq? Can it be good? No one knows."
Petraeus's question and Amal's are tied together, just as the events of the past six years will forever bind their countries to one another.
http://www.washingtonpost.com/wp-dyn/content/article/2009/03/13/AR2009031304300.html
What do Iraqis call the war that is now entering its seventh year?
If you can't answer that question, it's not because you haven't been paying attention. In this country, the Iraq war has been an American story. It was born inside the Beltway. Its costs in suffering have been most visible to us at gravesides across the United States, or in the wards of Walter Reed. A growing library of histories of the war chronicles battle after bitter battle between factions of official Washington, skirmishing over ideas, strategy, about how we got in and how to get out.
As the war has gone on, Iraqis' stories have been overshadowed by the towering drama of our own experience. The imbalance struck me as I recently read and revisited some of the best books to grow out of American journalism on Iraq since the invasion began on March 19, 2003. They are rich in raw, unblinking dispatches from alongside U.S. troops and investigative digging into the thinking of U.S. leaders -- overall, a remarkable record of a continuing conflict. But they also reflect how frustration and isolation, including the isolation of journalists, have reduced Iraqis to a narrow cast of supporting roles: ungrateful partners, untrustworthy supplicants, invisible enemies and unreadable victims.
With U.S. forces set to withdraw from Iraq over the next 18 months, does it matter that we know so little about how Iraqis have understood and lived through the war? The invisible connection between the overlapping experiences of Americans and Iraqis -- and the blame, estrangement and hatred that has choked the air between them -- impairs our ability to see what will happen next. It also means that as U.S. officials apply the lessons of the Iraq war to strategy in Afghanistan, they risk missing a central part of the story.
Tom Ricks's new book, "The Gamble," shows how difficult it is to line up Iraqi and American views of the conflict, and of each other. In a sequel to his best-selling "Fiasco," Ricks, formerly The Post's chief Pentagon reporter, provides an inside account of how Gen. David H. Petraeus resurrected the Iraq war from a seemingly lost cause in 2006 and made it the more stable military situation it is today. At the heart of Petraeus's success against insurgents, Ricks writes, is the general's determination, with the help of 30,000 additional U.S. troops, to win over the Iraqi population, to demonstrate that "the people are the prize."
It's a powerful case. Yet there are scarcely any Iraqis at the center of Petraeus's world (or in "The Gamble," whose "cast of characters" lists just two: Prime Minister Nouri al-Maliki and the Shiite cleric Moqtada al-Sadr). The general's "eclectic" brain trust includes a British pacifist and an Australian counterinsurgency ace -- but no Iraqis. (His translator and personal liaison to the Iraqi government is Sadi Othman, a Palestinian born in Brazil and raised in Jordan). The tribal leaders who are converted from enemies to allies -- and lend their 100,000 fighters to the anti-al-Qaeda cause -- are presented as unknowable archetypes. U.S. commanders and soldiers report a warming of Iraqi hearts and minds and credit the change to the U.S. approach, but we have to take their word for the depth of this transformation. We don't know firsthand what Iraqis ultimately make of the surge and whether the stability it has brought will help build a new nation or just an express lane for the American exit.
There's nothing unusual about American journalists focusing on Americans at war, especially on military and civilian leaders weighing truths and consequences for millions of lives. You have to read deep into the Library of America's 1,700-page anthology, "Reporting Vietnam," before Vietnamese civilians or insurgents step out of the chorus and become individual subjects. In Iraq, chasms of language and culture have affected those chronicling the war as much as those fighting it. At the same time, there have been strong incentives to excavate the facts about the Washington end of the war. Not least has been some reporters' and editors' motivation to go back and do the job of holding the government accountable in ways that were missing, and might have mattered, before the war started.
The depth and drama of several journalists' books about Washington at war have given them heightened impact, beyond the good reporting in newspapers and magazines that preceded them. Bob Woodward's trilogy on the Bush White House, followed last year by a fourth book, "The War Within," extracted from the secretive administration scene after damning scene of a government's rush to disaster. Copies of "Fiasco" and "Cobra II," by Michael Gordon and Bernard Trainor, seemed to be standard issue in officers' quarters across Iraq. In "Imperial Life in the Emerald City," his devastating 2006 portrait of the Green Zone, The Post's Rajiv Chandrasekaran wrote the definitive account of the early phase of the occupation, corrupted by ideology, incompetence and arrogance.
From the first days of the invasion, however, correspondents struggled to construct a common narrative for Iraqis and Americans. "The most important struggles were the ones going on inside the minds of Iraqis and Americans alike," wrote George Packer of the New Yorker in "The Assassins' Gate," published in 2005. "The war's meaning would be the sum of all the ways that all of them understood one another and the events that had thrust them together." Packer's book, reported mostly in 2003 and 2004, shows how the story might have looked. His accounts of Iraqis reveal the things they carried, including their "psychological demolition" under Saddam Hussein's tyranny and their disorientation after the invasion. He got close to some Iraqis who professed a "middle level of mind" -- a moderate space between religious and secular certainties -- that seemed to promise an alternative national identity. But it was not a hope, or line of inquiry, that would hold.
It's now clear that we owe an enormous gap in our understanding of Iraq to the violence unleashed in early 2004, when kidnappings and beheadings, hundreds of suicide bombings and street fighting forced Western reporters to end the serendipitous daily contact with Iraqis that had produced the most telling stories. As The Post's foreign editor at the time, I started asking fewer questions about our coverage and constant questions about our reporters' safety. The media withdrew into armed convoys and hid behind blast walls, or abandoned the country altogether. (The Post and others stayed.) As Dexter Filkins of the New York Times, who emerged in those years as the premier combat journalist of his generation, wrote: "Iraq disappeared for us then, and it never came back."
In his 2008 book, "The Forever War," Filkins writes that there "were always two conversations in Iraq, the one Iraqis were having with the Americans and the one they were having with themselves." The exceptions in nearly every book are the conversations -- complex, edgy, intimate -- between correspondents and their Iraqi translators, drivers and guards. These relationships aren't simple; they are layered with suspicions, conflicting loyalties and the tension that comes from putting your life in the hands of someone you don't completely understand. But they also carry the mutual debt of shared experience. And, for the most part, they work.
For Filkins, most Iraqis lived in "the world we never saw." What he saw more closely than other reporters was the jagged end of the mission. He was present in Fallujah during the 2005 assault by 6,000 soldiers and Marines, and his brutal writing on this and other battles burns through the barriers of language that protect us from the truth of combat -- that nothing is more senseless, or more meaningful. Filkins reports about more than fighting. But his book is an example of how much of Iraq comes to us by way of American soldiers. The view they provide is emotionally draining and provocative, inspiring, banal, funny, heroic and tragic all at once. In her 2007 book, "The Long Road Home," Martha Raddatz of ABC News reconstructs almost minute by minute the 2004 battle for Sadr City that marked U.S. forces' baptism into the muck of counterinsurgency. In last year's "Big Boy Rules," Steve Fainaru of The Post uncovers the abuses inflicted by and upon the forgotten American fighters, the private security contractors who have done the work of an understaffed military while living beyond even the war's legal and moral horizon.
But in these impressive tales of sacrifice, the closer we get to the Americans, the farther we are from the Iraqis. U.S. troops under fire in Sadr City struggle to distinguish "good Iraqis" from "bad Iraqis" before blasting away at everyone to save their own lives. If seduction was a theme of the Vietnam tragedy, in Iraq it seems replaced by repugnance, with an acrid distaste seeping into encounters between Americans and Iraqis. For the Iraqis, the abuse of prisoners at Abu Ghraib seems to have been part of a national humiliation; Petraeus saw the scandal as a significant strategic setback that needed to be reversed. Over and over, Americans have seen themselves paying with blood to give the Iraqis "a chance to do the right thing," as one colonel tells Filkins. Over and over, the Iraqis disappoint. As Ricks reports, many soldiers view "the biggest threat to American aspirations" in Iraq as being "the Iraqis themselves."
Today, Iraqis are the anonymous authors of their own history. As the U.S. withdraws, the course of "Iraqification" will depend partly on how Iraqis reveal and resolve their own versions of the last six years. American journalists should once again take up the mission of reporting their stories as increasing security makes that possible. Public interest in these stories may have disappeared, but their importance hasn't. The lessons of the Iraq war, including making "the people the prize," are now migrating under Petraeus's command to Afghanistan, another country of strangers.
Anthony Shadid, The Post's Baghdad correspondent, tells me that Iraqis have called the war by different names over the past six years: ghazu or "invasion"; sometimes "the events"; occasionally "sectarian war"; and most often, and most hauntingly, suqut -- simply "the collapse."
Shadid's 2005 book, "Night Draws Near," remains the richest attempt I've read to track the journeys of Shiite and Sunni Iraqis, farmers and doctors, insurgents and agnostics through the ambiguous terrain of their internal conflicts and the war outside. (It's also the only book in my stack that has a photograph of an Iraqi on the cover.) Shadid is back in Iraq after several years away; I hope he revisits these people.
The defining quotation of the Iraq war -- "Tell me how this ends" -- was posed by David Petraeus to Rick Atkinson of The Post on the road to Baghdad during the invasion. Years later, it has acquired a connotation that Petraeus perhaps didn't intend: Tell me how this ends for us, for the Americans. Re-reading Shadid's book, I came across the Iraqi coda, written on almost the same day in the diary of a 14-year-old girl named Amal Salman: "What's going to be the future of Iraq? Can it be good? No one knows."
Petraeus's question and Amal's are tied together, just as the events of the past six years will forever bind their countries to one another.
http://www.washingtonpost.com/wp-dyn/content/article/2009/03/13/AR2009031304300.html
Wednesday, March 4, 2009
Obama administration launches housing plan
By ALAN ZIBEL, AP Real Estate Writer
WASHINGTON – The Obama administration kicked off a new program Wednesday that's designed to help up to 9 million borrowers stay in their homes through refinanced mortgages or loans that are modified to lower monthly payments.
Borrowers, however, are being advised to be patient in their efforts to get help because mortgage companies are likely to be flooded with calls.
Government officials, launching the "Making Home Affordable" program also acknowledge that the initiatives are only a partial fix for a sweeping problem that has helped plunge the U.S. economy into the worst recession in decades. In fact, tens of thousands of homeowners in some of the most battered real estate markets — concentrated in California, Florida, Nevada and Arizona — won't be eligible for the two programs.
"It's not intended to prevent every foreclosure or to help every homeowner," a senior Treasury Department official told reporters. "It's really targeted at responsible homeowners."
There was also skepticism that banks would be willing to participate.
"I've just seen so many of the programs not work," said Pava Leyrer, president of Heritage National Mortgage in Randville, Mich. "It gets borrowers hopes up. They call and call for these programs and we can't get anybody to do them."
The Obama administration's program has two parts: one to work with lenders to modify the loan terms for up to 4 million homeowner, the second to refinance up to 5 million homeowners into more affordable fixed-rate loans.
For the modification program, borrowers who are eligible will have to provide their most recent tax return and two pay stubs, as well as an "affidavit of financial hardship" to qualify for the loan modification program, which runs through 2012.
Borrowers are only allowed to have their loans modified once, and the program only applies for loans made on Jan. 1 2009, or earlier. Mortgages for single-family properties that are worth more than $729,750 are excluded.
Lenders could reduce a borrower's interest rate to as low as 2 percent for five years. Rates would then rise to about 5 percent until the mortgage is repaid.
If the plan works as intended, it could be a big plus for borrowers like Nick Kavalary, a network cable installer who lives outside Milwaukee.
Kavalary, 42, has been struggling with JPMorgan Chase & Co. to get a loan modification. He was finally approved for one this year, but it only cuts his interest rate to about 9.8 percent from 10.75 percent. Even at the lower rate, he said, making the payment is nearly impossible.
"If I can't pick up a second job, I'm going to lose this house," he said. "With the job market being the way it is, nobody's hiring nobody."
For the refinance program, only homeowners whose loans are held by Fannie Mae or Freddie Mac are eligible and have until June 2010 to apply.
Consumers should contact their loan servicer — the company that sends out their monthly bill — to find out if their mortgages are held by Fannie or Freddie. The two mortgage finance companies own or guarantee almost 31 million home loans — more than half of all U.S home mortgages.
Many mortgage brokers, however, are critical. They argue the fees imposed by Fannie and Freddie over the past year make it difficult for borrowers to afford to refinance. The two companies, which are now government controlled, have yet to detail how they will implement the plan, or whether any fees will be rolled back.
Meanwhile, action to put in place another part of Obama's housing plan is expected soon on Capitol Hill.
House Democrats agreed Tuesday to narrow proposed legislation that gives bankruptcy judges the power to change the terms of mortgage loans for debt-strapped borrowers.
In the latest version of the bill, judges would have to consider whether a homeowner had been offered a reasonable deal by the bank to rework his or her home loan before seeking help in bankruptcy court. Borrowers also would have a responsibility to prove that they tried to modify their mortgages.
A full vote in the House could come as early as Thursday.
http://news.yahoo.com/s/ap/20090304/ap_on_bi_ge/obama_housing/print
On the Net:
http://www.FinancialStability.gov.
Copyright © 2009 The Associated Press
WASHINGTON – The Obama administration kicked off a new program Wednesday that's designed to help up to 9 million borrowers stay in their homes through refinanced mortgages or loans that are modified to lower monthly payments.
Borrowers, however, are being advised to be patient in their efforts to get help because mortgage companies are likely to be flooded with calls.
Government officials, launching the "Making Home Affordable" program also acknowledge that the initiatives are only a partial fix for a sweeping problem that has helped plunge the U.S. economy into the worst recession in decades. In fact, tens of thousands of homeowners in some of the most battered real estate markets — concentrated in California, Florida, Nevada and Arizona — won't be eligible for the two programs.
"It's not intended to prevent every foreclosure or to help every homeowner," a senior Treasury Department official told reporters. "It's really targeted at responsible homeowners."
There was also skepticism that banks would be willing to participate.
"I've just seen so many of the programs not work," said Pava Leyrer, president of Heritage National Mortgage in Randville, Mich. "It gets borrowers hopes up. They call and call for these programs and we can't get anybody to do them."
The Obama administration's program has two parts: one to work with lenders to modify the loan terms for up to 4 million homeowner, the second to refinance up to 5 million homeowners into more affordable fixed-rate loans.
For the modification program, borrowers who are eligible will have to provide their most recent tax return and two pay stubs, as well as an "affidavit of financial hardship" to qualify for the loan modification program, which runs through 2012.
Borrowers are only allowed to have their loans modified once, and the program only applies for loans made on Jan. 1 2009, or earlier. Mortgages for single-family properties that are worth more than $729,750 are excluded.
Lenders could reduce a borrower's interest rate to as low as 2 percent for five years. Rates would then rise to about 5 percent until the mortgage is repaid.
If the plan works as intended, it could be a big plus for borrowers like Nick Kavalary, a network cable installer who lives outside Milwaukee.
Kavalary, 42, has been struggling with JPMorgan Chase & Co. to get a loan modification. He was finally approved for one this year, but it only cuts his interest rate to about 9.8 percent from 10.75 percent. Even at the lower rate, he said, making the payment is nearly impossible.
"If I can't pick up a second job, I'm going to lose this house," he said. "With the job market being the way it is, nobody's hiring nobody."
For the refinance program, only homeowners whose loans are held by Fannie Mae or Freddie Mac are eligible and have until June 2010 to apply.
Consumers should contact their loan servicer — the company that sends out their monthly bill — to find out if their mortgages are held by Fannie or Freddie. The two mortgage finance companies own or guarantee almost 31 million home loans — more than half of all U.S home mortgages.
Many mortgage brokers, however, are critical. They argue the fees imposed by Fannie and Freddie over the past year make it difficult for borrowers to afford to refinance. The two companies, which are now government controlled, have yet to detail how they will implement the plan, or whether any fees will be rolled back.
Meanwhile, action to put in place another part of Obama's housing plan is expected soon on Capitol Hill.
House Democrats agreed Tuesday to narrow proposed legislation that gives bankruptcy judges the power to change the terms of mortgage loans for debt-strapped borrowers.
In the latest version of the bill, judges would have to consider whether a homeowner had been offered a reasonable deal by the bank to rework his or her home loan before seeking help in bankruptcy court. Borrowers also would have a responsibility to prove that they tried to modify their mortgages.
A full vote in the House could come as early as Thursday.
http://news.yahoo.com/s/ap/20090304/ap_on_bi_ge/obama_housing/print
On the Net:
http://www.FinancialStability.gov.
Copyright © 2009 The Associated Press
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