AIG Bonuses Camouflage The Government’s Destruction
The zodiacal sign Pisces is symbolized by two fish swimming in opposite directions. This is an appropriate description of the government’s actions regarding American International Group (AIG).
The politicians have got the media focused on a fish swimming in “a tidal wave of rage,”* stoked by the President and members of Congress over retention bonuses paid to AIG employees. At this rapid rate it won’t be long until the waters turned toxic from hatred kill the fish’s food supply. Meanwhile the other fish is frantically trying to swim as fast as it can in the opposite direction, pushing hard to escape from the political cesspool so it can regain its strength to free itself from the government’s 79.9% ownership.
Pisces and its planetary ruler Neptune describe things that are not what they seem, making it difficult to penetrate through the veil of illusion. A simple story is devised to distract the public’s attention from a tangled web of lies, deceit, and incompetence.
According to the Administration, the origins of the anger and outrage over $165 million in retention bonuses paid to employees in AIG’s financial products unit began on the March 10 Full Moon after the Federal Reserve Bank of New York sent a list of payments to the Treasury Department due to be paid by March 15. These retention bonuses had been publicly disclosed by AIG in an SEC filing on May 8, 2008. In a March 14 letter to Treasury Secretary Geithner, AIG’s government-appointed CEO Edward Liddy explained that AIG and its legal counsel came to the “distasteful” conclusion that the best outcome for AIG was to pay the employees under contract for successful completion of winding down their part of the $1.6 trillion remaining in the unit’s esoteric derivatives book.
Mars moved into Pisces shortly before midnight on March14, increasing the anger and aggressiveness government officials and members of Congress were ready to unleash over the bonus payments. At a lower level of expression, Pisces and Neptune energy is about suffering and sacrifice, and with Mars in Pisces, someone or something usually ends up becoming the collective scapegoat. With the Moon (emotions) in secretive Scorpio** the weekend of March14-15, Liddy had already had enough of the government’s sideshow. With his Mercury conjoining the USA’s natal Pluto, Liddy revealed the information Fed Chairman Bernanke and other government officials claimed was private. AIG’s press release shows the government funneled over $50 billion through AIG to domestic and foreign banks to make these counterparty CDS holders whole on the value of their underlying CDOs. The largest recipient was Goldman Sachs (GS) at approximately $13 billion, followed by Societe Generale, Deutsche Bank (DB), and Barclays Bank (BCS).
As a way of deflecting the government’s secret actions and to extract revenge on AIG, Administration officials and certain members of Congress were determined to vent their outrage. Political hypocrisy and hysteria reached epic proportions with the Moon in Sagittarius Monday through Wednesday. Senator Grassley said AIG’s top managers should "resign or commit suicide" (a Pisces/Neptune act).
At the House Financial Services Subcommittee hearing, Representatives seemed more interested in conducting a witch hunt than asking Liddy why AIG and the government failed to negotiate haircuts on the collateral payouts made to Goldman, Merrill Lynch, Bank of America (BAC), Citigroup (C), etc. They should have asked Liddy to elaborate on AIG’s plans to pay back the government. And Liddy should have been joined at the witness table by Fed Chairman Bernanke and Geithner who with former Treasury Secretary Paulson were the engineers of the bailout. Then maybe we could learn why these individuals sought to impose the 79.9% solution on AIG. It would have also been helpful to have Harvard economics professor Martin Feldstein as a witness. Dr. Feldstein has been a director of AIG since 1987 and serves on President Obama’s Economic Recovery Advisory Board.
At the hearing Liddy made it clear that “Everything we do, we do in partnership with the Federal Reserve,” commenting that the Fed knew of the bonuses for months. After watching most of the hearing the only thing I learned about AIG is that even though $173.3 billion has been approved by the government for AIG, AIG actually owes the government around $80 billion in TARP and Fed loans outstanding. AIG will pay back the Federal Reserve first to strengthen its credit rating.
As part of the theme of the two fish swimming in opposite directions, James Lockhart, director of the Federal Housing Finance Agency (FHFA) and the Conservator of the government’s 79.9% takeover of Fannie Mae (FNM) and Freddie Mac (FRE), announced his approval of retention bonuses for the GSEs. In a March 18 statement, Lockhart cited the bonuses as “critical” to retain employees and “it would have been catastrophic to lose the next layers down and other highly experienced employees.” While Fannie’s retention bonuses will be between $470,000-$611,000 (Freddie hasn’t announced their bonuses yet), the justification in retaining these employees is no different than AIG except it’s been sanctioned by a government regulator. The Treasury has committed to provide Fannie and Freddie with up to $200 billion each, but if you factor in the Fed’s commitment to purchase $1.25 trillion in GSE MBS and $200 billion in GSE debt, AIG’s $173.3 billion pales in comparison with the GSEs $1.85 trillion government commitment.
On Monday as Venus (values) challenged the USA’s Sun (the leader), President Obama spoke of his “anger” despite being told by officials that nothing could be done about the AIG bonuses. The President said the bonus issue is about “our fundamental values” and the need for an equal playing field between Main St., Wall St. and Washington.
Venus represents fairness, the key element in successful alliances and partnerships. From the beginning, the government’s handling of the financial crisis has been anything but fair and totally ad hoc. Now that Pluto in Capricorn is opposing the USA’s and President Obama’s natal Venus in Cancer for the next two years, the government (Capricorn) is trying to cover up (Pluto) its costly mistakes by getting aggressive about taxing (Pluto) compensation at certain TARPed financial institutions (Venus). Venus in Aries retrograde now reflects that the compensation tax bill approved by the House yesterday is retroactive.
Pluto in Capricorn represents the transformation of government structure and regulation that must occur in order to overhaul the nation’s financial system. Pluto represents debt, which runs deeper and in ways not envisioned. Part of the overhaul must involve the regulation of financial entities such as hedge funds, along with the regulation of derivative products. Pluto in Capricorn opposing the USA Venus and challenging Venus in Aries reflects that “taxpayers” will pay dearly for Washington’s political gamesmanship.
The President’s “anger” over AIG bonuses erupted on the six month anniversary of the government taking a 79.9% stake in the conglomerate. It also marked the one year anniversary of the fall of Bear Stearns. These events occurred at times when the USA’s challenging alignment between Mars in Gemini and Neptune in Virgo was activated by the Moon and other transiting planetary energies impacting these placements in the USA chart. This is explained in a post I wrote on 9/16/08 on “AIG, Lehman, and Merrill under a Harvest Moon: Parallels to the Panic of 1907” and my follow up post, “After AIG, Paulson’s Moral Hazard Ends at the Golden Door.” And since the March 10 Full Moon in Virgo reactivated the energies of September, I thought the government would be taking further action relating to the financial institutions that tumbled last September.
Yesterday President Obama said: “I don’t want to quell anger. I want us to channel anger in a constructive way.” President Obama’s natal Mars in Virgo exactly impacts the USA’s Mars/Neptune alignment. With his Mars harmonizing with Saturn retrograde in Capricorn, the President can channel his anger into rebuilding a sound, secure and fair financial system. Or he can continue to play political games that attempt to cover up and perpetuate the problems, ensuring the financial health of the entire nation remains a dream (Neptune).
*Rep. Gary Ackerman, member of the House Financial Services Committee.
** Scorpio was ruled by Mars prior to Pluto’s discovery in 1930.
Edward M. Liddy: January 28, 1946 Brunswick, New Jersey