I've said that I spent a lot of time looking at AIG not because it was the worst offender, which it wasn't by any means, but because it was a classic example of so many of the more common faults, foibles, and clammy tricks used by corporations in the Bush Era. But I did hope that slamming the AIGPigs would eventually spread to the rest of the Pigs, the ones who really did the damage, leaving behind them burnt fields and slaughtered tenants. AIG is piddlyshit compared to, say, Goldman Sachs, Countrywide, and the infamous BoA, whose executives walked away with $$$Billions$$$ in our tax money. (CitiBank CEO Vikram Pandit [$216M], in a stunning example of tone deaf "who cares what they think?"ness, announced the day the news broke about the AIG bonuses that he intended to spend $10M of Citi's bail-out taxpayer money renovating his office.)
I also hoped we'd get angry enough to demand changes in a tax code that is obscenely tipped in favor of the rich and a proliferating band of corporate thieves. They are ripping us off now right in the open but they've been doing it for ten years behind the closed doors of Congressional tax committees where, in the Bushian Republican years corporate lobbyists actually wrote the tax codes and then handed them to the Pubs to rubber stamp. Most of those laws and codes are still on the books and still saving Big Corpo's $$$hundreds of Billions$$$ every year in tax payments they don't have to make.
[R]ather than continue arguing over chump change, it is long past time for the United States, with its international friends and allies, to demand accountability from the long list of tiny countries and principalities, from Andorra and the Cayman Islands to Singapore and Switzerland, where corporations, wealthy clients and unrepentant evildoers hide their assets.
The big claw-back will reach into quaint islands and mountainous principalities, because the same banks, hedge funds and private equity firms responsible for the world financial meltdown keep their profits in those "secrecy spaces" -- alongside the ill-gotten gains of numerous drug dealers, dictators and delinquents of every description.
According to the Government Accountability Office, nearly all of America's top 100 corporations maintain subsidiaries in countries identified as tax havens. As the GAO notes, there could be reasons other than avoiding the IRS to set up branches in places such as Singapore, Luxembourg and Switzerland, where taxes are light or nonexistent and keeping clients' illicit secrets is considered a matter of national pride.
But what reason other than evasion could there be for Goldman Sachs Group to set up three subsidiaries in Bermuda, five in Mauritius, and 15 in the Cayman Islands? Why did Countrywide Financial need two subsidiaries in Guernsey? Why did Wachovia need 18 subsidiaries in Bermuda, three in the British Virgin Islands, and 16 in the Caymans? Why did Lehman Brothers need 31 subsidiaries in the Caymans? What do Bank of America's 59 subsidiaries in the Caymans actually do? Why does Citigroup need 427 separate subsidiaries in tax havens, including 12 in the Channel Islands, 21 in Jersey, 91 in Luxembourg, 19 in Bermuda and 90 in the Caymans? What exactly is going on at Morgan Stanley's 19 subs in Jersey, 29 subs in Luxembourg, 14 subs in the Marshall Islands, and its amazing 158 subs in the Caymans? And speaking of AIG, why does it have 18 subs in tax-haven countries? (Don't expect to find out from Fox News Channel or the New York Post, because News Corp. has its own constellation of strange subsidiaries, including 33 in the Caymans alone.)
That strikes me as a reasonable set of questions to start with, or would if I didn't already know the answer to all of them.
They're legal tax dodges.
Obama's not up against some lone insurance outfit HQ'd in Britain. What he's eventually going to have to go head-to-head with is the whole stinking corporate structure. There is no way to get out of this mess unless corporations start paying more of the taxes they owe. Thery've stripped us, stripped our wallets, our credit, our jobs for the sake of a momentary profit. They've taken everything and you can't get blood out of a stone, as my mother used to say. This time they're going to have to do the paying because they're the ones who've got all the money.
Why is that so hard to understand?
It isn't. It's just hard to accept. Going after the corpo's for the money means facing down contributors, not the GOP. It means taking on the winning party, not the losing one. The one that lost has made itself so irrelevant that it is the political equivalent of the Flat Earth Society. Caring what they think about anything is like asking what Charles II or Genghis Khan would do in a spot like this.
Leave us not forget that the DLC-born and trained Democrat leadership hasn't exactly exuded bravery these last few years. Instead they made it their business to collaborate with the enemy, voting with the GOP more often than not. It was, after all, Democrat VP Joe Biden who rammed the odious bankruptcy bill down our throats, a bill that helped the finance industry consign debtors to the hell of perennial payback and prevents courts from moderating homeowner payment schedules when they're in foreclosure. And it is Obama's Treas Sec who refuses to face facts in a ludicrous attempt to keep funneling money to his Wall Street cronies.
As economic historians can tell you, this is an old story, not that different from dozens of similar crises over the centuries. And there’s a time-honored procedure for dealing with the aftermath of widespread financial failure. It goes like this: the government secures confidence in the system by guaranteeing many (though not necessarily all) bank debts. At the same time, it takes temporary control of truly insolvent banks, in order to clean up their books.
That’s what Sweden did in the early 1990s. It’s also what we ourselves did after the savings and loan debacle of the Reagan years. And there’s no reason we can’t do the same thing now.
But the Obama administration, like the Bush administration, apparently wants an easier way out. The common element to the Paulson and Geithner plans is the insistence that the bad assets on banks’ books are really worth much, much more than anyone is currently willing to pay for them. In fact, their true value is so high that if they were properly priced, banks wouldn’t be in trouble.
And so the plan is to use taxpayer funds to drive the prices of bad assets up to “fair” levels. Mr. Paulson proposed having the government buy the assets directly. Mr. Geithner instead proposes a complicated scheme in which the government lends money to private investors, who then use the money to buy the stuff. The idea, says Mr. Obama’s top economic adviser, is to use “the expertise of the market” to set the value of toxic assets.
This is not much more than a last-ditch effort to make sure that in the end the Little Guys rather than Big Guys pay for the Big Guys' mistakes. "If we all clap our hands real loud, Tinkerbell will LIVE!" Because it's that or do an FDR and face the fury of both Wall Street and your own party.
Obama needs cover to do that and we need to give it to him. The stink has just begun. We need to spread it around and demand that the cost of the clean-up not keep landing on our backs.
This is more than disappointing. In fact, it fills me with a sense of despair.