Houston Chronicle Business Columnist Loren Steffy says the public's anger over paying for AIG's $165 million in bonuses is understandable, but as "one one-millionth of the total amount we've pumped into the foundering insurance shop," the bonus boondoggle pales in comparison to the $13 billion in bailout funds that AIG funneled to Goldman Sachs.
The $13 billion was used to pay swap contracts that Goldman bought from AIG--meaning that AIG irresponsibly sold $13 billion more insurance on other deals than it had the resources to cover. Thus taxpayer funds were used simultaneously to relieve AIG of a debt and make creditor Goldman whole.
The move also might allow Goldman, although claiming that the $13 billion was "immaterial," to return $10 billion in TARP bailout funds after finding the government controls that came with it too confining. That way Goldman gets even more taxpayer billions through AIG, but with no government regulation whatsoever.
As Steffy suggests, the public and politicians need to direct their anger at Goldman's really big ripoff, compared to which the AIG bonuses are truly chump change.
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