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Former CEO Hank Greenberg Piles on AIG for Bonuses

2009-03-16T21:02:00Z

Former CEO Joins Obama in Pillorying Payout for AIG Derivative Traders

By SARAH NETTER, MATT JAFFE, KATE BARRETT, JOHN HENDREN and ALICE GOMSTYN

March 16, 2009—

Add former AIG chief executive Hank Greenberg to the growing list of public figures fuming about the $165 million in retention bonuses awarded to executives at the bailed-out insurance giant.

Greenberg, who stepped down as CEO in 2005, told ABCNews.com that it was "mind-boggling" that AIG executives were promised retention pay in the first place.

Given how much the company has lost, "why would you make it up in bonuses? It's hard to understand," he said.

"I think many of the people who received bonuses did not deserve them."

Greenberg has been criticized for supposedly helping create the financial problems plaguing AIG today. But during his time at the company, Greenberg said, retention packages did not exist at AIG Financial Products, the Connecticut-based division of AIG now under fire for the bonuses.

"We would never have been blackmailed into such an arrangement," he said.

"I know from long experience that you don't retain people by buying them. You don't buy loyalty," he said.

A company achieves loyalty, Greenberg said, when "people believe and share the same values as you do." It's an issue of leadership, he said.

Meanwhile, President Obama said today that he has asked his Treasury secretary to "pursue every single legal avenue" to block the AIG bonuses.

"This is a corporation that finds itself in financial distress due to recklessness and greed," the president said.

"Under these circumstances, it's hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay," Obama said today during a news conference announcing an aid program for small businesses. "How do they justify this outrage to the taxpayers who are keeping the company afloat?"

At one point, Obama coughed and said half-jokingly, "I'm choked up with anger."

Obama said Treasury Secretary Timothy Geithner was working to resolve the conflict with AIG CEO Edward Liddy, who took the company's reins after the contracts allowing the bonuses were agreed to last year.

"I know he's working to resolve this matter with the new CEO, Edward Liddy, who came onboard after the contracts that led to these bonuses were agreed to last year," Obama said.

"This isn't just a matter of dollars and cents. It's about our fundamental values," he said. "All across the country, there are people who work hard and meet their responsibilities every day, without the benefit of government bailouts or multimillion-dollar bonuses. All they ask is that everyone, from Main Street to Wall Street to Washington, play by the same rules."

Obama said the bonuses underscore a need for overall financial regulatory reform to prevent a similar situation in the future, and "so we have greater authority to protect the American taxpayer and our financial system in cases such as this."

New York Attorney General Andrew Cuomo, who has been investigating AIG's executive compensation, sent a letter today to Liddy saying he was "disturbed" to learn of the scheduled bonuses and asked again for the names of executives who had received extra cash.

"We need this information immediately in order to investigate and determine ... whether any of the individuals receiving such payments were involved in the conduct that led to AIG's demise and subsequent bailout ... and whether such contracts may be unenforceable for fraud or other reasons," Cuomo wrote.

A source close to the beleaguered company told ABC News, "AIG gets it."

Liddy "doesn't blame people for being angry," the source said. "It's not like he woke up in October and said, 'Let's pay millions to these people!'" It's a point that Liddy will make when he testifies before Congress Wednesday.

"Everyone gets that this doesn't look good," the source added.

Not only are people outside AIG upset, but also within the company, because the same people who "tarnished" the whole company are now receiving millions, the source said.

Federal Reserve Chairman Ben Bernanke also criticized the AIG contracts in a rare interview Sunday on "60 Minutes."

But he gave Americans a glimmer of hope, saying that the recession could wind down as early as this year.

"We do have a plan. We're working on it," Bernanke said in rare interview on "60 Minutes" Sunday. "And I do think that we will get it stabilized, and we'll see the recession coming to an end, probably this year."

"We'll see recovery beginning next year," he continued. "And it will pick up steam over time."

That progress, he said, would hinge on whether the government can keep the banks from failing and if the banks, in turn, could start to lend more freely.

Outrage over AIG hasn't seemed to dampen Wall Street's spirits: The Dow Jones industrial average was up more than 40 points by the mid-morning, continuing an upswing that began early last week after Citigroup reported strong performance for the current quarter.

But Bernanke's optimism didn't take away from his anger over AIG's spending of $165 million in bonuses.

He told CBS' "60 Minutes" Sunday that out of all the events in the last 18 months, the federal government's intervention with AIG makes him the angriest, saying the company made "unconscionable bets."

'Fooled by AIG'

While there's seemingly no shortage of outrage AIG's plan to pay the bonuses, it may turn out that the best the country can hope for in response is to learn its lesson for next time and make sure it doesn't happen again.

Sen. Richard Shelby, R-Ala., told "Good Morning America" today that the American people had been "fooled by AIG."

"These people brought this on themselves, now you're rewarding [them,]" he said. "A lot of these people should be fired."

AIG has refused to comment on the contracts' specifics, including how it could allow for such bonuses after losing $61 billion in a single quarter, while taking $170 billion in government bailout money.

"It's ridiculous," U.S. Rep. Elijah Cummings, D-Md., told "GMA," adding that he doesn't buy the notion that the government doesn't have enough control over taxpayer dollars to stop bonuses like these.

Even though they may not like it, the nation's top financial officials can't seem to do much to stop it, citing AIG's position that they it's contractually obligated to pay the bonuses.

"We are a country of law," Lawrence Summers, chairman of the White House National Economic Council, said on ABC's "This Week With George Stephanopoulos." "There are contracts. The government cannot just abrogate contracts."

AIG CEO Edward Liddy said in a letter to Treasury Secretary Timothy Geithner that the payments can't be stopped and that his "hands are tied."

Cummings admitted that the stimulus package was moved through Congress so quickly that there may be room for improvement going forward, including add-ons that would prevent failing banks and institutions from using government money to reward the same executives who were responsible for the company's failure in the first place, such was the case with AIG.

"We have to be very careful ... we don't allow these things to happen again," Cummings said.

Lawmakers Furious About AIG: 'This Is an Outrage'

"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," Summers said this morning on ABC's "This Week With George Stephanopoulos." "What that company did, the way it was not regulated, the way no one was watching, what's proved necessary, it is outrageous."

Summers repeated the characterization several times on the morning talk show circuit.

Lawmakers, too, are furious at the payout of big bonuses at a company that has so far eaten up $170 billion in taxpayer money, and whose risky behavior has helped push the economy into one of the biggest financial crises in American history.

"The message here, I'm afraid, to any business out there that's thinking about taking government money, is let's enter into a bunch of contracts real quick, and we'll have the taxpayers pay bonuses to our employees," Senate Minority Leader Mitch McConnell, R-Ky., said on "This Week." "This is an outrage."

Sen. Russ Feingold, D-Wis., sent a letter to Treasury Secretary Timothy Geithner saying he "would like to know what legal options have been explored for canceling the bonuses or recouping the money from the recipients, and in particular whether the Administration has considered holding AIG executives accountable in court for any breaches of their fiduciary duties to the shareholders."

An angry Geithner called AIG chief executive Edward Liddy Wednesday, demanding he slash the bombshell bonuses.

"AIG'S hands are tied," Liddy replied. In a letter to Geithner yesterday, Liddy said he found the bonuses "distasteful" but he added, "These are legal, binding obligations" and "we must proceed with them."

Obama's top economics adviser agreed that despite committing $170 billion in bailout money to AIG, the government was limited in its power to stop the bonuses.

"This is an example of people at the commanding heights of the economy misbehaving, abusing the system," Rep. Barney Frank of Massachusetts said on "Fox News Sunday."

"I do think it's inappropriate for those people to stay in power at that company," Frank said.

Rep. Cummings Harsh Criticism of AIG: 'You Got to Help Me Screw You'

AIG's Liddy was recruited last year by the Bush Administration to run the company, and the bonuses were negotiated before he arrived.

Cummings cites AIG's lavish corporate parties and historic losses and says Liddy should step down. He said he can't believe most of the bonuses are to retain the executives who have been leading AIG.

"It's like, OK, you got to help me screw you," Cummings said. "And by the way I'm going to take your money and I'm going to slap you with it. As I walk into this $1,500-a-night hotel to have fun."

Liddy will face soon more questions about the bonus backlash as well. He'll be in the hot seat at a House hearing this week to explain how American taxpayers ended up paying millions more to executives who have already cost them billions.

ABC News' Matthew Jaffe and The Associated Press contributed to this report.

A message from President Obama

2009-02-18T02:53:00Z

Bill --

Today, I signed the American Recovery and Reinvestment Act into law.

This is a historic step -- the first of many as we work together to climb out of this crisis -- and I want to thank you for your resolve and your support.

You organized thousands of house meetings. You shared your ideas and personal stories. And you informed your friends and neighbors about the need for immediate action. You continue to be a powerful voice for change throughout the country.

The recovery plan will create or save 3.5 million jobs, provide tax cuts for working and middle-class families, and invest in health care and clean energy.

It's a bold plan to address a huge problem, and it will require my vigilance and yours to make sure it's done right.

I've assigned a team of managers to oversee the implementation of the recovery act. We are committed to making sure no dollar is wasted. But accountability begins with you.

That's why my administration has created Recovery.gov, a new website where citizens can track every dollar spent and every job created. We'll invite you and your neighbors to weigh in with comments and questions.

Our progress will also be measured by the tens of thousands of personal stories submitted by people who are struggling to make ends meet. If you haven't already, you can read stories from families all across the country:

http://my.barackobama.com/yourstories

Your stories are the heart of this recovery plan, and that's what I'll focus on every day as President.

With your continued support, we'll emerge a stronger and more prosperous nation.

Thank you,

President Barack Obama

If you oppose the Stimulus, don't take the money

2009-02-16T21:44:00Z

By Paul Begala
CNN Contributor

WASHINGTON (CNN) -- Gov. Mark Sanford of South Carolina took umbrage at my writing that his approach to the economic crisis is to do nothing. I'll deal with his "ideas" in a moment, but first let me make a modest proposal:

If Republican politicians are so deeply opposed to President Obama's economic recovery plan, they should refuse to take the money. After all, if you think all that federal spending is damaging, there are easy ways to reduce it: Don't take federal money.

Gov. Sanford can lead the way. South Carolina should decline to accept any federal funds for transportation, education, health care, clean energy or any of the other ideas President Obama is advocating to fix the economy. And the rest of the GOP can follow suit.

Justice Louis Brandeis famously called states "laboratories of democracy." So let's experiment. Gov. Sanford can be the guinea pig. His Palmetto State already gets $1.35 back from Washington for every dollar it pays in federal taxes, according to 2005 numbers, the latest calculated by the Tax Foundation, a nonprofit tax research group.

South Carolina is a ward of the federal government. It's been on welfare for years. If Gov. Sanford is so all-fired opposed to federal spending, let's start by cutting federal spending in South Carolina. Otherwise, he's got about as much credibility on fiscal conservatism as A-Rod has on steroids.

Under the Bush-Sanford economic theories, South Carolina's unemployment rate has reached 9.5 percent -- among the highest in the nation. But if Gov. Sanford wants to continue those policies, good luck to him.

Make no mistake about it, Republicans like Gov. Sanford want to go back to the bad old days of George W. Bush. In his CNN.com column, Gov. Sanford expends 605 words attacking President Obama's plan to turn the country around after eight years of Bush-Republican-Sanford economics.

That is his right, but attacking President Obama's plan is not itself an alternative plan. Nor is dredging up hoary old gripes about the New Deal. Nor, indeed, is deriding neighborhood electric vehicles -- which create jobs, save money and reduce pollution -- as "streamlined golf carts." But that is what Gov. Sanford offers us. iReport.com: Share your thoughts on the stimulus plan

Then Gov. Sanford turns to his ideas (keep in mind he was responding to my charge that he favors doing nothing). He devotes precisely one half of one sentence to his plan to save the world economy; 24 words that will create millions of jobs, restore liquidity to capital markets, protect investors and consumers, regenerate stagnant demand and restore the capitalist system. Here they are:

"... cutting the payroll tax, opening foreign markets through an expansion of our trade agreements, and reducing our corporate tax, which is among the highest worldwide."

Wow. As we say in the South, I've got the vapors. So cutting taxes and cutting trade deals will get us out of this mess? That's all we need to do?

We don't need to extend unemployment insurance, or update health information technology, or move to renewable energy or repair roads or rebuild bridges or modernize the power grid or prevent states and cities from laying off teachers and cops or any of the other myriad proposals in President Obama's plan?

To be sure, President Obama's plan includes tax cuts -- mostly for middle-class families. But cutting taxes on corporate profits is of little utility when there are no corporate profits to tax. And precisely with whom would Gov. Sanford cut these miraculous trade deals? In case he hasn't been watching CNN, the entire world economy is in the tank.

If cutting taxes for the rich and for big corporations and promoting foreign trade alone could energize the economy, we wouldn't be in this mess. But maybe Gov. Sanford is right. Let's keep our federal money -- give it to states where the governors will actually put it to good use. We'll let Gov. Sanford try his plan, we'll try President Obama's plan.

Something tells me Gov. Sanford won't take that gamble. Because for all his rhetoric about hating federal spending, he can't wait to get his hands on our money.

Senate approves $787B Stimulus Plan

2009-02-14T04:07:00Z

By JONATHAN KARL, Z. BYRON WOLF, HUMA KHAN and CHRISTINA CARON
Feb. 13, 2009

In a major victory for President Barack Obama, the Senate approved the $787 billion economic stimulus bill late Friday night by a vote of 60-38. The bill, which includes tax cuts, and billions in federal spending, now awaits President Obama's signature on Monday.

Three Republicans who supported the measure on earlier votes once again cast their votes for the stimulus package. And, as expected, Sen. Sherrod Brown, D-Ohio, provided the necessary 60th vote for passage after the Senate held the vote open for several hours while he flew back from his home state.

Voting in the Senate started at 5:30 p.m., but Brown was attending his mother's wake at the time and could not secure a commercial flight back to Washington. Eager to ensure the bill's passage, the White House stepped in and arranged for Brown's flight back.

Only 98 senators voted because there is no second senator from Minnesota yet seated, and Sen. Ted Kennedy, D-Mass., who has brain cancer but came to the Capitol earlier in the week to vote on procedural motions, did not vote.

An earlier Senate version of the bill passed the 61-37. In that vote, as with today's, the only Republicans to support the bill were Sen. Susan Collins, R-Maine, Sen. Olympia Snowe, R-Maine, and Sen. Arlen Specter, R-Pa.

House Republicans Balk

Earlier today, the House passed the stimulus bill by a vote of 246-183, although a week of negotiations and lobbying by President Obama failed to convince a single Republican to support the bill.

Republicans who don't support the bill continued to have scathing words about it, but many consider the fight over the stimulus to be lost.

"This debate is coming to an end and it really never started," complained Sen. Lindsey Graham, R-S.C., referring to the short amount of time they had to review the bill, which was completed and posted online just before 11 p.m. Thursday.

Sen. Judd Gregg, R-N.H., who withdrew his nomination to be Obama's secretary of commerce yesterday, also criticized the plan.

"What was initially advertised as a well-intended effort to boost economic growth has become sidetracked by misplaced spending and lack of attention to the true problems facing the nation, especially housing. Massive amounts of money will be spent years after this bill is signed into law, thereby undermining claims that it is stimulative," Gregg said in a written statement. "This bill, therefore, is not timely, targeted, and temporary, which is what a stimulus bill should be."

But Democrats continued to tout the plan.

Speaking to reporters after the House voted, an exultant House Speaker Nancy Pelosi, D-Calif., hailed the passage of the stimulus as "transformational for our country." Surrounded by her Democratic colleagues, Pelosi thanked Obama for his efforts in the stimulus bill.

"He did something faster than any other president in history. ... I salute him for his leadership," Pelosi said.

Where have you been Harry Markopolos?

2009-02-05T19:10:00Z

Michael Schulder
CNN Senior Executive Producer

I wonder what would have happened if Harry Markopolos went to lunch at Bernard Madoff’s Palm Beach Country Club in the fall of 2000, stood up in the dining room, and shouted “Madoff is a fraud!” I suspect Madoff’s fellow club members, many of whom joined for the sole purpose of meeting Madoff and getting invited to put millions in his investment fund, would have looked the other way. A guy who screams fraud in a crowded country club would be considered a nut, especially given the returns Madoff’s investors were getting on paper.

Harry Markopolos is not a nut. And shouting fraud in a crowded room is not his style. Harry Markopolos goes through proper channels. The proper channels didn’t work. He started blowing the whistle on Bernard Madoff’s alleged Ponzi scheme nearly a decade ago. But it was a whistle in the wilderness. Who is Harry Markopolos? Would you have paid attention to him ten years ago, or five years ago, or five months ago - before Madoff was formally charged with executing what might be the largest financial fraud in history. I know this. We’ll all listen to him later today when he exposes what he says is another giant financial fraud that federal investigators have missed.

Discovering Harry

Harry Markopolos has operated under the radar, to put it mildly.

Harry Markopolos first showed up in a footnote in an obscure financial industry publication in 1997.

The second sighting came on September 12th, 2001, the day after the twin towers fell. The Boston Herald, Markopolos’ home town newspaper, found him, with members of his Rampart Investment Management firm, at Boston’s St. Anthony Shrine, praying for those who lost their lives the day before.

We find him again, nearly four years later, in July 2005. Markopolos wrote a letter to the editor of The Army Times about Iraq, questioning, in his words, “why the Army’s senior leaders who might disagree with the current war strategy lack the courage to speak out.” Markopolos had the credentials to write that letter. You’ll find out why soon.

The fourth, and final reference to Harry Markopolos, before the Madoff story broke, came in September 2005, in a Connecticut newspaper called The Stamford Advocate, with the following headline: “Fraud ’starts at the top’, Analyst tells Norwalk, Conn. Crowd.” The opening line: “If you’re considering blowing the whistle on your company’s illicit activities it may be best to have someone like Harry Markopolos on your side.” Markopolos told the group of investors that day: “I can teach you how to spot fraud and what to do about it, so you aren’t in the hot seat.” And he adds “You’ve got to be real courageous to be a whistle blower.” That’s it. That’s all you would have discovered about Harry Markopolos by searching all of America’s public news sources.

Harry Markopolos - Boots on the Ground

A little more digging turns up a far more fascinating story. Markopolos is a former Army special ops commando who had to swim 50 yards in combat boots and full battle uniform to gain admission to the U.S. Army JFK School of Special Warfare. From 1973 to 1975 he commanded a 64-member special ops squad overseas.

When he left the Army, he joined Rampart Investment Management Company. In late 1999, he testified before Congress today, the company’s Senior V-P told him that investors in New York were buzzing about the fantastic and consistent returns that Bernard Madoff was getting. Try to replicate those returns for us, Markopolos was asked. After studying Madoff’s strategy and numbers, he said, “within 5 minutes I suspected it was a fraud.” You can read why by going through this captivating testimony from Harry Markopolos before the House Financial Services Subcommittee at this link. It reads like a financial spy novel.

Markopolos and his team of three investigators took their evidence on Madoff to a guy Markopolos calls “the SEC’s hit-man,” one of the old hands in the Boston office of the Securities and Exchange Commission, who had a reputation for going after stock fraud cases that ended with people in jail. “Throughout the past 9 years,” Markopolos told members of Congress today, that SEC hit man, a guy named Ed Manion, “was the only SEC staff member who ever truly understood the Madoff scheme and the threat it posed to the public.”

Markopolos, a certified accountant and investment advisor, describes a trip he made to Europe to meet with 14 French and Swiss banks who handled investments for wealthy individuals. “All bragged about how Bernard Madoff had closed his hedge fund to new investors but “they had special access to Madoff and he’d accept new money from them.” That’s when Markopolos concluded that Madoff was likely running a Ponzi scheme - recruiting new investors to pay off the old.

So there’s Harry Markopolos and his small team of financial commandos. They’re getting no traction with the SEC legal staff. Neither is the SEC’s Boston “hit man,” Ed Manion. Madoff was a major force on Wall Street. He had a lot to lose. The SEC wasn’t acting. Those factors, taken together, says Markopolis, made him become “fearful for the safety of my family.” You know whistleblowing is a scary business when a former special ops commando, whose financial investigative team includes a former Army Ranger, is scared for his family’s life. His fears may have been unfounded. But it must be frightening being a whistleblowing commando team with no backup.

The Oracle

Nearly a decade after he first tried to blow the whistle on what he suspected was a giant theft, Capitol Hill treated Harry Markopolos like an oracle. Today, Harry Markopolos is a brand name. A search of his name on Google now turns up more than 65-thousand hits. Harry Markopolos is finally on everyone’s radar. He is someone we journalists will want to chase in the coming months and years as we try to keep corporate America honest. Who knows, maybe The Obama Administration will recruit him for the SEC.

If only we had met Harry Markopolos sooner. The next time Harry blows a whistle, he won’t be in the wilderness.

Firms gear up to fight new regulations

2009-01-31T17:16:00Z

WASHINGTON ---- Congressional leaders are proposing new government oversight of Wild West corners of the financial markets that operate largely in secrecy and have been pinned as potential threats to stability. Fresh targets are hedge funds and the $60 trillion global market in credit default swaps ---- a form of insurance against loan defaults.

But powerful financial interests, representing industries battered by the crisis though still deep-pocketed, already are pushing back against new restrictions.

New proposals for financial regulation are coming from all corners, including the Obama administration, lawmakers, state securities regulators and the congressionally chartered panel overseeing the government's $700 billion bailout program.

Their efforts have become more urgent as the crisis has plunged economies worldwide into recession. Proponents in the new Congress see enhanced prospects for stricter regulation provided by the changed financial environment and Barack Obama, a Democrat, in the White House. What could emerge from Capitol Hill are the most sweeping changes to the financial regulation system since the 1930s.

"We look forward to being a part of that conversation," said Roger Hollingsworth, executive vice president and managing director for government relations at the Managed Funds Association, the hedge fund industry's trade and lobbying group. "We will engage" on those issues, he said Friday.

The one-year prohibition on lobbying for Richard Baker, the Managed Funds Association's chief executive, expires next week. Baker, a Louisiana Republican, was a longtime senior member of the House Financial Services Committee.

On Thursday, Sens. Carl Levin, D-Mich., and Charles Grassley, R-Iowa, formally proposed legislation to stiffen regulation of hedge funds, vast pools of capital holding an estimated $1.5 trillion in assets that operate mostly outside of government supervision. As the market crisis deepened in recent months, the selling of hedge funds was widely cited as one of the reasons for the increased volatility that pounded stocks and bonds.

The senators' bill would put hedge funds under the supervision of the Securities and Exchange Commission ---- an authority the agency sought several years ago. It was stymied in that effort by a federal appeals court in 2006.

"There wasn't much of an appetite for this sort of legislation before the financial crisis," Grassley, who proposed a similar measure two years ago that went nowhere, said in a statement. "I hope attitudes have changed and that Congress takes up this important legislation without delay."

Hedge funds suffered huge losses last year, notably from investments in securities backed by subprime mortgages.

In the House, the chairman of the Agriculture Committee, Rep. Collin Peterson, D-Minn., has circulated a draft bill with a provision that would prohibit trading in credit default swaps in cases where investors don't own the underlying bonds.

Credit default swaps have been partly blamed for stoking the financial and credit crises.

The swaps are commonly used contracts to insure against the default of financial instruments such as bonds and corporate debt. But they also are bought and sold as bets on bond defaults.

They played a prominent role in the credit crisis that brought the downfall of Lehman Brothers Holdings Inc., a government rescue plan for giant insurer American International Group Inc., and Merrill Lynch & Co. selling itself to Bank of America Corp.

The banning of so-called "naked" credit default swaps under Peterson's draft proposal would effectively gut the market for the swaps and hamper efforts to restore the credit markets, the industry's trade group said Thursday.

"This bill would increase the cost and reduce the availability of essential risk management tools while failing to address the true causes of the credit crisis," Eraj Shirvani, the International Swaps and Derivatives Association's chairman and an executive at investment bank Credit Suisse, said in a statement.

ISDA is one of many industry groups that have talked with Peterson and his staff about his proposal, a congressional aide said.

How to fix the economy..Everyone Has an Opinion..What's yours?

2009-01-30T23:35:00Z

Ali Velshi |
CNN Chief Business Correspondent

President Obama and his administration are facing America’s worst economic crisis in generations. The recession is entering its fourteenth month, fast approaching the longest recession ever seen. Job cuts continue to mount: 2.6 million in 2008 and this week alone, 110,000 more cuts were announced. As Americans continue to cut back on their spending, companies will be forced to cut costs, resulting in further job losses, and even less consumer spending. It’s a continuous, downward spiral.

And nearly as bad: there’s little agreement on how to fix any of it.

The stimulus package being kicked around in Congress right now has proven extremely divisive: legislation with a price tag approaching $900 billion tends to do that. Proponents say if passed it will create 4 million new jobs, but detractors contend that burying the government in even more debt isn’t going to help anyone. They say the best thing to do is cut taxes and let Americans get out and spend on their own.

But would Americans even do that? Most of us are running scared right now: we’re afraid to spend a dime over what we have to. Our jobs seem less and less secure with each new round of layoffs. Is anybody safe?

And it’s not like loans are readily available. Remember the $700 billion bailout for the financial industry that Congress approved in October? Well a full half of that has already been spent- doled out to banks and automakers- and still credit remains nearly frozen. Millions of Americans can’t secure a loan to pay for college, a car, or a house, and small businesses are struggling just to make ends meet. Spending continues to drop further and further.

So to whom should we look for help? Those Titans of Industry down on Wall Street? Given that each day seems to deliver even wilder swings in the market and more dismal corporate reports, I think not. Oh, and the Madoffs of the world aren’t exactly helping to gain back the public’s trust, either.

So, I ask: how do we fix the American economy?

Everybody’s got an opinion.

Angry Senator wants pay-cap on "Wall Street idiots"

2009-01-30T23:15:00Z

An angry U.S. senator introduced legislation Friday to cap compensation for employees of any company that accepts federal bailout money. Under the terms of a bill introduced by Sen. Claire McCaskill, D-Missouri, no employee would be allowed to make more than the president of the United States.

Obama's current annual salary is $400,000.

"We have a bunch of idiots on Wall Street that are kicking sand in the face of the American taxpayer," an enraged McCaskill said on the floor of the Senate. "They don't get it. These people are idiots. You can't use taxpayer money to pay out $18 billion in bonuses."

McCaskill's proposed compensation limit would cover salaries, bonuses and stock options.

On Thursday, Obama said the prospect that some of the $700 billion Wall Street bailout could end up paying for bonuses to managers of struggling financial institutions was "shameful."

The president said it was the "height of irresponsibility" for executives to pay bonuses when their companies were asking for help from Washington.

"The American people understand we've got a big hole that we've got to dig ourselves out of, but they don't like the idea that people are digging a bigger hole even as they're being asked to fill it up," Obama added.

McCaskill's proposal comes three days after struggling banking giant Citigroup -- which has taken about $45 billion from the government's Troubled Asset Relief Program -- reversed plans to accept delivery of a new $42 million corporate jet. The company changed its mind under Treasury Department prodding.

Former New York Mayor Rudy Giuliani on Friday defended corporate bonuses, saying that cutting them also means slashing jobs in the Big Apple.

"If you somehow take that bonus out of the economy, it really will create unemployment," he said on CNN's "American Morning." "It means less spending in restaurants, less spending in department stores, so everything has an impact."