What’s Wrong With The Post’s AIG Debate?
Here’s The Washington Post’s idea of debate on AIG:
The leadoff contributor to the op-ed page’s ‘”Topic A” section is former AIG CEO Maurice Greenberg, who was forced out of the firm in 2005 amidst a fraud investigation that (mostly) ended without charges. Greenberg argues “the Obama administration should allow AIG to rebuild itself and earn the money necessary to repay the taxpayers.”
What The Post doesn’t say is that that Greenberg has a hefty financial stake in the issue. According to Bloomberg, Greenberg has filed suit against his former company charging that its “material misrepresentations and omissions” caused him to acquire New York-based AIG shares in his deferred compensation profit-participation plan at an “artificially inflated price.”
Edward Liddy, the current AIG CEO and Capitol Hill flak catcher, told Bloomberg that “Greenberg was at the helm during the formation of AIG’s financial products unit, which sold derivatives that cost the company more than $30 billion in writedowns and prompted a government rescue.”
So Greenberg, identified by The Post only as “a former AIG executive,” is offered as a reliable guide to cleaning up the mess he helped make. And The Post does not disclose his financial stake in his policy advice.
The Post also offers AIG commentary from Douglas Holtz-Eaken, the former Congressional Budget Office official and economic adviser to Sen. John McCain’s 2008 presidential campaign. Holtz-Eaken argues that “no matter how bad you think market capitalism is, the federal government has proved it is worse.”
Is it relevant that in 2006-2007 Holtz-Eakin headed the Maurice Greenberg Center for Geoeconomics at the Council on Foreign Relations, a perch created by the largesse of the former AIG chairman? Yes, it is relevant for two reasons. First, CFR has dropped Greenberg’s name from the Center’s Website (though “Greenberg” lives on, ghost-like, in the URL). Perhaps the establishment talk shop wants to avoid the appearance that Greenberg was buying influence into the foreign policy-making elite. Second, Holtz-Eakin is one of those clueless commentators who didn’t see the crisis coming even though he lived in the orbit of one of its architects.
There was a third point of view in Topic A, that of William Seidman, a former economic adviser to Presidents Ford and Reagan, who headed the government’s savings and loan rescue in the 1980s and now does commentary for CNBC. Seidman says the lesson of AIG is that the government should proceed slowly.
This is the AIG debate in Washington’s paper of record. It covers a small slice of the center-right, ranging from the the self-interested to the clueless to a talking head, all the while excluding the numerous economists and analysts who warned about the dangers of the bubble economy. If this is the way AIG is discussed, is it any wonder Washington seems unable to coherently address the financial meltdown?