The Democratic Party and President Obama both got caught with their pants around their ankles on the AIG bonus "scandal".  Porkzilla had specific provisions to ensure these bonuses were paid.  These provisions were added to the measure by none other than one of the Three Horsemen of the Financial Apocalypse - Sen. Christopher Dodd (D-Conn).  At long last the white glare of the spotlight shone directly on him.  With no place to hide, what was Senator Dodd's excuse?  Obama made him do it. 

So there was Obama, throwing Dodd under the bus, and there was Dodd throwing Obama under the bus.  And there was Congress and the all too willing press throwing AIG bonus recipients in front of the bus, fomenting class warfare.  Obama and his tax cheat Treasury Secretary claim they knew nothing, Sargent Schulz style, until nearly mid-March - a blatant lie dutifully reported and largely unchallenged by the press.  The AIG bonuses where known to the Administration at least in February, likely well before, and Congress was asking questions about these bonuses in the first week of March.  Then suddenly last week - shock and awe over 'surprise' bonuses.    Anything to distract the masses from what every Democrat plus the Three Stooges of the Republican Party had done - enact Porkzilla, along with it's AIG bonus guarantees; this farcical piece of crap legislation that was written within Nancy Pelosi's office, at the direction of the Obama Administration.  This is what happens when legislation is written out of the public eye, without hearings, rushed through so fast no one had time read the bill let alone fully analyze or challenge it's contents.  As we stated before, the urgency in passing Porkzilla wasn't because of some dire economic consequence as Obama warned, it was because Obama knew full well that Porkzilla could not stand the light of day, and he needed it to be passed blind.  One thousand plus pages of financial catastrophe, and the first of the fallout was nothing less than precious.

As we have argued in the past, the Democratic Party is the Party of Failure, so it is altogether fitting and proper that the Democrats would seek to reward the executives at AIG who were responsible for monumental failure.   They did not anticipate the visceral reaction from the public, and like cockroaches caught in the open when the lights go on, Democrats scrambled for any cover they could find.

But the bonus scandal is dwarfed (in dollars) by the larger scandal involving AIG.  Unfortunately, the larger scandal is more complicated, and so it slips past much of the unclean masses, and we suppose, to the great relief of the Democrats.  The larger scandal is that AIG mega-billions in bail out money have been flowing to other bailed out banks domestically, as well as foreign banks in the form of payouts on AIG's underwritten "credit default swaps".  In layperson terms - these are insurance policies taken out by banks on their credit derivatives, should those derivatives decline in value, which they did with a vengeance.  AIG has been making good on billions and billions guaranteed by these insurance policies at 100% of their underwritten value, bailing out foreign banks along the way.  In other words, the Fed, and AIG, made no offer of a percentage of value mark-down of these worthless insurance policies, they paid them off in full, and these banks and other institutions did not have to write off a single solitary dime on these swaps.  There is your true scandal America.  We taxpayers funded those swaps at 100% of value using the money our grand kids haven't earned yet.  An enormous chunk of those bail-out billions went to foreign banks, a fact that pro-transparency Obama tried in vain to keep secret.  The bonuses issue is chump change in comparison.  It is literally a distraction.

In order to learn the real lessons of AIG, Congress must investigate itself.  Congress won't do it.  So the lessons of what really went wrong here will neither be learned, nor preventative wisdom applied.  Few times before has Congress been more acutely aware of it's own role in precipitating a disaster upon the people for whom they are supposed to serve.   Yet there is a glimmer of hope in this spectacular debacle.  Much has been made over the years about how Congress has been bought by special interest groups, lobbyists and so forth, and how elections are won chiefly by where the Corporate money flows.   But the AIG scandal has shown us that, at the end of the day, nothing terrifies Congress more than an aroused populace.  And Congress positively freaked out when the voter backlash against these bonuses  took off like wild fire in a parched California forest. 

Congressional fear of ordinary voters gives us hope.