NOW with Alex Wagner | January 29, 2013
>> the unemployment rate and wages for many middle class workers stagnant for several decades, a main street roer is still far from complete, but for top executives at firms bailed out by the government, the happy days are here again. yesterday inspector general released a report scolding the treasury department for allowing executives at three firms, aig, general motors , and allied financial to receive lavish pay packages in 2012 . a breach of government rules limiting compensation. as the morning times annie lowery reports, all but one of the top executives at the failed insurer a.i.g. which required more than $180 billion in emergency taxpayer financing received pay packages worth more than $2 million and 16 top executives at the three firms earned comboyned pay of more than $100 million. the report concluded, treasury made no meaningful reform to its processes lacking criteria and an effective decision making process . treasury risks continuing to reward executives of bailed out companies, excessive cash compensation without good cause. david corn , the more things change , the more they stay the same.
>> it was the lack of all the folks who did this to our economy. we had the wall street casino style economy which i don't think people fully realize to the degree to which we were all held hostage by the people playing with our money downtown from here. you know, they were doing things that a lot of experts say were not legal, not proper, and there never was a really good accounting, and so only have they not been held accountable, they got to keep their yachts and everything else and homes in the east hamptons. now we find they still got bonuses, which i think is a pipal on the back side of this that they got a small piece of the big picture . the lack of accountability overall is a stain on our entire society for the last few years.
>> and, there was a great rolling stone piece that we talked about that basically says not only did we not get reform, we might have exacerbated the situation. he writes we didn't just allow banks to be barred from paying bonuses to pay bonuses. we allowed them to pay bigger bonuses hand they otherwise could. instead of forcing firms we allowed them to pay in depressed stock, the amount which became inflated.
>> since i'm in new york and i feel the ora of wall street around me, i'll --
>> especially on this show.
>> exactly. i won't stick up for this, but i think that the -- what treasury said and there was some defense of this, which is you have to pay people to keep them at their firms.
>> that's always been the line.
>> that has been the line.
>> top talent --
>> i can see david recoiling over there.
>> as long as you take the money away from them when they screw up big-time, i'm all for that principle. we didn't do that the first part of the equation.
>> i'm trying to get myself more popular. i think that's the problem is that the money was there for them when they collapsed and now they're getting paid big.
>> during the a.i.g. bailout a big problem was actually the retention of these top executives because what you were trying to do is basically, you know, die construct all these massive problems that they had that were right at the structural level of our economy and had they not been there and had they not fixed it, we would have all had big problems, but now a.i.g. is a profitable company. they came out of it. everybody is better for it. you know, on the enforcement piece of this, i will say that part of the problem was that the rules probably were not clear enough. now that we have dodd fraij and we have this tough prosecutor --
>> mary joe, which we're going to talk about in a second.
>> i think that you do have -- you do sigh the president a lot more focused on enforcement and making sure that there are tough rules that are abided by.
>> i have to say it all worked out and we're all better off. the banks are as big as they have been pre-bubble. they're bigger than they were pre-bubble. we are -- our financial -- our financial security is no better really effectively than it was before. in truth of actual regulation or reform, it ain't there.
>> we still don't have the credit flowing the way we wanted to. the housing market , good numbers this week, but the whole premise of this beginning was to do something about bad mortgages and help a lot of the homeowners, and as you know, even the president has said this, one of the big disappointments was that the administration and treasury secretary geithner did not put together a more effective and a better mortgage rescue program that helped homeowners.
>> aside from the law and the technicality, the problem is how it makes people feel and to see that executives, whether or not it's technically true, it was a way to keep them, and that was important, and even the polls showed people figured that those guys needed stay and be part of the solution, if you are still struggling in this economy and you see these guys are getting millions and millions of dollars or a.i.g. who is considering suing the american taxpayers, that's the problem is how it makes people feel, and that's the other piece of in terms of what's been done that hasn't been addressed. it's not there.
>> if there had been accountability and people saw people being punished and paying for their mistakes, they wouldn't mind so much if people are rewarded for trying to clean up.
>> let me say two things, one is this is coming against the back drop where middle class wages have stagnated. "new york times", this is -- we repeat this all the time. we'll repeat it now. from 1973 to 2011 worker productivity grew 80% while median and hourly compensation grew by one-eighth that amount. since -- i mean, there is a stagnation if you are on main street . you see what's happening here. not only are the bonuses through the roof. there's been no criminal charges. i want to bring up mary joe white because i want to know from -- as someone who has worked inside the white house , there are a lot of people that think very, very highly of mary joe white . that includes eric snyderman, who is a new york a.g. who has been very tough on a lot of these banks in terms of cracking down on wrongdoing. that said, she represented bank of america chief ken lewis in their case before the s.e.c. she helped john mack at morgan stanley . she has worked for the other side of the aisle. is that a compromised position?
>> no, because she's not working for them right now. she's not on bank of america 's payroll. she's on the payroll of the united states of america . when she is on your team, she is fighting for your side. just because a lawyer represents somebody or a firm represents somebody doesn't mean that they can't go on and follow the laws as they stand and as they're being prom you will gated. in temz of enforcement, we still have over 100 rules in dodd frank that need to be developed and put into place. so having her there as the tough street fighter for, you know, average citizens i think is a very good thing.
>> i guess i would just sound a little bit of a -- i find it a little bit questionable and i go back to gabe sherman's piece in new york magazine two years ago which says the alliance among wall street universities and the white house is the military industrial complex of our time.
>> but you are also not going to find people with expertise in an industry who have only worked on one side of an issue. it's something that we see in washington all the time.
>> it's a long-term problem. we see this although time with people going from regulatory positions to private positions. and back and forth. some people do it quite well, and you put them in charge of regulating people who had hired them before and might hire them before.
>> it stays in that job for a long time and develops cred as a guy who will go after anybody at any time. we don't have enough of people like that perhaps in part because they don't get paid as much as you get in the private sector .
>> fitzgerald, i think, just went into private practice .
>> mary joe white follows in some of the footsteps.
>> there is no question that the onus is on her to prove that she is working on the side of the american people . i think that's something we have to watch very closely to make sure we are getting out of her the product and the work that we need.
>> we have not had a problem in the past with anyone being too aggressive. i think in terms of executing the provisions of reform and making sure that let's say it's actually acted upon and those funds are spent when we sort of make provisions for bailouts. we have to take a break, but ast reports that the u.s. will