A matter of trust

March 19, 2009 12:55:17 PM PDT
Trust is not overrated. In our business, there's nothing that's more important. Trust is not overrated. In our business, there's nothing that's more important.

If you don't trust us, then we have nothing, really. Our product is news, but if viewers don't trust that what we're saying is accurate - or at least as accurate as we can make it at that moment - then we're peddling empty airtime.

Trust is fairly important in politics as well. And so when people begin to think that they can't trust their elected representatives, well, then, nothing else matters. The jig's up, at least for the pol.

We have been told by government folks -- who seem like they know what they're talking about -- that if these businesses we're bailing out by mortgaging our children's future should fail, the results would be catastrophic.

And we've believed them. They, in turn, seemed to trust big business, which was making the catastrophe claim.

But what does "catastrophic" mean? High unemployment rates? Tight credit markets? A record number of bankruptcies and home foreclosures?

Don't we already have that?

Yes we do, say the experts; but it would get worse if we didn't spend a gazilliontrillion dollars making sure these corporations -- which got themselves into this mess without our help thankyouverymuch -- don't go belly-up.

Ok, so we trust what we're told, and we mortgage our children's future -- and who knows, maybe their children's future as well.

It's a sacred thing, having all that trust given to you. And you'd dang-well better make the most of it, and make the best decisions you can.

Which is why many Americans these days feel a little bit like Charlie Brown does when Lucy pulls the football away as he's trying to kick. He trusts her, as he has dozens of times, to hold the football in place. But she stays on script, and disappoints.

We're being disappointed now.

Of course people who signed contracts to get big bonuses for the companies they work for rely on those bonuses as the bulk of their pay. These people aren't Michael Bloomberg Billionaires; they make a salary and then, if things go well, they get a fat bonus at the end of the year.

And, yes, a $250,000 base salary in Manhattan isn't the same $250,000 as it is in Idaho. But it's still five times the median income of the average New Yorker. And you don't need a Harvard MBA to see that things have in fact not gone very well. So while their contracts may say they should get a big bonus, if the company hadn't been bailed out with our tax dollars, there'd be no money to pay them the bonuses.

The contract issue aside, if taxpayers had known that their borrowed-against-the-future-money was going to pay for bonuses for the short-sighted executives who made the ill-advised decisions that got us into this situation, I have a hard time believing these hail-mary bailout/stimulus packages would have been passed by Congress or approved by the White House.

Or maybe I'm wrong.

U.S. Senator Chris Dodd, the veteran Democrat from Connecticut who wanted us to elect him President at one point, now seems to be in the middle of what charitably can be described as an unexplainable contradiction with regard to who knew what and when about these bonuses for AIG executives. There are 73 of these bonuses, totaling $165 million - and given to the same executives that got the giant insurance company into financial trouble. It has now received $170 billion, and counting, in bailouts; taxpayers now own 80% of the company. (Congratulations, by the way, on your new assets. Wonder if we could borrow against those funds?)

Turns out that Mr. Dodd, as head of the Senate Banking Committee, wiped out a clause that would have prevented the AIG execs from getting bonuses from the bailout money. At first he said he didn't, then he admitted (after much publicity) that he did.

I won't say he lied, although there are many people who make that claim. But he certainly made quite a turnabout. And now his seat this fall has got a big-fat bullseye on it from Republicans: Dodd, the once-popular incumbent, could be in trouble for re-election.

The bigger question: should he remain as head of the Banking Committee, given this contradiction in his positions? There are many who say he shouldn't.

He has certainly not helped his new President, who is finding out the hard way the shortcomings of rushing into trillion-dollar decisions without exploring all the options.

The advice for doing that came in no small measure from this Treasury Secretary, Tim Geithner. Perhaps his tax problems that came to light before his confirmation should have been the canary-in-the-coal mine for his aversion to little details. But if there's one person who is set to take the fall for the bailouts that aren't yet working, the man from Treasury seems to be candidate number one.

And if you need more evidence of the they-just-don't-get-it arguments -- consider Citigroup, which has already accepted $45 billion in bailout funds.

Today it was disclosed that the troubled banking giant will spend $10 million on new offices at its Park Ave. headquarters for CEO Vikram Pandit and his fellow executives. To be sure, $10 million is a pittance, percentage-wise, in relation to Citi's problems and budget. And Citigroup officials insist this office re-do is a downsizing that will save the company lots of money in the future.

But this is the problem with the public forking over money for private enterprise: Our borrowed funds paying for the CEO's new $10 million office just doesn't pass the smell test.

Downsizing the office? How about staying in your bigger offices and making do with the old stuff? That might be more palatable to taxpayers who are struggling to pay their own bills.

I'm just sayin'.

And lest you think I'm being too critical, remember this is the same Citigroup that scrapped plans to buy a new $50 million corporate jet ONLY after a public outcry.

Even the head of the Federal Deposit Insurance Corporation is beginning to question the notion that these corporations are simply "too big to fail."

Sheila Bair told Congress today that the country needs a "new system" of supervision that will prevent institutions from growing so large that their failure threatens the financial system.

And if you need more convincing here's one more nugget: More than a dozen firms that received billions in bailouts owe more than $220 million in unpaid federal taxes. Two firms owe more than $100 million each.

One of the caveats of getting the funds was that the firms not owe any money to the IRS.

Sheesh.

We'll have the latest on the bonuses ( Congress voted today to tax them at 90 percent), Sen. Dodd's troubles, the bailout and the economy, tonight at 11.

Also at 11, the cause of death of Natasha Richardson turns out to be an Epidural Hematoma -- blood in the brain caused by a blunt trauma.

So it seems that the fall the actress took while learning to ski on a family vacation this week in Canada did indeed cause her death. She was not wearing a helmet - which raises the safety issue, again.

And Carolina Leid tonight looks at the sudden and growing popularity of Graduate Equivalent Degree programs in New York. It's hard to get into G.E.D. Classes - thanks to the rising number of unemployed. People are going back to school, trying to get their high school diplomas. Good for them, but they're finding they have to take a number.

We'll also have any breaking news of the night, plus Lee Goldberg's AccuWeather forecast, and Scott Clark with the night's sports. I hope you can join Sade Baderinwa (in for Liz Cho) and me, tonight at 11.

BILL RITTER


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