[Congressional Record Volume 155, Number 53 (Monday, March 30, 2009)]
[House]
[Page H4066]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                     PREFERENTIAL TREATMENT OF AIG

  The SPEAKER pro tempore. The Chair recognizes the gentleman from 
California (Mr. Sherman) for 5 minutes.
  Mr. SHERMAN. Madam Speaker, this country is being treated to Kabuki 
theater in three acts. In the first act the American people are told, 
``We feel your anger. We share your anger. You have a right to be angry 
at AIG and all the others on Wall Street that are bailed out.''
  But in the second act, Wall Street nitpicks to death any practical 
proposal that would be adverse to the interests of Wall Street.
  And then in the third act, we transfer a trillion dollars to Wall 
Street on very favorable terms. That is to say, terms that are 
unfavorable to the taxpayer, terms very favorable to Wall Street.
  Now the first act is one in which those of us who are angry are told 
that we are blinded by our anger and therefore should not participate 
in the decision-making. Rather, that should be left to those who are 
blinded by their gullibility for Wall Street's demands and entreaties. 
We are told that those of us who are angry are stupid peasants with 
pitchforks and torches. We are told that it is wrong to be angry with 
the bonuses because that is just the tip of the iceberg, and it is 
wrong to be angry with the $170 billion we gave to AIG because that is 
too complicated to talk about.
  The fact is AIG should have been in receivership; that would have 
voided its employment contracts, and we need to compare AIG to GM in 
just a second.
  The second act is one where we nitpick to death any proposal that 
Wall Street disagrees with. We had a proposal to impose taxation on 
excess compensation, and we are told, ``Oh, we can't change the rules 
after the game.'' The fact is that this Congress has often passed tax 
laws a few months into 2009, or any particular tax year, that would 
affect the 2009 tax year or even prior tax years. We have done it 
repeatedly. We just never did it to Wall Street.
  Finally, we go to the third act where we transfer a trillion dollars 
to Wall Street as part of this public-private partnership. Now how does 
that work? Wall Street puts up 6 percent of the money. They get 50 
percent of the profits and 100 percent of the control. I would say 
those are terms very favorable to Wall Street. I am not blinded by my 
anger; but I am, indeed, angry.
  Now let us compare how we have dealt with AIG and how we dealt with 
General Motors. Both entities need to continue to produce. The AIG 
insurance companies are relatively safe. They are State-regulated. They 
weren't part of the big disaster. The big disaster occurred at the 
parent company where they opened a casino and all of the guys on Wall 
Street and the powerful interests around the world went to the casino. 
They placed their bets. They bet against the mortgage market in the 
United States. They won and they broke the bank. And now they are being 
paid every penny they are owed, down to the last penny. How can that be 
done when AIG is bust? Simple, taxpayer money, $170 billion. Some of 
it, we put it into AIG, and tens of billions of dollars go to overseas 
banks within minutes.
  How does that compare to the creditors of General Motors? General 
Motors owes its bondholders. It owes its retirees, and General Motors 
owes its workers. What is happening to what is owed by General Motors 
under these contracts? Those contracts are being shrunk. The 
bondholders are going to have to take about a third of what they are 
entitled to in cash. The retirees are going to get about half of what 
they are entitled to in cash, and the UAW has already made substantial 
changes in their union contract.
  So with General Motors, there is either a bankruptcy, and I hope we 
avoid a formal bankruptcy, or there is, in effect, an informal 
bankruptcy. What is a bankruptcy? It is a reorganization process in 
which the company goes forward but its creditors have to take a 
haircut. They have to lose money. And all of the creditors of General 
Motors are losing substantial amounts, even people who worked their 
whole lives expecting retirement benefits and health benefits when they 
retired. They are taking major haircuts.
  What about the rich and powerful that AIG owed money to? They are 
getting paid every penny. They demand it, and it comes from the 
American taxpayer. It is time that we respect the companies like GM 
that do work and make products. It is time that we not hollow out our 
manufacturing sector.

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