All Posts Tagged With: "taxpayers"

One more thing wrong with the way this bailout is being executed…

AIG, Citibank and a number of other federally bailed-out financial institutions have no plans to cancel hundreds of millions of dollars in sports team sponsorships, even as they take billions in taxpayer support, ABC News has found.

In boom times, the sponsorships were seen as a way to advertise the firms’ “brands” and appeal to potential customers. Even today, at least one bank told ABC News that a naming deal was increasing its revenue. But critics, including a member of Congress, say the decision to continue them now is hard to defend.

Struggling Citibank just sealed a multi-billion-dollar emergency “backstop” deal with the U.S. government. The financial behemoth, suffering with billions in bad mortgage-related assets on its books, recently shed 53,000 workers and saw its stock price lose over half its value. Yet it’s in a 20-year contract to pay the New York Mets $400 million to name the team’s new stadium “Citi Field.”

“This type of spending is indefensible and unacceptable to Citigroup’s new partner and largest investor: the American taxpayer,” said Rep. Elijah Cummings, D-Md., in a statement Monday.

Citi isn’t alone: Imploding insurance giant AIG is paying the British soccer team Manchester United $125 million for the privilege of having its logo appear on Man U’s uniforms. That, despite the fact the firm is standing largely thanks to a $150 billion lifeline from the U.S. Treasury.

“A friend of mine joked they should put ‘US Treasury’ on the front of their uniforms,” said Steve Ellis of Taxpayers for Common Sense, a Washington, D.C.-based nonpartisan watchdog group which is outraged by the expenditures.

Helen may be on to something. In an Op/Ed piece for The Guardian, Brian Beutler essentially says what Helen was saying: If the U.S. automakers need a $25 billion bailout, let those who profit most off the gas guzzlers the U.S. automakers have been building foot the bill for any rescue plan:

Here’s some data. According to the Bureau of Transportation Statistics (pdf), Americans drove about three trillion miles last year. To fuel all of that shuttling around, according to the Energy Information Administration, we purchased about 142 billion gallons of gasoline from retailers. A little bit of quick division and we find that, in 2007, the average vehicle mile was travelled with a fuel efficiency of 21 miles per gallon. Kind of pathetic.

At the same time, in 2007, the average gallon of gasoline ran about $2.80 – which is to say that Americans spent something like $400bn on gasoline last year alone. The EIA further reports that, in 2007, “distribution, marketing and retail dealer costs and profits in 2007 were 10% of the gasoline price”. Just for fun, let’s guess that “profits” accounted for 62.5% of that 10%. Well then: $400bn x .1 x .625 = (drumroll) $25bn! Let’s see …where have I heard that number before?

Overall, the oil industry collected $155bn in profits in 2007. That’s in no small part (about 16% if this math is right) thanks to a decades-long lobbying effort to keep vehicle fuel standards as low as possible, which, as collateral damage, has made the American fleet uncompetitive in an era of high oil prices. That, in turn, is one (a big one) of the many reasons the auto industry is sitting on the precipice of a major collapse. And if it needs $25bn to stay alive, I can think of one place where they can find that kind of money.

But, of course, Detroit hasn’t (and won’t) ask Big Oil to bail them out. They’ve asked taxpayers – or, more specifically, the interest-group-beholden men and women in the US Congress who supposedly represent the taxpayers. They’re the ones who will decide on the terms of an aid package. As they devise one, they should keep in mind the oil industry’s role in the auto industry’s woes.

Sounds like a good plan to me. Read the rest of the piece here.

From Think Progress:

AIG executives went on luxurious retreat one week after receiving $85 billion bailout.

Today, the House Oversight Committee discovered that, just one week after the federal government bailed out insurance giant AIG, company executives went on a retreat to a luxury resort. The executives spent nearly $500,000 on manicures, facials, pedicures, and massages. During a hearing today, Rep. Elijah Cummings (D-MD) asked, “Have you heard of anything more outrageous?”:

CUMMINGS: Let me describe for some of you the charges that the shareholders, taxpayers, had to pay. AIG spent $200,000 dollars for hotel rooms. Almost $150,000 for catered banquets. AIG spent $23,000 at the hotel spa and another $1,400 at the salon. They were getting manicures, facials, pedicures and massages while American people were footing the bill. And they spent another $10,000 dollars for I don’t know what this is, leisure dining. Bars?