Vol. 3, Issue #18 Sept. 26th - Oct. 9th, 2008

The Faulking Truth

Top McCain Advisor Linked to AIG Collapse

By: Mark Faulk
© 2008 Mark Faulk. All rights reserved.

      Just before his acceptance speech at the Republican National Convention three weeks ago, McCain told ABC News, “The important thing right now is to tell Americans why I can restore our economy, get them affordable and available health care, a decent education, get these jobs back.” Today, his campaign is struggling to answer questions about serious ties between one of his top economic advisers and AIG, whose bailout could cost American taxpayers over $80 billion.
    One week ago I posted a commentary called John McSame’s Campaign to Nowhere, about John McCain’s political advisers and their ties to the Bush Administration. In that article, I mentioned that one of his economic advisers, Martin Feldstein, was on the Board of Directors of American International Group, Inc. (AIG):

    Marty Feldstein was a leading candidate to replace outgoing Federal Reserve Board Chairman Alan Greenspan in 2005, but is believed to have been passed over because he was a board member of AIG, which restated five years of financial reports by $2.7 billion the same year. AIG paid a $126 million fine to the SEC and a $1.6 billion settlement to the state of New York for soliciting rigged bids for insurance contracts from insurers. (Author’s note: On Monday, September 15, AIG’s stock dropped another 60% amid serious financial troubles, from a high of over $70 a share to a close today of $4.73) Former chairman of the White House Council of Economic Advisers R. Glenn Hubbard and President Bush’s top economic official Lawrence B. Lindsey, both worked as assistants for Feldstein at Harvard.

    My source for the McCain/Feldstein connection was a September 2, 2008 opinion piece in the Wall Street Journal written by Feldstein and John B. Taylor, entitled John McCain Has a Tax Plan to Create Jobs which says at the end: “Messrs. Feldstein and Taylor are economic advisers to John McCain and professors of economics at, respectively, Harvard and Stanford.”

    Today, after AIG’s middle of the night takeover by the U.S. government, which loaned AIG $82 billion of taxpayers’ money in exchange for the right to buy 79.9 percent of the company, the McCain organization can’t seem to confirm that Messr. Feldstein is even still connected to the campaign. After a dozen calls to various people within the campaign, none of whom could confirm who McCain’s advisers were or where on the internet I could find that information, I finally left a number of messages with regional spokesperson Tom Kise. Several hours later, I called Kise again, reaching him on his cell phone. He told me that he had made several calls himself in an attempt to answer my question about whether or not Feldstein was still one of McCain’s economic advisers, but had received no response. I also called Feldstein and left a message, but he hasn’t replied either.
    Hours passed, and still no response from Kise, Feldstein, or anyone with the McCain organization. I called Kise again, and he said he “still had no answer” for me. I asked him to check again and to add this question as well: “If Feldstein is still associated with the McCain campaign, would they like to comment on the fact that he is the longest sitting board member (since 1988) with AIG, who was just bailed out by U.S. taxpayers?”
    Here I sit two hours later, and apparently the McCain organization still can’t decide if Martin “Marty” Feldstein is currently an economic adviser for John McCain. I can understand their hesitation. If in fact Feldstein is an economic adviser to McCain, then they have to explain how someone who is the only remaining board member after AIG cleaned house following its prior massive scandal three years ago is qualified to make major economic decisions for the entire country. Articles written at the time delighted in quoting AIG’s claim that they are the financial institution of choice for your “great-great-great-great-great grandchild”. Ouch. (Another author’s note: I stumbled on to a magazine from July of 2005 with a full page ad for AIG on the back cover. Their registered slogan on the ad? “WE KNOW RISK.” Again....ouch.)

    Do Americans want their economic future controlled by a man who helped to run one of the largest companies in the country intro the ground, not once but twice? How does the self-professed candidate of change and political reform explain how his economic adviser cost taxpayers $82 billion, AIG shareholders and helped to trigger the latest collapse on Wall Street? Not to mention the loss to shareholders, who have seen $160 billion in value ripped from their portfolios, including a loss of $36 billion in shareholders’ value the past week alone, or to investors in the overall market which continued its unprecedented meltdown today as the Nasdaq and S&P lost almost 5% of its value.

    Ironically, McCain released a statement today condemning the management of AIG, saying “The government was forced to commit $85 billion. These actions stem from failed regulation, reckless management and a casino culture on Wall Street that has crippled one of the most important companies in America.”

    In an interview on ABC’s “Good Morning America” today, former CEO Maurice “Hank” Greenberg, who was ousted in 2005 after the first major AIG scandal, was asked whether it was fair to say that the collapse of AIG and our financial markets in general was the result of greed, bad business, and corruption.

    Greenberg’s response: “No, I think it’s an unfair appraisal. You know, there are many things that contributed to this unfortunate episode. After I left the company, all the risk management procedures that we had in place were obviously dismantled. I can’t explain that. There’s a new board of directors. One should be asking that board of directors what they did and why.”

    It’s a valid question, and as I post this article eight hours after my first phone call to Feldstein and the McCain organization, one that is still unanswered. For those who would like to ask the question themselves, Tom Kise’s phone number is 303-952-4696. Let me know if you have any better luck than I did.
    And that, as always, is the Faulking Truth.

(Mark Faulk’s awesomely wonderful first book, entitled The Naked Truth: Investing in the Stock Play of a Lifetime, is now available at www.thenakedtruthbook.com. Tune in with Mark Faulk and DeWayne Reeves every Friday from 9-10 AM CST on The Faulking Truth Show, and join Mark and Paul Faulk every Saturday from 1-2 PM CST on The Faulking Truth X2 Show at www.toginet.com)

Contact Mark Faulk at faulkingtruth@gmail.com

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