The Jersey press is following the
taxpayer to AIG to Barclays to Ratner money:
deal for arena criticized because of bailout money
BY JOHN BRENNAN
NorthJersey.com (Bergen Record)
AIG’s distribution of $8.5 billion in federal bailout money to Barclays
Bank means Barclays should call off its $400-million naming-rights deal for
a proposed Brooklyn arena, project critics charged Tuesday.
A spokesman for Develop Don’t Destroy Brooklyn — a group which
for several years has protested the Atlantic Yards arena and housing project
— questioned the propriety of Barclays’ continued financial interest
in the plan.
The New Jersey Nets are slated to be the marquee tenant at the proposed arena.
“Why are federal taxpayers being forced to pay for Barclays’ marketing
scheme?” Daniel Goldstein, the spokesman, asked in a statement. “The
federal bailout of AIG was not intended to assist Barclays in hyping its brand
in Brooklyn, or to help them slap their logo for 20 years on a basketball
arena already heavily dependent on city, state and federal subsidies.”
AIG, the world’s largest insurance company, revealed over the weekend
that it sent a majority of its $173 billion in bailout money through Dec.
31 to Goldman Sachs and to a group of European banks including British Barclays.
AIG was contractually obligated to make the payment to Barclays, in deals
known as credit-default swaps, or face serious consequences. Supporters of
the AIG bailout have said a collapse of AIG would have devastating consequences
on the world economy.
Goldstein seeks support from Congressman Barney Frank, D-Mass., a Bayonne
High School graduate and chair of the powerful Financial Services Committee
in the U.S. House of Representatives.
Frank, who last month called naming-rights deals for sports facilities “nonsensical,”
reluctantly accepted the fact that the Mets’ new park that opens next
month will still be called CitiField. Citigroup, which received $45 billion
from the federal government’s separate $350-billion bailout, has a similar
20-year, $400-million naming-rights deal with the Mets.
Treasury Secretary Timothy Geithner opposed demanding that Citigroup try to
void the deal. Officials for the bank and for the Mets also described the
contract as legally binding.
“I’m confident you won’t see anything like that going forward,”
Goldstein compared the Citigroup deal to the Barclays agreement, even though
in the latter case Barclays received bailout money only indirectly and only
as a payoff of money owed to Barclays.
The money is not entirely "owed to Barclays." And Barclays would
not have gotten what they were "owed" by AIG, at a discount or in
full, had the federal government—the taxpayers—not bailed out AIG.
As former Governor Eliot Spitzer asks
rhetorically in his Slate.com blog post ("The Real
AIG Scandal: It's not the bonuses. It's that AIG's counterparties are getting
paid back in full"): "Why are AIG's counterparties [which
includes Barclays] getting paid back in full, to the tune of tens of billions
of taxpayer dollars?"
The article continues:
“When Congressman Frank learns of yet another instance of fungible bailout
funds going towards a lucrative naming-rights deal, we expect that he will
not be pleased and will quickly take action,” Goldstein said.
Barclays, which announced its partnership with the Nets in January 2007, reportedly
had an opt-out clause in the naming-rights deal last November. That was based
on the years of delays caused by a series of lawsuits — and more recently,
the national credit crunch for developers.
It’s not clear if the bank has paid the Nets any money yet, or if the
contract remains binding. Barclays officials in November reiterated their
“unwavering” support for the project.
Spokesmen for the Nets and Barclays each declined to comment Tuesday...