In a video communication last October, bin Laden lieutenant Ayman al-Zawahiri's threats to the U.S. included a vow to drain its economy. But the economy can be drained without al-Zawahiri's help. America's own financial institutions are doing it.
A textbook example of a grab for American taxpayer money by an American company comes from investigations focusing on insurer AIG.
Last spring, Ohio Congressman Dennis Kucinich launched inquiries into AIG's handling of workers' comp insurance for contractors in Iraq and Afghanistan after reporting by the Los Angeles Times, the nonprofit news agency ProPublica and ABC News suggested that AIG, which handles nearly 90 percent of the taxpayer-supported contractor insurance, was profiteering from it.
The contractor insurance business became a bonanza when the U.S. invaded Iraq; premiums quadrupled then, according to the government's General Accounting Office. "Early in the Iraq war, insurance brokers charged prices for premiums that in some cases equaled the salaries of the insured workers. In other words, it cost taxpayers $100,000 per year to insure a civilian paid $100,000 per year," ProPublica and the Los Angeles Times reported.
By 2007, AIG dominated the market for contractor insurance. An Army audit found that the company was overcharging, taking in, for example, $284 million from contractor KBR between 2003 and 2005 when it expected to pay out $73 million for KBR workers. Even though it took high premiums plus government reimbursement for claims resulting from combat, the company denied so many claims by injured contractors that their complaints led to the media investigation.
In non-war-related business, AIG has been under scrutiny for its credit default swaps, which led to its paying 100 cents on the dollar when (or even before) banks claimed losses as bundled securities called CDOs (collateralized debt obligations, including risky subprime loans) went sour. Those payments for instruments worth less than 100 cents on the dollar were made with taxpayer money through the federal TARP program.
