Topic: TARP
Why Are We Mad At AIG? There is a national furor building over $165 million in bonuses paid out by AIG after it had received billions in TARP bailout funds.by Right Rev. Rowland
(conservative libertarian)
Thursday, March 19, 2009
From the President all the way down through the man on the street, Americans are furious at reports of $165 million worth of bonuses paid out after they received TARP funds.
Congress is holding hearings and writing laws to take away bonuses from workers who had been promised under contract that they would be paid. How did this happen? It is outrageous! Do you hear me? We are OUTRAGED!
Why is all of the outrage pointed at AIG? Can we get some perspective here? The final days of the Bush administration and the first, tentative few of the Obama administration have given us TRILLIONS in debt for financial bailouts of financial institutions. Some estimates have the debt by the US taxpayer approaching ten trillion.
We were told that unless the Congressed passed Paulson's TARP funding, that the world would end. No, no time to study the problem, no research or stipulations, just vote and have the President sign, NOW!
With no restrictions or direction, these institutions resumed business as usual. Being saved the penalty of their poor business decisions by the federal government, or more accurately, the taxpayer, they didn't have to change much at all, just keep a hand out, ready for more money from us.
Last fall, we were told that AIG was too big to fail, so 40 billion more dollars had to be given to the giant insurance company after the original $85 billion to insure solvency. But since last November, that amount has balloned to 173 Billion, with a 'B', dollars. With this latest stimulus bill passed by congress and signed by President Obama, we heard the same arguments.
"We don't have time to read the bill, it is too critical! We don't have time for debate, it must happen NOW! No, we can't look for alternatives, just vote it through and sign! NOW" Then the President took the weekend off with the family before coming back to sign the bill that had been passed the previous week. And still, no one who voted on the bill read the bill. Huh?
When it comes out that this bailed out insuror is going to pay a total of $165 million in bonuses, NOW we're outraged? Why didn't we read the provisions of the bailout and see this coming? Or more precisely, why did Sen. Dodd (D, CT) have the leverage to keep a provision in the funding mechanism that bonuses were protected under this latest action? And why isn't there a similar outrage that Fannie and Freddie are going to DOUBLE their bonuses from last year after losing a collective $108 billion?
So, why did we give them any money? If we didn't want them to pay salaries and bonuses, if we didn't want them to pay on policies when claims came due (as insurance companies do) why did they get money? They should have been allowed to go into bankruptcy protection, allowing them to break their contracts and allowing other investors to pick up the pieces of their business at bargain rates.
Everyone is ignoring the fact that Geithner knew about the bonuses, or should have, as reported by the San Jose Mercury News: "AIG disclosed its retention-payment program more than a year ago, and the amount of the bonuses had been widely reported. But as the payments were coming due in recent days, the White House began to express its indignation." They wait for just the most politically profitable time to jump in, with outrage! This cannot stand! We will fix it!
You know, my grandfather used to say, "When you're in a hole, stop digging!" But we send the same people out who created the problem to fix the problem. Because they are so much wiser now? And while these idiot politicians bitch and moan and accuse, all over 1/10th of 1% of the money given, the Fed and Treasury are preparing another 2 TRILLION to go out of our pockets under TALF?
Where is the outrage at Congress and the Administration? Every parent and family member of an alcoholic or drug addict knows, that when you keep giving them money, with no boundaries, they spend it on the same things - their addiction. There comes a point when you cannot remain angry with the person trapped in their addiction when they are being enabled by others to destroy their lives.
It is no less righteous for those enablers to be held accountable. But we allow Barney Frank, et tal, to harrangue and harrass executives on CSPAN and all the cable outlets, finding soundbites for the evening news, while congress crafts legislation to take from these employees what was contractually agreed upon before this whole mess started.
In my opinion, it's the fools that keep giving the addict resources that perpetuate the problem. If the geniuses in the Capitol and on Pennsylvania Ave. don't stop their spastic, emotional hystrionics and find a sensible way forward, then we'll have quite a chore explaining to our kids why the USA was liquidated to the Chinese and the Russians at a fire sale.
Crack whores do what crack whores do, but if nobody gave them money to do it, they would meet reality quickly. We should have let them fail. The cure is to cut it off at the source. Yeah, I'm looking at YOU, Washington, D.C. !
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The views expressed in this
article are those of Right Rev. Rowland only and do not represent
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I agree with most of your rant. However, it didn't change my mind. I'm still ticked off at AIG. I'm ticked off at ALL of the people who knew better and still turned a blind eye.
Yep, you are right on. I'm mad at the "older AIG" that obviously mismanaged their company, and gave so much money to Obama and the democrat party, but Liddy by no means deserves the ridicule of the currently pathetic body that is our congress. What we truly need is for the media to quit telling us who we're mad at and why. Reverend, the reason that we are outraged now, is that the media is telling us that we are. Trust me, we’ve been outraged for quite awhile! The problem is that as long as BO and his band of Socialists is heading the lynch mob, we can’t be mad at the REAL PROBLEM: AIG should never have received the money to begin with. The thing is, now that they have been given the money... THE GOVERNMENT DOES NOT HAVE THE RIGHT TO DEMAND THE BONUSES BE RETURNED, and they absolutely DO NOT HAVE THE RIGHT TO TAX IT AT 100%. Meanwhile, somehow the left finds the nerve to call us fascists.
"THE GOVERNMENT DOES NOT HAVE THE RIGHT TO DEMAND THE BONUSES BE RETURNED..."
Hi Mike, what you are saying in your comment is that shareholders, even majority shareholders have no control over the workings of corporations. I believe we own 80% of AIG now. I think you are 100% right! Another reason why the "nature" of corporations is in such opposition to a true free market system. The question is not AIG or Fannie Mae, etc. but every single existing corporation.
Also, you mentioned the term fascist, this is very timely, since Corporatism throughout history almost always accompanied Fascism! Think mussolini and hitler, two of the biggest Corporatists in history! Something about extreme nationalism and economic fascism seem to resonate.
I completely agree with what you are saying! Yes, like many others, I am very angry with the AIG officials. However, our biggest issues should be with those members of the Obama administration that let this happen. Let's focus the anger where the anger belongs! President Obama keeps saying that the "buck stops" with him... Fine, then let's start holding him (and his administration) accountable.
I do have to agree with some of the other readers on the issue of taxing those AIG bonuses at some unreasonable rate. Not only would that seem to be illegal, but it would also set a terrible legal precedent in place... much like the taxation issues we fought against in the Revolutionary War.
This issue here isn't that a majority shareholder (e.g. US Treasury) cannot effect compensation. One in such a position certainly can, however that leaves the company open to civil suits for breach of contract; from what I've read elswhere, the branch of AIG in question is incorporated in CT where such a breach, if the suit wins, the damages are 2x the original compensation owed.
Secondly, and far more important in my view, is that the US Constitution Article 9 under restrictions of Congressional power states that a) No bill of attainder nor b) ex post facto law shall be passed. Bills of attainder are writs or laws constructed explicitly to punish an individual or select class (seems the case here); Ex post facto is roughly translated as "after the fact". Is it blatently unconstitutional to pass laws that criminalize or provide for civil penalties (e.g., retroactive taxes or fines) actions that, when they occurred, were completely legal. This is also blatently the case.
Should this AIG bill that panders to much to the Fasists and National Socialists among our population pass, it shouldn't take much of a challenge from those who have recieved these bonuses to make their case.
We are angry at AIG for be begging money from the tax payers after creting their own mess. We are angry at the U.S. Government for giving our money away to these idiots. If they were going to throw away the money anyway, they should at least opened the contracts or NO MONEY like they did with the auto industry. The damage would have at least be less. We are angry at the exponential government expansion and natZionalization of businesses.
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