The Most Terrifying Part of the AIG Mess

I was mad as hell over the past few days, reading the papers about members of the financial products division at AIG (NYSE: AIG  ) receiving seven-figure retention bonuses for a job not-so-well done.

These bonuses were just another slap in the face for an already well-battered population of American taxpayers, who are investors in all the bailed out financial companies like Citigroup (NYSE: C  ) , Bank of America (NYSE: BAC  ) , Fannie Mae (NYSE: FNM  ) , and Freddie Mac (NYSE: FRE  ) .

And though legally entitled to these awards, I saw no reason why any person of decency and honor should feel himself ethically entitled to them.

The fruits of their labor
In that fit of rage, my first thought was to call for the names of every individual who accepted these bonuses to be published in every newspaper across the country.

I longed for good, old-fashioned public shame and peer pressure -- nothing more, nothing less.

Fortunately, it seems the media has worked faster than I could ever dream. Respectable members of the insurance giant have already begun to return these payments, realizing that these monies were nothing more than the unearned skins off their neighbors' backs.

Caution: Media at work
To the individuals who have returned the money, I award you no commendation. This was simply the right thing to do.

To the bankers that have yet to do so, I call on you to do the right thing: Refuse these monies, or return what you have accepted in full.

I would hope that the embarrassment of keeping this money would be far more expensive than the sum of whatever you would hope to gain from it.

But there is something far more nefarious brewing out of this mess. And it's happening at the Capitol.

To Chuck Rangel and other members of Congress
As we speak, you (Congress) are making efforts to manufacture highly specialized taxes to effectively void contracts that were made in good faith. That is what is terrifying to me.

I caution our government: Do not attempt to break these contracts or render them useless through retroactive legislation and taxation.

What a slippery slope you place us upon with these types of actions. When a government decides that something isn't fair (determined entirely by its unfortunate outcome), it should attempt to compensate for it by drafting retroactive legislation?

Heck, no!

The legal community has a name for that, you know. These laws are called ex post facto ("after the fact"), and they are expressly prohibited by Article 1, Section 9 of United States Constitution: No bill of attainder or ex post facto Law shall be passed.

I'm not a lawyer. And I'm sure that a crafty politician (or a reasonably competent lawyer) could run circles around this argument of mine. But surely our founding fathers would be against enacting special, targeted taxes (aimed at an astoundingly small number of private citizens) purely to affect the outcome of contracts that were bargained upon in good faith and meeting all standards of legality at the time of agreement.

And yet that is precisely what you are trying to achieve here.

To the president
Mr. Obama, perhaps you haven't explicitly instructed your party members to draft such legislation, but when you order Treasury Secretary Geithner to use every legal means necessary to recover these bonuses, it's not hard to imagine some enterprising congressman inferring that message as, "If it's not already legal, make it legal."

That's a problem.  

We are a nation of laws
Are we willing to abrogate the good rule of law simply to punish a few, select individuals? I sure hope not.

Perhaps, today, punishing these individuals may seem like the "fair" thing to do, and surely the mob is calling for it. But once you set these wheels in motion, they'll surely be difficult to stop.

Once we give our government the power to retroactively dictate what is and what isn't fair based on the outcome of events, we've given it tremendously dangerous jurisdiction.

What would happen, dare I say, if the government were to decide to take advantage of these powers when it isn't fair or decent?

History repeats itself
I'm reminded of Patrick Henry who said, "The Constitution is not an instrument for the government to restrain the people, it is an instrument for the people to restrain the government -- lest it come to dominate our lives and interests."

So, I say shame the bankers at AIG who refuse to return money that is legally theirs, but not rightfully theirs. But I seriously advise our government not to attempt to redefine its own role, for I suspect we'll long regret it.

Fool Nick Kapur owns no securities mentioned in the article above and seriously wonders what is going on. The Motley Fool is investors writing for investors.


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  • Report this Comment On March 19, 2009, at 2:40 PM, mreedpgh wrote:

    > What would happen, dare I say, if the government were to decide to take advantage of these powers when it isn't fair or decent?

    Then you find people--your elected representatives and your courts--who push back. Which, if you're paying attention, is exactly what has happened to an Executive Branch that overstepped its bounds.

    DON'T PANIC. It's there, in big letters on the front cover of the thing.

  • Report this Comment On March 19, 2009, at 2:42 PM, wuff3t wrote:

    Nick, I agree with every word you've said. If the government can do this now to a small group of people, they can do it again next year to everyone. Suppose they decide the unions are too powerful because they've just negotiated a pay deal that is fantastic for their members but not so good for the company? Well, just decide after the fact that you can call something the union or workers did "illegal", and strike the deal from the books - maybe even imprison some of the union leaders for good measure.

    A desire and willingness to manipulate the law is one of the prime signs of totalitarian regimes. Not a good sign, and much as I despise the bankers who have ripped us all off I'd rather they kept their money and I kept my freedom (and faith in system of law) than the alternative...

  • Report this Comment On March 19, 2009, at 2:47 PM, UnfooledOne wrote:

    Excellent article Nick:

    Did you know that Ron Paul made a speech in Congress stating that the Bill to Tax Bonuses is Unconstitutional, Dr. Paul on House Floor 3/18/09

    See the video clip:

    http://www.dailypaul.com/

  • Report this Comment On March 19, 2009, at 3:06 PM, cooski wrote:

    What I'm mad about is that the Pres and his corrupt cronies in congress and Treasury continue to screw us continually. They put all the focus on these bonuses (which is outrageous) to distract everyone from the real truth: billions continue to be poured in to AIG (with more coming) to bail out GS, JPM, and the rest. These guys in the gov all have ties to these institutions, and because these institutions have ties to all the bad bets AIG made, they will continue to try and distract us with the bonus issue. Bernanke, Paulson, now Geithner and the Banking Comm. idiots want to save their banking buddies and make some xtra dough before the mega crash. If GS, JPM etc. were all healthy, why would they have taken billions in payments via AIG? This is the big sham, because this is allowing those institutions to grab our money indirectly and not have to pay it back. Make no mistake about it, AIG goes down, so do GS, JPM, and many of the other big boys. How come the Pres and congress can't agree to work for a $1.00 until the economy turns around? Why aren't we asking most of our elected officials who voted for the stimulus package to resign? Many of them with their expensive educations can't figure out the wording in this pork bill, or didn't read it - well that would indicate the highest degree of incompetence and lead to dismissal in the corporate world. Wake up people...time to plunge the crap out of the toilet!

    P.S. E-mail the White House and ask the Pres how many more $50,000 Hr trips he needs to take on Air Force One (this time to appear on Leno) with our tax money before he feels it is excessive. They all continue to lecture the corporations...classic do as I say, not as I do.

  • Report this Comment On March 19, 2009, at 3:11 PM, anilkapur wrote:

    Dear Nick: I have always admired your fire power. I fully agree with your sentiments. Not are we starting to break contracts, the United States has also been responsible to establishing off shore banks and now it does not feel comfortable with them; now we are breaking contractual obligations. What next and what could be the implications on foreign investment into the United States both in terms of direct investment and buying US Treasuries. I think we are heading down a slippery slope. Pop

  • Report this Comment On March 19, 2009, at 3:11 PM, pkrishna wrote:

    "effectively void contracts that were made in good faith"

    No, rewarding employees who managed to bankruptthe company, and by the way the entire global financial system, can in no way be construed as in "good faith". Nice try.

    As you admitted, lawyers can argue the merits of the contract. Let these employments contracts be made available, and let AIG show us how they earned the bonus/retention payment. The company market cap is 2 or 3 billion now, and the Federal Govt has already gave them $170 billion, thus owning the company several times over. The Congress is justified in demanding these documents.

    More power to Andrew Cuomo who has the guts to take on AIG and other financial institutions. Too bad Geithner/Bernanke/Summers are in bed with the companies.

  • Report this Comment On March 19, 2009, at 3:20 PM, RHaganC wrote:

    KUDOS! Been saying it already brother.

  • Report this Comment On March 19, 2009, at 3:21 PM, EngineerPaul wrote:

    As much as I applaud your advice about returning the bonus, the people doing it might want to defer to the advice of a good tax lawyer. It would be a real shame if they returned the bonus only to find that they still owe hundreds of thousands of dollars in taxes on the amount that they returned. Receiving money and then donating it back to a for-profit enterprise doesn't seem like a very clean tax move, but I am not a tax lawyer.

  • Report this Comment On March 19, 2009, at 3:26 PM, rajeevsingh111 wrote:

    This whole IAG bonus issue has once again brought out in light the very reason why these companies are where they are today. They have been callous, irresponsible and most of all greedy . how on earth can they think of doing something like that. Should they have not looked at Vikram Pandit from CITIGROUP who has foregone his totaol salary , let alone bonus. Thats the way to go Vikram. Thumbs to you.

  • Report this Comment On March 19, 2009, at 3:34 PM, CAPTAINWACK wrote:

    At what point is everyone going to realize that this is just another stroke job by the Washington elite. The employees of AIG Financial Group that were at the drivers seat and OK'd all the questionable investments are gone. The head dog Joe (I'll beat your head in if you question my authority) Cassone and his buddies are now off on there own with no place to hide. So the current people still working at AIG Financial are trying to correct these wrongs and get the company back on track. A lot of them had absolutely nothing to do with the down bringing of this once great company, but they are still hanging in there trying to fix it. What needs to be done is to impeach Chris Dodd for his stupidity. Keep the bonuses...they only have a year or two before they are all out on the streets anyway. Hope they know how to save.

  • Report this Comment On March 19, 2009, at 3:41 PM, DrBDH wrote:

    "Once we give our government the power to retroactively dictate what is and what isn't fair based on the outcome of events, we've given it tremendously dangerous jurisdiction."

    I'm wondering if you could provide me the URL for your equally outraged reaction to the telecom immunity bill? Thanks!

  • Report this Comment On March 19, 2009, at 3:46 PM, solomon wrote:

    I agree with the article. So much to say here. Most of what I wanted to say has already been said by "cooski". These bonuses were announced last year. Tax-cheat Geithner and other geniuses were in the room and were OK with them then. They were paid back in February, but the news didn't come out until this week. Why? What is happening to the billions and even trillions while we are being prodded to be outraged over millions? It is classic misdirection. Remember the burning house analogy? Well, I am upset that the firemen stepped on my petunias while fighting the fire. But I'll be even more upset if they are pouring gasoline on the fire while telling me to be outraged over the petunias.

  • Report this Comment On March 19, 2009, at 3:55 PM, BMFPitt wrote:

    I hate the idea of the tax, but I hate the idea of them keeping the bonuses more. I think a better way would be to recognize that in all reality AIG went bankrupt a long time ago, and contracts can be voided in bankruptcy. And the Supreme Court should void the law, but I want to make them go that far to get their ransom money.

  • Report this Comment On March 19, 2009, at 4:37 PM, hushweeva wrote:

    thumbs up

  • Report this Comment On March 19, 2009, at 4:56 PM, mlaursen wrote:

    I AIG had been left to normal bankruptcy procedures, just one of the benefits would have been that the bonuses would never have been paid.

  • Report this Comment On March 19, 2009, at 5:06 PM, Melaschasm wrote:

    If people are this upset that 1% of the bailout went to employees as a bonas, imagine what the reaction would be if they knew how the other 99% was wasted.

  • Report this Comment On March 19, 2009, at 5:28 PM, jjqsr wrote:

    I believe that all the AIG people receiving bonuses were "set up". Did you see the legislation that was written into the agreement that was created by Sen Dodd - who lied only the day before saying he didn't know who wrote the amendment for the Treasury Dept - at their request. So these people from AIG - probably not worthy of a bonus, but now are vilified because of the a...holes called Barney Frank and Chris Dodd - both of whom I used to like - have created an environment of letting the bonuses go through but know join the chorus of "he's a bum, he's a bum". These people from AIG didn't deserve a bonus, but they made the same stupid mistakes - encouraged by congressmen and senators - to give mortgages to people who didn't deserve them. They are the real culprits of the downfall of a once great nation. Teddy Roosevelt is spinning in his grave!

  • Report this Comment On March 19, 2009, at 6:14 PM, zephod0 wrote:

    Question: Would a bankruptcy court allow bonuses to be paid if the bankruptcy is declared before actually paying them out?

  • Report this Comment On March 19, 2009, at 6:28 PM, gr325 wrote:

    Well said jjqsr!!!

    Simply put…. “Elmer Fud” (Barney Frank) and the rest of the grandstanders are all fools who think we are stupid people who believe they did not know about this.

    The treasury department knew that if they did not pay these contracts the legal implications would cause more disruption and money than the bonuses themselves. Think about it….

    You will also find that the anger this has caused has clouded the reality of the issue and how it needed to be handled.

    Legal contracts are legal contracts and anything else we do after the fact to cause them to be different will be nothing more than Gestapo tactics by our own government.

  • Report this Comment On March 19, 2009, at 7:06 PM, jbromet wrote:

    The bonesus for AIG and Freddie and Fannie were enabled by Congressmen and Senators who were given thousands of dollars by these very same organizations. Many of the managers who received the retension bonesus actually left the companies, which doesn't qualify as "retension." Now that this issue has been made public, Congressmen and Sentors are encensed and appaled. It reminds me of that scene in "Casablanca" when the prefect of police announces that he's shocked to hear that there's gambling at the night club, after receiving his winnings. Now our legislators try to clean up the mess they've made by advancing unconstitutional laws. There'll be a fallguy for this, yo can bet. But when you hear the phrase "I'll take responsibility" from the resident on down, haven't you asked what that means? If someone takes responsiblity, then (fine) step down. Anything esle is strictly BS.

  • Report this Comment On March 19, 2009, at 7:18 PM, mlaursen wrote:

    My understanding is that bonuses would be one of the last items likely to be paid under a bankruptcy procedure.

  • Report this Comment On March 19, 2009, at 7:45 PM, xetn wrote:

    I have said this before and I will say it again: Do you think that AIG or any other of the bailout companies would be paying bonuses without bailout money? Of course not!. So the problem isn't the bonuses, it is the government bailout program and government intervention in the economy. The sensible thing to do in all cases, is let the failing companies fail, go bankrupt, clear the malinvestments and get back to solid footing. The market, after all will end up doing it any way unless government decides to nationalize all of the bailout companies.

    The simple fact is that the whole crisis was caused by the Fed's printing money out of thin air and massive amounts of low interest rate lending by Freddie, Fannie and the fractional-reserve banking system.

    To try to put this in perspective, there was a depression in 1921-22. The Fed and the government did practically nothing and it was all over in 1 year. By contrast, there was massive amounts of government intervention and Fed inflating the money supply during the great depression which extended that fiasco to more than 10 years. GOVERNMENT HAS NO PLACE INTERFERING IN BUSINESS!

  • Report this Comment On March 19, 2009, at 7:58 PM, TomH3 wrote:

    Obama was hopping mad about the bonuses, characterizing the payees as reckless and greedy; at the same time he wants to save a lot of people from foreclosure. Most of those facing foreclosure could also be characterized as reckless and greedy. This is just another case of political hypocrisy. Prudent people will be picking up the bill for all of them.

    Now Obama seems to support a law of "ex post facto" which sounds unconstitutional on the face of it, and worse than being reckless and greedy.

  • Report this Comment On March 19, 2009, at 9:03 PM, libliever wrote:

    Shame these guys into giving the money back?

    Yah, right-they have no shame. It doesn't work on these little turds.

    Yes, I question the consitutionality of this ex post facto law that Congress just passed.

    Constitution is pretty clear on this but then again you got people who think that social security is unconstitutional.

    I mean the only thing we are getting back is our own money. It's not like we're stealing it from them, ahem, they stole it from us.

    If they had any guts they should have fallen on their swords like Grassley suggested long before this whole debacle happened.

  • Report this Comment On March 19, 2009, at 10:07 PM, abpc1 wrote:

    Folks:

    Can someone point me in the direction to get a job where one is guaranteed to receive a "performance bonus" or "retention bonus" regardless of how that company does financially? I really would like to have that kind of a job. I'll let all of you gripe and moan and discuss this ad nauseam while I count my money in my UBS tax evading accounts.

    Seriously... what company in their right mind would ever do this? This was a scam pure and simple just like all of this derivative wealing and dealing. I'm surprised that the public is not demanding "pound them in the a**" prison for everyone involved from the mortage brokers to the bankers to the insurance companies to the investment houses and to the politicians.

    Regards,

  • Report this Comment On March 19, 2009, at 10:14 PM, mlaursen wrote:

    re: "t's not like we're stealing it from them, ahem, they stole it from us."

    The Federal government knew about the bonus terms at the time AIG was bailed out. Some of the politicians doing the loudest grandstanding were the biggest recipients of campaign contributions from AIG. Who did the stealing, again?

  • Report this Comment On March 19, 2009, at 10:41 PM, brwn8484 wrote:

    I cant believe what I'm reading here. Members of our current congress are proposing legislation that explicitly goes against the constitution.

    And no one has said a word about removing those members? I believe we have lost the will (and backbone) to defend our constitution and our freedom.

    This is truly a sad day for America and her posthumous heroes and patriots. We spit in their faces and nullify their greatest sacrifice of lives lost for the freedoms that we so easily dismiss with no action.

    "The price good men pay for indifference to public affairs is to be ruled by evil men." Plato (427 BC - 347 BC).

  • Report this Comment On March 19, 2009, at 10:53 PM, jbromet wrote:

    Let's take a look at another kind of bailout. If the American public continues to bailout the same group of criminal legislators, they are guilty of bailing out a failing institution. In the conservative tradition, let's let the sham legislators fail. Then we'll find the bottom and begin to build again. This is not matter of party loyalty or political philosophy. It doesn't matter if their nameshave an "R" or a "D" in front. They're all part of the same betrayal. For them, it's all about power and influence. To serve the public - please!!!!

  • Report this Comment On March 19, 2009, at 11:29 PM, mexicankev wrote:

    This is a very silly, FOX news quality article. Contracts are abrogated all the time, especially when issues of fraud are involved. It appears now as well that AIG lied to Congress months ago, claiming that the financial services group would not be receiving bonuses. I've read at least 3 articles now outlining the possible legal arguments for revoking or taking back these bonuses. The writer really needs to expand the breadth of his sources of information.

  • Report this Comment On March 19, 2009, at 11:31 PM, texjammer wrote:

    Nick,

    You've hit the nail on the head with this one. This whole stinking mess reeks of McCarthyism all over again. If the entire force of the US Govt can be directed at a few selected citizens, will any of us ever really feel safe about anything we do? What ever caveat is unpopular at the time and has mass media fueling the fire can result in any select sector of citizens being anihilated without a fair trial or consequence to those bringing the power to bear.

    I have said it before and a few others are also saying it, REMOVE EVERY INCUMBENT PROFESSIONAL POLITICIAN FROM OFFICE REGARDLESS OF PARTY. We can start with the 2010 elections and continue on from there. We MUST INSIST that term limits be a major issue. 12 years combined total for both the House and/or Senate and then they must go home! The Congressional Golden Parachute must have it's strings cut. No more benefits for the rest of your life. Once you are out of office, you get nothing else from the taxpayers.

    Until we slap the politicians to remind them who they work for, we will always have what we deserve. Until we start acting like Americans instead of Republicans and Democrats, we will never truly fix the system. The parties created the system for THEIR power, not for the people.

    "Those that do not learn from history are bound to repeat it."

  • Report this Comment On March 19, 2009, at 11:51 PM, libliever wrote:

    Hey Texjammer, do you read what you write?

    First, you worry about our freedom and go off on some rant about tailgunner Joe and then the next paragraph you want to play dictator and throw all the bums out.

    I think mexicankev has a better handle on what should be done.(the post above yours)

    Let's not throw the baby out with the bathwater just yet.

    BTW, every two years you can throw the bums out and it's legal too:)

    But in all honesty I have to agree with your sentiment.

    I think everyone of us (excepting those that are getting bonus checks) are sick and tired of Congress, have bailout fatigue, and are less than stimulated by the stimulus package.

    I just want my old country back.

    Good night!!!!!!!!

  • Report this Comment On March 20, 2009, at 2:21 AM, mlaursen wrote:

    re: "It appears now as well that AIG lied to Congress months ago, claiming that the financial services group would not be receiving bonuses."

    I just checked on the story you're talking about. Sounds like AIG lied or obfuscated when dealing with some members of Congress, while folks at the Treasury either knew or didn't ask such details. Not sure how that makes Kapur's article silly.

    Aren't you concerned about Congress issuing a writ of attainder, which is specifically forbidden by the Constitution?

  • Report this Comment On March 20, 2009, at 2:35 AM, mlaursen wrote:

    By the way, even if executives at AIG lied to Congress, why punish the actual workers who earned the bonuses by slapping them with a bill of attainder? They're not the ones who lied.

  • Report this Comment On March 20, 2009, at 9:57 AM, TMFCop wrote:

    Hey Nick,

    Great article, and I like best of all that you got your dad giving you props!

    But Congress' fake anger is so laughable. I mean, these are the same people who not only passed the bailout originally without reading the darn thing, but approved the insertion of language -- at the behest of the President and the Treasury secretary -- to specifically exclude these bonus payments from restrcitions. Now they're upset?!

    Of course, with Congress taking up their torches and pitchforks they're merely trying to ride the populist wave and divert attention from their own culpability in the fiasco. Let's hope that the Senate considers the options of running roughshod over the Constitution in a more sober manner.

    And let's hope some of the public's gnashing of teeth is reserved for the politicians that brought us here. The bonus payments are a miniscule amount of money in comparison to the tends of billions of dollars used to make whole the counterparties in the deal.

    But this is what you get when you turn over the keys to the government. And this was supposed to be better than letting AIG fail? Ha!

    Rich

  • Report this Comment On March 20, 2009, at 11:50 AM, TMFDiogenes wrote:

    I feel like someone should try to defend this on constitutional grounds, so I'll give it a go:

    A I Sec 9:

    No bill of attainder or ex post facto Law shall be passed.

    For the bill to be unconstitutional based on A I Sec 9, it would need to be a bill of attainder or a form of ex post facto law.

    1. Is it ex post facto law? No. This one's pretty clear. The courts held in a unanimous decision in 1994 that retroactive taxes over a brief period are constitutional.

    2. Is it a bill of attainder? No. Bills of attainder are a) apply directly to a specific person or corporation, and b) are punishments.

    2a) Does it apply to a specific corporation? No. It applies to companies that owe bailout funds in excess of $5B. I forget how many there are, but the number's around 10, give or take.

    2b) Is it a punishment? Highly questionable. One could also argue that Congress doesn't want to waste taxpayer dollars.

    I'm not a tax lawyer, but the bill doesn't seem to be obviously in violation of A I Sec. 9. Does it violate the spirit of the constitution, as Nick claims it does? Maybe, maybe not. But my understanding is that where the law is explicit, courts side with the word of law over its reason and spirit. If you don't like how the constitution was written, there's a process called amending that can be used to change it.

  • Report this Comment On March 20, 2009, at 1:19 PM, CaptainFiveBaggr wrote:

    If these elected officials can not come together to make a decision that is best for all parties involved then who will. This not only should happen, but NEEDS to happen. When two sides are so drastically seperated someone has to step in do whats right. As for your comment about our founding fathers:

    "But surely our founding fathers would be against enacting special, targeted taxes (aimed at an astoundingly small number of private citizens) purely to affect the outcome of contracts that were bargained upon in good faith and meeting all standards of legality at the time of agreement."

    Do you honestly believe that a disaster 1/10 the size of this was on their minds when drafting a constitution? Come on, lets be realistic. Times have changed ten fold since back when "life was simple".

    Do two people who agree to get married ever imagine having to hire attorneys and moderators to divide up their life savings and award them rights to see their children after 20 years? Absolutely not. But whens things get ugly beyond repair drastic measures are needed to mend the differences.

    no proof read sorry

    5bagger-Out

  • Report this Comment On March 20, 2009, at 1:40 PM, mlaursen wrote:

    What has changed so much since the 18th century? They had businesses, money, real estate, bonus payments, governments.

  • Report this Comment On March 20, 2009, at 4:01 PM, motrehallag wrote:

    Regarding the sancity of contracts and the outrage expressed by the author about ther potential abrogation,why is it that no similar outrage has been expressed over the changes made in the contracts of union auto workers whose firms have accepted G ov't money

    Why can the terms of their contracts be modified but

    the terms of the contracts of the "financial genuises"

    are off limits to modification

  • Report this Comment On March 20, 2009, at 4:20 PM, AustinAndy wrote:

    Anyone ever read the Constitution of the United States? Ever heard about a bill of attainder as mentioned in the Constitution? Congress should follow the Constitution when it makes law.

  • Report this Comment On March 20, 2009, at 4:30 PM, TMFMitten wrote:

    According to Constitutional law scholar Laurence Tribe, the tax bill does nothing to violate Constitutional principles:

    http://blogs.wsj.com/law/2009/03/18/would-an-aig-bonus-tax-p...

    Mind you, this comes from The Wall Street Journal.

    I only wish people has been as concerned about the Constitution when the Patriot Act got rammed through Congress, but that's another rant entirely.

  • Report this Comment On March 21, 2009, at 5:37 AM, spenglowe wrote:

    If the American taxpayer did not think these bonuses were a good thing, then why did they buy 80% of the company? This is why we do not invest our money without doing the Due Diligence thing FIRST.

  • Report this Comment On March 21, 2009, at 10:19 AM, mobiusblack wrote:

    Nick,

    You are assuming that the bonuses were entered into legally. Seems to me like a planned rip-off of the stockholders and the government. In other words, fraud.

    mobiusblack

  • Report this Comment On March 21, 2009, at 12:12 PM, Philyogy wrote:

    Government for the people, by the people...

    Is this not what is supposed tobe in congress and the White House?

    But where is the governement FOR THE PEOPLE??

    all I see is the governemtn for the taking.. We should let these failed buisnesses fail... I'm sure it will hurt our economy to a massive extent... But it will do far less damage to our country than what the government is doing now.. If I wanted a Nationalized place to live, I'd be over in China.. But I'm in the USA.. and we are supposed to have our freedom here.... I say down with the bailout, down with the stimulus checks.. Let what works prosper,and what doesn't fail....

  • Report this Comment On March 21, 2009, at 2:35 PM, Purpleheartfool wrote:

    Time to check your 2nd amendment rights. Our foundng fathers foresaw such a government and left us the right to "amend" it as necessary.

    Reid, Pelosi and Frank are stealing our country and our "token" president (not a race related statement, a reference to whoever wanted him in office so they could get their agenda passed) is playing along. None of them are really concerned about AIG bonuses, they are CYA for their incompetence in passing the "bailout" bill without anybody knowing what was in it (except many recognized, but did nothing about, the pork).

    My biggest fear is big, uncontained, government controlled by people who are so left leaning that they will capsize the country.

  • Report this Comment On March 22, 2009, at 1:18 AM, texjammer wrote:

    There comes another side to the "bonus rage". It seems it might have all been a smoke screen to keep us from seeing the $1 TRILLION that the Federal Reserve printed to buy Treasury Bonds. Wait........isn't that just taking money from the left pants pocket to put in the right pocket??

    The whole bailout fiasco has just been more proof that GOVERNMENT CAN'T RUN BUSINESS. If anyone who studied the Great Depression didn't come to that conclusion, this should pretty much take care of that for them.

    MAKE TERM LIMITS AN ISSUE FOR THE NEXT ELECTION!! Vote 'em all out and start over. It surely couldn't get any worse!

    Thank our founding fathers for the foresight of the Second Amendment. Anybody tried to buy ammo lately???

  • Report this Comment On March 22, 2009, at 10:31 AM, CaptainFiveBaggr wrote:

    Some of these comments are comical yet scary.

    The foresight of our founding fathers to amend this issue? Are you guys serious. Form some type of militia or anarchist group bearing arms to take back what YOU feel is the right thing? The rhetoric you are spewing is closer to terrorism than patriotism.

    As for the early comparisons to the great depression, I hate to bring everyone back to reality but we are still NOT CLOSE AT ALL to the great depression. Yes the stock market took similiar hits. But the truth is back in the 1930's the majority of people had very few options when they lost their jobs and means to support a family. Also the unemployment rate (although different reported numbers) was nearly 25% compared to our 6-7% rate right now. Next time you walk your dog or go for a run think about 1 of 4 houses you pass on the street being unemployed and unable to provide for their family. Then realize we are not close to that position yet, and hopefully we never will be.

    5bagger-out

  • Report this Comment On March 24, 2009, at 11:33 AM, annia wrote:

    Right you are Sir, The Congressional attempt to use the Tax system to punish anyone is unacceptable at any time. Let's hope they don't spend time calling the bonus-babies to hearings where they can rant rather than try to understand what happened and fix it.

    Thanks to all who posted comments too.

    annia

  • Report this Comment On March 24, 2009, at 2:51 PM, TradePro1982 wrote:

    I came across this superb article on how to condemn the AIG fatcats, it actually made me feel quite good. One of the best articles I have read, well worth the copy and paste.

    http://www.bukisa.com/articles/48974_how-to-condemn-the-aig-...

    This made me laugh out loud, forward to anyone affected by AIG.

  • Report this Comment On March 24, 2009, at 8:57 PM, farmnut1985 wrote:

    Great article and glad to know I am not the only one who strongly believes congress is well outstepping its bounds.

    Congress probably just wasted 450 million on bickering and him hawing around on what to do to get the AIG bonuses back. Another idea to help the economy would be for congress and everyone else to take a paycut. Many of my friends are now working 4 days a week so that they can all keep their jobs so it seems only fair congress do its part. I STRONGLY ENCOURAGE EVERYONE TO VOTE IN 2010

  • Report this Comment On March 24, 2009, at 10:44 PM, OscarBullFrog wrote:

    Excuse me ... but this AIG 'retention payment' crap is barely a zit on a rhinoceros - and NO ONE is paying attention to the damage as congress' raging rhino roots, ruts and routs the American economic, capitalistic, contract-based system you thought we had.

    But, there is a 'retention payment' that bothers me - the congressional 'retention payments', along with other benefits, paid annually, per term. They could quit, and you know we'd all be better off - immediately. But their 'retention payment' contract is ALSO not based on 'performance', (neither were AIG's retention contracts performance-based) or we'd have about 400 different congressional bodies thinking rather than knee-jerking a CYA at every riotous twist and turn.

    There is plenty to dislike about the sum of Congress' profligate and profligate-sponsoring cheating of us - starting historically right after President Kennedy was assassinated, for the record. Congress' finger-pointing ... "OVER THERE!! -- OVER THERE!!" ... is a wholesale pandering the likes of which would make a Stalinistic purge blush. Have you ever seen a purge blush? it;s not pretty. In fact, it;s plurgy bad.

    And, fwiw, ALL you who are employees are also paid on a 'retention payment' basis. You agreed, for the money (and benefits) to WORK until the END of YOUR 'contract' ... and get paid!. Want a retroactive evisceration of your contract? Just ask congress to commit another un-constitutional faux pas. I'm sure they would oblige.

    What bilge! Please pay attention to that rhino in the room instead.

    cheerrzz,obf

  • Report this Comment On March 25, 2009, at 3:53 AM, Thumper1949 wrote:

    How you can chastise our lawmakers using terms like "nefarious" defies logic. These bailouts were meant to save their failing business and were not intended to fund outrageous boni (?plural of bonus) or extravagant soirees. To use these funds for anything other than the purpose intended is tantamount to the public aid recipient who uses those funds to buy a Rolls Royce. The public should be outraged at the executives of these companies and proud of our lawmakers and president for finding a way to curtail their complete disregard for the taxpayer. Had this happened during the time of the authors of the Constitution that you so willingly cite, these same executives would have, no doubt, been summarily executed, and come to think of it that's not a totally bad idea!

  • Report this Comment On March 25, 2009, at 8:09 AM, kstoltz wrote:

    I'm more scared of unfettered corporate power that is using government to keep the good times going on than I am the supposedly horrifying precedent being set by Congress. We monitor our government far, far better than we do the people who caused this recession.

  • Report this Comment On March 25, 2009, at 11:49 AM, UtahStockMom wrote:

    Read CAPTAINWACK comment above.

    It's not that taking the money is the right or wrong thing to do. It's that the people who (might) get the money aren't the ones that had anything to do with losing all the money!

    When a profitable company buys up another company at a discount because of a pending debt payout, all the employees of the company do not give up their commissions on the sales they accomplish! They still earned their commissions based on the success they had at their part of the business. And the company made a SEPARATE decision to make an acquisition. And the acquistion will cost money and the value of the company will, for a little while at least, be less than it was before the acquistion. One expects that in that case, the acquisition has strategic positive impacts. But sections of AIG which did WELL will be punished because other sections of AIG did crazy things with their money (credit default swaps). All should not be punished for the crimes of a few.

    http://www.nytimes.com/2009/03/25/opinion/25desantis.html?pa...

    If I were doing the best I could at my job and did WELL, I do not think I would appreciate having all my earned remuneration retroactively taken away, not being able to pay my mortgage (a contract I cannot just abbrogate!) and have my name dragged through the mud on top of it like I was some criminal!

  • Report this Comment On March 25, 2009, at 11:58 AM, Pandorabelle wrote:

    It's a slippery slope...on the precipice of an "Atlas Shrugged" culture of quick fixes.

  • Report this Comment On March 25, 2009, at 7:01 PM, nestegg4324 wrote:

    We should be doing this.

    French workers burned tires, marched on the presidential palace and held a manager of U.S. manufacturer 3M hostage Wednesday as anger mounted over job cuts and executive bonuses.

    Rising public outrage at employers on both sides of the Atlantic has been triggered by executives cashing in bonus checks even as their companies were kept afloat with billions of euros (dollars) in taxpayers' money and unemployment soars.

    As the U.S. administration seeks ways of recouping some of the $165 million in bonuses paid to executives at insurance giant American International Group Inc., kept afloat by $170 billion in taxpayer bailout money, French President Nicolas Sarkozy is threatening new laws on bonuses and golden parachutes.

    Sarkozy is also trying to deflect anger against his government's failure to ward off the job losses and economic hardship that comes with recession.

    The euro3.2 million ($4.3 million) exit bonus paid to the former head of Valeo SA, an auto parts maker that received state aid, has fueled outrage in France. Controversy also grew Wednesday over bonuses at brokerage company Cheuvreux, a unit of a French bank that got state handouts.

  • Report this Comment On March 26, 2009, at 12:51 PM, thisislabor wrote:

    hey sfbeal, it IS about whether or not it is the right thing to do.

    they earned their pay in contracts set forth in a moral manner, to go back take that money from them is the WRONG thing to do it is same concept as stealing. pay them their bonus, let AIG go bankrupt. we got along fine as society before that company came along we will get along just fine as a society after it goes through bankruptcy court.

  • Report this Comment On March 26, 2009, at 4:44 PM, mpendragon wrote:

    If AIG had gone under no one would have gotten bonuses. When the auto industry got their substantially smaller bailout their blue collar workers had to make major concessions on their contracts and the US taxpayer doesn't even own those companies. I'm not especially moved by the argument that AIG had a contract that granted these bonuses even when they ran the company into the ground. The government isn't taking away the bonuses, the new owners are.

    The more compelling argument is the Treasury's position that a small fraction of a percent of the bailout to AIG going to their leadership is important if we don't want the company both insolvent and entirely without direction. This would make the rest of the bailout pointless. The bonus situation was unsavory but practical if you accept the premise that a bailout of AIG was necessary.

    My biggest beef with the AIG deal was that the government should have renegotiated even more contracts. They should have only honored claims against the credit default swaps at say 60-80 cents on the dollar for domestic contracts and 30-50 cents of the dollar for foreign ones (I'm pulling these numbers out of the air). AIG has given tens of billions in taxpayer money to foreign banks and considering what they'd have received if AIG had folded anything is generous.

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