Okay. I'm pissed off about AIG executives getting big bonuses after the bailout, too.
But I'm hearing things that suggest that at least some of these bonuses were already locked in contractually before the bailout was even requested. In other words, if AIG chose not to honor those contracts by paying bonuses already agreed on, they'd get sued--and lose.
Does anyone know if that's the case?
If so, then obviously, considering the performance of these executives, the contracts were bad bargains. Putting into an employment contract, 'you get a bonus, no matter what,' is, no doubt, a bad deal. But "we made a bad deal" has never been an defense for simply not paying.
But if we demand as a cost of the bailout that the company spend attorney fees defending a contract claim that AIG'S going to lose and end up paying anyway (with interest), doesn't that seem like a worse deal?
Now, demanding as a cost of the bailout that these idiots get shitcanned, given their agreed-on bonuses and escorted off the property by security with the contents of their desk drawers in a little box...THAT I could get behind without reservation. Demanding as a condition of the bailout that all future compensation be tied to actual performance benchmarks, definitely.
But the Feds coming in and saying "previous contracts are null and void...." Hmmm. Don't know if we want to go there.
UPDATE: an interesting proposal, via BoingBoing:
Congress, as usual, is merely whining. Here's what it might do: Enact legislation that imposes a 100 percent income tax on bonuses or whatever the financial wizards want to call them at the companies receiving our tax dollars for their, and the economy's, survival.
IANAL, but it seems to me that a condition of, "None of the bailout money can be used to pay bonuses, you have to pay that yourself," would be perfectly legitimate. Let 'em sue the banks for not meeting the contract if they want -- that particular failure is a knife that cuts both ways.
ReplyDeleteI think the money AIG received was from the Bush administration in September of 2008 prior to the first massive bailout amount ($350 billion). It's actually a loan in the amount of $85 billion, which gave the feds an 80% stake in the company. I believe the only caveat to the loan was that then-CEO Robert Willumstad had to step down. The money was meant to insure the payment of credit-fault swaps. It would seem in light of the lack of any specific restrictions on bonuses that AIG has every right to pay the money out. If I remember correctly, Bush wasn't real big on limiting pay to any corporate bigwigs. We oughtta send him the $165 million bill.
ReplyDeleteI think the 100% tax rate is a capital idea!
Tom, you might want to send Obama a copy of that bill since he stood right behind it (along with his Democratic brethren).
ReplyDeleteThe real issue here is why wasn't a stipulation put in BEFORE they got the damn money?
But that's just me complaining again ... and while I'm at it, they shouldn't have gotten a dime of bailout money, end of story. Had the companies defaulted, they would have had to sue to get blood from a stone.
All this sudden "anger" (must be catchy) by Obama et al is nothing more than a dog and pony show. This should've been handled up front. They could've blocked the original bailout by demanding no bonus money, etc.
Just like the last president, this one seems to have lost his clothes (on this issue).
What will be interesting to find out is when the bonuses were actually given or approved. If the bailout they received had no salary/bonus stipulations similar to later bailout monies, seems to me AIG is in the right, and our government - all of them - either screwed up again, or continues to pander to large corporations at the expense of the taxpayers.
ReplyDeleteSeems like the bonuses are for 2008 and were contractually guaranteed to remain at 100% OF 2007 levels, according to N.Y. AG Mario Cuomo. read the details at http://www.huffingtonpost.com/2009/03/17/cuomo-reveals-details-of_n_175865.html .
ReplyDeleteUh....ANDREW Cuomo. ANDREW!!
ReplyDeleteTom wrote: and our government - all of them - either screwed up again, or continues to pander to large corporations at the expense of the taxpayers.
ReplyDeleteWhich is why Tom is my other hero today (Beneath the Carolina Moon over at Dave 3x's blog is also one) ...
There's no difference between these parties and until we (all of us) stop playing "their" game (defending one or the other) and start voting for ANOTHER party (take your picks), the status quo remains the same.
Sorry, until the DEMS can do more than "talk" about helping the suckers (us), I'm not interested in anything they have to say. The Reps are no better or worse.
The joke has been on us long enough.
And trust me, this AIG nonsense is the tip of the iceburg ... wait'll you see how much money winds up unaccounted for over the next few years (just like the money the Reps were responsible for in Iraq--some of it seemed to have disappeared).
The scam artists were lining up waiting for that bailout to be passed ... and the "oversight" both parties gave lip service to never happened (obviously).
So, tell me, Bush and Obama ... aside from aesthetics, what's the difference so far?
The idea that a contract can't be broken for these employees who screwed up and should have been fired last June, is ridiculous. The autoworkers who didn't approve stupid credit default swaps had their contracts abrogated so that the car companies could get bailout money. Why is it that overpaid exectutives can't be penalized for bad work performance and union workers who did their jobs can be penalized. That's just bullshit.
ReplyDeleteKate ... I feel your anger (and share it -- ask JD) ... but welcome to the 1930's ... companies and corporations are taking full advantage of their self-made crisis and are taking back what workers (unions especially) struggled for decades to get. On one of my jobs I no longer get "sick days" (this in NY). On the other, with a very good review, I was told raises are on hold.
ReplyDeleteThen about 30 people were whacked from the "raises on hold job" ... the other one had already been outsourced.
American workers need to unite (under any flag other then Democrat or Republican). Both parties were bought and sold down the river a long time ago.
Today Obama announced he wants tougher regulation and that business on Wall Street won't be business as usual.
Somebody smack me ... is this guy for real? He's starting to look every bit as incompetent as the last moron. They could've blocked all that bonus bullshit (and written in a host of other protections for workers) before they gave away all that gelt.
It's exactly as Kate said: "Bullshit."
There is more, and the truth isn't out yet. Seems the restrictions concerning payout limits WERE in place in the Senate portion of the bailout bill, and would have prevented this travesty from happening. Senators Ron Wyden and Olympia Snow added a provision that would have limited bonus payouts to $500,000 (still an outrageous amount for someone who screwed up), but that provision died in committee prior to being sent to the House. Who killed it is yet to be determined.
ReplyDeleteHowever, it was Bush who first opposed any salary caps on executive compensation in the original bailouts. I have a feeling that anyone who wants to blame the Dems for this one will wear mud before it's over. At the same time, it sounds like once again, both Congress and the White House were willing to let this ride and showed no concern until the public started screaming. To Obama's credit, he is at least attempting to do something about it instead of taking Cheney's tack that "Public opinion doesn't matter." The screaming in Congress? A predictable reaction - I've always contended that were it not for opinion polls, Congress would never take action on anything.
Tom wrote: I have a feeling that anyone who wants to blame the Dems for this one will wear mud before it's over.
ReplyDeleteHero status revoked forthwith.
The Dems are the ones who bribed the 12 gutless wonder republicans who held out on the original bailout ... the bribe was worth $150 billion ...
Both parties, Tom ... both parties are guilty of this mess.
And you're right about it not ending here. They are going to find scammed missing money for years to come when this fiasco is over.
To reiterate ... 12 pieces of human garbage republicans held out for $150 billion (provided for by the Dems in Congress) and the first bailout passed.
Not a single stipulation regarding outsourcing ... those clowns gave our money to companies and corporations who will outsource OUR jobs freely.
That makes a lot of sense.
Sorry, the Dems (the Messiah included), are wearing the same mud as the losers from the other side of the aisle on this one.
The idea that a contract can't be broken for these employees who screwed up and should have been fired last June, is ridiculous.
ReplyDeleteWhile this may be satisfying to say, I don't know if it counts as a legal argument.
I know, I know, no one here cares about legal arguments, but if these guys sue AIG over these contracts, they're going to need to get made, probably at great expense.
All I'm saying is, unless the contracts these guys negotiated before the government got involved don't tie the bonuses to company performance, then they're as much a legal obligation of the company as the light bill.
Yes, it sucks. Yes, it was foolish of AIG to negotiate a deal like that. But tell me what we can do about it? I like the idea of a 100% tax, but you start running into the fact that this may be an unconstitutional Bill of Attainder (an act of legislature declaring a person or group of persons guilty of some crime and punishing them without benefit of a trial.)
so how do we get this back, under the rule of law? Or do we just give Obama and/or Congress the supreme power to take something away because it offends us? That would go beyond socialism into despotism. Charlie, you like to sneer that I think of Obama as "the Messiah." well, I may give that power to Jesus, but even then I'd have to think about it. and I'm not handing it to Barack Obama.
JD: That would go beyond socialism into despotism.
ReplyDeleteBrother, I'd tattoo his face on my arm if he did that.
I'd be his fan for life.
Truman ran the American flag up the flag poles at the Steel mills during the Korean War and although it was reversed, it was the right thing to do.
He would become MY messiah if he did one god damn thing in favor of all the poor sob's who put him in office.
Sometimes, my brother, too much democracy isn't a good thing.
Do I sneer?
ReplyDeleteSo, Charlie, you want a king?
ReplyDeleteI'd settle for a generalissimo about now.
ReplyDeleteI want the workers of this country represented. The dirty words communism and socialism are fine with me. Anything but this fiasco of a democracy.
But since you asked me a direct question ... No, no Kings. A benevolent Generalissimo or an Alan Alda with very big balls.
a benevolent Generalissimo or an Alan Alda with very big balls.
ReplyDeleteHeh. Problem with Generalissimos (Generalissimi?) is that they're hard to keep benevolent and hard to get rid of once the crisis passes. How long did it take Spain to get rid of Franco?
Alan Alda, of course, is nearly impossible to get rid of.
I don't think even Hawkeye Pierce could wisecrack his way out of this one. The track JD is following is the one I see playing out. I bet the damage was done long before Bush gave them the first unconditional payout (yeah, Bush - the first one came from the Treasury, not Congress). Now Liddy has asked for all the recipients to voluntarily give back 1/2 of their bonus - let's see how that goes!
ReplyDeleteAs for "hero status revoked" - no crying there. I am my own hero, my childrens' hero, and on most days, my wife's hero. That's enough heroing for any sane person.
Tom wrote: I bet the damage was done long before Bush gave them the first unconditional payout (yeah, Bush - the first one came from the Treasury, not Congress).
ReplyDeleteYes, except it couldn't get anywhere without democratic approval and that only happened after 12 Reps stalled the bill until the Dems gave them $150 billion on top of the original $700billion.
I'm not excusing Bush. He should've been shot long before this fiasco (like when the Dems took control of Congress--it wouldn't been nice to see them bring him up on war crimes (or the Hague) and/or impeach him instead of giving him just about everything he asked for the last two years of his debacle (including TARP I).
On to hero status ... you're back, brother. Anyone who mentions wives and kids is a hero in my book.
Charlie - check your history. AIG's first and largest bailout $(85B)was prior to any broad government bailout. If it was stipulated then, that would have taken care of it. But Bush and his cronies balked at capping any salaries. At this point, it's still undetermined who yanked the Wyden-Snow provision out of the current bailout ($750B) provision. I'm not sure what, if any, money they have received since the first princely sum prior to asking for the current additional $30 Bil they've just requested, has come out of either Bush's subsequent $350B bailout or the current $750B. BTW, Wyden-Snow also required any bonus money rec'd from a bailout company be taxed at 35%. Now Congress is trying to tax those bonuses at 90%? I hope the Pres vetoes that shit - it'll go to the courts for sure and end up costing the taxpayers more than the $165 mil. This is a lose-lose situation, unless all the bonus money is voluntarily returned, which seems highly unlikely but possible (at least most of it).
ReplyDeleteTom ... you got me on the initial $85 billion (that was Bush's baby) ... but then explain how and why after that fiasco the Dems rammed home the $700 billion (with a $150 bribe to 12 Reps) ... with again no stipulations regarding outsourcing, bonus money (a 35% tax on bonuses to guys who bankrupted a system is a joke).
ReplyDeleteThe point being, there's no excuse for what both parties permitted with the initial 85 billion, Tarp I and/or Tarp II. The taxpayers were ignored once again and it is the lower and middle classes who are suffering the most while millionaires were bailed out.
And the Dems just don't get to ignore the last 2 years of Bush's presidency (they were in power) ... they did NOTHING to stop the guy ... and in fact, especially in light of Bush's $85 billion loan to AIG, they suddenly found him an economic genius ...?????????
They followed his lead and the result is what we get to read about day in and day out now ... how CEO's have parties with our money ... get bonuses ... golden parachutes ... and some of us move into tent cities while the rest wait for the hammer to drop.
They have us right where they want us ... just about everybody I know, no matter what their work environment, are saying "we should be happy to have jobs."
Soon they'll hand out brooms and tell us to sweep up when there's nothing else to do.
Check the news - seems the switch might have happened in the Treasury. But I agree with you - the Dems did nothing to stop Bush, just as they did nothing to stop him in the beginning of his presidency.
ReplyDeleteI don't want to get too far off the track here, but I have always felt the best thing that could happen to Congress is term limits. Fire the fatcats - they don't use their experience to govern, they use it to line their own - and the corporate world's - nest.
Here's what I heard:
ReplyDeleteIf AIG had gone through any normal bankruptcy proceeding, those contracts would have gone to the judge, and the judge would (probably) have ripped them up and a compromise would have occurred.
*IF* that's true - I'll work on the assumption it is - then what frosts me is that the CEO didn't go into "folks, we *are* bankrupt, in all but name, so we're bloody well going to act like it!" and modified everything before this issue arose.