Ok, I know there are people on this board that know a lot more about this than me. What I want to know is who's responsible for the bonus loop hole. Correct me if I'm wrong but didn't the Bush administration provide the majority of the bail out money for AIG? If so wouldn't the loop hole have been written into the proposal for the bailout that the Bush administration presented?
Personally I think A.I.G. is the one who needs take 95% of the heat on this one. Let's stop protecting the corporations that are running us into the ground with greed. It seems like the conservatives want to put the heat on Geithner and Obama for lending out this money and allowing the loop hole. It also seems to me that the Republican Party is suddenly all about cutting ties with the same monster corporations that they've supported and in return received support from for way to long. I think it's great that there is outrage over the bonuses but I have to ask....Couldn't we have used this same outrage all these years these Corporations have been acting completely irresponsible and robbing us blind. I guess all good things come to an end. I think it takes a while after you rub your eyes for things to come fully into focus, but at least we are waking up.
Obviously we couldve used/needed the outrage when the economy was better and these people were still receiving their bonuses.
I dont think AIG needs to be singled out, because I think many more similar companies run the same protocol, but it just hasnt come to the surface/been as bad.
IMO it's also terrible because I think 1 of the most underpaid/appreciated professions is teachers, and their salary is severely lacking. What even gives people incentive to be teachers this days?! Honestly, I might have considered teaching if the pay wasnt the same as a tenured toll booth worker. Take them out of the equation, and where are even the most intelligent students???
This is just but a small microcosm of the larger picture. What you have is a regulation giving a corporation an inch, and they take it a lightyear. The question for AIG is a question of ethics, not legality. The legality issue arises with Congress, both pre- and post-bonus.
From what I understand, Sen. Dodd included the provisions at the urging of Tim Geithner with assent/tacit consent from Obama. The media has sort of run wild with this by saying this is $193M in the face of $193B or whatever the numbers are, which makes it seem like a lot less. Put it in persepective and add some zeros (which doesn't make any more or less wrong), but it looks like this:
$193,000,000,000 in TARP funds
____$193,000,000 in bonuses
Yes they were contractual, and no, they were not really bonuses but retention expenses. A bonus implies contingency on success, which is obviously missing. So the question now becomes a matter of why anyone would want to retain these people and who is making the decision? If the government has a large stake in the company, shouldn't they be making an effort to fire these people? On the flip side, is it cost effective to fire these people when their replacments may cost millions more to replace?
At the end of the day, at least to me, it's on the people receiving these bonuses to return them. It's a massive affront to the rest of the public that the people who were complicit in losing the public's money is now taking it and padding their pockets with it.
It is also a failure of congress to proscribe these bonuses before hand. It is fairly unconstitutional to retroactively tax these people, but if congress has no problem doing that, it should have had no problem in prohibiting these bonuses regardless of contractual obligations. In fact, I think it would be more legally feasible to argue for the breaking of the contractual obligations over this stupid 90% tax
EDIT: Also, I believe the new rumor is that congress has their pensions tied up with AIG, but I'm not sure of the validity of that statmeent
QuoteObviously we couldve used/needed the outrage when the economy was better and these people were still receiving their bonuses.
I dont think AIG needs to be singled out, because I think many more similar companies run the same protocol, but it just hasnt come to the surface/been as bad.
IMO it's also terrible because I think 1 of the most underpaid/appreciated professions is teachers, and their salary is severely lacking. What even gives people incentive to be teachers this days?! Honestly, I might have considered teaching if the pay wasnt the same as a tenured toll booth worker. Take them out of the equation, and where are even the most intelligent students???
I hope Obama moves to the merit-based pay. My mom is a teacher and gets paid less than most of the gym teachers, who don't even have to plan a curriculum or deal with the parents.
Also, if you want outrage that escapes my other post with regards to number games, I believe Merril Lynch recieved 9B in TARP funds and allocated 3B to bonus payments.
The problem lies with the fact that when everything is sunny they all take what they want. If there were more stringent rules during these times, they would have to adhere to them, and possibly never get into this mess. I for one think large corporations have too much control over things that happen around us. If everyoone thought about people as a whole, and not themselves, or their bonuses, this wouldn't be an issue. But as we see, too many people thrive off of greed, and it hurts me as a human to see it.
Well, that's not an easy answer. On the one hand, you have "bonuses" that are really people's compensation. The contracts were made a year ago. In Connecticut, if you sue a company for separation of wages and win, you're entitled to treble damages & lawyers fees. So, being a contract dispute, AIG could have been out 3 times as much on many of the Ks. In addition, congress handed out money with no strings attached which allowed for this to happen.
So it's a little of column A -AIG irresponsibly paying out "bonuses", column B- contractually they were obligated to pay them & column C- Congress was asleep at the wheel, making knee jerk reactions to the financial situation and not thinking it through.
--the new tax law they're throwing out there to recapture the bonuses is another knee jerk reaction IMO--and unconstitutional? i am hoping most will volunteer to give them up, which i believe some already have?
There is a really great article in Rolling Stone this week that breaks down the housing crisis, the AIG issue and specifically CDOs that really caused most of this; the writer (i think matt thaibbe or taibbe) broke it down for normal people like us.
Quote
EDIT: Also, I believe the new rumor is that congress has their pensions tied up with AIG, but I'm not sure of the validity of that statmeent
yes this makes sense---they have a bulk of the govt retirees pens/retirements
QuoteThe problem lies with the fact that when everything is sunny they all take what they want.
This statement could also be applied to politicians.
QuoteIf there were more stringent rules during these times, they would have to adhere to them, and possibly never get into this mess.
Yeah, that's likely - I mean, the government is awesome at oversight, right?
QuoteI for one think large corporations have too much control over things that happen around us.
Hey, we're close to agreement there - I think the government has too much control over things happening around us.
QuoteIf everyoone thought about people as a whole, and not themselves, or their bonuses, this wouldn't be an issue.
This isn't going to be a popular statement, by far, but that just isn't human nature. We look out for ourselves and our families. We work, we toil, we suffer for our own good and our own moral imperative - not for the good of some "people as a whole"...
QuoteBut as we see, too many people thrive off of greed, and it hurts me as a human to see it.
The War on Greed is like the War on Terror and the War on Drugs.
Quoting someone else,
QuoteI hope Obama moves to the merit-based pay.
I haven't put much thought into this, but I
think I'm all for it as long as the criteria is measurable. It won't happen, though - the teacher's union won't let that happen.
Quote--the new tax law they're throwing out there to recapture the bonuses is another knee jerk reaction IMO--and unconstitutional? i am hoping most will volunteer to give them up, which i believe some already have?
Yes, it was a knee-jerk reaction, and yes, like most knee-jerk reactions from congress, it's unconstitutional. And I
think most of the people have already surrendered their bonuses, not sure.
QuoteQuote
EDIT: Also, I believe the new rumor is that congress has their pensions tied up with AIG, but I'm not sure of the validity of that statmeent
yes this makes sense---they have a bulk of the govt retirees pens/retirements
BINGO
US V Carlton (http://www.law.cornell.edu/supct/html/92-1941.ZS.html)
Now, I believe that the 90% tax should fail on a bill of attainder or ex post facto grounds. However, in this case decided in the Tax Court and ultimately SCOTUS, the basic idea is that the court would uphold such a retroactive tax if it was the intended ends of a misguided means on behalf of congress.
Bleh.
A few cartoons I found amusing:
(http://d.yimg.com/a/p/uc/20090323/ljd090322.gif)
(http://d.yimg.com/a/p/umedia/20090323/cp.59379fb8c796cbd52b87ba7ae1a1eaa3.gif)
(http://d.yimg.com/a/p/uc/20090324/lta090324.gif)
politics too, obama can't come across too p*ssed about this (well he did in the beginning, but since then, he's pulled back) he still has to work w/Congress and get more stimulus passed; not much he can do; he barely passed the first TARP.
Quotepolitics too, obama can't come across too p*ssed about this (well he did in the beginning, but since then, he's pulled back) he still has to work w/Congress and get more stimulus passed; not much he can do; he barely passed the first TARP.
You know what really annoys me? The pork was put in the TARP only to get people on board. If you're not on board for its intended purpose, then what are you on board for?
What pisses me off is that politicians voted for something they didn't even read. You want to talk about the dangers of greedy people running wild? These elected losers are a threat to national security.
QuoteWhat pisses me off is that politicians voted for something they didn't even read. You want to talk about the dangers of greedy people running wild? These elected losers are a threat to national security.
In all honesty, if there were smart lawyers out there, I wonder if the mere fact of the bonuses being paid could be unconstitutional. Article VIII of the Const provides:
The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United StatesDepending how you read that, if the taxes are directly related to paying the debts and general welfare, then how is the paying of the bonus related to this means?
Okay, how is a monetary bonus different than employer's providing health care?
QuoteWhat pisses me off is that politicians voted for something they didn't even read. You want to talk about the dangers of greedy people running wild? These elected losers are a threat to national security.
patriot act?
they are a threat to nat'l security and they pretty much slaughtered the 4th amend in one swoop
QuoteQuoteWhat pisses me off is that politicians voted for something they didn't even read. You want to talk about the dangers of greedy people running wild? These elected losers are a threat to national security.
In all honesty, if there were smart lawyers out there, I wonder if the mere fact of the bonuses being paid could be unconstitutional. Article VIII of the Const provides:
The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States
Depending how you read that, if the taxes are directly related to paying the debts and general welfare, then how is the paying of the bonus related to this means?
i agree but lack of oversight is part of the reason this happened. hands off approach and these 4 or 5 guys at AIG running wild; even a smart lawyer and this stuff is so complex; years of litigation and for what? will AIG still go under? i get depressed thinking about it.
QuoteQuoteQuoteWhat pisses me off is that politicians voted for something they didn't even read. You want to talk about the dangers of greedy people running wild? These elected losers are a threat to national security.
In all honesty, if there were smart lawyers out there, I wonder if the mere fact of the bonuses being paid could be unconstitutional. Article VIII of the Const provides:
The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States
Depending how you read that, if the taxes are directly related to paying the debts and general welfare, then how is the paying of the bonus related to this means?
i agree but lack of oversight is part of the reason this happened. hands off approach and these 4 or 5 guys at AIG running wild; even a smart lawyer and this stuff is so complex; years of litigation and for what? will AIG still go under? i get depressed thinking about it.
I get depressed that we now have an opportunity to start fresh and build a new boat, but everyone seems more content to ride in a raft covered in patches that are covered in patches and hope that we don't run out of material for the patches.
I don't even think it was hands off or hands on or it was too much regulation or not enough, it was just half-assed mis-guided regulation that basically was warned against in Federalist 9 & 10 - regulation and laws in favor of the factions.
Good stuff friends!!! Thank You.
I heard something the other night about how 15 of the top 20 AIG guys declined the bonus.
What's strange is that the total on the amount of money saved by those 15 people declining the bonus was - 30 Million dollars. So that's an average of 2 Mil per bonus.....Wow!!!
I got a hundred dollar check for being the full time staff of the year at the Boys & Girls Club in our East TN area which includes 14 different clubs and serves thousands of children and families. I'm not bragging, complaining or being ungrateful (trust me I was really excited about the check and truly did not expect to get anything) the whole thing is just interesting to me.
Anyway, I agree with something Tracy said a while back, let's just let all these corporations fail and go bankrupt. I'm just not sure we are ready for that yet. I do think we are getting closer and closer to a day when someone like Nader or Paul will really have a chance and I know I wouldn't feel like that right now if McCain had been elected.
Speaking of Nader having a chance, here is a good example of why Fox News really bewilders me.......
http://www.youtube.com/watch?v=ibsP6XN2dIo
Ralph Nader said, when talking about if we are going to have corporations be our government or the people.......
The difference between the Republican Party and the Democratic Party is the velocity with which their knees hit the floor when corporations pound on their door.
I've often said that capitalism is what makes this nation great and capitalism will be why this nation eventually fails.
Fear usually wins over reason.
QuoteI've often said that capitalism is what makes this nation great and capitalism will be why this nation eventually fails.
Fear usually wins over reason.
I've always said it's the bastardization of capitalism that will bring it all down. As in, the nature of capitalism is PROFIT and not COMPETITION. It's not deregulation, it's proper regulation. What is the value of capitalism when a market is dominated by a few companies who share even fewer umbrellas?
The move has been from intentional inefficiency to efficiency in the name of laziness. If the shortcut doesn't hurt, it's not really a shortcut.
the more i read about AIG, the more baffled i get. the lack of internal controls .. they didn't even have a CFO for the last 6 months before the bailout. internal auditors did nothing and outside auditors questioned admin (i assume CEO, Gen Counsel, COO) and they knew nothing; this guy behind the whole CDO scheme is STILL employed there. he gets a million a month as a consultant!!! (this i got from that new rolling stone article)
QuoteI've often said that capitalism is what makes this nation great and capitalism will be why this nation eventually fails.
Fear usually wins over reason.
i think that capitalism fails to take into account the bad side of human nature (greed, immorality) and socialism fails to take into account the good side of human nature (work ethic, determination, creativity, innovation) **i think i'll still take capitalism any day, though
From the New York Times,
The following is a letter sent on Tuesday by Jake DeSantis, an executive vice president of the American International Group's financial products unit, to Edward M. Liddy, the chief executive of A.I.G.
DEAR Mr. Liddy,
It is with deep regret that I submit my notice of resignation from A.I.G. Financial Products. I hope you take the time to read this entire letter. Before describing the details of my decision, I want to offer some context:
I am proud of everything I have done for the commodity and equity divisions of A.I.G.-F.P. I was in no way involved in — or responsible for — the credit default swap transactions that have hamstrung A.I.G. Nor were more than a handful of the 400 current employees of A.I.G.-F.P. Most of those responsible have left the company and have conspicuously escaped the public outrage.
After 12 months of hard work dismantling the company — during which A.I.G. reassured us many times we would be rewarded in March 2009 — we in the financial products unit have been betrayed by A.I.G. and are being unfairly persecuted by elected officials. In response to this, I will now leave the company and donate my entire post-tax retention payment to those suffering from the global economic downturn. My intent is to keep none of the money myself.
I take this action after 11 years of dedicated, honorable service to A.I.G. I can no longer effectively perform my duties in this dysfunctional environment, nor am I being paid to do so. Like you, I was asked to work for an annual salary of $1, and I agreed out of a sense of duty to the company and to the public officials who have come to its aid. Having now been let down by both, I can no longer justify spending 10, 12, 14 hours a day away from my family for the benefit of those who have let me down.
You and I have never met or spoken to each other, so I'd like to tell you about myself. I was raised by schoolteachers working multiple jobs in a world of closing steel mills. My hard work earned me acceptance to M.I.T., and the institute's generous financial aid enabled me to attend. I had fulfilled my American dream.
I started at this company in 1998 as an equity trader, became the head of equity and commodity trading and, a couple of years before A.I.G.'s meltdown last September, was named the head of business development for commodities. Over this period the equity and commodity units were consistently profitable — in most years generating net profits of well over $100 million. Most recently, during the dismantling of A.I.G.-F.P., I was an integral player in the pending sale of its well-regarded commodity index business to UBS. As you know, business unit sales like this are crucial to A.I.G.'s effort to repay the American taxpayer.
The profitability of the businesses with which I was associated clearly supported my compensation. I never received any pay resulting from the credit default swaps that are now losing so much money. I did, however, like many others here, lose a significant portion of my life savings in the form of deferred compensation invested in the capital of A.I.G.-F.P. because of those losses. In this way I have personally suffered from this controversial activity — directly as well as indirectly with the rest of the taxpayers.
I have the utmost respect for the civic duty that you are now performing at A.I.G. You are as blameless for these credit default swap losses as I am. You answered your country's call and you are taking a tremendous beating for it.
But you also are aware that most of the employees of your financial products unit had nothing to do with the large losses. And I am disappointed and frustrated over your lack of support for us. I and many others in the unit feel betrayed that you failed to stand up for us in the face of untrue and unfair accusations from certain members of Congress last Wednesday and from the press over our retention payments, and that you didn't defend us against the baseless and reckless comments made by the attorneys general of New York and Connecticut.
My guess is that in October, when you learned of these retention contracts, you realized that the employees of the financial products unit needed some incentive to stay and that the contracts, being both ethical and useful, should be left to stand. That's probably why A.I.G. management assured us on three occasions during that month that the company would "live up to its commitment" to honor the contract guarantees.
That may be why you decided to accelerate by three months more than a quarter of the amounts due under the contracts. That action signified to us your support, and was hardly something that one would do if he truly found the contracts "distasteful."
That may also be why you authorized the balance of the payments on March 13.
At no time during the past six months that you have been leading A.I.G. did you ask us to revise, renegotiate or break these contracts — until several hours before your appearance last week before Congress.
I think your initial decision to honor the contracts was both ethical and financially astute, but it seems to have been politically unwise. It's now apparent that you either misunderstood the agreements that you had made — tacit or otherwise — with the Federal Reserve, the Treasury, various members of Congress and Attorney General Andrew Cuomo of New York, or were not strong enough to withstand the shifting political winds.
You've now asked the current employees of A.I.G.-F.P. to repay these earnings. As you can imagine, there has been a tremendous amount of serious thought and heated discussion about how we should respond to this breach of trust.
As most of us have done nothing wrong, guilt is not a motivation to surrender our earnings. We have worked 12 long months under these contracts and now deserve to be paid as promised. None of us should be cheated of our payments any more than a plumber should be cheated after he has fixed the pipes but a careless electrician causes a fire that burns down the house.
Many of the employees have, in the past six months, turned down job offers from more stable employers, based on A.I.G.'s assurances that the contracts would be honored. They are now angry about having been misled by A.I.G.'s promises and are not inclined to return the money as a favor to you.
The only real motivation that anyone at A.I.G.-F.P. now has is fear. Mr. Cuomo has threatened to "name and shame," and his counterpart in Connecticut, Richard Blumenthal, has made similar threats — even though attorneys general are supposed to stand for due process, to conduct trials in courts and not the press.
So what am I to do? There's no easy answer. I know that because of hard work I have benefited more than most during the economic boom and have saved enough that my family is unlikely to suffer devastating losses during the current bust. Some might argue that members of my profession have been overpaid, and I wouldn't disagree.
That is why I have decided to donate 100 percent of the effective after-tax proceeds of my retention payment directly to organizations that are helping people who are suffering from the global downturn. This is not a tax-deduction gimmick; I simply believe that I at least deserve to dictate how my earnings are spent, and do not want to see them disappear back into the obscurity of A.I.G.'s or the federal government's budget. Our earnings have caused such a distraction for so many from the more pressing issues our country faces, and I would like to see my share of it benefit those truly in need.
On March 16 I received a payment from A.I.G. amounting to $742,006.40, after taxes. In light of the uncertainty over the ultimate taxation and legal status of this payment, the actual amount I donate may be less — in fact, it may end up being far less if the recent House bill raising the tax on the retention payments to 90 percent stands. Once all the money is donated, you will immediately receive a list of all recipients.
This choice is right for me. I wish others at A.I.G.-F.P. luck finding peace with their difficult decision, and only hope their judgment is not clouded by fear.
Mr. Liddy, I wish you success in your commitment to return the money extended by the American government, and luck with the continued unwinding of the company's diverse businesses — especially those remaining credit default swaps. I'll continue over the short term to help make sure no balls are dropped, but after what's happened this past week I can't remain much longer — there is too much bad blood. I'm not sure how you will greet my resignation, but at least Attorney General Blumenthal should be relieved that I'll leave under my own power and will not need to be "shoved out the door."
Sincerely,
Jake DeSantis
wow
brad-can't find this, what's the link?
QuoteWhat pisses me off is that politicians voted for something they didn't even read. You want to talk about the dangers of greedy people running wild? These elected losers are a threat to national security.
Uhh, politicians never read the entire bill or even more than a few sentences. 1000 pages of legal jargon sucks to read, especially when you have hands to shake and dinners to attend.
QuoteRalph Nader said, when talking about if we are going to have corporations be our government or the people.......
The difference between the Republican Party and the Democratic Party is the velocity with which their knees hit the floor when corporations pound on their door.
And as obnoxious a demagogue as he may be, I voted for him last year and probably will again if he's still kicking.
QuoteUS V Carlton (http://www.law.cornell.edu/supct/html/92-1941.ZS.html)
Now, I believe that the 90% tax should fail on a bill of attainder or ex post facto grounds. However, in this case decided in the Tax Court and ultimately SCOTUS, the basic idea is that the court would uphold such a retroactive tax if it was the intended ends of a misguided means on behalf of congress.
Bleh.
Yeah I just read the synopsis of the case. Ehh, rational basis, good to go
(Edit) - Now that I ponder it some more, I'm hesitant to give the stamp of approval on this retroactive tax as nonviolative of substantive due process. Both Carlton and its test predecessor Pension Benefit Guaranty take legitimate corrective measures that do not represent themselves as penalties.
Alas, I am no longer sitting in fiery discussions of the classroom but I'd venture that this SCOTUS makeup may in fact not find this to be a "legitimate legislative purpose by rational means."
Ughhh, I'm rusty. ;D
QuoteQuoteUS V Carlton (http://www.law.cornell.edu/supct/html/92-1941.ZS.html)
Alas, I am no longer sitting in fiery discussions of the classroom but I'd venture that this SCOTUS makeup may in fact not find this to be a "legitimate legislative purpose by rational means."
Ughhh, I'm rusty. ;D
and souter, stevens and ginsberg leaving really wouldn't change the makeup of things
QuoteQuoteQuoteUS V Carlton (http://www.law.cornell.edu/supct/html/92-1941.ZS.html)
Alas, I am no longer sitting in fiery discussions of the classroom but I'd venture that this SCOTUS makeup may in fact not find this to be a "legitimate legislative purpose by rational means."
Ughhh, I'm rusty. ;D
and souter, stevens and ginsberg leaving really wouldn't change the makeup of things
One of the few reasons I'm glad Obama was elected was that I always prefer a balance than a rail-roading skewing of government branch. This goes for Congress as well. Friction, baby.
QuoteQuoteRalph Nader said, when talking about if we are going to have corporations be our government or the people.......
The difference between the Republican Party and the Democratic Party is the velocity with which their knees hit the floor when corporations pound on their door.
And as obnoxious a demagogue as he may be, I voted for him last year and probably will again if he's still kicking.
Nader gives me mixed feelings. Sometimes he's too pro-union for me, but if you've ever seen the coverage/documentary on Poletown and his involvement, he really stood in all the right places and I gained a lot more respect for him.
Poletown, for those of oyu who aren't familiar, was the Kelo of the 80s, just at the state level, and could have been on of the biggest nails in Detroit's coffin.
QuoteI've often said that capitalism is what makes this nation great and capitalism will be why this nation eventually fails.
Fear usually wins over reason.
Fear usually wins over reason.So true on so many levels, it makes me want to bite someone.
I've often said that capitalism is what makes this nation great and capitalism will be why this nation eventually fails.I think what is happening now is that our country is going to have to set pride aside, on all sides. Maybe come to realize that Socialism and Capitalism are not black and white but the tools for grey.