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    March 18, 2009

    A.I.G. and Congressional blowhards

    Posted by: Andoni

    It's amazing to see the tirade in Congress over the $165 million in bonuses that have been paid to employees of A.I.G.'s credit swap derivatives division in London. That's the division that took the company to insolvency and the world to the brink of financial disaster.

    Am I happy about these bonuses? Absolutely not. I'm very angry about it. In fact I'm sick over the whole A.I.G. mess. But what I suggest is that what we see going on in Washington over A.I.G. is 535 adults acting like children.

    Consider the following:
    1. these A.I.G. employees are based in London. Unless any are U.S. citizens, all the proposals to claw back 99% of the money by raising the income tax on them won't apply. These people are British citizens. You would have to get the British government to go along and pass similar laws. This is a feel good solution that won't work.

    2. many of the same individuals who are now advocating for the heavy hand of government to get that money back, just a few weeks ago were screaming that we shouldn't convert our government to the heavy hand of nationalism or socialism. Is there a short term memory problem among these people?

    3. to get the money back, these people are willing to write new laws that apply only to a very small subset of people who have angered them to put the full force of the United States government to go after them. Any reading of the new law makes it very transparent that this was not a general law for all, but a targeted law to get specific people. Is this constitutional? I don't think so. Is this the type of government we want- one that crushes people out of anger? No. If we do this once, I guarantee we will go down this path again and again for more and larger groups of people who get us angry.

    I think most of the Members of Congress spewing their hot air realize the above three points.

    That makes them irresponsible panderers, hypocrites, and opportunists. They are not rational thinking leaders. They are one celled animals simply reacting to external stimuli. And that's sad to see.



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    1. DaveA on Mar 19, 2009 9:47:08 AM:

      I don't have any sympathy for these greedy pigs! When average people like myself lose one-third of their 401Ks and these gluttons are getting paid millions...I say off with their fraken heads! One should not be rewarded for failure. If I was failing at work, I would get fired not a big bonus!

    1. Tim C on Mar 19, 2009 10:00:03 AM:

      In all this economic collapse, the concept of using the US tax code to specifically target a group of individuals who have offended Congress is the most frightening thing I have heard. This seems more like the activity of the Politburo than the US Congress. To make legislation specifically to have a punitive impact on individuals who were doing something perfectly legitimate at the time it was done is very close to a bill of attainder, which is prohibited by the Constitution. This provision was put in the Constitution just for the purpose of preventing the government from targeting individuals who have angered them. If specific legislation can be used to target AIG executives, who is next? I have written my Congressman asking him to oppose this use of legislation and the tax code. It is perfectly legitimate to write legislation to prevent these kinds of bonuses in the future, but to reach back and punish someone for something already done (and taking 98% in taxes is punishment) is out of bounds.

    1. Andoni on Mar 19, 2009 10:48:20 AM:

      Tim C, your comment would make a great letter to the editor. Go for it!

    1. Wes on Mar 19, 2009 9:29:35 PM:

      This is chump change. From the chumps to the chumps.

      Very little is being said about the approaching $200 billion we already have in this company and no plan to get it back any time soon.

      But the $1 Trillion the Fed is creating (out of nowhere) to try its best to cause an inflationary depression is kind of out of the ballpark and cannot be called chump change. And we are still talking about the few little tens of millions in bonuses. Don't worry. By the time the recipients get around to spending it the money will be worth much less--if that is a consolation.

    1. Tim C on Mar 20, 2009 8:04:29 AM:

      The best comment on yesterday's activity in Congress came from a California Republican who asked from the well, "Doesn't anyone care about the Constitution?"

    1. Bradley on Mar 20, 2009 9:42:03 AM:

      Aren't contracts made to be broken? I thought that's what lawyers did...sue to break agreements. Trump sues his bank because the bank has the audacity to not change terms. There's no point in even writing contracts for professional athletes any more (unless it's just to spread the wealth among a few lawyers).

    1. GMRinSAN on Mar 20, 2009 1:24:19 PM:

      I completely agree with you Andoni and Tim C. The bonuses for AIG execs are indeed condemnable, however the PR circus going on in Congress these days is as frightening in its future implications as it is embarrassing to watch. I too have contacted my Congressional representation to urge them away from this dangerous precedent.

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