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Congressman Barney Frank (D-MA) says allowing AIG executives to keep their $165 million in bonuses is "rewarding failure." Barney is right. It is rewarding failure. What Barney doesn't say is, it was Barney Frank and company (the federal government, under both Bush and Obama) who enabled the bonuses to be paid in the first place, by giving AIG over $170 billion in bailout money. That was rewarding failure too, Mr. Frank, and on a far bigger scale. And while we're on the subject of failure, I'm wondering why we are paying Congress a salary at all, since the country is up to it's ears in red ink. Isn't THAT rewarding failure too ? I'm also wondering how any Congressperson has the cojones to complain about $165 million in AIG bonuses a few days after Congress passed the largest Omnibus spending bill in history, which contained $7.7 billion in unnecessary and wasteful pork spending. The hypocrisy is deafening.
Doesn't it seem odd that nobody in our federal government knew about the AIG bonuses until right around the time they were being paid out (they were paid last friday) ? The government owns 80% of AIG. AIG made the contractual obligations to pay the bonuses about a year ago, according to the information I've read. And the $165 million is only part of AIG's bonus payments. The total 2009 bonus payment schedule for AIG comes to $450 million. Treasury Secretary Tim "Turbo Tax" Geithner is said to be the one who negotiated the initial AIG bailout last fall, yet Turbo Tim acted like he knew nothing about these bonuses until LAST WEEK. Did Treasury even ask AIG about it's operating procedures before giving AIG all that bailout money ? Is Geithner merely incompetent, or is he lying ? When DID the government know about the bonuses ? Inquiring minds want to know.
Two weeks ago, Obama press secretary Robert Gibbs (who almost manages to make ex-Bushie Scott McClellan look smart by comparison, no easy feat) said the government knew how the AIG bailout money was being spent. We can probably discard Gibbs' comments, because it's not like he's telling the truth about much of anything anyway. He's just there for spin. Let's move on to Sen. Chris Dodd (D-CT). Last month, Dodd inserted an amendment into the stimulus bill that restricted executive compensation for companies being bailed out. The amendment provided an “exception for contractually obligated bonuses agreed on before Feb. 11, 2009.” The Dodd amendment insured that the AIG bonuses would be paid, though now Dodd laughably claims he doesn't know how the DODD AMENDMENT got into the stimulus bill. Really. He's actually saying that. Read the link. I'm setting aside the larger issue here, which is, the Dodd amendment was superfluous to begin with, because contractual obligations don't have to be validated by Chris Dodd or anyone else. They are already valid. THE GOVERNMENT HAS NO LEGAL BASIS TO NULLIFY EXISTING CONTRACTS, even if the government wants to. I know our legislative branch doesn't pay much attention to outmoded concepts like contracts and such (that's the old way of doing business), but I think the notion used to be known as "the rule of law." Now that the uproar over the AIG bonuses is in full swing, Dodd and others want to get back the bonuses that Dodd explicitly authorized, by taxing the bonus recipients at nearly 100%. That too, of course, would be unconstitutional. There is another outmoded idea from the past called "equal protection under the law" that would prevent Congress from singling out a few AIG employees and confiscating all their money. Imagine the precedent it would set if the federal government could just nullify legal contracts and confiscate a person's wealth because they felt like it. Totalitarian change we can believe in. Even our current liberal administration realizes it can't go THAT far, or at least some of them do. Obama, who has a background in Constitutional Law, realizes he can't go that far, though many in Congress think they're entitled to do anything they damn well please. They WON, after all. Here's Sen. Chucky Schumer (Communist-NY):
"If they [AIG employees] don't [return the bonuses] we plan to tax virtually all of it."
Here's what was in a letter Harry Reid (D-NV) and nine other Democrats wrote to AIG CEO Edward Liddy:
"We expect that you will report back to Congress on your efforts to recoup these payments in short order."
CEO Liddy is to testify before the House Unamerican Activities Committee, er, I mean, Congress, on wednesday.
Hey, here's a simple idea. Obama is going to give AIG $30 billion more in bailout funds next month. Just deduct the $165 million from that amount. I doubt AIG would even miss such a paltry sum. Here's an even better idea. Don't give AIG any more taxpayer money. If we don't reward failure, then failure can't blow our money on huge bonuses, Las Vegas trips, private jets, or whatever. Failure will be bankrupt, as failure should be. That would leave only success standing. Now that I think of it, I'm pretty sure there's a concept for punishing failure and rewarding success already in place. What do they call that ? Darn, I can't remember anymore, it's another of those outmoded ideas. What was it ? Oh yeah, now I remember, it's called "capitalism." In capitalism (which is little more than a theory at this point), when your company loses all it's money by acting foolishly, the company is bankrupt, and then there is no more company. Darwin called this "survival of the fittest." We've replaced the Darwinian idea with a new idea - "too big to fail." Do you think massive incompetence may be the result of this change ?
Sen. Chuck Grassley (R-IA) also made a suggestion for the AIG executives. He said they should take the Japanese route for dealing with shameful business practices and either resign or commit suicide. That may be taking things a bit far, but at least it exhibits some personal responsibility. I have an old set of Ginsu knives I'll donate to the cause.
Parting thought - Why are we upset that $165 million of the AIG bailout funds went for bonuses, but we AREN'T upset that $58 billion of the bailout funds went to FOREIGN BANKS ????? That's American taxpayer money being used to bailout France, Germany, etc. Shouldn't THAT be the headline news ?
I've seen incompetence before, but I have never witnessed anything like this. The inmates ARE running the asylum. The AIG follies are proof positive.