Posted by
Bill Crawford on Wednesday, March 18, 2009 12:23:45 PM
What a circus we have going on in Congress today. The elected officials are mad as hell, and they are letting the management of AIG have it with both barrels. They are also more than happy to share their populist anger with the public.
It's too bad they haven't done their fargin' homework. If they did, they would become aware of a few things.
First, if a government entity uses it's power to break a contract agreed to between two private entities, the precedent will be dangerous beyond recognition. Imagine the hell you would be going through if you retired and found that Congress was renogotiating your pension benefits-
and had the power to change them at will.
Secondly, the bonuses were negotiated and agreed to before the bail out last year. If Guethner didn't know about them this week, he should be dumped as Treasury Sec immediately, because he was the principal negotiator of said bail out.
Third, the bonus structure in these companies are not strictly based on performance. Some of them are practiically guaranteed as part of the salary package. This is a byproduct of the Clinton years, when cap gains taxes were lowered and income taxes were raised.
Fourth, the notion of Dodd, Frank and Waters questioning these people with moral indignation sets off all my Barnum & Bailey circuit breakers. Chris and Barney should be burlap sacked and tied up in the basement until the housing market corrects a few years from now.
It seems to me that whatever the punishment of the AIG people, it is well and fair that they should suffer. While I still hold out hope that the concept of inviolate contract agreements stays out of the hands of the government, let this be a disincentive for all companies out there who are applying for bail money from the feds. Look at what they do to you when they own even part of your company.
Hey, GM and Chrysler, are you listening?