The futile arrogance of AIG outrage

posted at 8:51 am on March 17, 2009 by Ed Morrissey

The Barack Obama administration needed a new target for their populist rabblerousing, since they’ve apparently decided that Rush Limbaugh fights back and the oil companies don’t make enough of a profit to matter.  The contractual bonus payouts at AIG came just at the right time for them to demonstrate moral outrage and get the people to aim their ire at a shared enemy.  So far, few have figured out that the Obama administration enabled the bonus payouts:

A tidal wave of public outrage over bonus payments swamped American International Group yesterday. Hired guards stood watch outside the suburban Connecticut offices of AIG Financial Products, the division whose exotic derivatives brought the insurance giant to the brink of collapse last year. Inside, death threats and angry letters flooded e-mail inboxes. Irate callers lit up the phone lines. Senior managers submitted their resignations. Some employees didn’t show up at all.

“It’s a mob effect,” one senior executive said. “It’s putting people’s lives in danger.”

Politicians and the public spent yesterday demanding that AIG rescind payouts that they said rewarded recklessness and greed at a company being bailed out with $170 billion in taxpayer funds. But company officials contend that the uproar is scaring away the very employees who understand AIG Financial Products’ complex trades and who are trying to dismantle the division before it further endangers the world’s economy.

“It’s going to blow up,” said a senior Financial Products manager, who spoke on condition of anonymity because he was not authorized to speak for the company. “I have a horrible, horrible, horrible feeling that this is going to end badly.”

Maybe it’s an Obama stimulus.  After all, someone has to pay all of those guards, answer those threatening phone calls, and screen the mail for anthrax.  Just think how many jobs got saved by the White House turning AIG into a pariah — after dumping tens of billions of dollars into it.

The nasty little secret at the center of all the outrage is that the Obama administration could have stopped the bonuses by simply stopping the bailout.  They could have forced AIG into bankruptcy, which would have voided the company’s contractual compensation obligations.  Instead, the Obama administration chose to inject liquidity into AIG, following the lead of the Bush administration, which had done the same thing.  That kept AIG’s doors open, and therefore kept its contractual obligations to its employees intact.

Now Obama is outrageously outraged, as Allahpundit put it yesterday, but over what?  A company complying with its contractual obligations?  AIG has no more right to abrogate those contracts than any other employer would with its union contracts.  Whether or not the compensation agreements reflect wisdom and managerial brilliance, they exist — and as a matter of law, AIG has to honor the commitments.  Screeching about the bonuses now is not just futile, but a demonstration of the arrogance involved in these bailouts. If the government wants to tear up all the contracts, it will have to nationalize AIG and get Congress to approve it.

In the future, we can avoid having taxpayer dollars go to Wall Street bonuses by not bailing out private companies with taxpayer dollars.

Update: Fausta has more, plus a poll.


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Because that wasn’t stipulated before we made it rain with the cash.

Congress asked the car companies to make concessions before handing out the cash.

Big difference.

So what your saying is that auto company contracts are not worth the paper they are written on but financial company contracts are?

See I don’t understand why it was “ok” for auto companies to void their contracts but it’s not ok for financial companies to void their contracts.

Contracts are contracts.

Quality Weenie on March 17, 2009 at 9:54 AM

Because they know full well how STUPID 54% of America is.

anniekc on March 17, 2009 at 9:53 AM

OI’ll agree with uninformed but not stupid. I’ve met few truly stupid people. Most are just really uninformed.

TheBigOldDog on March 17, 2009 at 9:54 AM

I have a horrible, horrible, horrible feeling that this is going to end badly.

Yeah, I had that feeling at the beginning of this disaster.

Way too many billions reported “lost”. All that money is not lost, it is sitting somewhere.

It’s a free for all money grab and it stinks to high heaven.

Your tea parties should be outside of the AIG building.

getalife on March 17, 2009 at 9:55 AM

Obama’s main fault is not being able to identify the problem and take constructive action to insure the problem is being addressed in a positive manner. He is so naive in throwing money to correct the mistakes that it only encourages the continuation of the same action that created the problem. When he bankrupts our economy, the problems that caused it will be so severe as to add to the demise of our nation.

volsense on March 17, 2009 at 9:57 AM

No kidding, Greta! Do you think you can figure out the difference between those companies and A.I.G.???

Buy Danish on March 17, 2009 at 9:41 AM

Greta may be a “competant” attorney, but she’s not that bright- she tends to be, as almost all “hosts” are, incredibly populist. If it’s going to make her viewers froth at the mouth, she’s in.

anniekc on March 17, 2009 at 9:57 AM

See I don’t understand why it was “ok” for auto companies to void their contracts but it’s not ok for financial companies to void their contracts.

Contracts are contracts.

Quality Weenie on March 17, 2009 at 9:54 AM

The auto companies were forced to modify the contracts before the bailout money was given, as a condition of the bailout. AIG bonuses are castigated months after the bailout money was given. See the difference?

Vashta.Nerada on March 17, 2009 at 9:58 AM

We need to place “blame” where it belongs – on the people who campaigned for and signed off on TARP without taking the time to institute regulations on where public funds could be used.

We need to recognize this for what it is – another attempt by the Obama administration to further infiltrate the public sector – I imagine the raids of the AIG offices are already in the works – turn public opinion against the fundamental principles of capitalism – profit bad, reward for performance unacceptable – government will take care of everything – go back to watching Idol.

Wake up!

gopmom on March 17, 2009 at 9:58 AM

So what your saying is that auto company contracts are not worth the paper they are written on but financial company contracts are?

See I don’t understand why it was “ok” for auto companies to void their contracts but it’s not ok for financial companies to void their contracts.

Contracts are contracts.

Quality Weenie on March 17, 2009 at 9:54 AM

I am not saying that is right or wrong, but it was voluntary.

They could have kept all the contracts in place and not been bailed out.

People within the company can make needed changes and mutually void contracts (see Romney and Bain).

But none of that was asked for by Congress from the financial companies before they handed out the money.

myrenovations on March 17, 2009 at 9:58 AM

Sure, I am outraged as well, but what many are forgetting is that this money was given to AIG and other hand-picked companies with NO STRINGS ATTACHED!!!! Another clear picture, at least for me, that our dear elected officials don’t read first what they vote on!!! Had they studied this and other companies they are bailing out before throwing the money at them, they would have known that there were contracts in place!!!! Do I need to say “Stimulus Bill”?
I would be very upset if I got a loan – or a grant for that matter – to help out my business, and then, after I accepted it, I was told that I could only do certain things with this money! Why not spell out the rules of the game BEFORE we start playing!!!!!?????
I am a small business owner, and if I make decisions that will hurt my company, I will have to either close my doors or figure out ways to change my way of doing business. We – actually Congress, but since we elected these buffoons, it is WE – gave this huge amount of money to companies who had done bad things, thus telling them to keep on keeping on… Now we are all outraged that they are doing exactly that????
I am AGAINST any government interference in business! Every time it has been tried, it was bad! But we are stuck – at least for now – with the clowns we elected to office! All we can do is make a lot of noise and continue to make it, and hope that SOMEONE will listen! If they don’t there is another election coming up some day (not a day too soon for me)…

mkosin on March 17, 2009 at 9:58 AM

Wonder what it is they are trying to keep all of us from seeing.

Tommy_G on March 17, 2009 at 8:59 AM

What they are trying to do is prevent their next ripoff of the American taxpayer, your kids and grandkids, from going down in flames as the American public is not so asleep that they cannot see that the spendathon is not helping and The Pinnochio President and his merry bands of crooks have grand plans for another trillion or so of our money, to spread around the country, paying off their favorite constituents and greasing the wheels for their next election.
Some are not so dumb that they cannot see that their retirement hopes have gone down in flames under democrat control of the House and Senate.
Without a strawdog or twelve the Tea Parties may turn into lynch mobs and the New Pinnochio and old fossils on the hill may find themselves running for their lives or hiding behind Nasty Pelosi, and big bad Hillary, or under their desks.

dhunter on March 17, 2009 at 9:59 AM

getalife on March 17, 2009 at 9:55 AM

Wow! You admit Obama’s plans are a massive failure. I’m impressed. You have learned much in a short time here.

Guardian on March 17, 2009 at 10:00 AM

This is nothing more than old-style Chicago politics. AIG gave tons of money to Dems. Now they’re getting their money back for a while until it’s time for the next round of campaign contributions.
When the list comes out, don’t be surprised if the majority gave significant cash to Obama’s campaign. This is Chicago-style payback, pure and simple.
It’s also grounds for impeachment.

either orr on March 17, 2009 at 10:00 AM

Operating from the assumption that AIG was too big to fail, the money was given to AIG without strings attached. Hank Paulson cut the deal, Congress approved it. Anger directed at AIG is misplaced. The bad deal was reviewed and approved by Congress.

Second the numbers in the bailout do not match the outrage directed at the bonuses. The U.S. taxpayer is on the hook to AIG for up to 173 billion, and the Obama administration is going to the mat to recoup 130 million in bonuses?

Rush Limbaugh was a more credible foil. ; ) This faux outrage directed at AIG is supposed to convince the markets that Obama knows what he is doing?

Angry Dumbo on March 17, 2009 at 10:01 AM

OI’ll agree with uninformed but not stupid. I’ve met few truly stupid people. Most are just really uninformed.

TheBigOldDog on March 17, 2009 at 9:54 AM

Sorry, but in this day and age, with what is at stake, I’m thinking anyone who choses to be uninformed, is stupid. Obama isn’t making, “unpopular” decisions, he’s making life changing decisions.

anniekc on March 17, 2009 at 10:01 AM

So what your saying is that auto company contracts are not worth the paper they are written on but financial company contracts are?

See I don’t understand why it was “ok” for auto companies to void their contracts but it’s not ok for financial companies to void their contracts.

Contracts are contracts.

Quality Weenie on March 17, 2009 at 9:54 AM

It’s not okay for either unless the go into bankruptcy. The financial companies like AIG did not go bankrupt. They are not in receivership. They were simply purchased by the US Government which for example, now owns 80% of AIG. They were bought becuase it was determined they posed a systemic risk to the world economy. That is, their failure would results in losts of other failures in a domino fashin which would lead to a world-wide economic collapse (see my expert of Don Luskin’s recent post above).

The Auto companies must either get the unions to renegotiate their contracts or go bankrupt and have their contracts abrogated by a bankruptcy judge in which case they may wind up much worse than if they make concessions now. The US Government did not purchase the Auto companies (yet) as they have with companies like AIG mainly becuase they do not pose the same systemic risk to the World economy. Make sense?

TheBigOldDog on March 17, 2009 at 10:02 AM

Sorry, but in this day and age, with what is at stake, I’m thinking anyone who choses to be uninformed, is stupid. Obama isn’t making, “unpopular” decisions, he’s making life changing decisions.

anniekc on March 17, 2009 at 10:01 AM

Most people are so busy keeping their head above water they have little time for seeking the truth beyond what is spoon fed to them by a dishonest media.

TheBigOldDog on March 17, 2009 at 10:03 AM

Your tea parties should be outside of the AIG building.White House.

getalife on March 17, 2009 at 9:55 AM

Fixed it for you.

Dire Straits on March 17, 2009 at 10:03 AM

Obama gives $900 MILLION to HAMAS and the media yawns.

AIG gives contractually obligated bonuses to its emplyees and they go nuts.

Hamas, good.

AIG employees, bad.

That says it all.

What’s with the medias love affair with terrorists?

roninacreage on March 17, 2009 at 10:05 AM

TheBigOldDog on March 17, 2009 at 10:03 AM

Nonsense. If everyone spent 10 minutes a day at HotAir, ignorance over the Obama administration would disappear in a short time.

:)

Guardian on March 17, 2009 at 10:06 AM

but what many are forgetting is that this money was given to AIG and other hand-picked companies with NO STRINGS ATTACHED!!!!

People need to stop thinking about this as a loan or a gift. It was neither. They purchased AIG lock, stock and barrel. They own it. They put the CEO in. They need to be running it like any owner which means governence. Not throwing stones like outside critics with no stake in the outcome. If the Gov wants their money back and/or ever hope to turn a profit they better get serious about managing their assets.

TheBigOldDog on March 17, 2009 at 10:06 AM

Way too many billions reported “lost”. All that money is not lost, it is sitting somewhere.

It’s a free for all money grab and it stinks to high heaven.

Your tea parties should be outside of the AIG building.

getalife on March 17, 2009 at 9:55 AM

The money is not lost, it evaporated, much like when a hurricane hits a town. All the building materials are there, just in pieces that have a fraction of the value they had pre-storm. You will spend more than your house was worth to put it back in the condition it was in before the storm hit.

Your outrage at AIG is misplaced. Who pushed them into the subprime business? Congress.

Vashta.Nerada on March 17, 2009 at 10:07 AM

Guardian on March 17, 2009 at 10:06 AM

We first need to teach them how to turn a computer on….

TheBigOldDog on March 17, 2009 at 10:07 AM

They are trying to get us to focus on $165,000,000 instead of the $19,000,000,000 paid to Goldman Sachs.

CC

CapedConservative on March 17, 2009 at 9:02 AM

I saw a Hank Greenburg (former head of AIG) interview a few weeks ago. As one of AIG’s largest individual shareholders, he wanted a seat at the table when the gov’t bailout was initially being discussed. (He didn’t get it). He’s now suing AIG, because he’s lost a bundle as his AIG stock value plummeted.

One of the things that Greenburg is most frosted about is how sweet a deal Goldman Sachs received. Greenburg says that AIG paid off Goldman Sachs’ claims at par value — they never even attempted to negotiate a discount, despite the fact that AIG was basically insolvent and facing bankruptcy (without the huge infusion of taxpayer money) at the time. Hank Paulson, former head of Goldman, signed off on the deal.

It will be interesting to see what happens with Greenburg’s lawsuit. How much did Paulson (and all his Goldman, Sachs-stockholding friends and former colleagues) benefit from the AIG deal?

AZCoyote on March 17, 2009 at 10:10 AM

Wow! You admit Obama’s plans are a massive failure. I’m impressed. You have learned much in a short time here.

Guardian on March 17, 2009 at 10:00 AM

No, I said when w said Wall Street got drunk, this was not going to end well.

I am tired of reading about it but there is much more to this story and many countries are involved.

Way too much money suddenly “lost” and I am not buying it.

It stinks.

getalife on March 17, 2009 at 10:10 AM

Your outrage at AIG is misplaced. Who pushed them into the subprime business? Congress.

Vashta.Nerada on March 17, 2009 at 10:07 AM

They weren’t in the subproime business. They were in the business of insuring securities through a derivavtive called a credit default swap (CDS). Those securties were created out of mortgages and other collateral, packaged, and rated by the rating houses. They were writing policies on what they thought were AAA securities that were really junk. Now the policy holdres (banks all over the world) are trying to collect on the defaults and the US Gov, which ownes AIG, is now paying off those policies using AIG as a pass through. Make sense?

TheBigOldDog on March 17, 2009 at 10:10 AM

What’s with the medias love affair with terrorists?

Sorry, but “terrorists” is no longer an acceptable term (ala Janet Nepalitano). I’m trying to wrap my mind around “man-caused disaster maker” but it’s a struggle…

karl9000 on March 17, 2009 at 10:11 AM

Way too much money suddenly “lost” and I am not buying it.

It stinks.

getalife on March 17, 2009 at 10:10 AM

Educate yourself. Type less, read more.

TheBigOldDog on March 17, 2009 at 10:12 AM

Make sense?

TheBigOldDog on March 17, 2009 at 10:10 AM

CDOs were based on subprime loans to the tune of 50%. Add in 30-1 leverage, and the picture becomes clear.

Vashta.Nerada on March 17, 2009 at 10:13 AM

Barny Frank and Christopher Dodd should be cuffed and put into orange jumpsuits. They are lynchpins in the Obama conspiracy to toppel the US.

saiga on March 17, 2009 at 10:14 AM

Way too much money suddenly “lost” and I am not buying it.

Do you really think all that “cash” represented by the increasing value of stocks as the market headed up physically existed someplace? Before decrying where it went, where did it come from, and where was it kept?

karl9000 on March 17, 2009 at 10:15 AM

Yo O, AIG didn’t spend a dime more in bonuses than you and Bush/Paulson gave them!

katablog.com on March 17, 2009 at 10:16 AM

What kind of company promises bonuses to its employees that is not in turn tied to the companies performance? The U.S. Govt should not interfere with U.S. Capatalism. If a company mismanages itself, it should not be saved from its own actions. If it prospers, then it can award bonuses. Period!

SGinNC on March 17, 2009 at 10:16 AM

CDOs were based on subprime loans to the tune of 50%. Add in 30-1 leverage, and the picture becomes clear.

Vashta.Nerada on March 17, 2009 at 10:13 AM

They ensured these securities. They did not create them. They did not rate them. They simply insured them. They weren’t in the subprime business. They were in the complex insurance business. Nobody forced them to write these polices (these derivative securities). In fact, they weren’t in it really until Elliot Spitzer forced the founder, Hank Greenberg out of AIG on a despicable witch hunt during his jihad to become Governor.

TheBigOldDog on March 17, 2009 at 10:17 AM

Insured…not ensured

TheBigOldDog on March 17, 2009 at 10:17 AM

Thank you, Ed, for this post.

We can’t fall for Obama’s Enemy of the Week.

Obama’s enemies (always Americans, always private citizens):
- Joe the Plumber
- Rush
- AIG workers
- Cramer
- Santelli
- Republican cabal (48% of Americans)

Obama’s friends (always our enemies):
- terrorists (no longer enemy combatants)
- Gitmo detainees (catch and release)

faraway on March 17, 2009 at 10:20 AM

They ensured these securities. They did not create them. They did not rate them. They simply insured them.

TheBigOldDog on March 17, 2009 at 10:17 AM

They were the ones holding the bag when the government created ponzi scheme crashed, in other words. It is a question of semantics. Had the CRA not been turbocharged, AIG would not have been in the business, and would not be crashing the US and Euro economies. Spitzer’s role only compounds the error of the government.

Vashta.Nerada on March 17, 2009 at 10:21 AM

It’s all a distraction from the real issues. They should have filed for bankruptcy.

becki51758 on March 17, 2009 at 10:21 AM

Greta may be a “competant” attorney, but she’s not that bright- she tends to be, as almost all “hosts” are, incredibly populist. If it’s going to make her viewers froth at the mouth, she’s in.

anniekc on March 17, 2009 at 9:57 AM

Let me preface this by saying that I do like Greta; she seems very personable, and she seems to get really p!ssed at the same things I do. That being said…if she (or any other lawyer-turned-tv-host) were that great at practicing law, they would still be practicing, and making a TON of money defending corporate weasels and hi-profile, low-class celebrities.

uncivilized on March 17, 2009 at 10:22 AM

I am tired of reading about it but there is much more to this story and many countries are involved.

Way too much money suddenly “lost” and I am not buying it.

It stinks.

getalife on March 17, 2009 at 10:10 AM

You are almost there. I’m so proud of you. There is hope for the left. Just a few more misconceptions in that little head of yours to clear up and you will be well on your way to normalcy.

You’re not buying into Obama’s B.S. yet you can’t quite admit that he is the B.S. artist that’s in charge and directing this fiasco. You will though. Eventually.

It does stink. The stinkmeister would deliver no less. I realize that you are embarrassed and maybe a little ashamed that you have supported Obama. You’re not alone. Lot’s of people made the same mistake.

You keep hanging around here and we’ll have you deprogrammed in no time.

Good Luck!

Guardian on March 17, 2009 at 10:22 AM

Shouldn’t the “brilliant Harvard lawyer” have understood the contractual obligations of AIG earlier in the process?

cs89 on March 17, 2009 at 10:22 AM

Barny Frank and Christopher Dodd should commit suicide.
/

faraway on March 17, 2009 at 10:23 AM

They were the ones holding the bag when the government created ponzi scheme crashed, in other words. It is a question of semantics. Had the CRA not been turbocharged, AIG would not have been in the business, and would not be crashing the US and Euro economies. Spitzer’s role only compounds the error of the government.

Vashta.Nerada on March 17, 2009 at 10:21 AM

Sorry, it’s not just semantics. It’s an important distinction. You’re right about the root cause but wrong to say AIG was a subprime lender. They weren’t. They are an insurance company who wrote polices without any of the normal rules for insurance – like reserve requirements. They existed in a regulatory gap and ran completely open loop once Hank Greenberg was forced out by Spitzer. They bet the company and lost. The management didn’t even seem to realize the group had bet the company. It’s not too different from the kid Nick Leeson in Singapore who kept doubling his bets on the Nikkei and sunk Barings in $1.4B in losses in ’95.

TheBigOldDog on March 17, 2009 at 10:27 AM

Vashta.Nerada on March 17, 2009 at 10:21 AM

One last point is that AIG could simply declare bankruptcy and so really the ones holding the bag are the banks and other institutions that hold the MBS/CDOs.

TheBigOldDog on March 17, 2009 at 10:29 AM

Meghan Kelly just asked Karl Cameron who is the one who grandfathered in the provision for bonuses to AIG. Answer, Chris Dodd. Dodd is also the one who has received more campaign contributions from AIG than any other senator.

moonsbreath on March 17, 2009 at 10:30 AM

It’s not too different from the kid Nick Leeson in Singapore who kept doubling his bets on the Nikkei and sunk Barings in $1.4B in losses in ‘95.

TheBigOldDog on March 17, 2009 at 10:27 AM

$1.4 billion in losses? Sad thing is, that almost seems “cute” these days.

rbj on March 17, 2009 at 10:33 AM

But that’s what it means for a company to be “systemically important” — that it has obligations to third parties, the failure of which would set off a domino effect of continuing collapse. When it is said that these “funds” are “funneled,” that’s just provocative language for saying that AIG was able to pay its debts, which was the whole purpose of the bail-out.

Posted by Donald L. Luskin at 11:22 AM |

TheBigOldDog on March 17, 2009 at 9:53 AM

And that is the problem with unpopular positons implemented by people that could not lead if you showed them the way.

AIG is backdoor because our leaders do not want to be honest with the Americian people. they do not want to lead us. Instead they use a backdoor to get unpopular stuff passed. The trouble with backdoors is that they have a way of becoming known and those that are using that backdoor have no incentive to be ethical, honest, or transperant. In fact the opposite is true. They have incentives to be dishonest and unethical.

If ObamaBush would have been honest with the Amerrican people about where the money was going, the extent of the problems I think things would be better now. However, the elites think of us as children and stupid children at that and were afraid if they told us the truth we would not be able to handle it. So ObamaBush lied and continue to lie.

the economy is not sound because at its foundation it is based on 100′s of trillions in bad debt. The elites screwed up. The New world order is a failure. It is time we return to what made this country great for 200 years local and state gov control and a consitutional limited federal gov.

unseen on March 17, 2009 at 10:34 AM

The real question is this:

Why did Obama do a hostile takeover of AIG?

faraway on March 17, 2009 at 10:34 AM

Fox News’Carl Cameron just stated that language was inserted into the stimulus bill grandfathering AIG and specifically allowing these bonus payments. Who, you might ask, inserted the language? Why Chris Dodd did. The same Chris Dodd who, according to Cameron, was the number one recipient of AIG contributions during the 2008 campaign. That Chris Dodd.

Waiting for the other media to pick this up…..

Dave in W-S on March 17, 2009 at 10:34 AM

While I heard no details, I did hear that o has a new small business initiative that would force banks to loan stim $ to small business and report on how much of this activity they(banks) are doing. Also said that banks would run little to no risk in doing so. Sounds good doesn’t it? Then why , if I owned a small or medium sized business would I only do this as an absolute last desperate resort? Because anything associated with this administration’s monumental fiscal incompetence would scare me to death. I read an article this AM that a couple NH banks that took this fed. money are obligated to pay 5% interest to feds on this money, but the going rate for a mortgage is only 4% now, and in five years they’ll(banks)must pay feds 9%. Not much of an economy student, but do see some problems with this.

jeanie on March 17, 2009 at 10:35 AM

Then why , if I owned a small or medium sized business would I only do this as an absolute last desperate resort? Because anything associated with this administration’s monumental fiscal incompetence would scare me to death.

jeanie on March 17, 2009 at 10:35 AM

Plus, you would have to put one of those goofy Recovery symbols on your front door.

myrenovations on March 17, 2009 at 10:37 AM

Obama knows full well that there is no legal basis to attempt to block or otherwise interfere in the contractual obligations of AIG short of bankruptcy proceedings.

As I said in another thread, this is more blatant promotion of class warfare, from the Healer of Wounds Himself. Post-partisan my ass.

Obama wants to whip the flames of class warfare in order to gain momentum for his redistributionist policies and plans. We will be lucky if this doesn’t backfire and ignite a wave of civil unrest when the economy continues to tank.

Obama doesn’t care that his policies practically guarantee more misery for all, especially the low-income folks he is purporting to be helping. He is only interested in nationalizing a huge portion of our economy (and redistributing wealth as he sees fit) with his phony-baloney “pillars” of economic recovery.

The green energy portion of his plans, if implemented, with cap-and-trade assuring skyrocketing energy costs for individuals and companies alike, will inevitably lead to massive job losses throughout our economy that will dwarf any gains realized from this pie-in-the-sky scheme.

hillbillyjim on March 17, 2009 at 10:38 AM

rbj on March 17, 2009 at 10:33 AM

That’s when a billion dollars was – you know – a billion dollars!

TheBigOldDog on March 17, 2009 at 10:39 AM

Shouldn’t the “brilliant Harvard lawyer” have understood the contractual obligations of AIG earlier in the process?

cs89 on March 17, 2009 at 10:22 AM

Oh, please – Barry doesn’t bother reading all that president stuff.

uncivilized on March 17, 2009 at 10:39 AM

Fox News’Carl Cameron just stated that language was inserted into the stimulus bill grandfathering AIG and specifically allowing these bonus payments. Who, you might ask, inserted the language? Why Chris Dodd did. The same Chris Dodd who, according to Cameron, was the number one recipient of AIG contributions during the 2008 campaign. That Chris Dodd.

Waiting for the other media to pick this up…..

Dave in W-S on March 17, 2009 at 10:34 AM

ROFLMAO!!!!!!!!Its like the best comedy writers have all moved to washington. the place is one big joke

unseen on March 17, 2009 at 10:40 AM

I spent several hours yesterday helping out a neighbor who kept his TV tuned to CNN all day and so got to hear plenty of the AIG spin. The manipulation by both CNN and the Obama administration is disgraceful.

It was obvious that they were playing up to folks who have no idea how bonus incentives work, let alone what a contractual bonus obligation is.

Our company used bonuses as an incentive to get hourly workers to show up. Every employee who had perfect attendance received a five percent bonus (it was still a problem- we usually awarded bonuses to less than half the workforce). Would the morons ranting on CNN be demanding to withhold bonuses to them? I doubt it.

Another example- I’ve provided technology services to companies with the promise of a bonus if certain goals were met. Nothing to do with the success or failure of the company I was doing the work for. So if the contracting company gets stimulus money, does that mean I shouldn’t get paid even though my company met the goals? If they go bankrupt, I’d have to wait in line and probably lose out, but the whole point of the bailout was supposed to be to keep them in business, part of which means paying their bills!

I have to wonder what the agenda behind this rabble-rousing really is. As much as we like to say it, the Obama administration really isn’t stupid, so what’s the point? My guess is that they intend to demonize any business where they want to increase regulation, and claim that they are doing so to satisfy the “outrage of the people.”

dinobalz on March 17, 2009 at 10:41 AM

Does anyone believe that the Present Administration that is full of lawyers did not note the contracts? They noticed GM’s contracts with it’s employs. Does anyone know when they are being had today? Look they are using A.I.G. as a whipping boy so you don’t pay attention to what they are attempting which is taking the country down a dangerous path. I guess Barack Obama has duel citizenship somewhere? So he has somewhere else he can go if the Republic goes down?

They always knew about A.I.G. this is them trying to posture like they are part of the populist movement while they funnel our tax payer dollars to the people who already caused the meltdown….people they are not incompetent they are CROOKED. Take A Look, do you own Inventory of the White House yourself, and the Administration, how many Lawyers do you count? How many are rooted in Chicago? Not Incompetent…NOT in the least but if the public at large buys what the MSM wants to paint them as bumbling naive populist just like the majority of Americans…Well Go Ahead and Throw Up that “Mission Accomplished” banner.

I was born at Night I wasn’t born last night. They are sinking us into debt why? If we are deep in debt we will not project our out remember we are the last SUPER POWER. Apparently this Administration thinks taking the last SUPER POWER out of influence in the World is the way to go. You tie the country up in their Domestic Concerns and our Enemies get a jump on us. I remember President Bill Clinton cut back on intelligence and defense during his Administration remember the surplus we paid for that with 9/11 we were not ready we were in the middle of “Politically Correct” stance in the F.B.I. that is after being hit multiple times by Al Qaeda. So going back to 9/10 stance calling enemy combatants “Detainees” pretending that our enemy is misunderstood victims of our Self Defense.

If you don’t believe me read the comments to Mitch McConnell’s article in the Washington Post. Don’t Close It. Reference Gitmo. According to some of the comments those are poor innocent bystanders we are keeping in Gitmo.

Dr Evil on March 17, 2009 at 10:42 AM

unseen on March 17, 2009 at 10:40 AM

ROFLMAO! Watch the backtracking now.

TheBigOldDog on March 17, 2009 at 10:43 AM

Correction “If we are deep in debt we will not project our POWER out” Who wins when that happens? Not Americans, don’t blame me I voted for Gov Sarah Palin, and Cindy McCain’s husband.

Dr Evil on March 17, 2009 at 10:44 AM

If the outrage from the mob actually demand an open BOOK on where every single penny of the bailout money went to pay out for whom/which entitiy, it will be the only good outcome from all this.

But we already know Obama admin won’t pressure those firms for actual accounting. It is just a black hole, and we will have to trust and hope those guys know what they are doing.

HOPE AND CHANGE!

Sir Napsalot on March 17, 2009 at 10:45 AM

I need more coffee, I couldn’t believe the comments in reference to Mitch McConnell’s article “Don’t Close It” ..I am still sputtering.

Dr Evil on March 17, 2009 at 10:47 AM

Fox News’Carl Cameron just stated that language was inserted into the stimulus bill grandfathering AIG and specifically allowing these bonus payments. Who, you might ask, inserted the language? Why Chris Dodd did. The same Chris Dodd who, according to Cameron, was the number one recipient of AIG contributions during the 2008 campaign. That Chris Dodd.

Waiting for the other media to pick this up…..

Dave in W-S on March 17, 2009 at 10:34 AM

Karl also pointed out that a number of the execs receiving the bonus payouts are not Americans.

Not only is the American taxpayer on the hook for the bonuses, we are paying them to non-citizens residing in London.

Yoop on March 17, 2009 at 10:48 AM

Last night watching the local news they had two segments, one of the Democrats and one of the Republicans “venting their rage” about the AIG bonuses, as if all of these politicians were so genuinely angry that they simply had to seek out a reporter to gush about their discontent. It’s nonsense.

This isn’t an issue of greed, sure the people at AIG are greedy, but whatever, so is everyone. The issue is that bad business is being rewarded, and that’s not the fault of corporate greed, that’s the fault of incompetent, indifferent, and/or immoral politicians. In the free market would never have done what they did in the first place because they’d know it would inevitably lead to their destruction, and if they were stupid enough to do what they did, they would’ve failed. The only reason that people who practice such bad business are in a position to get these bonuses is because these rats in Washington cannot for the lives of them pull their heads out of their asses and getting the hell out of the economy.

galenrox on March 17, 2009 at 10:48 AM

I have to wonder what the agenda behind this rabble-rousing really is. As much as we like to say it, the Obama administration really isn’t stupid, so what’s the point? My guess is that they intend to demonize any business where they want to increase regulation, and claim that they are doing so to satisfy the “outrage of the people.”

dinobalz on March 17, 2009 at 10:41 AM

Geoploticals. The WH and Congress are not stupid when it comes to politics. True they are clueless about everything else but when their job is on the line they become the smartest person in the room.

There is a major populist feeling in AMerica right now. Obama was able to tap into it to win the election. Now that he is part of the establishment and not changing on thing on how business is done in Washington. He and the dems need a way to tap into that sentiment before it consumes them too. they are riding a tiger IMO and will be eaten in the end but that’s another post.

The Tea parties are some of the reason. The MSM may not be reporting it but they are scaring the hell out of washington. These protesters are not you avg bombthrowers that protest everything at the drop of a hat. These protesters are people with a job, family in most cases that were bothered enough to give up a day to show up. If they are bothered enough to show up to protest you can bet your last dollar we will be bothered enough to show up on election day.

They are not afraid of a revolt/revolution yet but I would imagine some of the samrter ones might see the possibility of one if this is left to its own formation.

In short Obama is trying to seize the tea party movement here and make it his own.

unseen on March 17, 2009 at 10:49 AM

Guardian on March 17, 2009 at 10:22 AM

I think this one goes back to Clinton and it stinks to high heaven. Sure,I read too much trying to find the truth because you can’t believe what they are telling you. This fake outrage on the bonuses is a distraction and some of them are getting scared the truth will come out.

getalife on March 17, 2009 at 10:49 AM

So far, few have figured out that the Obama administration enabled the bonus payouts:

Which explains the rising crescendo of ‘outrage’. It’s called “Covering Your Ass 101“.

GarandFan on March 17, 2009 at 10:54 AM

This fake outrage on the bonuses is a distraction and some of them are getting scared the truth will come out.

getalife on March 17, 2009 at 10:49 AM

The truth is already out there. The problem is that Americian so far have not put 2 and 2 together. It is starting to take shape. The backdoor bailout to europe, the Paluson bailout to his friends.

AIG is the linchpin to keeping the elites in power and money. It is funnel for the elites to remain wealthy. In a free market those idiots would have lost everything and AMerica would have risen new elites up from those that made good decsions.

AIG is the “let them eat cake” bailout.

unseen on March 17, 2009 at 10:55 AM

Karl also pointed out that a number of the execs receiving the bonus payouts are not Americans.

Not only is the American taxpayer on the hook for the bonuses, we are paying them to non-citizens residing in London.

Yoop on March 17, 2009 at 10:48 AM

Well, when Cuomo releases the names and addresses of the people getting bonuses, at least the people residing outside of the US will be safe.

myrenovations on March 17, 2009 at 10:55 AM

The free market system has never been a perfect system, but it’s one that works when allowed to succeed…. and fail.

If AIG were allowed to go into bankruptcy all of their contracts would have been able to be regnegotiated.

If GM failed they would have been able to renegotiate theres as well.

The market is strong enough to function as long as we tinker as little as possible, especially by people who have never ran a commercial operation in their lives.

Let this be a reminder….hands off.

itsspideyman on March 17, 2009 at 10:56 AM

unseen on March 17, 2009 at 10:55 AM

Oh, it goes much deeper than that.Yes, AIG insured the bankers who took the risk but could not cover all the “reported losses”. We are talking trillions worldwide. This crisis is an opening for major fraud.

Lets take Madoff, for example. He said he deposited all those billions in one bank. Yeah right, then refuses to take a trial and pleads out. Case closed. I don’t think so.

Then you have Sanford that refuses to cooperate and pleads the fifth. Both are definitly hiding their fraud and where did they put the money?

I am guessing they put those “missing” billions somewhere like the safest place in the world, US Treasury. Now, China is worried about that safe place they put their billions.

Like I said, it stinks to high heaven.

getalife on March 17, 2009 at 11:07 AM

getalife on March 17, 2009 at 11:07 AM

This post is an example of “engaging in” rather than simply doing drive-by posts. It’s good to see you engage in conversation getalife. More of this and I (I can only speak for myself)will gladly engage with you on a real level rather than a snark level. I agree with you here getalife, and I’m glad to see your mind is open and looking for the truth.

Keemo on March 17, 2009 at 11:13 AM

getalife on March 17, 2009 at 11:07 AM

The way Ponzi schemes work is that you pay off early investors with new investors’ money. So most of that money was paid out to investors less whatever he stole off the top.

TheBigOldDog on March 17, 2009 at 11:13 AM

While I heard no details, I did hear that o has a new small business initiative that would force banks to loan stim $ to small business and report on how much of this activity they(banks) are doing. Also said that banks would run little to no risk in doing so. Sounds good doesn’t it?

jeanie on March 17, 2009 at 10:35 AM

Sounds eerily similar with what happened to the housing economy. Gov’t forcing banks to lend, promising them safety on the loans. The banks are awash in money, courtesy of the Fed. If they thought small businesses could pay back the loans, they’d have already flooded their mailbox with offers.

How many small businesses are looking to take on debt right now, anyway?

hawksruleva on March 17, 2009 at 11:14 AM

Shouldn’t the “brilliant Harvard lawyer” have understood the contractual obligations of AIG earlier in the process?

cs89 on March 17, 2009 at 10:22 AM

Obama is a one-trick pony in this regard. Constitutional law, not contract law, is supposed to be his area of expertise. I can assure that tax law is certainly not his area of expertise.

But on the constitutional law point, one of the leading legal scholars in that area (Prof. Ronald Rotunda) ran an article in the Sunday Chicago Tribune arguing that at least some part of Obama’s stimulus bill is unconstitutional.

http://www.chicagotribune.com/entertainment/arts/chi-perspec0315stimulusmar15,0,216570.story

He’s no quack. He and a former colleague (John E. Nowak) maintain the leading treatise on constitional law and have done so for about the past 30 years. In fact, I’m confident Obama would know exactly what you’re talking about if you asked him, “What’s Nowak & Rotunda?”

Obama is a dolt.

BuckeyeSam on March 17, 2009 at 11:15 AM

Keemo on March 17, 2009 at 11:13 AM

I am Independent for a reason. I don’t trust either party and think the blame game is a distraction. I will continue to support the President and our country but this thing stinks bad, real bad.

getalife on March 17, 2009 at 11:16 AM

Breaking just now, on FOX Business: Amid AIG Furor, Dodd Tries to Undo Bonus Protections He Put In.

Enjoy. ;)

Kent18 on March 17, 2009 at 11:20 AM

This fake outrage on the bonuses is a distraction and some of them are getting scared the truth will come out.

getalife on March 17, 2009 at 10:49 AM

I think you’re right about that. But I also think that Obama is setting fire to his own house – or at least a house that America owns 80% of. If the folks who created the knot at AIG leave, who else will be able to unravel it? AIG has been working diligently to try and find a solution to their own portion of the CDS mess. And now we’re practically begging the people who are working on that solution to leave the company. The guys getting bonuses are getting 43% of what they got in 2007. And they’re working at a firm that’s being vilified in the press. Some are already leaving – and taking unique knowledge of our financial problems with them.

Heck, even the distraction of this furor is likely to cost AIG (and us) tens of millions, as the guys who’re responsible for HUNDREDS of millions in assets are reading stories about how Obama hates them.

hawksruleva on March 17, 2009 at 11:22 AM

getalife on March 17, 2009 at 11:16 AM

Good for you… Agree with the stench, and agree that Americans had better be watching our government very very closely, while seeking the truth.

Keemo on March 17, 2009 at 11:24 AM

Keemo on March 17, 2009 at 11:24 AM

Check out number four on this list.

http://www.treas.gov/tic/mfh.txt

I think that popped up during the bush administration.

getalife on March 17, 2009 at 11:29 AM

hawksruleva on March 17, 2009 at 11:22 AM

Yeah, and this suicide comment by Grassly is not normal outrage. He is reaching for a bigger distraction or scared.

getalife on March 17, 2009 at 11:33 AM

If the folks who created the knot at AIG leave, who else will be able to unravel it? AIG has been working diligently to try and find a solution to their own portion of the CDS mess
hawksruleva on March 17, 2009 at 11:22 AM

Not using logic here. One you do not place the stupid people in charge of fixing the mess they made. if you do you will only get stupid resolutions to the problem. You hire new people with new ideas to fix the mess made by the stupid people.

this has been a known problem since july of 2007. Yet AIG continued to write policies on the debt when it was know the risk of default was going up. Therefore these people had no intention of fixing the problem. They want to enable the problem by keeping the sytem afloat. they are hoping the economy/home vaules increase before the entire system comes crashing down. They are not “fixing” anything they are simple caretakers of a broken system hoping the sytem magically repairs itself while doing the same activites that got us into the mess to begin with. Why? because they are stupid people that are stuck on being stupid. They are out of ideas and they are only doing what they have done in the past hoping it works like it once did. They are afraid to admit that the party is over.

Finally the solution to the problem the only solution that is will cause massive pain to the economy, to wall street, to main street and to the world at large. It will drop our standing in the wrold from superpower to brokea*s nation in a day. The entire last 20 years of the new world order will coming crashing down. This is going to happen regardless anyway so we might as will get it done with. At this time it is important that our army is the best it can be. We should be increasing spending on the army because when the ship goes down which it will. It is now a matter of when not if we will need a strong military both at home and aborad to handle the fallout.

unseen on March 17, 2009 at 11:33 AM

getalife on March 17, 2009 at 11:29 AM

Interesting, I have no clue as to who they are. I’m going to do some research…

Keemo on March 17, 2009 at 11:33 AM

Keemo on March 17, 2009 at 11:33 AM

Yeah, China getting scared raised a red flag. It’s a lot of reading but these elites have a password protected network.

getalife on March 17, 2009 at 11:36 AM

So should Chris Dodd commit suicide now?

faraway on March 17, 2009 at 11:37 AM

unseen on March 17, 2009 at 11:33 AM

Good post unseen. I believe this to be true also. What scares me the most, is Obama and the Democrats are going to shrink our military capabilities at a time when foreign powers are getting ready for what is surely coming. Russia, China, Iran, all rushing to increase their military capabilities. Some are saying they are simply going to test Obama. Bullshit on that, something much bigger is coming down the shoot.

Keemo on March 17, 2009 at 11:38 AM

Burning the candle at both ends. Won’t be long before financial genius Obama runs out of wick.

whitetop on March 17, 2009 at 11:40 AM

Just spotted this;
.

Rich Edson
FOXBusiness
Senator Chris Dodd (D-Conn.) on Monday night floated the idea of taxing American International Group (AIG: 0.9426, 0.1625, 20.83%) bonus recipients so the government could recoup the $450 million the company is paying to employees in its financial products unit. Within hours, the idea spread to both houses of Congress, with lawmakers proposing an AIG bonus tax.

While the Senate constructed the $787 billion stimulus last month, Dodd unexpectedly added an executive-compensation restriction to the bill. That amendment provides an “exception for contractually obligated bonuses agreed on before Feb. 11, 2009,” which exempts the very AIG bonuses Dodd and others are seeking to tax. The amendment is in the final version and is law.

Also, Sen. Dodd was AIG’s largest single recipient of campaign donations during the 2008 election cycle with $103,100, according to opensecrets.org.

Dodd’s office did not immediately return a request for comment.

One of AIG Financial Products’ largest offices is based in Connecticut.

oldernwiser on March 17, 2009 at 11:41 AM

Hope and Change.
Eat the rich.

Y-not on March 17, 2009 at 11:42 AM

`(b) Executive Compensation and Corporate Governance-

`(1) ESTABLISHMENT OF STANDARDS- During the period in which any obligation arising from financial assistance provided under the TARP remains outstanding, each TARP recipient shall be subject to–

`(A) the standards established by the Secretary under this section; and

`(B) the provisions of section 162(m)(5) of the Internal Revenue Code of 1986, as applicable.

`(2) STANDARDS REQUIRED- The Secretary shall require each TARP recipient to meet appropriate standards for executive compensation and corporate governance.

`(3) SPECIFIC REQUIREMENTS- The standards established under paragraph (2) shall include the following:

`(A) Limits on compensation that exclude incentives for senior executive officers of the TARP recipient to take unnecessary and excessive risks that threaten the value of such recipient during the period in which any obligation arising from financial assistance provided under the TARP remains outstanding.

`(B) A provision for the recovery by such TARP recipient of any bonus, retention award, or incentive compensation paid to a senior executive officer and any of the next 20 most highly-compensated employees of the TARP recipient based on statements of earnings, revenues, gains, or other criteria that are later found to be materially inaccurate.

`(C) A prohibition on such TARP recipient making any golden parachute payment to a senior executive officer or any of the next 5 most highly-compensated employees of the TARP recipient during the period in which any obligation arising from financial assistance provided under the TARP remains outstanding.

`(D)(i) A prohibition on such TARP recipient paying or accruing any bonus, retention award, or incentive compensation during the period in which any obligation arising from financial assistance provided under the TARP remains outstanding, except that any prohibition developed under this paragraph shall not apply to the payment of long-term restricted stock by such TARP recipient, provided that such long-term restricted stock–

`(I) does not fully vest during the period in which any obligation arising from financial assistance provided to that TARP recipient remains outstanding;

`(II) has a value in an amount that is not greater than 1/3 of the total amount of annual compensation of the employee receiving the stock; and

`(III) is subject to such other terms and conditions as the Secretary may determine is in the public interest.

`(ii) The prohibition required under clause (i) shall apply as follows:

`(I) For any financial institution that received financial assistance provided under the TARP equal to less than $25,000,000, the prohibition shall apply only to the most highly compensated employee of the financial institution.

`(II) For any financial institution that received financial assistance provided under the TARP equal to at least $25,000,000, but less than $250,000,000, the prohibition shall apply to at least the 5 most highly-compensated employees of the financial institution, or such higher number as the Secretary may determine is in the public interest with respect to any TARP recipient.

`(III) For any financial institution that received financial assistance provided under the TARP equal to at least$250,000,000, but less than $500,000,000, the prohibition shall apply to the senior executive officers and at least the 10 next most highly-compensated employees, or such higher number as the Secretary may determine is in the public interest with respect to any TARP recipient.

`(IV) For any financial institution that received financial assistance provided under the TARP equal to $500,000,000 or more, the prohibition shall apply to the senior executive officers and at least the 20 next most highly-compensated employees, or such higher number as the Secretary may determine is in the public interest with respect to any TARP recipient.

`(iii) The prohibition required under clause (i) shall not be construed to prohibit any bonus payment required to be paid pursuant to a written employment contract executed on or before February 11, 2009, as such valid employment contracts are determined by the Secretary or the designee of the Secretary.

BobMbx on March 17, 2009 at 11:46 AM

Darn it. Hit the wrong button.

My post above is the law. The bold text is Dodd’s amendment that authorizes the AIG bonuses.

How does crow taste? Is it better with salt or Arugula?

BobMbx on March 17, 2009 at 11:48 AM

On a related note, since President Pinnochio can’t seem to find a taxpaying Dem to appoint to office, perhaps now would be a good time to ask our overseas friends and investors to disclose the names of anyCongress Critters or Senate Scumbags who have large overseas accounts and ask these crooks to pay back the money for the good of the country or do the honorable thing and fall on their sword. A good place to start would be with #4 at:
http://www.treas.gov/tic/mfh.txt

dhunter on March 17, 2009 at 11:59 AM

So should Chris Dodd commit suicide now?

faraway on March 17, 2009 at 11:37 AM

Yes

anniekc on March 17, 2009 at 11:59 AM

If I’m understanding things correctly, Dodd initially sneaked in an amendment to permit bonuses agreed to before 12 February 2009:

BobMbx on March 17, 2009 at 11:46 AM

Now, a month later, Dodd is jumping on the populist bandwagon with a hokey tax-legislation proposal.

oldernwiser on March 17, 2009 at 11:41 AM

And all the while, Dodd is one of the largest recipients of AIG contributions.

oldernwiser on March 17, 2009 at 11:41 AM

Whose side is Dodd on? That’s a rhetorical question, of course. Dodd is the guy against whom much of this anger should be directed.

BuckeyeSam on March 17, 2009 at 12:00 PM

In the future, we can avoid having taxpayer dollars go to Wall Street bonuses by not bailing out private companies with taxpayer dollars.

There is only one lesson to be taken away from this post, and the above quote is it.

No bailouts. Full stop.

thirteen28 on March 17, 2009 at 12:00 PM

CapedConservative on March 17, 2009 at 9:02 AM and
Angry Dumbo on March 17, 2009 at 10:01 AM

Nailed it. This outrageous outrageousness is all about pulling the wool over all of our eyes, so that we taxpayers don’t notice how we’re getting LOOTED. The bonuses are just the side story to all of this. Billions of our taxpayers money has mostly gone to hedge fund investors. AIG is simply paying off these hedge fund investors so that they can make their profits instead of taking actual losses. This includes Goldman Sachs and a number of foreign banks. Why are we paying off foreign investors???? Are their losses our problem?

Btw… regarding the bonuses. I’m not sure that Ed is correct based on the following:

Even first year law students in Contracts 101 learn that there are numerous exceptions to the “sanctity of contracts”. As any working lawyer will tell you, contracts are legally abrogated every day–a big part of our court system is given over to litigating disputes over the enforceability of various commercial contract provisions. If Treasury Secretary Geithner is rolling over and passively taking the advice of lawyers hired by AIG’s Chairman that there are no legal defenses and counterclaims to paying the executive bonuses, then he’s talking to the wrong lawyers.

quote is from here

P.S. How the heck do I get spaces between paragraphs when posting??

Geofizz on March 17, 2009 at 12:05 PM

lol nvm re. spaces :\

Geofizz on March 17, 2009 at 12:06 PM

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