Article I, s. 9 of the U.S. Constitution says that
No bill of attainder or ex post facto Law shall be passed.
Exactly what does and does not qualify as a “bill of attainder” has been difficult to nail down over the years. It hasn’t come up all that often, and when it has, the results have been less than entirely consistent. There’s no bright-line test. But basically, the question is whether the legislature has usurped the judicial function by singling out an identifiable group of people for “punishment.”
Consider one form of the super-tax bill that either has been or will be filed soon:
[Rep. Gary] Peters [(D-MI)] describes his bill as imposing a surtax on bonuses paid by “any company in which the U.S. government has a 79 percent or greater equity stake.”
Well, not much doubt who that one applies to. And one of the definitions of “punishment” under Supreme Court precedent is “the punitive confiscation of property by the sovereign.” So the question boils down to whether the super-tax is “punitive.”
In determining whether punitive or nonpunitive objectives underlie a law, United States v. Brown established that punishment is not restricted purely to retribution for past events, but may include inflicting deprivations on some blameworthy or tainted individual in order to prevent his future misconduct. This view is consistent with the traditional purposes of criminal punishment, which also include a preventive aspect…. Brown left undisturbed the requirement that one who complains of being attainted must establish that the legislature’s action constituted punishment, and not merely the legitimate regulation of conduct.
Someone challenging the super-tax shouldn’t have any trouble finding evidence that the folks in Congress are interested in punishing AIG’s bonus recipients, even setting aside Senator Grassley’s call for them to commit suicide. And though there are cases that declare taxes as non-punitive, a 100% (or close to it) tax might be a different thing — especially with the current Supreme Court. It’s not a slam-dunk either way, but the argument that a 100% tax on pretty much anything is punitive seems pretty strong to me.
I’m writing this on the fly — haven’t got time to do more detailed research. If there’s a reason I’m clearly wrong on this, please let me know. But otherwise, there’s got to be a better way.
any company that takes any bailout or emergency government loan gets the tax-on-bonuses (or just ban ’em altogether).
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p>How’s this for a better idea? Pay people to do their job and get rid of large bonuses altogether. People may complain, ‘well, what’s the incentive?’ Duh, your fucking paycheck, just like every other person in this country.
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p>Others may say, “well, what about exceptionally workers who do really well?” Um, duh, give them a frakking raise! Sign them to a contract. Lock them up Dustin-Pedroia style.
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p>Bonuses have become way too shady. Let’s just do away with them, at least the huge ones, altogether. (I’m not talked your Christmas bonus that may go up to a few thousand…. I’m talking 3-figure, ugly, shady bonuses… and especially those given from companies that are taking our cash just to stay alive).
6 figure, not 3 figure…
But what about bring back the 91% tax rate for incomes over $400,000.00 that was instituted under Dwight Eisenhower. That would get Golman Sachs bonuses, BofA, Citigroups, among the other bad boys of wall street certainly above what 97% of all americans. Now that would be consitutional.
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p>As Usual Just my Opinion
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p>Link to Income tax Table
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p> http://www.truthandpolitics.or…
if you think you can dictate how much everyone can earn. Go get that money, confiscate it! Its morally yours of course! Just use a few examples of fraud and some high bonuses to lynch the entire class.
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Mayor Bloomberg says 1% of NYC tax filers pay 50% of the city’s tax revenue.
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p>Ho many would continue to work at 91% marginal rate? Who would risk capital? They’d simply pack up and retire. And NYC would default. And no more Hollywood (hey, I might be agreeing with you.)
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p>By the way, hardly anyone paid the 91% rate back then because of the exemptions and shelters.
of hos who would work at a 70% rate, or a 40% rate. BTW, I see you didn’t substantiate any of your assertions, including the one about exemptions and shelters, so I won’t take the trouble either.
You would see that we are currently at almost a 100 year low in our top tax rate. As compared to other countries we tax the top 1% the least of most European countries. Take England which is now at 40% but you should take a look at the other taxes they charge such as their value added tax which we do not have
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p>Link: http://en.wikipedia.org/wiki/T…
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p>Interestingly as the US began to cut it’s rates in the late 60’s and 70’s the UK joined in.
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p>With the UK on it’s way up again under Gordon Brown it is rising to 45%
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p>Link: http://www.dailymail.co.uk/new…
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p>In crisis either a war or the great Depression the United States has turned itself to taxing those with the greatest wealth to pay down the debt. So if you want to make the argument that we are now turning into a socialistic society. I would counter we are returning to a socialistic society that was supported by many of the presidents we point to historically in the last 100 years as leaders of both parties.
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p>Facts are that we are both at war and in a form of Depression/ Deep Recession with the down turn continuing and the bottom uncertain we must return our government and economy to solid ground. Maybe many missed the Finance Director of China signaling the need for the US to suck it up and get its house in order Just what do you think he was talking about? Well as I read it as an economist he was saying yes we will lend but you need to start raising revenues to show us that you will repay us. We as a country as a democracy not an aristocracy have used the top marginal tax rates to achieve this in the past when faced with over whelming debt and expenses. What we can discuss is at what level we need to set to achieve a certain return to show we are putting in enough skin to make the world feel confident again. May I also point out and I take some license in doing so that hey we started this down turn with the actions of the large corporate banks and AIG among others who played the game as well. It is our obligation to reverse the practices of the past (regulation) and to start raising the revenue to pay our way. Many including Demolisher suggest that contracts are sacred ground and to a great extent under the normal business practice he is correct when you give your word to do something you better do it or your likely not to be in business for long. Yet he fails as others to see that the obligation extends to those you shake hands with as a matter of doing your business not the failure of your business clearly their needs to be a separation between in side contracts and outside contracts.
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p>Lost in many discussions and a point that deserves to be made is the rapid uncontrolled growth in Executive compensation in relation to profit and loss quarterly statements in American Companies
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p>Pat Buchanan ” in the 60’s a CEO made 20-30 times his employees wages and he was in their with his sleeves rolled up and America was never stronger today we have CEOs and top executives earning 400 times plus and America is acting like a third world country we are getting spanked in the global economy”
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p>Although I do not support Pat’s isolationist and immigration points of view he has hit a key point that has been behind the scenes in this meltdown that is the run away compensation amounts driven by success measured by Profit statements. As a result of this dynamic shift in the American industrial focus we have lost our way chasing after profits that we now know were simply illusions on paper.
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p>As Usual just my Opinion
Taxation is about revenue, and $100 million isn’t chump change where I live. That money could go to these individuals, from the taxpayers, or the taxpayers could keep it. Given that the amount of money involved is significant, the motive for such a tax is not primarily punitive but is a matter of fiscal responsibilty.
Guy X signs an employment contract, that provides if he works for 12 months, he gets payment Y. He does the work, is entitled to Y. Now, we decide we don’t want to pay Y, we want to fire Guy X. Fair enough, but Guy X is still owed under the contract. The only way that the payment isn’t happening is is the company is insolvent. Insolvency prevention has been the entire point of the govt takeover of AIG. That is to say, if AIG is insolvent, the owner of the company is insolvent.
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p>What is even sillier is that all of these incompetent politicians are spending days on this– allowing the economy to plummet around them– all for the price of a few yards of I-93.
Did the job description involve bringing the company to the brink of insolvency, I wonder? Who wrote these contracts? They have to have been the most idiotic and self-defeating documents in history, from the perspective of AIG’s shareholders.
Businesses only have the rights government gives them. If we decide any company that takes federal bailout dollars can’t hand out 6-7 figure bonuses, right as they’re feeding on the federal trough, that’s our right as a representative democracy. What, do you think the contracts written by crooks and quasi inside traders* count more than law crafted by the federal government, the beast that wields the commerce clause of the United States of America?
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p>I. Don’t. Think. So.
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p>*Ryan’s Definition for Quasi Inside Trader:
Random AIG VP/Selfish Bastard: “Hey everyone, we have a serious problem. The company’s going to go bankrupt, but the government will have too bail us out. We’re too big to fail! This may be our last chance, so let’s write ourselves one more big bonus as a last hurrah!”
Every other executive at AIG: “What a fucking great idea! Why didn’t I think of that?“
Read his letter to Nancy Pelosi where he states “it would be difficult to to prevent these contractually-mandated payments.”
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p>That’s the problem with progressive mob mentality. In the passion of your outrage, you advocate the government’s abrogation of a legally binding contract.
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p>Hey, I’m outraged, too. But if this is the way the government will act, tearing up contracts just “because,” well, then who will want to play ball with Treasury? What sort of example does the US Government then set for commercial contracts everywhere?
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p>WTF, if the USG won’t live up to their contracts, why should anyone else?
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p>To drive the point home, you’re advocating abrogation of AIG’s 2008 bonus contract EVEN AFTER (1) Treasury counsel concluded they’re legally binding, (2) the bonus payments were explicitly exempted in TARP’s Dodd Amendment, and (3) given another opportunity to prohibit bonus awards by TARP recipients via the Wyden/Snow amendment, Congress punted.
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p>Because you’re outraged.
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p>Obama, Geithner, Summers, Biden, Schummer … proving to be incompetent and in over their heads. And now dangerous, too.
It does not (nor should it) prohibit the federal government from abrogating these contracts.
first to think that businesses (i.e. groups of people) have no rights except those granted by the government, and then to think that the intent of the section 10 is anything other than to avoid state-state or state-foreign conflict, and worst of all to think that something not explicitly forbidden to the federal government must be OK!!!
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p>I refer you to amendment 10:
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p>Therefore, the federal government does not have the power to abrogate contracts, or any other thing that you might wish that has not been written in the constitution. [or invented by judicial activists and become case law]
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p>For reinforcement, I refer you to article 9:
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p>This limited government power thing must have been important to someone, sometime.
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p>Liberals. Always backwards!
And now for the real 9th amendment (not “article 9” masquerading as the 10th amendment!!)
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businesses have the rights we decide to give them, as the people. This tends to be a lot of rights, but it doesn’t extend, to, say, allowing the Marbolo Man on tv anymore. Etc.
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p>Just because I don’t say they have any rights that we don’t decide to give them, doesn’t mean I don’t think they should have any rights. It’s just that we get to decide what rights businesses have. “We” includes business owners, though their individual votes don’t count anymore than mine.
But maybe you have some supporting evidence?
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p>Just think of what things were like at the founding of the nation: were businesses illegal until some legislation was passed allowing them to exist, and do business? Or were we a free nation which gradually added regulations to business?
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is that too may people think I have it backwards – that businesses are the ones with the rights and that we’re a nation of consumers, not citizens.
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p>Thankfully, I don’t have it wrong and there is some hope yet.
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p>If there’s no law making something illegal, then it’s legal. This is civics 101. All I’m saying is that we have the right to regulate business in almost anyway we see fit. If we don’t regulate it, then you can do it. The ability to do something doesn’t mean you automatically do it.
we haven’t passed the legislation that would void it (along with all these other bonus-on-taxpayer-dollar shenanigans). Ron makes the point more crisp above, but suffice it to say the federal government has plenty of authority to undo these contracts — if Congress and Obama pass the necessary legislation. My recommendation would be no bonuses – or ‘retentions’ on the taxpayer dime. We could even legislate to make sure they just don’t double everyone’s salary — for example, any company that takes a US bailout is barred from giving raises over the rate of inflation.
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p>Simple, sweet and at least one problem solved.
How you view each of your own policy preferences as Constitutional Rights and Principles Upon Which the Very Fabric of Our Society Are Founded, and view the actual constitution as a nonentity.
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p>You would have made an excellent apologist for the previous administration. They certainly valued your particular skill set.
Each one of these “bonus” is salary. They aren’t gifts handed out for performance. These guys all had employment contracts that provided for an annual salary of $X, 60% (or whatever) of which to be paid through the biweekly payroll, and 40% of which to be paid as a “bonus” or, rather, a balloon.
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p>Since this has been relatively obvious since day 1 of this new teapot tempest, I gather that your position is that these employment contracts should be retroactively modified. (I suppose that one wouldn’t now this if one listened to Chuck Schumer and Barney Frank, but one should know better than to listen to politicians.)
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p>Fair enough.
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p>As long as we are having the government unilaterally and retroactively abrogate employment contracts, why don’t we also have them abrogate the wages already earned by the UAW workers at GM? Since the cars are crappy, we can retroactively determine that the proper wages for UAW workers should have been, maybe $20/hour, tops, including health care expenses, and send them all a bill for the excess, plus reasonable interest.
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p>Alternatively, a means of avoiding these payments –one that enjoys actual legal authority — would be to allow AIG to become (or be deemed) insolvent, and recover them as preferential transfers. (AIG still owes the money, but doesn’t have it, and shouldn’t have paid these creditors at the expense of others.) This has the excellent benefit of sticking it to those evil people, but the pleasure of having done so might be cold comfort if AIG crashes, and brings us to 30% unemployment with it.
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Why are the contracts entered into by the auto manufactures that promise benefits to Retirees on the table to be voided and by extension of law that suggests similar circumstances should be treated in the same way under the same law are the AIG contracts not the same.
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p>Both companies are by most standards insolvent I think that is a given yet we are yelling in the halls of the house of representatives that auto workers (contract employees) should be cut immediately and trimmed to a lower standard. Now the masses are outraged by the contract payments to AIG we call for them to be cut and we even have the support of many of the same voices in the Halls of Washington but locally you jump up and say hey hold on a minute we are talking about real people and real money and we have to pay tem no matter what.
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p>I have to wonder if the UAW had a clause that called for a 1 million dollar balloon payment to be given upon retirement to every employee if you would not be jumping up and down yelling socialism.
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p>Some how your arguments lose value as you move down through the strata of levels of compensation.
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p>The last time an aristocracy tried to rule here in America we fought a revolution with our then leadership maybe
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p>Thomas Jefferson was correct
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p>The aristocracy of wealth has lead to a belief that elitism is a right, I would suggest that this has lead to the popular uprising of the socialist ways that our Great American society has embraced when ever the sense of entitlement reared it’s ugly head. Once again I point to the table I have posted several times that shows how we taxed our way out of the last great depression and should once again do so. Because it was the concentration of wealth at the top in the 1920’s that has a key role in that down turn and for almost 50 years we returned the balance. We lost it especially in the last 20 years and we need to recapture our greatness. I challenge any of you to suggest that the 1950’s to 1960’s were not some of the most innovative and productive decades in our 220+ year history. Offer proof!
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p>As Usual Just my Opinion
That is an interesting question.
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p>Note that, at present, the proposed modification of the UAW pension is not to be unilaterally imposed, but requires the consent of the retirees. I don’t happen to think that any agreement sufficient to make GM viable will be forthcoming, and therefore think that bankruptcy–which is the appropriate legal avenue for problems such as this– will be required. In a bankruptcy, unpaid employees are creditors, entitled to some small priority, but otherwise indistinguishable from any other creditors.
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p>So it would be for AIG. An insolvent or bankrupt (I don’t think an insurance co. can be a debtor in bankruptcy, but receivership law would give many of the same powers) AIG could choose not to pay, and even claw back, these deferred comp payments.
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p>The difference between GM and AIG is that if AIG is permitted to become bankrupt or insolvent, it will wreck the financial sector of the economy, upon which the entire rest of the economy depends. In other words, the bankruptcy, even the collapse, of GM would be a tragedy. But the failure of AIG would be an absolute catastrophe. Which tends to make the insolvency option far, far less palatable for AIG.
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p>The US govt therefore made the decision to buy AIG outright, while declining to do so for GM.
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p>In other words, the answer to your question is: triage.
Your assumption about the level of exposure in AIG and our ability to keep it afloat I believe is flawed. That the shock to the system is inevitable and should be embrassed quickly inorder to preserve capitol with which to rebuild. To make good or to by the time needed for revenue from AIG’s other businesses to payoff on the debt or exposure is likely to run out before that is reached and the level of debt we will then be obligated to pay off on to hold the ship afloat will crush our economy.
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p>As Usual Just my Opinon
I’m not sure that the assumption is that AIG’s profitable life insurance business will somehow cover these losses over time. I think the intention was to make these losses the obligation of the US govt, and sell the life insurance business back to the private sector as soon as conditions permit, and then wind down the toxic part.
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p>There is something to your position about simply letting the chips fall where they may. There is always the possibility that trying to help will make everything worse. This is not dissimilar to arguments about the foreclosure crisis: one side says intercede to delay or prevent foreclosures, while prices decline steadily, while the other says accelerate the rate of foreclosures so that prices hit their bottom ASAP, so that the properties can be used as collateral again, with the lender reasonably confident of the collateral’s value.
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p>For both of these, I see reasonable arguments on both sides. What truly concerns me is that no one in government seems to be confronting the problem. Treasury is not even staffed yet, two months after the inauguration. Congress is frittering away its time on witch hunts–over $165 million dollars– rather than addressing the issue.
The UAW and the auto companies are negotiating changes. The UAW is free to say “no.”
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p>If the unions say “no,” then GM can declare bankruptcy and the contracts, by law, are nullified.
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p>If you want to do the same thing with AIG, the federal government owns 80% should go ahead and enter bankruptcy. I think that’s the best course right now as the Obama administration and a Pelosoi/Reid Congress have no idea what they’re doing.
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p>Why throw good money after bad?
I don’t think it’s quite 80%, which is our unwanted investment in AIG. Is the entity that we the taxpayers now own really the same as that which promised these guys all this cash? That entity seems to have failed, and to have been taken over by a federal bailout. Most of the new owners don’t feel these guys deserved $180 million for running the company into the ground. The federal bailout should be sufficient to negate these overgenerous and wasteful compensation packages, that were signed by representatives of an essentially defunct entity. These execs, as far as I can tell, should be forced to the very back of the line of people and businesses that the US-owned company is obligated to pay.
At least not yet. The same old entity got a huge infusion of capital specifically to ensure that it would not fail.
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p>That happened because AIG wrote many/most of those derivative instruments that have indeed made everything FUBAR. But each one of those derivative instruments has a counterparty. If AIG fails, that means that the counterparty winds up taking the hit. Recall that the Masachusetts Turnpike, counterparty on derivatives issued by Lehman, is taking a multi-hundred million dollar hit because Lehman went kablooey.
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p>AIG wrote far more of these things than did Lehman, so a kablooey by AIG would have a similar, but vastly amplified, effect. And that effect would hit every other financial institution, worldwide, as well as every pension fund and many, many corporations. In other words, there would be, in short order, no more financial industry. No credit of any kind. No one to even issue or process the checks in your checkbook.
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p>Worse, as all of these banks explode, they would become wards of the FDIC, which has helpfully guaranteed deposits. What happens if the government suddenly becomes obligated for the vast majority of bank deposits in American banks? It will be unable to meet those obligations, that is what will happen. What happens if the govt defaults on its obligations? T-Bills cease to be a desirable investment, and the govt is suddenly unable to pay for things like, say, Social Security without simply printing money willy nilly.
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p>That is a very, very bad scenario. The economy of Weimar Germany we do not want, at least if we do not want many Americans to simply starve.
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p>In order to avoid this outcome, Treasury made a wise decision to simply back AIG in order to prevent its failure. This way, these derivates can be unwound carefully, and hopefully without causing catastrophe. The government can, and likely should, then move to regulate the hell out of these things, but regulation doesn’t help the existing problem.
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p>But this wasn’t a good option, it was just the least bad option. One of the reasons it wasn’t a good option is because AIG, under its previous management, made some awful decisions. Writing all of these CDSs. Entering into bloated employment contracts with the people who made those awful CDSs.
If the insurance on your home were cancelled would your house fall down? No
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p>If an insurance policy is cancelled a CDS will you have to pay more for new insurance or pay more for your house? Likely
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p>If AIG were to collapse and thus not make good on CDS’s, which are insurance on debt, would the world stop spinning not likely
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p>What would happen is the debt which has been leveraged in other words it was used as an asset to obtain more debt in order to do this their had to be a system that suggested this original debt was a good as gold it had worth even if the world went super nova so that the money borrowed against it was safe for the lender to loan and re-loan the problem is just what I stated the effect will be someone is standing in the middle of the street with no cloth on. Does this mean the CDO’s have all failed and have no value well because of the house of cards we created in the short term yes because it is likely you will have to sit and hold them until the borrower pays them off 20, 30, 40 years you will collect the interest negotiated, they have value they are just not as liquid now can you put them up as an asset and borrow more against your anticipated return well not likely in the short run because everyone is worried where the foreclosure rates are going to land if it holds at say 10-12 % as we currently are experiencing then yes you are looking at a 90 % return their is the value if they continue to climb to say 20% then you have 80% value and a return level at this rate it is the uncertainty that the insurance took out of the market place. Doing this took out the important role of Loss that keeps markets in check. Gone is the restraint that market forces need to have in order to stay in control. Read any article the actuaries of AIG(dolts of math) put Zero stock n the collapse theory not even a decimal point in the equation they went with what I have called the Titanic Theory it was unsinkable no risk so go out and prosper and make profit. It was like turning the kids loose in the candy store and telling them your teeth will be fine and you want gain a pound no matter how much you eat and oh ya it’s all free. Nothing is lifetime and time again is for free!!!! We forgot that because we insured against it from a company that was so under collateralized that when we went to collect o some of our insurance they went broke!
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p>No time to cut the loses and throw them under the bus we can not borrow our way out of this we can not print money till the presses burn out, out of this mess. We have one possible option tax our way out of it (raise the money needed to pay for it) but we all seem to agree this is to costly and to socialistic for Free Market Republicans and Aristocratic Americans to stomach so we will do nothing and hope it goes away. LOL next joke please is it Friday yet?
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p>As Usual just my Opinion
The relevant question is therefore: Would you be able to build a new house if your insurance is canceled after your house falls down? The answer is likely “no.”
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p>The total cost of the damage to the house is, essentially, unknown. That is why there is so little lending going on– no lender knows if their borrower has the ability to repay. Even among banks. As business debt becomes due, the business, even if otherwise healthy, has no ability to roll it over. Again, a bad state of affairs that has profoundly negative implications on every single person employed in the US, regardless of whether that employment is in the financial sector.
I suggested that the leverage the US has in Borrowing be used to accomplish the very thing you refer to instead the full faith and credit ahs been and is continueing to be used to hold up a house that as you so apply point put has already collapsed. What would you rather see money poored into the pile in a hope it will rise from the ashes or money put into rebuiding we can not do both as a result of the debt we currently owe as a nation we must move forward standing still and pouring it onto the pile is bad policy and Washington will wake up to this some day I just hope the bucket has something left in it.
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p>Taxes will be the only solution 91% and a war year economic structure may be the only solution now this may seem to be socialism to sum I choose to think it is economic survival and reality
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p>As Usual just my Opinion
We could have bought the “toxic” assets. But the problem with this was that there was zero potential for taxpayer upside. We take the lousy stuff, you keep the good, is a good deal for you, and not for us.
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p>I suppose that we could have purchased the toxic assets for fair value, but that value was probably negative, meaning that AIG couldn’t give them away for free. In any event, this would not have helped restore liquidity or solvency in the financial sector, and would have been pissing up a rope.
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p>So, we bought the company outright. And the company is on the hook for, among other things, salary to a bunch of guys that effed things up.
Is we are on the hook for a whole lot more then just a bloated corporation and some bonuses. We Have by taken ownership placed our selves as the guarantor of the CDS (insurance) on CDO which are simply bundled mortgages from may I suggest around the world they are not just CDO fro the US that are insured. CDO yes are likely to be a majority of US but, not by a long shot are they 100%.
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p>RBS is nationalized because of Mortgages and Loan CDOs from the UK remember they sold Amro to Citigroup just before the collapse.
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p>AIG insured the worlds Credit, they actually hold an extremely small amount of CDO’s on their balance sheets They insure by and large a significant segment of World Debt bonds. When I post $30 Trillion that is approx 60% US and 40% world.
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p>What do you feel is the ability to pay off such obligations with the sale of assets in the corporation which even in the hay day may have been 10-12 Trillion everything at the old inflated value the company can not raise 10 cents on the dollar the stock has been under a dollar for weeks under the rules of the Dow and NYSE they should have been delisted a Month ago.
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p>Your still stuck with the belief that you can make a silk purse out of a pigs ear, you have to get past this in liquidation yes we may see as much as .05 on a dollar based on hard assets like buildings, equipment, and the ownership of Leases on hard assets as well. If they held or were underwater on CDO’s mortgages I would agree that these have value that the market does not recognize. This value comes from the interest earned on the payments they will receive as 80-88% of the notes contained continue to make monthly payments. Your missing the point that no one including AIG want to hold 20 year notes any longer they want to be able to buy and sell on a day to day basis barring that they place no value which is the current crisis. Which is why we need to say your stuck with the long term return sit back and be thank full your not losing your investment then take the Capitol in the government, FED, FDIC, and use it to continue to lend and restructure the debt that needs it but spaying off on insurance policies that should never have been written you might as well take it out in the yard and use it instead of charcoal on the grill. Your chasing a dream, this system because of the lack of risk has grown beyond the sustainability of the GDP models in the short term and no one want s to wait out the long term. Why do you think we have to keep going back to the well over and over they are continuing to discuss the need for maybe a third or fourth round of bailouts. The markets after almost 2 Trillion dollars in Fed, TARP, FDIC has had what effect on the credit markets? NONE what will it take in your opinion 20 Trillion GDP in the US in 2008 was 14.7 Trillion and shrinking? Who is going to pay the bill, and then what do you have left for the other bills on the table Healthcare infrastructure Social safety nets, like the contract we took money for week in and week out for Social Security. Lets tear them us as well and throw them on the grill too.
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p>It’s an ABYSS created by a reckless company that is not just to big to fail it’s too big to re-float. AMBAC the privet equity firm used by Massachusetts for its Swaptions and exotic investments by all Authorities is on the slippery slope as well.
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p>Face it credit markets will have to change to survive they will always need to weigh risk in the future which by its nature will make credit move more cautiously and slowly. This may be a good thing slowing down the red-hot moments and chugging along in the retooling phases as well.
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p>As Usual Just my Opinion
There is no good option. We’re looking for the least bad option. The one that keeps the sow’s ear from becoming the sow’s turd.
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p>I happen to think that if AIG fails outright, it takes the financial system with it. And I also happen to think that it is difficult to exaggerate what a worldwide catastrophe this would be, and also difficult to exaggerate how difficult it would be to recover from such a catastrophe.
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p>In other words, it might be worth spending some money today in order to avoid being dead tomorrow.
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p>Oh, and again, I’ll note that you are willing to embrace such a catastrophe because you’re mad about $165 million dollars, which is probably less than the cost of the yellow paint on the road in the Big Dig tunnels.
Is that all? Why didn’t you say so? Heck, I’ll cover the bonuses myself, right after I close Boston’s budget gap. I’m feeling generous these days- i just got my tax refund check.
It is increasingly looking like Congress is out to cut off our nose to spite our face, here.
May I suggest you look at my past posts and comments here on BMG their are many on this and go back a long time on this issue and the bailout. I am not just angry at the bonus as a matter of fact this is little more then a comma in my postings on the risks of the TARP and this bailout. That I am angry about because we have systems set up to deal with these circumstances that have served us well. They include FDIC and the courts. My concern in a nut shell is that we allowed these entities to get so big as to be to big to fail we have laws against this called Sherman Antitrust and Clayton bill I have posts on these as well. Second that the role of the SEC and FED as well as the private rating agencies Moody’s and Standard and Poor’s have yet to be called to really explain how they ignored the hand writing on the wall, as it stands now they are little more then accomplishes to the Fraud of writing insurance with out the capital to back them up. To suggest that this handful of individuals some how is the only perpetrator involved in this is even a bigger lie. What you have though is an industry as I stated earlier that crossed out the issue of risk for the sake of profit and this stems from the board all the way down to the division management teams.
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p>What has my blood boiling is the depth of the debt as a direct factor of the profit they took for themselves out of the process instead of maintaining the reserves needed to fulfill the promises made this is a complete betrayal of the trust we all must have in any system of commerce. This trust has not been misplaced it was nuked and I think we all have the obligation to demand change.
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p>More is the point with the potential of the loss could destabilize our country if De-flation takes hold and or the Chinese’s decide to stop lending or worse yet dump dollars on the market and Bonds. The United State may find it’s way of life reduced to little more then that in Third World Countries. What a great job of managing our world and passing it on to future generations. Now for my self I have been lucky darn lucky I made my success early and as I am growing older I have few things to worry about except for the fact that I have three Children that will have to wade through the mess we have left to them. We as a generation should be ashamed yet we still see People Like Edward Liddy an early baby boomer making excuses instead of changes.
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p>Seriously I would love to see how any of the policies that have been tried thus far produced the effect of returning confidence and trust in the system> Please even those in the position of leadership who I know laugh at that prospect. We still are trying to understand where and when we will see the bottom, and how we are and from where we are going to get the money to pay off the debt we did not benefit from but have now promised to make good.
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p>So there you have it.
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p>As Usual Just my Opinion
As the guy who endorsed Dodd for president, do you have anything to say about the Dodd Amendment including an exception for these very bonuses?
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p>Lefties from media matters to Kos are scrambling to prove that Dodd himself did not put in the language, but it doesn’t help that Dodd was a top AIG donation recipient
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p>http://www.opensecrets.org/new…
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p>and for fun
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p>http://fundrace.huffingtonpost…
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so I obviously messed up the second link – but –
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p>Since we’re lynchin’, look at the names on the last link. Does anyone have access to the list of people who collected the bonus? I wonder how many bonus recipients are on the donor list…
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You need work on your skill set consider sending a resume to AIG.
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p>As Usual just my opinion
… you can do this without framing it as punitive for future dealings as conditions on any future public money. For the current issue though, I think post-facto is much more of a problem. They already agreed to terms when the money changed hands. Attempts to change the terms with a workaround are likely to be seen as such by a court. If they legislated a ‘solution’ with the desired outcome, it could be interpreted by a court as a post-facto attempt ‘by other means’. They could attempt new legislation ‘at arms length’ from the old legislation by not referencing the old legislation at all but applying alternate criteria that still produce the desired result. But I’ve got to wonder how a court would rule if they interpreted it as a ‘blatent’ attempt to produce a ‘post facto’ result by those means.
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p>What about the ‘executive’ authority of a majority stakeholder. When Reagan did his thing with the air traffic controllers, ATCs worked for the Government,…. well what about people who work for a group mostly owned the government?
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p>The other thought I had was that there is arguably a difference between a punishment and the denial of a privilege. The very fact that these things are called ‘bonuses’ seems to me to be much more indicative of the latter than the former.
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p>All of this offered with the caveat that it’s a layman’s perspective.
All the yakkity yak and hyperbole by the politicians makes good press. (Seppuku?, Aww, c’mon.) The bottom line is that nothing will be done. Too late. The real culprits are in Washington. What should worry them is that the public will get smart (Fat Chance?) and realize that many a senator and congressman owes big time to banks. (Hmmm, Chris Dodd still hasn’t come clean like he promised in June, 2008.)
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p>Suppose the public realizes that the laws and regulation that is blamed for the economic disaster haven’t been changed or repealed? What if people realize that those that pushed for the bailouts allowed the bonuses? Will there be a rush for tar, feathers and rails?
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p>Will America, the giant, awake?
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p>Well, time to see the Shuttle/space station. G’nite.
What pompous outrage spouts from these windbags may be just to wind us up to support tearing apart what little is left of our Constitution. If they enact any ex post facto tax law against the executives they nurtured, they can do it to you. Or other people they target. America is dying and we the people vote for the thugs that use the weapons to destroy her.
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p>Have a good time with the shuttle, I’ll watch “Man for all Seasons”.
Reports tonight are that Sen. Chris Dodd (D-CT) had included in the stimulus package that NOBODY in Congress had time, or bothered, to read a provision explicitly exempting all TARP or Treasury moola recipients from restrictions on paying bonuses if that compensation was in place before February 11, 2009.
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p>David, you need to answer demolisher’s questions.
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p>And progressives must not think it’s a bad idea to use tax policy for political purposes. But Charlie Rangel does.
Complaining about the AIG bonus dustup NOW is, well, hypocritical and politically damaging, especially since Congress had an opportunity to add an explicit bonus prohibition, offered by Senators Wyden and Snow, onto the stimulus bill. (This is in addition to the Dodd amendment allowing it.)
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p>But it got stripped. (Oddly, this has been unreported except for Fox cable tonight. Unless I missed it elsewhere.)
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p>I think Geithner is in real hot water, as the AIG bailout architect in both the Bush and Obama administrations, Barry’s White House is floundering, and Congress is going to get its ass kicked by the taxpayers.
All the elected and appointed have to do is sit tight. And while the howl of bonuses abates, the real monies will have disappeared without a murmur.
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p>Abracadabra!
If they just go after AIG employees, I think there is an excellent claim that this is a bill of attainder within the meaning of the constitution. But if they just tax at 100% — or let’s say 90% to avoid the claim it is punitive — all bonus money paid to anyone working for a company that has received TARP funds, that doesn’t seem too specific to me — which is the essence of what the attainder clause is trying to prevent — plus there is a valid public purpose (better operation, at least in theory, of TARP recipients). But do I feel strongly enough about this to do a Lexis search and read cases for 30 minutes? No 😉
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p>As to the bonus provision in the legislation that others have referenced, that is outrageous in my opinion (and evidently Obama’s as well). If it is Dodd’s, let’s find a two progressive challengers — one for Lieberman and one for him.
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p>In the broadest sense, however, all of this is a perhaps predictable result of not actually taking ownership of companies in which the government has invested enough to control the businesses. AIG should be under new management from top to bottom, not the same management more or less.
But I think the focus is still to narrow to not be considered a punitive damage directed at one specific group.
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p>I again will repeat that AIG should have been cut lose to sink or swim on it’s own. If they had to slink along or File Bankruptcy I think you would agree that the payments being made would simply put them in line with the other creditors and well down on that list.
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p>Barring this out come which Mr Geithner(sp seen this spelled more ways then sun rays) has been at architect of as the CEO of the New York fed and now the Treasury makes me think we got Hammer Hank Paulson Light as the new wonder boy solution. Tim for Tim to go he is tied to the hip with the banks and as a result AIG.
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p>I will repeat the lessons of History as evidence of the current events CDO’ and CDS’s were the creation of executives at Goldman Sachs back in the 80’s! The creation was never intended to grow to the 900 lb gorilla that is now sitting on the chest of our economy. That grew out of the greed and need for profits. Non-the less when you look at the list of people benefiting from the AIG bailout Goldman is at the top of the list. Surprise surprise surprise!!!!! I feel like Gomer Pyle shazam! oops sorry!
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p>Lost also in the rage is the little man sneaking out the back door that just cut the support beam on the structure. By this I mean what makes you think that me are solving anything by pumping 176 Billion into AIG? Have you seen any reports of CDS being bought up or paid off? NO point in fact what has not gone to raises and operating expenses has gone to cash reserves as a result of the now 12% CDO loses and the drop in the credit rating of AIG. Simply put we have upped the cash reserves incase the worst happens to prop up the insurance policies (cds) we issued that banks all over the world used to hedge (keyword) their bets that run away growth of the world was unstoppable. Reports suggest and I have posted the links before here on BMG do some research you will find them. That AIG and the slick wily unit know as financial services based in London Sold and resold insurance on CDO’s and even sold insurance to individuals who did not hold the CDO’s in a chase to make the sale and earn the commission. Sort of like you buying insurance on your neighbors house and these Slick Willy’s just kept righting. THe earlier post suggests the outstanding CDS’s total upwards of 30 Trillion Dollars twice our countries annual GDP. Shocked yet you should be because we currently hold the bag thanks to Tim the tool man Treasurer and Hammer’n Hank. Nervous yet? You should be as the markets and banks continue to try to reorganize their balance sheets in the midst of devaluation of real property and commodities the spiral is growing the demand is growing for more payments more reserves and less capitol on the street as a result and Tim and Hank or the feeders. Now you should be sweating, I cannot for the life of me from the documents figure out why we are continuing the sham of propping up AIG and risking this entire countries future. I wish the documents had come out sooner and more was known about the details but hey why would those millionaires tell us the whole story and thus lose millions the last administration certainly believed “we could not handle the truth” maybe they are right we have spent days and hours at the computer screaming in Rage at $136 Million while, once again we have ignored the 900 lb gorilla chocking the life out of us. Wake up! It is time to shut AIG down it manufactures NOTHING the insurance they write will just be written by another insurer and life will go on, auto, homeowners and renters, and Life insurance will have a new name on the letter head yet we will be protected maybe a few dollars more but it is not going to disappear. What will happen will be a shock to the world banking system when the day comes and it is coming when everyone can see the banks and the CEO’s of them have no cloths on, we can get down to the business of dressing them up properly and sending them back out on to the street with new regulations and new purpose and an opportunity to get the world economy back on its feet. As it stands we are raping the hopes of the US having the capitol and command of the ground to remain standing when it happens. Taking on another dime of AIG’s (private company) shell game folly at profits is a Crime no it’s a fraud on the American people! A recipe for disaster.
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p>As Usual Just my Opinion
“bonus money” such that “bonus money” is distinguished from “income.”
I am not sure the terms are different in reality what they are a product of the legislation enacted back in the 1990’s and the term is used to minimize tax exposure. Something most of Americans will never see their compensation for work ever considered as an option but, in this case it is practice and has been for almost 15 years.
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p>As Usual Just my Opinion
And every other corporation that is taking these huge bonuses instead of sending most of the money down to workers in the form of more jobs, higher pay and better benefits. And every sucker who continues to believe that tax cuts for corporations will trickle down to “us” is a fool. I say raise corporate taxes across the board, and triple taxes on those who needed bailouts (what the heck, they raise our interest rates when we stumble.) But this should only apply to the biggest companies, with the highest profits, leaving out the small businesses that struggle to stay afloat. To be sure, their relentless greed will cause them to try to take more from the middle class in return, in the form of higher interest rates, higher prices, and job cuts. I say let it happen. There is a huge lesson waiting to be learned. I am ready to crash and burn for the sake of it. Get your gardens growing this summer, be sure to plant your winters keep. I am prepared to stop shoveling my hard earn money into their rotten greedy hands. It’s time to hit bottom and start all over again.
may play well in Peoria, but this seems like a lot of posturing to me. If we want to set a precedent of a Congress with pitch forks and torches launching draconian tax levies on folks, beware. Anyone on this board who had qualms about the Patriot Act on Gitmo guys (despite guilt) shouldn’t be lining up with this bit of nonsense.
If AIG is going to behave this way, shouldn’t the taxpayers immediately stop bailing it out, and let it default on its debts in an orderly way through a Chapter 7 bankruptcy and liquidation?
i’m beginning to give this option a lot of consideration. If owning 80% of the company is still essentially meaningless, lets wring our hands of it. These people shouldn’t be getting bonuses, they should all be immediately fired. That’s one very easy option the government has to immediately address these bonuses without even having to do a single piece of legislation…
It is unlikely that Washington is going to listen to a bunch of blogg comments no matter how load we type and how often. If we are dissatified with a companies performance market forces allow us to go to another company that meets our needs. Nothing I repeat nother AIG does in business does not have competition and the further down the food chain you find your self the more competition their is. Yet the power of the Purse is great when used to effect the market.
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p>I am not stisfied with AIG and how it conducts business thus I boycott it. I moved my Auto Insurance to another carrier that my agent represents thus reducing profits to AIG. I suggest that if enough do this they will get a clear message that they need to change and fast or they will be gone. Maybe Timmy the Treasurer will suddenly realize he will not be able to cover the loses and one denand change or two forced to admit the patient is dead!
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p>Either Way I SUGGEST YOU BOYCOTT AIG!
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p>As Usual just my Opinion
…is that a bill of attainder is basically a law declaring someone to be guilty of a crime without allowing for that person to defend himself in court and be found guilty by a jury. That does not appear to be what is being proposed here. I believe the definition I just gave is how it was treated in British Parliament and would have been the point of reference the Framers were using.
Read the cases linked in the main post.
Going to ttake a shot at it tonight NPR is reporting a move to bring to the floor of the house as early as this week a 90% tax on bonus income for companies that have taken 5 Billion or more in Government aid. Still sounds to narrow to me but they are the congress people we will have to see if they are now the best and the brightest. Any one want to bet.
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p>I think that history has left us a blue print to pay our way out of this mess. I still think a Marginal tax rate for all compensation over 500,000 to be taxed at a rate of 70% should help pay our way out of this. FDR, TRUMAN, IKE, Kennedy and Johnson all supported a high tax rate FDR 93% in 42 and Ike 91-92% for his entire eight years. THis is likely how he paid for the interstate highway system.
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p>As Usual Just my Opinion
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Fannie Mae plans bonuses of up to $611,000 for 4 executives; Freddie Mac has similar plans
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Now Fannie Mae is giving bonuses (+)
by: WoburnDem
Wed Mar 18, 2009 at 14:56:45 PM EDT
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p>Please try to keep up if you need a special accomadation please let us know in advance
As Usual just my Opinion
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Well , congress knew that the execs would get bonuses.. hence Dodd adding in the tripe to allow it to happen.. our congressmen are the biggest hypocrits.. they made the problem in the first place. So.. who to be angry at?? Both are just as guilty and all parties should be prosecuted for fraud. the Swaption problem is akin to opening a insurance policy on a stranger and reap in the rewards with a 32% payout.. that is illegal – shouldnt the SEC had stopped this.. oops too profitable.. Hey Dodd and Obama.. give back the 100k AIG donated to your campaigns..