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A.I.G. Bonuses Must be Halted in Public Interest

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Barack Obama is a savvy street smart politician who would never have overcome such long odds as a first term U.S. senator to win the presidency if he did not understand important elements of what makes John Q. and Jane Q. Public tick.

In the current unfolding saga with American International Group, Obama knows that the issue is dealing with John Q. and Jane Q. Public being ticked off. People understand in populist terms the reality of well paid executives living in large and comfortable homes and being provided with the best in health care.

In the unfolding dichotomy we see the other face of America living in another world sharply diverged from the charmed lives of corporate executives. The grimmer aspects are reminiscent of Charles Dickens' reference to the two Englands.

More Americans daily are not only losing homes and jobs; check the ranks of the steadily increasing homeless numbers along with those dependent on public assistance to survive.

The sad reality of events leading to the passage of the Obama financial stimulus package was how reminiscent it was following 9/11 and passage of the Patriot Act.

Events moved swiftly and its sweeping impact was not explored until the far reaching omnibus bill was passed. It encompassed a huge number of pages and members of Congress had not read it. Flash forward to the present and ask the same question: How many members of Congress read either stimulus bill?

What was needed in any of the stimulus packages doling out large chunks of taxpayer money was what is termed a condition precedent in contract law. As the term suggests, a condition must precede a certain action.

In this case language needed to be provided in any financial aid package that before anyone received any taxpayer funds under the legislation that no bonuses could be provided and that any contract negotiated, signed, and activated previously would be considered null and void.

Such a condition should have been rigidly enforced. Otherwise it is easy to envision what lies beyond the floodgates. If one company such as A.I.G., which has received so much federal assistance that the government owns almost 80 percent of it, uses the argument of "Sorry, but we did negotiate contracts with bonus provisions previously and to fail to honor them will result in lawsuits" then how many other C.E.O.'s might use the same argument?

Obama recognizes the gut level populist resonance of this issue and today has vowed to, in the words of the New York Times, "try to stop the faltering insurance giant ... from paying out hundreds of millions of dollars in bonuses to executives ..." while House Speaker Nancy Pelosi has declared that the government will vigorously seek to acquire on behalf of taxpayers any bonus money paid out by a corporation that has been staying afloat on a taxpayer assistance lifeline.

Obama has declared that he has asked Treasury Secretary Timothy F. Geithner "to use that leverage (of the federal government) and pursue every single legal avenue to block these bonuses and make the taxpayers whole."

It has not been lost on Obama and members of his administration, along with elected officials on Capitol Hill, that, as the president put it, "Under these circumstances, it's hard to understand how derivative traders at A.I.G. warranted any bonuses at all, much less $165 million in extra pay."

This is the jackpot question to which Americans who are compelled to make sacrifices in an effort to survive economic hardship demand immediate answers.

One tough possibility could be considered, the type that hardball players like Andrew Jackson or Franklin Delano Roosevelt might have exercised under comparable circumstances.

With the U.S. government owning almost 80 percent of A.I.G., could an involuntary bankruptcy proceeding be considered? This or a procedure like it would enable the U.S. government to take over companies like A.I.G., in this case one in which it has a controlling interest, and put its house in order.

Andrew Jackson abruptly curtailed a monopolistic bank enterprise operating under color of the U.S. government that Old Hickory believed was working against rather than for the interest of America. The American people rallied to his cause.

 

Began in the journalism field in hometown of Los Angeles. Started as Sports Editor and Movie Writer at Inglewood Daily News chain after working in sportswriting of high school events at the Los Angeles Examiner.

Received a bachelor's in (more...)
 

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Hard core?  You bet!  At the expense of ... by sometimes blinded on Tuesday, Mar 17, 2009 at 8:39:56 AM
The voiding of contracts ex post facto might in fa... by Bill Samuel on Tuesday, Mar 17, 2009 at 8:15:20 PM
Bill, you're a genius. Will they do it? Bill... by W. Christopher Epler (Bill) on Tuesday, Mar 17, 2009 at 8:40:14 PM
I don't think You can tax employees who don... by sometimes blinded on Wednesday, Mar 18, 2009 at 7:51:11 PM

 

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