“There are a lot of terrible things that have happened in the last 18 months, but what’s happened at A.I.G. is the most outrageous,” said Lawrence H. Summers, President Obama’s chief economic adviser, during an appearance Sunday on ABC’s “This Week With George Stephanopoulos.” “What that company did, the way it was not regulated, the way no one was watching, what’s proved necessary — is outrageous.”[...]
Mr. Summers also appeared on CBS’s “Face the Nation,” remaining consistent in his core message about the bonuses: “It is outrageous. The whole situation at AIG is outrageous. What taxpayers are being forced to do is outrageous.”
[...]
Word of the bonuses last week stirred such deep consternation inside the Obama administration that Mr. Geithner told the firm they were unacceptable and demanded they be renegotiated, a senior administration official said. But the bonuses will go forward because lawyers said the firm was contractually obligated to pay them.
AIG is telling us that it must pay those bonuses, because they are required by employment contracts necessary to retain its financial engineers.Treasury Secretary Geithner has expressed outrage. Instead, he should be embarrassed.
When the Bush White House agreed to bail out General Motors and Chrysler, it required those companies to renegotiate their labor contracts—that’s right contracts—and they are doing just that to keep their federal largess.
The Obama Treasury, headed by Tim Geithner, is forcing the terms of that deal on the United Autoworkers.
[...]
The threat was the same with AIG and GM. If either shut down, the economy would plummet into chaos and depression we were told.
So Mr. Geithner, instead of being outraged at AIG’s last revelations, perhaps you can explain to all of us why a UAW worker earning $29 dollars an hour must give back wages and benefits to keep their company alive, while the architects of the biggest financial disaster in history get to keep their gold plated contracts.
Oh, I think we know. You spell it U-N-I-ON-L-A-B-O-R. And we need to break it, right Tim?
Particularly in circumstances as extreme as these, there are a litany of arguments and legal strategies that any lawyer would immediately recognize to bestow AIG with leverage either to be able to avoid these sleazy payments or force substantial concessions.[...]
[T]he Obama administration’s claim that nothing could be done about the AIG bonuses because AIG has solid, sacred contractual commitments to pay them is, for so many reasons, absurd on its face.
And we live in an absurd world.
One might expect AIG to [willingly pay these bonuses] -- they haven't exactly proven themselves to be paragons of business ethics -- but the fact that Obama officials are also insisting that nothing can be done (even while symbolically and pointlessly pretending to join in the populist outrage over these publicly-funded "retention payments") is what is most notable here.[...]
If Congress (with Obama's support) was willing to immunize lawbreaking telecoms from lawsuits brought by their illegally-spied-upon customers, shouldn't Congress be willing to immunize AIG from bonus-seeking lawsuits brought by their executives who helped spawn the financial crisis?
[...]
There may be other reasons why the Treasury Department decided it wanted AIG to pay these bonuses (Marcy Wheeler considers some of those reasons here), but this claim from Larry Summers that the sanctity of contracts precludes any alternatives is not just false, but insultingly so. It's difficult to recall anything quite so vile as watching hundreds of millions of dollars in taxpayer money flow to AIG executives. One would expect the Obama administration to do everything possible to prevent that from happening. Instead, they seem to be doing the opposite.
• Yesterday AIG paid out $450 million in "retention bonuses" to executives in its Financial Services Group, the out-of-control derivatives trading arm that looted the company, destroyed its stock and contracted for huge bonuses even after they saw the risk of collapse.• The $450 million was just a portion of the $1.2 billion AIG paid out in bonuses across the board within a company that lost $100 billion last year.
• Rep. Barney Frank, chairman of the House Financial Services Committee, wants to try and recover these bonuses.
A.I.G., nearly 80 percent of which is now owned by the government, has defended its bonuses, arguing that they were promised last year before the crisis.
Last year before general knowledge of the crisis, but when AIG CEOs realized that the day of reckoning for their reckless behavior was at hand, don’t you mean?
The administration official said the Treasury Department did its own legal analysis and concluded that those contracts could not be broken. The official noted that even a provision recently pushed through Congress by Senator Christopher J. Dodd, a Connecticut Democrat, had an exemption for such bonus agreements already in place.But the official said the administration will force A.I.G. to eventually repay the cost of the bonuses to the taxpayers as part of the agreement with the firm, which is being restructured.
”We shall see,” said Grandpa. “We shall see.”
....but hey, do what you want....you will anyway.
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