transparency is probably a whole other thread....but was mentioned on the Leno-Obama thread...so I am attempting to not derail it.
Case in point...AIG - while I hate the stupidity of the company - MSNBC reported yesterday morning that these "bailout stimulus packages" had in provisions in them that all contracts were to be honored....it appears they didn't read this package bill either...
this isn't transparent.
It also reeks of laziness on our legislatures' part. I am not so sure 90% tax is the best answer.
Paw _ I know this will go to the political forum, but wanted to get comments from a broader base than just those who frequent the political - soap forum.
Transparency is something the Obama administration is aiming for. That's why the Prez is generally not afraid to take responsibility for what his administration does.
However, as you noted, this is a complicated situation. CONGRESS messed up. Apparently, Sen Dodd (D-CT) was responsible for removing the amendment that would have voided those bonus contracts.
There are several news reports this morning that Dodd's "political capital" is taking a big hit for that dumb move.
Further, it appears that Obama Treasury Secretary Geitner was aware of the bonus issue and neither properly briefed the Prez nor took issue with the removal of that amendment.
Hence, Obama taking responsibility for the situation and looking for ways to now void the bonuses.
Obviously, a bill to tax the bonuses at 90 percent, even if it passes and the Prez signs it, will likely only be symbolic. Because there are at least two reasons such a bill will not pass constitutional muster and would easily be struck down in court (if challenged).
It's an Ex Post Facto bill. Not constitutional. Congress cannot enact laws to address a prior situation.
It's also a Bill of Attainder. Also not constitutional. Congress cannot enact laws aimed at specific individuals.
transparency is probably a whole other thread....but was mentioned on the Leno-Obama thread...so I am attempting to not derail it.
Case in point...AIG - while I hate the stupidity of the company - MSNBC reported yesterday morning that these "bailout stimulus packages" had in provisions in them that all contracts were to be honored....it appears they didn't read this package bill either...
this isn't transparent.
It also reeks of laziness on our legislatures' part. I am not so sure 90% tax is the best answer.
Good point on transparency and laziness. President Obama and Congressional Democrats were in such a hurry to sign the spending plan they all didn't read it or even attempt to make it transparent for the American people to read and study it. Republicans and some Democrats complained about the lack of transparency and rush to sign. I think the whole procedure was lazy and irresponsible and non-transparent, from Obama on down. Obama pledged differently, so it is more evidence of Obama dishonesty since Americans are not getting something they voted for: transparency.
Obviously, a bill to tax the bonuses at 90 percent, even if it passes and the Prez signs it, will likely only be symbolic. Because there are at least two reasons such a bill will not pass constitutional muster and would easily be struck down in court (if challenged).
It's an Ex Post Facto bill. Not constitutional. Congress cannot enact laws to address a prior situation.
It's also a Bill of Attainder. Also not constitutional. Congress cannot enact laws aimed at specific individuals.
I'm not entirely sure of those two points Rocky - HOWEVER I am NOT claiming to be authoritative.
My previous company was publicly traded and went through the whole Sarbanes-Oxley compliance and audits. That was enacted after the infamous ENRON case. (You might actually enjoy the documentary movie BTW.) There are specific infractions where individuals can now be prosecuted whereas in the past the company was considered a "person" hence "protecting" the employees.
Like I started with - I'm not entirely sure - but I sure am NOT going to go back through all of the SOX compliance stuff just to be sure of a conjecture on GSC - It took us two years to get compliant and we were a fairly small company...however I remember enough of it to consider that since it focused on "controls" that there is a pretty good chance AIG and some of the others were not following strict nor even reasonable internal controls...and that smacks of SOX audit and we ain't talkin' Red Sox here.
It's an Ex Post Facto bill. Not constitutional. Congress cannot enact laws to address a prior situation.
It's also a Bill of Attainder. Also not constitutional. Congress cannot enact laws aimed at specific individuals.
I'm not entirely sure of those two points Rocky - HOWEVER I am NOT claiming to be authoritative.
My previous company was publicly traded and went through the whole Sarbanes-Oxley compliance and audits. That was enacted after the infamous ENRON case. (You might actually enjoy the documentary movie BTW.) There are specific infractions where individuals can now be prosecuted whereas in the past the company was considered a "person" hence "protecting" the employees.
Like I started with - I'm not entirely sure - but I sure am NOT going to go back through all of the SOX compliance stuff just to be sure of a conjecture on GSC - It took us two years to get compliant and we were a fairly small company...however I remember enough of it to consider that since it focused on "controls" that there is a pretty good chance AIG and some of the others were not following strict nor even reasonable internal controls...and that smacks of SOX audit and we ain't talkin' Red Sox here.
The (initial) question (subject of this thread) had to do with whether a bill making its way through Congress right now (passed the House yesterday) to tax said bonuses at the rate of 90 percent was the best answer.
Case in point...AIG - while I hate the stupidity of the company - MSNBC reported yesterday morning that these "bailout stimulus packages" had in provisions in them that all contracts were to be honored....it appears they didn't read this package bill either...
this isn't transparent.
It also reeks of laziness on our legislatures' part. I am not so sure 90% tax is the best answer.
THAT bill would essentially be symbolic only for the reasons I cited.
President Obama indicated during his interview on Leno's show that his administration was going to pursue any and all avenues to recapture those bonuses.
While nobody here at GSC has been able to cite anything specific about the conduct of AIG or about specific provisions in existing law that the federal government could invoke to legally effect said recapture, it's entirely possible that the laws you (RR) were thinking of might apply to the AIG situation.... BUT would be something exclusive of the question posed by washn'wear to start this thread.
WASHINGTON -- The number of probes by the Federal Bureau of Investigation into corporate fraud and mortgage fraud is growing by the month.
FBI Deputy Director John Pistole told a House panel Friday that the bureau has more than 2,000 open investigations into mortgage fraud as well as 566 corporate-fraud investigations.
Mr. Pistole said 43 of those corporate-fraud investigations involve "matters directly related to the current financial crisis."
Those numbers are all larger than those Mr. Pistole offered to a Senate committee last month.
Comparing Mr. Pistole's testimony Friday with the data he gave to the Senate Judiciary Committee in February, it appears the FBI has opened 36 new corporate-fraud investigations and 200 new mortgage-fraud investigations in recent weeks.
Mr. Pistole said the FBI continues to experience "an exponential rise" in the number of fraud investigations it is conducting, "a trend we expect to continue."
He said the FBI's investigations on corporate fraud and financial-institution failures are focused on accounting fraud, insider trading and financial-statement manipulation.
Mr. Pistole told the Senate Judiciary Committee last month that the FBI's investigations into the current financial crisis involve companies "that everybody knows about."
Mr. Pistole said Friday that the growing number of fraud probes was straining the FBI's resources for investigating white-collar crime.
Like I started with - I'm not entirely sure - but I sure am NOT going to go back through all of the SOX compliance stuff just to be sure of a conjecture on GSC - It took us two years to get compliant and we were a fairly small company...however I remember enough of it to consider that since it focused on "controls" that there is a pretty good chance AIG and some of the others were not following strict nor even reasonable internal controls...and that smacks of SOX audit and we ain't talkin' Red Sox here.
This had nothing to do with SOX though. From the risky mortgages they insured to the contracts with bonuses, no actual fraud was committed by AIG. SOX is about controls to prevent individuals from manipulating the company's finances. It really doesn't solve anything to do with what Enron did, and has nothing to do with what AIG did.
Actually P-Mosh it goes way farther than that - down to rather excruciating detail.
Eg - Inventory and materials managment - your purchasing person cannot also be your receiving person - as in the position of receiving not the recipient of the purchase - and indeed SOX has a rather onerous section of inventory, materials management, etc. Hmm increased cost of business in CA with overhead (100%) of a new employee? About $100K per year. Also your inventory is now managed by accounting - NOT the materials handlers. Moderate increase in cost to accounting for additional task assigned to department.
Your sales team doubles their paperwork (for our business) because now they need auditable sales transactions. Missing due dates for proposals? None. Annoyed customers for lack of internal turnaround? Lots. Cost? Increase in long distance and overseas calls - about $10K per month.
Project engineers, field engineers, assemblers and technicians - if you are not ISO (which actually has to apply to a whole company not just engineering) then SOX will give you a whole new regimen of document control - including who CANNOT see it before the product ships. We were ISO so I cannot validly conjecture cost estimates to a company who was not.
There is also an entire IT component - which is actually impossible to guarantee you can implement it fully. Cost? Unknown but somewhere around the $50K range because of the new servers we needed to get to run some required auditing software.
And of course, as you mentioned, a huge section to prevent direct manipulation of liquid, credit, or speculative finances. Cost? Two new employees costing, again with overhead, about $400K per year.
<snip>
SOX is about controls to prevent individuals from manipulating the company's finances.
Actually P-Mosh it goes way farther than that - down to rather excruciating detail.
I have to deal with SOX as well, as my team maintains a system that is one of the key controls from the I.T. side and we have to generate reports to auditors and sit with them and explain how we run things. It still seems like more hassle than help though, and it doesn't really do anything to prevent fraud because the company gets to define how they adhere to SOX, and as long as the company does what it says it will do, everything is fine with the auditors.
EX POST FACTO CLAUSE - A misnomer in that actually two Constitutional clauses are involved. The U.S. Constitution's Article 1 Section 9, C.3 states: 'No Bill of Attainder or ex post facto Law shall be passed,' and Section 10 says: 'No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law. . . .'
The 'words and the intent' of the Ex Post Facto Clause encompass '[e]very law that changes the punishment, and inflicts a greater punishment, than the law annexed to the crime, when committed.' Calder v. Bull, 3 U.S. (1 Dall.) 386, 390 (1798) (opinion of Chase, J.).
An ex post facto law is a law passed after the occurrence of an event or action which retrospectively changes the legal consequences of the event or action.
President Obama and Congressional Democrats were in such a hurry to sign the spending plan they all didn't read it or even attempt to make it transparent for the American people to read and study it. Republicans and some Democrats complained about the lack of transparency and rush to sign. I think the whole procedure was lazy and irresponsible and non-transparent, from Obama on down. Obama pledged differently, so it is more evidence of Obama dishonesty since Americans are not getting something they voted for: transparency
You have the bills mixed up. The recovery bill did not create the right for AIG -- or any company -- to pay bonuses. .
AIG disclosed that it had contractual agreements to pay these bonuses more than a year ago.
The Bush Treasury department approved of the AIG bailout with this agreement in place in September of last year. The relevant provision in the recovery act, which was based on an amendment by Sen. Dodd actually restricts the ability of companies receiving money from TARP to award bonuses in the future.
If the recovery bill of this administration hadnt passed, AIG's ability to pay the bonuses still would NOT have been limited.
My hang up on this AIG thing is the word bonus. In my line of work a bonus is something you get when you achieve certain pre-determined targeted objectives rather than an entitlement. So, my question what objectives did these AIG execs achieve when the Company as a whole was hemmoraging billions of dollars?
March 20 (Bloomberg) -- Courts probably will uphold Congress's effort to tax employee bonuses at American International Group Inc. and other companies receiving federal bailout funds, several legal experts said.
The House yesterday voted 328-93 in favor of a 90 percent tax on bonuses, including the $165 million insurer AIG paid last week after receiving $173 billion in bailout funds. The Senate plans to vote next week.
The measure raises a number of legal questions, and New Hampshire Republican Senator Judd Gregg yesterday said the legislation was unconstitutional. Still, any legal challenge will meet a significant obstacle: the historic reluctance of the Supreme Court to second-guess Congress on tax issues.
"Given the state of the law, it will be unlikely that the Supreme Court will strike down this legislation," said Edward McCaffery, a University of Southern California tax-law professor who says he questions the wisdom of the proposal.
Gregg said the legislation would violate the constitutional ban on bills of attainder, or laws that single out individuals for punishment. "It's basically targeted on a small group of people," he said.
The House took several steps to shield the measure from that argument, said Laurence Tribe, a constitutional law professor at Harvard Law School.(continued)
I think that its pretty safe to say that the investment banking industry is divorced from the reality of 99.9% of Americans, to the point that they have their very own definitions of words that the rest of us know, understand and take for granted.
Im not alone when I say I'd run that company for a tenth (hell a hundredth) of what those guys make--granted I dont know much about derivatives markets, credit default swaps, mortgage insurance etal--but its obvious they certainly dont either.. ...and...I wont even ask for any bonuses
I can't believe the audacity of these people to even consider giving out or accepting bonuses out of stinkin'bailout money from the government! This is so outrageous to my way of thinking.
Don't most companies skip bonuses as a first means of cutting costs?
Doesn't the word bonus mean something extra, above and beyond the regular compensation for the job?
If I were president I would demand that AIG return all the money and let them sink. It's bizarre that rather than pinch every penny tightly, they think we should not only get bailed out from their mess, but actually be rewarded with bonuses. They ought to have been happy to have had their lousy jobs saved.
I'm getting the distinct, sinking feeling in the last few days that we're still being played, right here in the midst of all the carnage.
Yeah, sure, it's dispicable that these amoral sons a bitches are busy feathering their own nests with the meager retirement assets that a few of us had managed to scrape together over our lifetimes, but, if you step back from the mess for a moment and look at the larger picture, I think it's primarily a diversion.
Yeah, so some miscreants weasled away 160 million or so. And we're all focused on that (ultimately insignificant) amount. But what about the 125 BILLION that we've given away to prop up the Foreign banks the AIG was involved with? I really think that's the real atrocity. So they give us a minor deal to get all lathered up about and wax vitriolic, meanwhile they're hauling the SERIOUS money out the back door.
My hang up on this AIG thing is the word bonus. In my line of work a bonus is something you get when you achieve certain pre-determined targeted objectives rather than an entitlement. So, my question what objectives did these AIG execs achieve when the Company as a whole was hemmoraging billions of dollars?
My company doubled our fourth quarter profits last year, and we still almost didn't give bonuses out in case we needed the money for this year (the decision was made to give bonuses anyway, although they weren't as big as previous years.) So if companies that increase their revenue are scrutinizing bonuses, it is amazing how AIG decided to give bonuses anyway. I don't see how this could please their shareholders, much less the U.S. citizens who all have a stake in it.
The rich have a "me first" mentality where they feel that they deserve everything they can get their hands on, no matter how unethical it may be. That's why we are in this crisis, and why the big corporationss don't seem to be taking the demands of the American people and our government seriously.
The rich have a "me first" mentality where they feel that they deserve everything they can get their hands on, no matter how unethical it may be. That's why we are in this crisis, and why the big corporationss don't seem to be taking the demands of the American people and our government seriously.
It's human nature. Can we really do anything about it?
It's human nature. Can we really do anything about it?
That was NOT off topic, really.
No, we cannot change human nature. HOWEVER... you have eloquently articulated the essence of and for the need for oversight and regulation of critical industries.
EX POST FACTO CLAUSE - A misnomer in that actually two Constitutional clauses are involved. The U.S. Constitution's Article 1 Section 9, C.3 states: 'No Bill of Attainder or ex post facto Law shall be passed,' and Section 10 says: 'No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law. . . .'
The 'words and the intent' of the Ex Post Facto Clause encompass '[e]very law that changes the punishment, and inflicts a greater punishment, than the law annexed to the crime, when committed.' Calder v. Bull, 3 U.S. (1 Dall.) 386, 390 (1798) (opinion of Chase, J.).
An ex post facto law is a law passed after the occurrence of an event or action which retrospectively changes the legal consequences of the event or action.
Even though these bonuses are only like 1/10 of a percent of the bailout money AIG has recieved, it is the principle... and that is still a sh!tload of money they are forking over in bonuses paid for by tax payers. Taxpayers of which many will never see that much money in their cumulative income earning life. That's f'ed up.
-----------------------
Unfortunately, Geo, we have to prop up these foreign banks because they have been apart of the risk management and credit leverage that has allowed us to blow this bubble in the first place. Spreading the risk out freed up capital to loan out to still riskier borrowers with even riskier loans, but that has resulted in a handful of banks etc. holding huge amounts of the worlds derivatives. So now that things have gone sour, they are all still linked at the wallet chain and if left to fail will see a world wide catastrophic financial domino effect.
It sucks and it's scary, IMO.
There has been a small chorus of people over the years sounding the alarm about the dangers of derivatives which Warren Buffet in 2003(?) called "Financial Weapons of Mass Destruction." It has been virtually unregulated thanks to Alan Greenspan and others like lawmakers who have been severely ignorant in terms of macro economics. Oh, but it would have worked so well if people would have just acted in their best nature. Oh, if we could have just not have had greed in the world. Thanks Alan.
The derivatives market has gone from virtually nothing twenty years ago to an estimated value of between 600 trillion to 1.144 Quadrillion USD world wide. Like all markets in a capitalistic system it is subject to booms and busts and this one is beyond unsustainable.
These bailouts will hopefully stop some of the bleeding and hopefully get the economy rolling again, but the bigger problem if not addressed will still remain and loom bigger still.
Obama said the other week that he hopes this budget lays the foundation for a future of sustainable growth and get us away from a "bubble economy." I welcome that change personally. I certainly am no expert, just someone who's been reading this sh!t lately, but unless he is thinking of completely ridding us of capitalism, which in spite of what dooms day conservatives are saying I don't believe he is, he will be sorely mistaken. Of course, so will we.
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Rocky
Transparency is something the Obama administration is aiming for. That's why the Prez is generally not afraid to take responsibility for what his administration does.
However, as you noted, this is a complicated situation. CONGRESS messed up. Apparently, Sen Dodd (D-CT) was responsible for removing the amendment that would have voided those bonus contracts.
There are several news reports this morning that Dodd's "political capital" is taking a big hit for that dumb move.
Further, it appears that Obama Treasury Secretary Geitner was aware of the bonus issue and neither properly briefed the Prez nor took issue with the removal of that amendment.
Hence, Obama taking responsibility for the situation and looking for ways to now void the bonuses.
Obviously, a bill to tax the bonuses at 90 percent, even if it passes and the Prez signs it, will likely only be symbolic. Because there are at least two reasons such a bill will not pass constitutional muster and would easily be struck down in court (if challenged).
It's an Ex Post Facto bill. Not constitutional. Congress cannot enact laws to address a prior situation.
It's also a Bill of Attainder. Also not constitutional. Congress cannot enact laws aimed at specific individuals.
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oldiesman
Good point on transparency and laziness. President Obama and Congressional Democrats were in such a hurry to sign the spending plan they all didn't read it or even attempt to make it transparent for the American people to read and study it. Republicans and some Democrats complained about the lack of transparency and rush to sign. I think the whole procedure was lazy and irresponsible and non-transparent, from Obama on down. Obama pledged differently, so it is more evidence of Obama dishonesty since Americans are not getting something they voted for: transparency.
Obama Dodges Transparency Pledge
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washn'wear
I am glad to hear about the:
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Zshot
Rocky,
You are exactly right.
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RumRunner
I'm not entirely sure of those two points Rocky - HOWEVER I am NOT claiming to be authoritative.
My previous company was publicly traded and went through the whole Sarbanes-Oxley compliance and audits. That was enacted after the infamous ENRON case. (You might actually enjoy the documentary movie BTW.) There are specific infractions where individuals can now be prosecuted whereas in the past the company was considered a "person" hence "protecting" the employees.
Like I started with - I'm not entirely sure - but I sure am NOT going to go back through all of the SOX compliance stuff just to be sure of a conjecture on GSC - It took us two years to get compliant and we were a fairly small company...however I remember enough of it to consider that since it focused on "controls" that there is a pretty good chance AIG and some of the others were not following strict nor even reasonable internal controls...and that smacks of SOX audit and we ain't talkin' Red Sox here.
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Rocky
The (initial) question (subject of this thread) had to do with whether a bill making its way through Congress right now (passed the House yesterday) to tax said bonuses at the rate of 90 percent was the best answer.
THAT bill would essentially be symbolic only for the reasons I cited.
President Obama indicated during his interview on Leno's show that his administration was going to pursue any and all avenues to recapture those bonuses.
While nobody here at GSC has been able to cite anything specific about the conduct of AIG or about specific provisions in existing law that the federal government could invoke to legally effect said recapture, it's entirely possible that the laws you (RR) were thinking of might apply to the AIG situation.... BUT would be something exclusive of the question posed by washn'wear to start this thread.
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Rocky
FBI Ramps Up Probes of Financial, Mortgage Fraud
WASHINGTON -- The number of probes by the Federal Bureau of Investigation into corporate fraud and mortgage fraud is growing by the month.
FBI Deputy Director John Pistole told a House panel Friday that the bureau has more than 2,000 open investigations into mortgage fraud as well as 566 corporate-fraud investigations.
Mr. Pistole said 43 of those corporate-fraud investigations involve "matters directly related to the current financial crisis."
Those numbers are all larger than those Mr. Pistole offered to a Senate committee last month.
Comparing Mr. Pistole's testimony Friday with the data he gave to the Senate Judiciary Committee in February, it appears the FBI has opened 36 new corporate-fraud investigations and 200 new mortgage-fraud investigations in recent weeks.
Mr. Pistole said the FBI continues to experience "an exponential rise" in the number of fraud investigations it is conducting, "a trend we expect to continue."
He said the FBI's investigations on corporate fraud and financial-institution failures are focused on accounting fraud, insider trading and financial-statement manipulation.
Mr. Pistole told the Senate Judiciary Committee last month that the FBI's investigations into the current financial crisis involve companies "that everybody knows about."
Mr. Pistole said Friday that the growing number of fraud probes was straining the FBI's resources for investigating white-collar crime.
(from the Wall Street Jounal)
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Mister P-Mosh
This had nothing to do with SOX though. From the risky mortgages they insured to the contracts with bonuses, no actual fraud was committed by AIG. SOX is about controls to prevent individuals from manipulating the company's finances. It really doesn't solve anything to do with what Enron did, and has nothing to do with what AIG did.
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RumRunner
Actually P-Mosh it goes way farther than that - down to rather excruciating detail.
Eg - Inventory and materials managment - your purchasing person cannot also be your receiving person - as in the position of receiving not the recipient of the purchase - and indeed SOX has a rather onerous section of inventory, materials management, etc. Hmm increased cost of business in CA with overhead (100%) of a new employee? About $100K per year. Also your inventory is now managed by accounting - NOT the materials handlers. Moderate increase in cost to accounting for additional task assigned to department.
Your sales team doubles their paperwork (for our business) because now they need auditable sales transactions. Missing due dates for proposals? None. Annoyed customers for lack of internal turnaround? Lots. Cost? Increase in long distance and overseas calls - about $10K per month.
Project engineers, field engineers, assemblers and technicians - if you are not ISO (which actually has to apply to a whole company not just engineering) then SOX will give you a whole new regimen of document control - including who CANNOT see it before the product ships. We were ISO so I cannot validly conjecture cost estimates to a company who was not.
There is also an entire IT component - which is actually impossible to guarantee you can implement it fully. Cost? Unknown but somewhere around the $50K range because of the new servers we needed to get to run some required auditing software.
And of course, as you mentioned, a huge section to prevent direct manipulation of liquid, credit, or speculative finances. Cost? Two new employees costing, again with overhead, about $400K per year.
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Mister P-Mosh
I have to deal with SOX as well, as my team maintains a system that is one of the key controls from the I.T. side and we have to generate reports to auditors and sit with them and explain how we run things. It still seems like more hassle than help though, and it doesn't really do anything to prevent fraud because the company gets to define how they adhere to SOX, and as long as the company does what it says it will do, everything is fine with the auditors.
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Jim
Ex Post Facto only applies to criminal law, not civil. I could cite a reference if I weren't slightly drunk....
Don't know about Bill of Attainder...
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Rocky
Legal Definition of Ex Post Facto Clause
EX POST FACTO CLAUSE - A misnomer in that actually two Constitutional clauses are involved. The U.S. Constitution's Article 1 Section 9, C.3 states: 'No Bill of Attainder or ex post facto Law shall be passed,' and Section 10 says: 'No State shall enter into any Treaty, Alliance, or Confederation; grant
Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold
and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law. . . .'
The 'words and the intent' of the Ex Post Facto Clause encompass '[e]very law that changes the punishment, and inflicts a greater punishment, than the law annexed to the crime, when committed.' Calder v. Bull, 3 U.S. (1 Dall.) 386, 390 (1798) (opinion of Chase, J.).
An ex post facto law is a law passed after the occurrence of an event or action which retrospectively changes the legal consequences of the event or action.
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mstar1
You have the bills mixed up. The recovery bill did not create the right for AIG -- or any company -- to pay bonuses. .
AIG disclosed that it had contractual agreements to pay these bonuses more than a year ago.
The Bush Treasury department approved of the AIG bailout with this agreement in place in September of last year. The relevant provision in the recovery act, which was based on an amendment by Sen. Dodd actually restricts the ability of companies receiving money from TARP to award bonuses in the future.
If the recovery bill of this administration hadnt passed, AIG's ability to pay the bonuses still would NOT have been limited.
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oenophile
My hang up on this AIG thing is the word bonus. In my line of work a bonus is something you get when you achieve certain pre-determined targeted objectives rather than an entitlement. So, my question what objectives did these AIG execs achieve when the Company as a whole was hemmoraging billions of dollars?
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Rocky
Courts Unlikely to Strike Down AIG Tax Law, Legal Experts said
March 20 (Bloomberg) -- Courts probably will uphold Congress's effort to tax employee bonuses at American International Group Inc. and other companies receiving federal bailout funds, several legal experts said.
The House yesterday voted 328-93 in favor of a 90 percent tax on bonuses, including the $165 million insurer AIG paid last week after receiving $173 billion in bailout funds. The Senate plans to vote next week.
The measure raises a number of legal questions, and New Hampshire Republican Senator Judd Gregg yesterday said the legislation was unconstitutional. Still, any legal challenge will meet a significant obstacle: the historic reluctance of the Supreme Court to second-guess Congress on tax issues.
"Given the state of the law, it will be unlikely that the Supreme Court will strike down this legislation," said Edward McCaffery, a University of Southern California tax-law professor who says he questions the wisdom of the proposal.
Gregg said the legislation would violate the constitutional ban on bills of attainder, or laws that single out individuals for punishment. "It's basically targeted on a small group of people," he said.
The House took several steps to shield the measure from that argument, said Laurence Tribe, a constitutional law professor at Harvard Law School.(continued)
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mstar1
I think that is the question on everyones mind.
I think that its pretty safe to say that the investment banking industry is divorced from the reality of 99.9% of Americans, to the point that they have their very own definitions of words that the rest of us know, understand and take for granted.
Im not alone when I say I'd run that company for a tenth (hell a hundredth) of what those guys make--granted I dont know much about derivatives markets, credit default swaps, mortgage insurance etal--but its obvious they certainly dont either.. ...and...I wont even ask for any bonuses
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bowtwi
I can't believe the audacity of these people to even consider giving out or accepting bonuses out of stinkin' bailout money from the government! This is so outrageous to my way of thinking.
Don't most companies skip bonuses as a first means of cutting costs?
Doesn't the word bonus mean something extra, above and beyond the regular compensation for the job?
If I were president I would demand that AIG return all the money and let them sink. It's bizarre that rather than pinch every penny tightly, they think we should not only get bailed out from their mess, but actually be rewarded with bonuses. They ought to have been happy to have had their lousy jobs saved.
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George Aar
I'm getting the distinct, sinking feeling in the last few days that we're still being played, right here in the midst of all the carnage.
Yeah, sure, it's dispicable that these amoral sons a bitches are busy feathering their own nests with the meager retirement assets that a few of us had managed to scrape together over our lifetimes, but, if you step back from the mess for a moment and look at the larger picture, I think it's primarily a diversion.
Yeah, so some miscreants weasled away 160 million or so. And we're all focused on that (ultimately insignificant) amount. But what about the 125 BILLION that we've given away to prop up the Foreign banks the AIG was involved with? I really think that's the real atrocity. So they give us a minor deal to get all lathered up about and wax vitriolic, meanwhile they're hauling the SERIOUS money out the back door.
Hmmmm...
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Mister P-Mosh
My company doubled our fourth quarter profits last year, and we still almost didn't give bonuses out in case we needed the money for this year (the decision was made to give bonuses anyway, although they weren't as big as previous years.) So if companies that increase their revenue are scrutinizing bonuses, it is amazing how AIG decided to give bonuses anyway. I don't see how this could please their shareholders, much less the U.S. citizens who all have a stake in it.
The rich have a "me first" mentality where they feel that they deserve everything they can get their hands on, no matter how unethical it may be. That's why we are in this crisis, and why the big corporationss don't seem to be taking the demands of the American people and our government seriously.
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Bolshevik
It's human nature. Can we really do anything about it?
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Rocky
That was NOT off topic, really.
No, we cannot change human nature. HOWEVER... you have eloquently articulated the essence of and for the need for oversight and regulation of critical industries.
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Jim
I said....
Then you said...
I'm not a little drunk today.
http://supreme.justia.com/constitution/art...facto-laws.html
It would be good if you'd do a little open-minded research instead of just trying to prove me wrong.
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Rocky
You seem to have made some unjustified inferences.
I simply posted a link and some of the text from that link.
Everything else you inferred from that is in the category of error that you alone are responsible for.
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lindyhopper
Even though these bonuses are only like 1/10 of a percent of the bailout money AIG has recieved, it is the principle... and that is still a sh!tload of money they are forking over in bonuses paid for by tax payers. Taxpayers of which many will never see that much money in their cumulative income earning life. That's f'ed up.
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Unfortunately, Geo, we have to prop up these foreign banks because they have been apart of the risk management and credit leverage that has allowed us to blow this bubble in the first place. Spreading the risk out freed up capital to loan out to still riskier borrowers with even riskier loans, but that has resulted in a handful of banks etc. holding huge amounts of the worlds derivatives. So now that things have gone sour, they are all still linked at the wallet chain and if left to fail will see a world wide catastrophic financial domino effect.
It sucks and it's scary, IMO.
There has been a small chorus of people over the years sounding the alarm about the dangers of derivatives which Warren Buffet in 2003(?) called "Financial Weapons of Mass Destruction." It has been virtually unregulated thanks to Alan Greenspan and others like lawmakers who have been severely ignorant in terms of macro economics. Oh, but it would have worked so well if people would have just acted in their best nature. Oh, if we could have just not have had greed in the world.
Thanks Alan.
The derivatives market has gone from virtually nothing twenty years ago to an estimated value of between 600 trillion to 1.144 Quadrillion USD world wide. Like all markets in a capitalistic system it is subject to booms and busts and this one is beyond unsustainable.
These bailouts will hopefully stop some of the bleeding and hopefully get the economy rolling again, but the bigger problem if not addressed will still remain and loom bigger still.
Obama said the other week that he hopes this budget lays the foundation for a future of sustainable growth and get us away from a "bubble economy." I welcome that change personally. I certainly am no expert, just someone who's been reading this sh!t lately, but unless he is thinking of completely ridding us of capitalism, which in spite of what dooms day conservatives are saying I don't believe he is, he will be sorely mistaken. Of course, so will we.
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