Kangaroo Court . . . RECOMMENDED READING!!
By Larry Doyle on March 19, 2009 at 5:57 PM in American Consumers, Bank Bailouts, Banking Institutions, Barack Obama, Ben Bernanke, Economy, Hedge Funds, Insurance Policies & Industry, Nancy Pelosi, Obama Administration, Sense on Cents (Larry Doyle blog), Wall Street
The kangaroo court on Capitol Hill just passed a bill to tax bonus payments at a 90% rate for employees (with family incomes in excess of $250,000) of AIG and other firms that received $5 billion or more in government bailouts. In my opinion, 
this piece of legislation is a poorly constructed means of recapturing government funds.
I have previously stated that firms that were truly bailed out by the government should be subject to strict government compensation controls. A number of firms – such as Northern Trust, JP Morgan, Wells Fargo, and Goldman Sachs – were compelled to take government funds. If employees of these firms are subject to this tax, it will be a travesty and injustice of unprecedented proportions. I believe that Congress is unknowingly escalating class warfare amidst a facade and charade of protecting the public. I believe we will see public outrage from employees at these firms (JP Morgan, Northern Trust, Goldman, Wells Fargo) that can only be rivaled by our forefathers back in the 1770s. This tax is another means of promoting the income redistribution upon which Obama ran his campaign. Taxation without representation is tyranny!!!
Amidst the smoke and mirrors emanating from Washington, make no mistake this legislation passed today is an attempt to cover the incompetence and ineptitude of these legislators. This smokescreen is further displayed as Nancy Pelosi Blames Bernanke Over AIG Bonus Fiasco.
In my opinion, public outrage would be mollified to a much larger extent by payments from our politicians in addition to the AIG employees and others. I am referring to the grotesque sums paid by Wall Street firms (banks, insurance companies, hedge funds, accounting firms) in the form of campaign contributions and lobbyist dollars to curry favor with Washington.
I called on the return of these payments from politicians on March 9th in How Wall Street Bought Washington. Well, the WSJ has picked up on this theme and is making the same point in highlighting Critics Got Donations from Insurer. If the government plans to take employee bonuses, let’s have the political crowd exposed for their greed and incompetence as well. At that point, perhaps we may really start to make some progress.
Yesterday, as President Obama informed the press that the buck stops at his desk, a reporter asked him whether he would return the $104k his campaign received from AIG in 2008.
He ducked the question.
Change? Sounds like more of the same to me!!
LD
***Cross-posted from my blog, Sense on Cents. Come by and visit!
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And yet another cycle of Congresspeople who have no problem with using the Constitution for comfort tissue.
So the unstimulating bill that allowed AIG to hand out bonuses is now going to be changed with a tax lien against those who broke no laws?
Why didn’t Congress just mandate NO BONUSES in the bill? Oh, because That One is as dense as a neutron star but twice as dim but STILL got his way with a group of spineless jellyfish.
If I were a member of Congress, I’d resign out of shame.
>>> …I’d resign out of shame.
Presupposes that anyone in Congress is capable of shame.
Though I usually loathe and detest Grassley (R-Archer Daniels Midland) I agree with him on this one.
I lived in Wayne, Nebraska in the 80s. Being in a college town, we called Grassley and Jepsen, Tweedle Dum and Tweedle Dummer. Not that the Nebraska Senators were much better.
I believe the legislation they enacted is going to be found to be unconstitutional.
You cannot enact legislation that negates an already executed and legally binding contract that has not been breached.
You cannot enact legislation that uses the tax code to punish a select group of people for purely political purposes.
And you cannot start forcing employees (who broke no laws and were acting to fulfill their contract) to hire attorneys to defend themselves against an unruly and irresponsible group of legislators who, frankly, deperately need to be investigated themselves.
If congress can, after the fact, zero in on one specific source of income then they conceivably could next target income that political writers earn from publications critical of the government.
I will offer one for them. Place a 90% tax on the amount that the annual congressional pay increase exceeds the cost of living index. Be sure to wait until the paychecks are cashed and granddaughter the measure.
The tone of most organizations is set from the top. This is yet another skit where the DC Amateur Hour demonstrates its lowest form.
The corruption and greed in politics is so pervasive, how is there any hope of stopping it from happening over and over again??? I’ve learned not to rely on the intelligence of all voters to run the “bad” ones out of office.
You’ll never lose a dime underestimating the intelligence of the American people.
So, now all these companies have to do is move their headquarters to some country or island and avoid having to deal with this stupid law.
What happened to the Senate being the deliberative body, where there’s a debate of bill on their merit?
Our congress is now acting like a third world country. But look what passes for US president. No wonder this country good days are behind us.
It’s so disgusting that America, the country I love, is being run by the mob of corrupt imbeciles.
O…perhaps I should have more specifically stated that the Congress passed this bill. Senate is working on its own version.
I am curious, why is it okay to break the union contract the automakers had with their employees (no outrage here or anywhere as far as I can see) but there is monumental outrage at breaking contracts with AIG perpetrators?
How about the same outrage for both of these situations.
“I have previously stated that firms that were truly bailed out by the government should be subject to strict government compensation controls.”
No companies should have been bailed out in the first place. Poorly managed companies should just go bankrupt. That is why bankruptcies laws were written. The laws weren’t written so companies “too big to fail” could donate $$$ to their favorite pol to siphon off tax $$$ to their heart’s content. GRRRRR!!!!!!
Agreed. Those who play fast an loose with the rules and take unmitigated risks should not expect any help from those of us who do not.
adagio: Do you not understand that corporations are so powerful and all-pervasive that if they go under then lots of very responsible, very moral upstanding working people will lose everything? This is where NeoConservatism breaks down. You people don’t want regulation because Republicans tell you regulation is a bad thing. You don’t realize that the people who run the financial sector have knowledge that the average American and even a lot of leaders in the government don’t really understand. They hold of the fate of us all in their hands. So, they MUST be regulated in order to keep them from destroying the country and the world. Because all the regulations were lifted in the past 8 years, we are now seeing a meltdown of the global economy.
ITs a shame then when McCain and company where saying a couple years ago that Fannie and Freddie needed regulated the DEMs blocked it
Exactly!
Hi Seattle. I agree too. Lets specify which groups of people should get taxed more. I think redheads.
Hey Ellen,
Just don’t tax us tall big guys…Not enough of us to go around…
All ball players should be taxed 99% of any amount over 500 K that they earn anually. They essentially produce nothing, their salaries drive op the cost of game tickets to the point that common shlubs like me can’t take my kids to a ball game for less than $150 when you add up parking, tickets, concessions, and for me, ferry tickets. And besides, why do they need so much to get by on? Bawahaha!
The bill the Senate passed today to punish innocent people would have OUTRAGED 90% of Americans not too long ago. But the increasingly ignorant masses in this dissolving Republic have consumed a fatal helping of egalitarian shit sandwiches washed down with generous quantities of class warfare Kool-Aid. During the primaries Obama made very clear that this was his ideal. He was asked why he wanted to raise capital gains taxes when it has been shown that doing so actually reduces revenue. His answer was that it makes things fair to the lower classes. WTF!!!
Get your pitchforks and torches out , Congress is leading the charge to drag the new aristocracy out of their ivory towers. I hope the envious and resentful clowns driving this dissaster will eventually have an epiphany when we’re all reduced to eating dirt.
Thanks LD. We really need to end the “access” money to our legislators now because the results are corruption and intentional incompetence and denials. This bill is smoke and mirrors as you state, because Congress and the Executive branches are scared about public reaction to this gigantic economic disaster. I read this earlier today regarding the “sanctity of [government] contracts…” http://informationclearinghouse.info/article22248.htm Was the Bailout Itself a Scam?
The employees of these firms did not blow the doors off an armoured truck and take this money!
Congress handed it to them, and in fact, inserted the mandate that bonuses would be paid.
This is embarassing theater on the part of incompetent actors in the House, and the American people should direct their anger at the real villians!
I’m sorry…I am reasonably well educated and a relatively sentient person but *I* do not comprehend how this law is such a “travesty and injustice of unprecedented proportions.” Neither does it make a drop of sense that it is class warfare. What it does do is deprive people who, by the grace of ME and you and every other American, still have a JOB. How dare they? What an incredibly outrageous act of brazen stupidity, to provide these bonuses…The Republican who said that they should apologize and then evicerate themselves is over the top but not by much. What they were trying to do is one hundred and eighty degrees from suicide. They are padding their pockets with millions of dollars from our pockets. Screw them and the horse they rode in on. Good job, Congress. The tax will take away the undeserved bonuses. If they don’t like it, they can go to hell.
Congress could have eliminated the bonuses with the original bill but didn’t because they are spineless jellyfish and That One must have pictures with the associated negatives in the safe. Congress did not do a good job at all, unless you define a good job as waving a white flag in the face of a scrawny man who was the sum total of the opposition.
James G.: Glad to see a voice of reason. I concur.
You have totally missed my point. Please go back and reread my comment in which I write I support restrictions on compensation at firms that were truly bailed out.
If you think it is reasonable to tax income at a 90% rate for individuals at firms that were compelled to take money then you and I have a dramatically different view on what is fair and reasonable.
If you think it is fair and reasonable for the government to implement tax policy that is specifically directed at certain individuals at firms that did NOT need govt money but were compelled to take it then where does the govt stop?
You obviously think I am writing about AIG. I am not. I am writing about JP Morgan.
If some firms didn’t need government money but took it anyway, I can’t see why they should be commended. Why are they taking our public funds if they don’t need the money?
Tek…you obviously do not recall that Paulson compelled them to take it.
This is common knowledge.
Are you kidding me? Public outrage from executives at corporations that sunk the global economy? Please.
Mar. 19, 2009 – 8:15 PM EST
TeamPOLITICO: Mar. 19, 2009 – 6:56 PM EST
Geithner said he did all he could legally to stop the bonuses – but also hinted strongly that he actually knew something about the bonuses earlier than previously disclosed.
Geithner said that he learn the “full scale and scope” of the AIG issue on March 10, as the White House disclosed this week. But when pressed as to whether that was the first time he became aware AIG officials would get bonuses, he repeated that it was the first time he learned of the full scope of the payments.
“And as soon as I heard about the full scale of these things, we moved very actively to explore every possible avenue — legal avenue to address this problem, to make sure that, again, the assistance we were providing was not going to unduly benefit these people,” Geithner said, according to a transcript provided by CNN.
So this scandal now turns on what the definition of “full” is…………sad. Of course Geitner knew, this whole outrage week by the Adminstration starting on Saturday afternoon with choice leaks to the NYT is a Axelrod counterspin construction. EVERYONE in the business and media world knew of the AIG Exec bonuses from the 10Q’s in Nov 08 and the CNN/Bloomberg coverage of AIG bonuses to the Financial Products Division in Jan 09:
http://www.bloomberg.com/apps/news?pid=20601087&sid=auhzcUg60VZA&refer=home
AIG Said to Offer $1 Billion in Retention to Workers (Update1)
By Hugh Son
Jan. 28 (Bloomberg) — American International Group Inc., the insurer saved from collapse last year by government money, may have committed more than $1 billion to employees to keep them from leaving the company.
About 400 workers at New York-based AIG’s financial products unit may get $450 million in two installments, said two people familiar with the situation who declined to be identified because the plan is confidential. That is in addition to about $619 million in retention pay going to 4,200 executives and employees at subsidiaries including life insurance.
AIG is trying to hold onto employees while it sells businesses to repay a government loan. The insurer took a federal bailout in September after the financial-products unit, which sold credit-default swaps that plunged in value amid the housing market collapse, caused about $34 billion in writedowns. AIG said the program was disclosed before the government rescue, which is now valued at $150 billion.
“I was extremely disappointed — but not surprised — to learn that AIG will be awarding bonuses to the very division that drove the company into the ground,” said Representative Elijah Cummings, a member of the House Committee on Oversight and Government Reform, in an e-mail. AIG shouldn’t be awarding “millions of unmerited dollars to employees while at the same time begging the U.S. government for financial life support.”
The fact that “Ali” at CNN didnt press Geitner with quotes from HIS OWN NETWORK and Bloomberg from Jan 09 is a disgrace.
And as a final bonus for you lefties out there, here’s a report from the AP re Obama’s “outrage” when he learned “last week” about the AIG bonuses…what, the President and Leader of the Free World doesnt watch CNN or read Bloomberg, nor does any of the hundreds of economic analysts and advisors who work for him? This is pure Axelrod counterspin lies.
BURBANK, Calif. – President Barack Obama has told Jay Leno he was stunned when he learned of the bonuses that bailed-out insurance giant AIG was paying its employees.
Obama told “The Tonight Show” host the payments raise moral end ethical problems — and the administration’s going to do everything it can to get them back.
But Obama added the bigger problem is the culture that allowed traders to claim them. He says that’s got to change if the economy is to recover.
According to NBC, Obama was the first sitting president ever to appear on “The Tonight Show.” He’d already appeared twice as a candidate. already appeared twice as a candidate.
In his opening monologue, Leno lots of people were surprised Obama would come on NBC — figuring he’d be tired of big companies on the brink of disaster with a bunch of overpaid executives.
Leno also joked about the dismal state of the economy, saying it’s so bad Obama flew to California on Southwest Airways — making nine stops.
“President Barack Obama has told Jay Leno he was stunned when he learned of the bonuses that bailed-out insurance giant AIG was paying its employees.”
You know the old expression that came out of the Watergate scandel, “it’s not the crime that gets ‘em, it’s the coverup of the crime that does it.”
There is so much fabricated outrage leading ro reckless finger pointing leading to shifting stories and atop this is either the most clueless President in history or the next Nixon.
I’ll go along with clueless. Nixon was a bad man but not half bad as president. That One is both a bad man and will be an even worse president.
I agree with your general comment that the kangaroo court is in session. However, make no mistake that several of the banks you listed including Goldman needed and got bailout money. The AIG bailout was a conduit to shoring up the capital of Goldman and others. They act they put up about not needing the money was just that an act. The reason Goldman is converting to a bank holding company is acquire the right to be backstopped by the fed.
gire YOU ARE 100% correct!
The real story being missed here is Goldman.
GOLDMAN WAS GOING DOWN! And they should have been allowed to fail.
I respectfully disagree. Goldman would certainly have taken a hit if AIG failed but there are very few people who think Goldman was going down.
Merrill, yes…Morgan Stanley, maybe…Goldman, no…