Posted tagged ‘bonuses’

Thank Democrats for the AIG Bonus Mess

March 18, 2009

[Updated 03/10/2009]

I’m sure anyone paying the least bit attention to the news has heard everyone talking about how upset they are about AIG and the bonuses they are paying.  It’s understandable…it’s upsetting enough that our government has given them bailout money three separate times.  That AIG thought it would be okay to pay undeserved bonuses with taxpayer money should make any reasonable person nauseated.  Why were they able to do this?

Fingers have been pointed at Senator Chris Dodd lately, attributing to him an amendment to a section in the February stimulus bill placing limits on executive compensations at companies that had received bailout money that exempted any contractually obligated bonuses agreed on before Feb. 11, 2009. Of course Dodd did what any Democrat put in this situation would do…denied responsibility:

“I can’t point a finger at someone who was responsible for putting those dates in,” Dodd told FOX.  “I can tell you this much, when my language left the senate, it did not include it. When it came back, it did.”

(Source)

Now he’s done a complete reversal and admitted to adding this amendment.  His explanation:

Dodd told FOX News that Treasury officials forced him to make the change.

“As many know, the administration was, among others, not happy with the language. They wanted some modifications to it,” he said. “They came to us, our staff, and asked for changes, and the changes at the time did not seem that obnoxious or onerous.”

(Source)

So the Obama administration pushed for this change…  But I thought Obama was supposed to be appalled by these bonuses.  Straight from Obama’s mouth:

“Under these circumstances, it’s hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay. I mean, how do they justify this outrage to the taxpayers who are keeping the company afloat?”

(Source)

Of course, it’s been confirmed that Dodd is a liar, so can we really believe that he was pressured by the administration to do this?  I can’t wait to hear what Obama has to say about this.  I will be surprised if he doesn’t try to blame it on the Bush administration like he does for all of his problems.  But regardless of what led to the amendment’s insertion into the stimulus bill, the bill was passed with the approval of just about every single Democrat in the House and Senate (and three RINOs) and signed into law by President Obama.  The Democrats put this law into place, and now they are feigning outrage about it.

Now it’s debatable whether or not AIG was actually obligated to pay these bonuses, especially considering that it appears those that received them hardly deserved them:

“A.I.G. made more than 73 millionaires in the unit which lost so much money that it brought the firm to its knees, forcing a taxpayer bailout,” Mr. Cuomo wrote in the letter. “Something is deeply wrong with this outcome.”

(Source)

James P. Tuthill, a lawyer and lecturer from the law school at the University of California at Berkley, had this to say:

Every contract has certain implied provisions and terms that are not specifically spelled out but presumed to be part of the agreement because such terms are so fundamental to a reasonable agreement between two parties. So with a payment of a bonus, it must be presumed that an implied term is the employee won’t destroy the company and shareholders for whom the employee supposedly works. If the employees’ acts have been so contrary to the interests of the shareholders, as is the case with A.I.G., then payment of the bonuses is unconscionable and the obligation can be voided.

(Source)

Others feel that the contracts must be upheld, while still others have mixed feelings on the issue.  Unfortunately, we don’t even know what these contracts said.  For all we know, they could have laid out specific performance requirements that had to be met in order for the bonuses to be paid.

Maybe this “Dodd amendment” was necessary to preserve rule of law or maybe it just provided AIG with an excuse to dole out these bonuses to undeserving employees.  Either way, this issue should have been addressed long before now.  They clearly knew that there was an issue with bonuses, so the Democrats should have at the very least stepped up and said, “look, we’re inserting this provision into the bill because of so and so and we believe it is necessary because of this.”  But, as always, they apparently just thought they could sneak it in there and no one would notice.  That didn’t work out so well, though, and now Democrats are playing dumb and shamelessly jumping into the angry mob when they’re the ones who were responsible for this being written into law to begin with.  Now it’s just a big confused mess of people pointing fingers every which direction and no one knowing what in the world is going on, and we can thank the Democrats for that.  It’s politics as usual in Washington!  Change!  You gotta love it!