Thursday, March 19, 2009

AIG bonus shenanigans...why are you/they surprised?

Obama has been taking a lot of heat-- more than he deserves-- on the AIG bonuses. (The lion's share of the blame for AIG should go toward Bush and the Democratic Congress.)

It's unfair, but that's a part of politics-- a lot of undeserved credit and blame. (I suppose you could also say it's justice-- since he's going to try to take credit for the country's economic recovery, even though his policies will not help that along.)

In any case, it's funny/sad that people continue to imagine that government policy in general-- or bailouts in particular-- will work as well as advertised and anticipated. Will we ever learn?

Here's the AP's Laurie Kellman in the C-J with the story...

Congressional Democrats vowed yesterday to all but strip AIG executives of their $165 million in bonuses as expressions of outrage swelled in Congress over the extra income for employees of a firm that has received billions in taxpayer bailout funds.

"Recipients of these bonuses will not be able to keep all of their money," declared Senate Majority Leader Harry Reid in an unusually strong threat from the Senate floor....

An unusually strong threat...Funny!

New York Attorney General Andrew Cuomo said the company last week had paid bonuses of $1 million or more to 73 employees, including 11 who no longer work for the failed insurance giant.

The bonuses were paid under legal contracts, part of a program that had been disclosed in advance filings that American International Group Inc. made with the government.

Republicans said President Barack Obama and his administration should have leaned harder on AIG executives to reject the bonuses. The complaints sparked a low-level hum about whether Treasury Secretary Timothy Geithner could or should survive this latest political storm....

Hmmm....Where were these courageous Republicans when the bailouts began under the Bush administration?

Separately, House Financial Services Committee Chairman Barney Frank, D-Mass., said the government should assert its rights as the owner of about 80 percent of AIG and sue to recover the bonuses.

"The time has come to exercise our ownership rights. We own most of the company. And then say, as owner, 'No, I'm not paying you the bonus. You didn't perform. You didn't live up to this contract,' " Frank told reporters.

Frank is correct. But this also points to the dangers and disincentives within nationalization.

Reps. Steve Israel, D-N.Y., and Tim Ryan, D-Ohio, introduced a bill that would tax at 100 percent bonuses above $100,000 paid by companies that have received federal bailout money.

"We will use any means necessary," Ryan said. "It boggles my mind how these executives can be so unaware of what the American people are going through."

Dude, it has nothing to do with that. They're not thinking about that at all-- and you're not either, unless it's politically convenient. This is simply standard redistribution-- a little bit from a lot of people, redistributed in big chunks to a small group of people. Ryan has voted for innumerable examples of the same thing-- from the recent "stimulus package" throughout his entire political career.


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