AIG: The rest of the story

Imagine working 14-hour days — for a year — on a $1 salary with the understanding that at the end of the year, you would receive a financial reward for your hard work.  Then imagine how you would react if Congress, angry mobs and a state Attorney General decided to take it all away.  This is the other side of the AIG story.

The following is from a letter sent on Tuesday by Jake DeSantis, an executive vice president of the American International Group’s financial products unit, to Edward M. Liddy, the chief executive of A.I.G. 

It is with deep regret that I submit my notice of resignation from A.I.G. Financial Products. I hope you take the time to read this entire letter. Before describing the details of my decision, I want to offer some context:

I am proud of everything I have done for the commodity and equity divisions of A.I.G.-F.P. I was in no way involved in — or responsible for — the credit default swap transactions that have hamstrung A.I.G. Nor were more than a handful of the 400 current employees of A.I.G.-F.P. Most of those responsible have left the company and have conspicuously escaped the public outrage.

After 12 months of hard work dismantling the company — during which A.I.G. reassured us many times we would be rewarded in March 2009 — we in the financial products unit have been betrayed by A.I.G. and are being unfairly persecuted by elected officials. In response to this, I will now leave the company and donate my entire post-tax retention payment to those suffering from the global economic downturn. My intent is to keep none of the money myself.

I take this action after 11 years of dedicated, honorable service to A.I.G. I can no longer effectively perform my duties in this dysfunctional environment, nor am I being paid to do so. Like you, I was asked to work for an annual salary of $1, and I agreed out of a sense of duty to the company and to the public officials who have come to its aid. Having now been let down by both, I can no longer justify spending 10, 12, 14 hours a day away from my family for the benefit of those who have let me down.

Ed Morrissey's reaction:

If the public threatens the safety of their families, the Attorney General threatens to prosecute them, and Congress threatens to take the money away they got paid for not seeking employment elsewhere, why should they stay?  And here’s an even better question: why should anyone take their place?   Would you work for $1 a year just so you could put your children in the gunsights of lunatics doing bus tours past your house and have the state’s top prosecutor pledging to come after you with all the tools at his disposal?  [snip]

This is what mob hysteria produces, and we can thank Congress and our “shaking with outrage” President for fomenting it.  They’ve put people in danger who had little to do with the actual wrongdoing, and deliberately encouraged the drooling, mindless reaction around the nation.  They’ve probably kneecapped any possibility of getting our money back out of AIG.  I hope people enjoyed their outrage parties, because we just paid $150 billion for them.

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Bailout!

Southpark's demented take on how the treasury system works:

Obama's Suicidal Policies

Obama has been working himself to the point of exhaustion trying to ensure that our economic crisis does not go to waste. If he can't get our country on the path to European-style socialism now, he might never have a better opportunity. Thus the sense of urgency.

With all the hand waving, grandstanding and parochialism that has been on display lately, let's not forget that there is at least one issue that is more important than our current economic woes: national defense.

While campaigning, Obama made several promises regarding national defense:

• I will cut tens of billions of dollars in spending.
  
• I will cut investments in missile defense systems.
  
• I will not weaponize space.
  
• I will slow our development of future combat systems.

Unfortunately, despite the fact that we live in a world that is as dangerous as it has ever been, Obama has provided every indication that he intends to keep these promises.

In the short time Obama has been president, he has shown that he does not take seriously the threats we face. He continues to insist that we can reason with madmen who have nuclear ambitions; he has begun to formulate serious plans to make significant cuts in defense spending, he has taken steps to halt the development of missile defense systems; and on the domestic front, Obama threatened to make cuts in support for military service-related medical care. These are not the actions I would expect from a commander-in-chief who understands the reality of the post 9-11 world.

The Heritage Foundation has produced an excellent documentary that exposes the life-threatening myths about defending America. 33 Minutes: Protecting America in the New Missile Age tells the story of the very real threat foreign enemies pose to every one us. The truth is brutal.

33 Minutes is the definitive documentary exposing the untold vulnerability we all face and the action plan necessary to revive a defense system that America uniquely can develop, maintain, and employ for its own defense and the peace-loving world's security.

Learn more

33 Minutes: Protecting America in the New Missile Age

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Obama Tries to Break Down Rising Resistance Over Budget.

Here's a great idea.

Reclaim AIG campaign contributions: Make members of Congress who have received campaign contributions from AIG — or any company paying bonuses — send the money to the Treasury.

Another Great Idea

Members of Congress should be compelled to wear uniforms like NASCAR drivers, so we can identify their corporate sponsors. Via: Humble Wife

What kind of president thrives on chaos?

Is it conceivable that a president would want matters to get worse?

33 Minutes: Protecting America in the New Missile Age

Fifteen Of Top Twenty AIG Bonus Recipients Returned The Money

N.Y. Attorney General: 15 AIG Execs Agree to Return Bonuses (Fox News)

SHAMED: 15 Of Top 20 AIG Bonus Recipients Returned The Money, Says NY Attorney General Cuomo... Some Have Refused... Holdouts May End Up Being Publicly Named... Less Than Half The Bonuses Went To Americans (Huff Post)

Cuomo strong-armed AIG for details on the millions paid to dozens of executives. (Politico)

New York Attorney General Andrew Cuomo says that more than $30 million in bonus cash has been returned so far.  (CNN)

Cuomo Says Most Huge A.I.G. Bonuses Were Returned. (New York Times)

Money For Democrats Dries Up

Are Democrat donors bearish on their party's future?

The Democratic National Committee raised $3.2 million in February, a strikingly low take for a financial juggernaut led by President Barack Obama and his legions of grass-roots supporters who helped him shatter campaign fundraising records.

Even the committee's Republican counterpart raised more — $5.1 million — last month and did so under more difficult circumstances. The GOP was coming off of a disastrous election in which it lost the White House and saw its numbers in Congress shrink further. New GOP chairman Michael Steele also had a rocky start.

Overall, monthly reports being filed Friday with the Federal Election Commission show the Republican National Committee in healthier shape than the Democrats as both parties start raising money for special congressional elections and governor's races in Virginia and New Jersey this year, as well as congressional elections in 2010.

The DNC reported $8.6 million on hand and $7 million in debt, while the RNC reported $24 million in the bank and no debt.

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CEOs Push Back on Bonus Tax

A Hidden Agenda Behind the 90 Percent Tax?

You see, taxes matter. They hugely impact economic behavior. The whole economic system is run on incentives to work, invest and take risks. And it must pay, after tax, to ignite the entrepreneurial activity that really drives the economy. Like it or not, our free-market capitalist system is driven by the economic activist, provided he or she is properly rewarded.

Maria Shriver: Obama Special Olympics 'joke' hurts

Maria Shriver says the reaction to Obama's joke shows there is still more work to do. She says laughing at such comments "hurts millions of people throughout the world."

Tax Me Like You Really Mean It!

From the Washington Times:

As he empathized with recession-weary Americans, President Obama arranged in the days just before he took office to secure a $500,000 advance for a children's book project, a disclosure report shows.

One blogger suggests we do unto our politicians as they have done unto Wall Street:

Since threats of confiscatory government taxes on "unmerited" or "windfall" income seem to be all the rage these days, I am simply proposing that all elected government officials who write books should be taxed at 100% on any royalty advances that they receive while in office — while they are employed by us as our public servants. That's only "fair" ... isn't it?

Obamaphiles don't like the idea:

• The limit on banker's bonuses is because the gov't gave BILLIONS OF DOLLARS to the banks. The gov't dollars should NOT be used to pad the already wealthy banking executives pay when their companies have performed so poorly.  I don't see Obama getting BILLIONS in gov't money for screwing up the financial system, like the bankers did.

• The growing discrepancy between extreme wealthy [sic] and the average American is what leads to political instability. And that only adds to market turbulence. It seems obvious what needs to be done, and yet boneheads are out there rambling in complete ignorance of the situation.
  

But Bush foes are interested in applying the AIG precedent to George Bush:

See, Dubya just signed a big ol' book deal. Crown publishers is paying him a $7 million advance to writing a book called Decision Points, all about what a decider he was. Now the general wisdom is that Bush screwed things up. Seriously, ask Pelosi, Rangel, Reed or Obama and they'll give you a whole litany of things he did wrong to get us in this mess.

If you can tax AIG bonuses at a punitive rate, is there any reason not to tax Bush? Is there some special exemption for ex-Presidents that protect them against vindictive tax policy from current politicians? Not as far as we know.

I can't take it anymore! Democrats whine about the "excessive" earnings of the high achievers in this country, but when the very same Democrats are elected to high office, they use the office as a stepping stone on their quest to take home seven figure mountains of cash.

Liberals say the key to a more just society is to get more money into the U.S. Treasury.  I say "put your money where your mouth is." There's hardly a liberal in this country who couldn't afford to send a FEW extra dollars to the U.S. Treasury on a voluntary basis.   Go ahead Mr. Liberal, give until it hurts.   Or try a more cautious approach.  Are you supposed to be getting a tax refund? Let Uncle Sam keep it.  The Federal Government doesn't owe you any money, you say?  Just send ten extra dollars to Uncle Sam. Then you'd actually have a little credibility. But you won't do that will you? 

You won't admit it, but your actions speak louder than words — you know that an extra dollar in the hands of Government, even with your democrat buddies in charge, is a bad investment!

And don't give me the this faux outrage about Bush's $7 million figure deal. Republicans aren't the ones preaching against productivity and wealth.

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Bonfire of the Trivialities

Now, in the scheme of things, $165 million is a rounding error. It amounts to less than 1/18,500 of the $3.1 trillion federal budget. It's less than one-tenth of 1 percent of the bailout money given to AIG alone. If Bill Gates were to pay these AIG bonuses every year for the next 100 years, he'd still be left with more than half his personal fortune.  

Grandstanding, parochialism...and a rush to mindless populism. Over what?  ...Bonus money that comes to what the Yankees are paying for CC Sabathia's left arm.

Is that AIG tax constitutional?

Concluding his written statement, Gregg said that the Senate bill would undermine the credibility of the U.S. tax system and "create an atmosphere where any group that offends the sensibilities of the majority may be at risk for punitive tax treatment."

100% Tax

On the AIG kerfuffle:

This whole AIG fiasco...is just a complete farce. What it really shows is how the government has completely bungled the AIG takeover. Blame the Bush administration and the Obama administration. It also shows, once again, why the government shouldn’t run anything, because it cannot run anything.

AIG should have been placed in bankruptcy last fall under some sort of government sponsorship. While in bankruptcy, all the salary contracts (and every other AIG contract) would have been nullified and voided. At the same time, there would have been an orderly liquidation and sale of AIG’s assets and separate divisions.

—Larry Kudlow 

I don't like the idea of tax money being used for multi-million dollar bonus checks, particularly when those millions are going to corporate executives who have driven their company into a ditch. This is why we shouldn't be handing out billions of taxpayer dollars to private corporations. Having said that, it's time to get some facts straight about the $165 million AIG mess.

1. The AIG employees recieved the payments in question persuant to contracts written last March (pre-TARP). The bonuses in these contracts were NOT based on performance.

2. AIG is headquartered in Wilton, Connecticut. In Connecticut they have a little gem called the "Wage Act." The state law allows employees to sue for twice the full amount of contractually owed wages plus attorney's fees, if an employer refuses to pay up. So...you're running AIG. What would YOU do?

3. The Democrat spendulus bill that was rammed down America's throat provided an extra layer of protection for these bonuses (thanks to AIG's bestest buddy, Democrat Chris Dodd). Oops! Our Democrat Congress and our Democrat POTUS have had considerable difficulty coming up with effective CYA maneuvers. In an act of despiration, Nancy Pelosi has proposed scandalously confiscatory legislation that would recover the bulk of these bonuses by taxing them at a rate of 90%. Ninety percent is barely enough as far as Chucky Schumer is concerned. "They should voluntarily return [the bonuses]. If they don't, we plan to tax virtually all of it," New York Sen. Schumer declared on the Senate floor.

4. Small problem with Madame Nancy's plan: it's unconstitutional. Article I, Section 9, clause 3 expressly forbids "bills of attainder." What's a bill of attainder? "It's a law that is written that is specifically aimed at an individual or small group of individuals, with the purpose of punishing or penalizing them in some fashion. It is also referred to as a 'private bill.' The British did this on a regular basis in the eighteenth century, which is one reason why the Constitution absolutely forbids it."

5. Not that congress actually cares about what the constitution says, but Article I, section 9 also prohibits the passage of ex post facto laws. "An ex post facto law is one that is passed after the event to which it relates has already occurred (another favorite strategy of the British). If Congress were to make the receipt of these bonuses taxable at a rate different than they are taxable now, and then enact a criminal penalty for the failure to pay, it would clearly be an ex post facto law and therefore would violate Article I."

The idea that Congress would even consider interfering with these contracts retroactively should be a grave concern for every one of us. And the idea that the government (with the support of a populist outrcry) would target a small group of individuals for a punitive 90% tax is extremely frightening to me. Who's next?!

AIG should honor its contractual obligations to its employees. Congress should stay out of it. Yes, it's depressing to witness this scandal, but let's not allow it to become a distraction. We should be much more concerned about Congress's insatiable, multi-billion dollar pork addiction. Let's get serious about saving taxpayer dollars: how about a 90% tax on porky earmark payouts?

Come on Nancy, make it happen! I'll make it easy for you. I've taken the liberty of borrowing your words; here's your press release:

"We must protect the American taxpayer from politicians who would use their constituents' crises as opportunities for private gain. Because Congress does not use sound judgment in the use of taxpayer funds, taxpayers will recover the bulk porky congressional indiscretions with a 90 percent rate of taxation on earmark payouts. I urge all my colleagues to vote in favor of this legislation and in favor of recovering taxpayer dollars and protecting Americans from the continued poor judgment of America's biggest spenders."

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AIG uproar rattles private investors

In the process of "doing justice," the government is undermining respect for contracts and ultimately respect for law.

Must read!

Why the Recipients of the AIG Bonuses Will Almost Certainly Not Have to Give Them Back

Geithner may not survive

To say Treasury Secretary Tim Geithner is on the hot seat would be an understatement. The chorus calling for him to lose his job is decidedly stronger...

Dodd facing fresh political firestorm

Dodd just admitted on CNN that he inserted a loophole in the stimulus legislation that allowed million-dollar bonuses to insurance giant AIG to go forward – after previously denying any involvement in writing the controversial provision. *All of the Democrats have to take responsibility for this, not just Chris Dodd. The Democrats and Mr. POTUS rammed this bill down America's throat. No time to read the bill, no time to debate the bill...just pass it! They promoted the bill, signed the bill, and to my knowledge, not one Democrat raised an eyebrow in reference to Dodd's "loophole."

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