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-- Tax-payer funded AIG to give tens of millions in bonuses
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Originally posted by djjoshuaallen what a disgrace. However the way we let AIG throw 1000x the amount of the bonus packages out to save foriegn companies is even more a disgraceful

One of the reasons they are in the hole is credit default swaps bought by other institutions. How the hell else are they going to pay the claims on that?

Whats next from this administration? I hope the uneducated voters are still paying attention.
http://www.bloomberg.com/apps/news?...id=aT_tMXRy2vDs

As much I hate horrible executives getting bonuses, CEO Liddy isn't to blame.

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Originally posted by The17sss haha... even CNN is calling Dodd a liar now. He's been lying since yesterday (when he strongly denied he had anything to do with that provision) and now he's trying to pass the buck.

Dodd's part in this is pretty minimal at best. If anything, he was one of the only folks that was actually trying to close down the bonus loophole altogether. Keep in mind that the original bill proposed had no language pertaining to the bonuses - i.e. as it was originally written, bonuses could have been handed out without anyone thinking twice about it.

I'll bet you'll never guess who wrote in the bill a means of controlling these funds going out as bonuses? Here's the original bill wrote by none other than Sen. Dodd:

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(4) a prohibition on such TARP recipient paying or accruing any bonus, retention award, or incentive compensation during the period that the obligation is outstanding to at least the 25 most highly-compensated employees, or such higher number as the Secretary may determine is in the public interest with respect to any TARP recipient; http://www.opencongress.org/bill/11...ext?version=eas

Compare that to the language of the final bill:

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(iii) The prohibition required under clause (i) shall not be construed to prohibit any bonus payment required to be paid pursuant to a written employment contract executed on or before February 11, 2009, as such valid employment contracts are determined by the Secretary or the designee of the Secretary. http://www.opencongress.org/bill/11...ext?version=enr

Guess who pushed Dodd into this?:

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The administration is concerned the rules will prompt a wave of banks to return the government's money and forgo future assistance, undermining the aid program's effectiveness. Both Treasury Secretary Timothy Geithner and Lawrence Summers, who heads the National Economic Council, had called Sen. Dodd and asked him to reconsider, these people said. http://online.wsj.com/article/SB123...tml?mod=testMod

So to summarize, Dodd had a bill that originally prevented the top 25 most highly compensated employees from receiving the bonuses, but thanks to the Treasury (and yes, Obama must share some of the blame), pushing back on him, the final bill in conference was re-written to exclude this version by Dodd.

What pisses me off is the Administration making Dodd the fall guy, and they were the ones that pushed him and the committee to include bonuses for the douchebags. If you read both of these articles in the NYTimes:

http://www.nytimes.com/2009/03/15/b...IG.html?_r=1&hp

http://www.nytimes.com/2009/03/18/b...bailout.html?hp

The administration was clearly trying to pin the blame on Dodd, i.e. via "anonymous Admin. officials". I really tire of those fucking "anonymous" officials who are too pussy to give their names, esp. when they drop heresay like this.

And before 17 gets his chest puffed out in vindication, I do hope you remember who were the most vehement defenders of giving out bonuses. From an article back in early February:

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President Obama has proposed capping compensation for executives at banks that take taxpayer bailout money at $500,000. Republicans hate the idea -- a position puts them uncomfortably on the side of people currently about as popular as child-porn producers and subprime mortgage brokers. Senate Minority Whip Jon Kyl (R-AZ) blamed the "tone deaf" bankers for creating the political environment that allows Obama to call for a cap. "Because of their excesses, very bad things begin to happen, like the United States government telling a company what it can pay its employees. That's not a good thing in America," Kyl told the Huffington Post. "What executives have done is troubling, but it's equally troubling to have government telling shareholders how much they can pay the executives," said Sen. Mel Martinez (R-FL). Sen. James Inhofe (R-OK) said that he is "one of the chief defenders of Obama on the Republican side" for the president's efforts to reach across the aisle. But, said Inhofe, "as I was listening to him make those statements I thought, is this still America? Do we really tell people how to run [a business], and who to pay and how much to pay?" . . . . The objection to the government intervention in salaries is rooted in the Republican belief that government is inherently ineffective. "If Congress can run a financial institution, it belies everything I've seen in this body. Government does not do a good job running private institutions," said Sen. Kit Bond (R-MO). Sen. Tom Coburn (R-OK) agreed: "If we do such a good job of running the federal government, what business do we have telling them how to run the banks?" The GOP is also concerned that setting compensation limits could put the country on the road to serfdom. "This is just a symptom of what happens when the government intervenes and we start controlling all aspects of the economy. This is just the first piece," said Sen. Jim DeMint (R-SC). "If you accept the fact that the government should be setting pay scales in America, then it's hard not to go after these exorbitant salaries. But I think it's a sad day in America when the government starts setting pay, no matter how outlandish they are." http://www.huffingtonpost.com/2009/...n_n_164544.html

Not to mention a few of the Republican Noise Machine mouthpieces being all for the bonuses too, including 17's bestest buddy and hero:

http://theplumline.whorunsgov.com/e...ip-on-aig-mess/

Well way to go. The house just passed legislation to tax bonuses of TARP recipients by 90%, effectively guaranteeing that New York gets a nice ass-fucking. This whole charade is so over-the-top it's not even funny. Apparently cutting off your nose to spite your face is the new black.


so overdone. Way to retain talent guys. *clap*

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Lost Bonuses Mean Manhattan Home Prices to Drop Most Since �80 2009-03-19 04:01:49.0 GMT By Oshrat Carmiel March 19 (Bloomberg) -- Patty Farmer bought a $5.6 million one-bedroom apartment at the Plaza on Fifth Avenue in 2006, when buyers were lining up for the landmark building. When she put it up for sale two years later for $8.4 million, there were no takers. �The offers were so silly,� said Farmer, a former model who manages her own money for a living. �People were like: �Oh, an apartment in the Plaza, why don�t you show it to me?� But people weren�t buying.� She took the unit off the market in December. Manhattan apartment sales declined 23 percent last year as the Dow Jones Industrial Average fell the most since the Great Depression. Now co-operative and condominium prices are dropping as Wall Street firms cut the bonuses that contributed to the property market boom of the past decade. A 50 percent reduction in bonuses would push down prices by about 24 percent from their peak through mid-2010, said Sam Chandan, chief economist at property research firm Real Estate Economics LLC in New York. That would mark the biggest slide since 1980 when appraiser Miller Samuel Inc. started tracking Manhattan prices. �This will probably be the worst price correction the city has seen,� said Marisa Di Natale, senior economist at Moody�s Economy.com in West Chester, Pennsylvania. When bonuses climbed 114 percent between 1998 and 2000, Manhattan co-op and condo prices followed, rising 51 percent during those years, data compiled by Miller Samuel show. Sliding Prices �If bonuses next year are expected at or below the current level, then prices will slide,� Miller Samuel President Jonathan Miller said. Sales of Manhattan condominiums and co-ops priced at $10 million or more fell 60 percent in the fourth quarter from a year earlier, the New York City�s Independent Budget Office said. Transactions involving Manhattan apartments valued at $1 million or more dropped 21 percent in the same period. The securities industry accounted for 51 percent of the growth in wages in Manhattan�s private sector from 2003 to 2007, according to the U.S. Bureau of Labor Statistics. Financial firms disbursed $18.4 billion of bonuses last year, down from $32.9 billion in 2007, New York State Comptroller Thomas DiNapoli said in a January report. The average bonus declined 37 percent to $112,000, according to DiNapoli�s office. New York City budget officials estimate bonuses will fall 50 percent in the fiscal year ending in June from a year earlier, and will decline further in fiscal 2010. Hedge Fund Reject Manhattan is already feeling the pinch. Real estate broker Lawrence Rich thought he had the perfect match when he paired a Wall Street buyer with a $1.8 million apartment in Chelsea. His client had a 30 percent down payment and financing lined up to purchase the triplex. The building�s co-op board rejected him because he worked at a hedge fund. �They were asking him if he was going to keep his job, they were asking him about his bonus,� said Rich, who works for Prudential Douglas Elliman Real Estate in New York. The hedge fund employee abandoned his effort to buy and is now renting. Apartment prices have dropped 15 percent in Manhattan and may fall another 11 percent to a median of about $820,000 in the next 12 months, said Chandan of Real Estate Economics. If bonuses are eliminated, prices would slump by another 20 percent to 24 percent to a median of $730,000, he said. �If there�s a shock to income in the city or a shock to employment, that changes the demand side in the short term and prices adjust to that,� Chandan said. Stalled Deals Right now transactions are stalled with some buyers refusing to make an offer unless prices are reduced, said Josh Guberman, chief executive officer of Core Development Group LLC, which builds luxury condos in Manhattan. �It�s literally this kind of Western standoff now, where buyers have their guns drawn and are ready to go, and the sellers are there, guns drawn wanting to make a move,� Guberman said. His group sold the last two duplex apartments at the Legacy on East 84th Street in January after cutting the price on one to $3.25 million and the other to $2.8 million, both down from $4 million. Paul Purcell, a partner at Manhattan real estate consulting firm Braddock & Purcell, said clients who approach him for advice are looking for even bigger price reductions. �They�re saying �The Dow is down 40 percent, I want real estate to reflect that,�� he said. Price Cuts On Manhattan�s Upper East Side, the price for a 15-room duplex at 740 Park Ave., the building that has been home to former Merrill Lynch & Co. Chief Executive Officer John Thain and cosmetics billionaire Ronald Lauder, was cut by 26 percent in January to $26 million, according to real estate Web site Streeteasy.com. The 6,700 square-foot duplex, owned by late investment banker Randolph Speight for more than 40 years, features a private elevator and landing, four staff bedrooms, a butler�s pantry and a marble gallery, according to the broker�s listing, and Michael Gross, author of �740 Park: The Story of the World�s Richest Apartment Building.� Speight�s unit has been on the market since August. �You need $50 million or $100 million liquid money before they would even consider you,� Gross said of the building�s co- op board. �It�s an all-cash building. There are no mortgages. And you have to pass a board that�s run by a hedge fund guy.� �Liquid Money� Real estate brokers now rely on sales to buyers outside the financial industry. Rich of Prudential Douglas Elliman recently sold a $2.7 million condominium on TriBeCa�s Warren Street to the owner of a small insurance company and a $4 million condo at East 74th Street to the owner of an electrical contractor, he said. As for Patty Farmer, she�s staying in her eighth-floor apartment with views of Central Park and the pond at the park�s southern tip, gilt framed mirrors and calligraphy of inspirational quotations on the walls. �Luckily I�m in a situation where I wanted to move,� said Farmer, who splits her time between New York City, Orange County, California, and Paris. �A lot of people are in a situation where they want out.�

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Originally posted by MisterOpus1 Dodd's part in this is pretty minimal at best. If anything, he was one of the only folks that was actually trying to close down the bonus loophole altogether. Keep in mind that the original bill proposed had no language pertaining to the bonuses - i.e. as it was originally written, bonuses could have been handed out without anyone thinking twice about it.

I agree that Dodd is not the only guilty party here, but he did flatly deny that he had anything to do with writing the loophole for a full day, then had to fall on his sword the following day and admit he did write. Wasn't it called the "Dodd ammendmant"? Interesting that this asshole got the largest amount of campaign contributions among senators.

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And before 17 gets his chest puffed out in vindication, I do hope you remember who were the most vehement defenders of giving out bonuses. From an article back in early February: Not to mention a few of the Republican Noise Machine mouthpieces being all for the bonuses too, including 17's bestest buddy and hero:

I like how you worded that.... lol. I don't have a problem with the bonuses though man (relatively speaking), because they were merit based and contractually in writing; I'm missing the point of this part of your post. My problem is in the feigned outrage as a strategy to further demonize businesses. They knew about all of this long ago. One might conclude that the administration deliberately enabled the bonuses so they could stoke populist outrage and push through more of their anti-business agenda. Freddie Mac also has retention bonuses built in... 2 months AFTER the taxpayer bailout. Where's the outrage on that? Oh yeah, they aren't a private company. Time Magazine is now reporting that the Treasury knew another 10 days sooner than they are saying:
http://www.time.com/time/business/a...1886138,00.html

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Though Treasury Secretary Timothy Geithner told Congressional leaders Tuesday he only learned of the impending $160 million bonus payments to members of AIG�s troubled financial products unit March 10, sources tell TIME that the New York Federal Reserve informed Treasury staff that the payments were imminent on February 28. That is 10 days before Treasury staffers say they first learned �full details� of the bonus plan, and three days before the Administration launched a new $30 billion infusion of cash for AIG. �Treasury staff was informed about the new bonuses in a Feb. 28 memo that the March 15 [bonus payment] date was upcoming,� a Federal Reserve source tells Time. A Treasury department source, speaking on background, confirms the e-mail memo and its contents, and says further, �Everybody knew that [AIG] had a retention issue.� The Treasury department official says the fault appears to lie with career staffers at the department, who failed to report the imminent bonus deadline up the chain to Geithner. This failure may be a by-product of the difficulty he has had staffing up at Treasury. But Geithner still has some personal vulnerability on the issue. It was he, as head of the New York Federal Reserve, who negotiated the AIG bailout last September. At that time, he could have sought to get bonuses repealed as part of the massive government loan.

Further proof of Geithner lying here: http://blogs.wsj.com/economics/2009...-the-dunk-tank/

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1:47: Rep. Scott Garrett (R., N.J.) asks more about the timeline. Liddy said that talking last week to Tim Geithner, the Treasury secretary, Geithner indicated he learned about the bonus issue the prior week. That appears to conflict with the timeline put forth by the Obama administration, saying Geithner only learned last Tuesday (March 10).

As noted by Allahpundit: Only three possibilities here. One: Geithner found out about the bonuses as soon as his staff did and lied about it to Congress. Two: Geithner told Congress the truth but, thanks to the understaffing crisis at Treasury, it now takes 10 days for politically important matters to trickle up to the secretary�s desk. Three: Geithner told the truth and there�s no understaffing crisis, but his staff�s so incompetent that they didn�t realize this was a priority when they found out.

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Originally posted by Krypton As much I hate horrible executives getting bonuses, CEO Liddy isn't to blame.

Of course he isnt, this has nothing to do with him. Its embarrassing the way that the democrats are trying to act like they are coming down on him on the tax payer's behalf. The Guy is working for free to fix this, and wasnt involved until 6 months ago.

Sen Dodd took over 5 milllion in campaign donations from financial companies, no wonder he made a last minute entry into the bill to allow this to happen. They put it in the bill!!!! Why the fuck are they up there trying to act tough and grill Liddy?

insane

haha... I'm not the biggest of Ron Paul fans, but he's pretty much on target with this statement

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Originally posted by Shakka Well way to go. The house just passed legislation to tax bonuses of TARP recipients by 90%, effectively guaranteeing that New York gets a nice ass-fucking. This whole charade is so over-the-top it's not even funny. Apparently cutting off your nose to spite your face is the new black. so overdone. Way to retain talent guys. *clap*

I can't even express how annoyed I am about what's going on with the anti-Wall Street rhetoric. This fucking country deserves $0 of the TARP money back considering how hard they're making it for banks to function. Deutsche Bank, UBS, Credit Suisse, the hedge funds, the list goes on and on, are licking their chops at the talent they'll be able to coax away.

I hope some of these banks pay back the money and to shore up capital, cut lending.

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Originally posted by Shakka Well way to go. The house just passed legislation to tax bonuses of TARP recipients by 90%, effectively guaranteeing that New York gets a nice ass-fucking. This whole charade is so over-the-top it's not even funny. Apparently cutting off your nose to spite your face is the new black. so overdone. Way to retain talent guys. *clap*

Dude who cares about Manhattan real estate. This bill is sooooo stupid on so many more levels. Allow me to outline a few salient points:

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Bonus-Tax Plan Heads to Senate After House Passes 90% Levy Share | Email | Print | A A A By Ryan J. Donmoyer March 20 (Bloomberg) -- The Senate plans to vote next week on steep levies on employee bonuses after the House overwhelmingly approved a 90 percent tax on bonuses at American International Group Inc. and other companies receiving bailout funds. The Senate�s proposal on companies that got the federal money would place a 70 percent tax on the bonuses. Half that amount would be paid by employees, half by the companies. The 328-93 House vote came amid a national outcry over $165 million AIG paid in bonuses last week after receiving $173 billion in bailout funds as part of the government�s efforts to stabilize credit markets. President Barack Obama said he was �stunned� by the bonuses and vowed to recoup the money. �Paying excessive bonuses to the same group of folks that helped get us into this crisis is simply unacceptable,� Senate Finance Committee Chairman Max Baucus said in a statement. �Millions of Americans continue to struggle to get by, counting their dollars, and Congress needs to do the same.� The House measure would cover companies receiving 75 percent of federal bailout funds, according to the Ways and Means Committee. The Senate proposal would affect a larger pool of workers and the chamber may vote on it next week, said its primary sponsor, Baucus, a Montana Democrat. Meanwhile, House Financial Services Committee Chairman Barney Frank proposed legislation late yesterday to ban payments at companies getting U.S. aid until the government is repaid. Responding to Furor The House bill passed yesterday would affect employees earning more than $250,000 who received bonuses from companies that received more than $5 billion in aid from the Troubled Asset Relief Program. �These people are getting away with murder,� said House Ways and Means Committee Chairman Charles Rangel of New York. �They�re getting paid for the destruction they�ve caused to our communities.� The financial industry is counting on the slower pace of the Senate to give it a chance to mount a defense, according to a Washington-based representative of the financial services industry. With a vote expected quickly next week, there may be little time to make a strong case. Still, the industry will argue that the new taxes would affect far more workers than previous measures, hurt families and undermine the economic recovery at banks receiving TARP funds, the representative said. �Negative Effect� �The concern is the negative effect on rank-and-file workers and couples,� said Scott Talbott, senior vice president of government affairs for the Financial Services Roundtable, a Washington trade group for the industry. Obama said in a statement that the measure �rightly reflects the outrage� among the public over bonuses, and said he hopes to receive a bill �that will serve as a strong signal to the executives who run these firms that such compensation will not be tolerated.� The Senate measure, proposed by Baucus and the panel�s top Republican, Iowa Senator Charles Grassley, would also restrict the amount of income that can be deferred from tax to $1 million. Democrat Ron Wyden of Oregon and Republican Olympia Snowe of Maine also are sponsoring the measure. Senate Majority Leader Harry Reid sought to have Baucus�s measure immediately passed; Arizona Republican Jon Kyl objected. �Other senators need time to consider the bill,� said Kyl. �The public ought to have a right to review this legislation to make sure it doesn�t have any additional loopholes or unintended consequences.� While the two chambers differ in their mechanics, both pieces of legislation would target bonus pools that as recently as 2007 totaled more than $39 billion. Court Fight Predicted Senator Judd Gregg, a New Hampshire Republican, predicted Congress�s efforts to rescind the bonuses through higher taxes would be thrown out in court. He said the legislation violates the constitutional ban on bills of attainder, which restricts lawmakers� ability to punish individual Americans. �It�s basically targeted on a small group of people,� Gregg said. He also said the bill may exceed lawmakers� power to rewrite existing contracts. He said �of course� the government ought to try to rescind the bonuses �but we�ve got to do it legally.� Some academics said the legislation may survive a court challenge. �From what I�ve seen, it would pass constitutional muster,� said Alexander Tsesis, an assistant professor of law at Loyola University in Chicago. Tsesis said the legislation targets several companies that received government funds. For the measure to be unconstitutional, courts would have to find that the motive of the legislation was to target one company, he said. �Think It�s Okay� �We�ve pushed the constitutional question pretty hard with constitutional experts and we think it�s okay,� Baucus said. The House�s 90 percent tax would apply to bonus payments made after Dec. 31, 2008, and it would cease when the U.S. government�s investment in the company fell below $5 billion. The tax wouldn�t apply to any bonus returned to a company, or to commissions or fringe benefits. About $3.6 billion in Merrill Lynch & Co. bonuses wouldn�t be affected by the new legislation because they were paid before Dec. 31. Bonuses for employees at Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co., Goldman Sachs Group Inc. and Morgan Stanley would be affected because they were paid after Dec. 31. Fannie, Freddie The measure also would affect employees of Fannie Mae and Freddie Mac, Rangel said yesterday. It wouldn�t apply to foreign workers of U.S. companies. Separately yesterday, Grassley called on Fannie Mae and Freddie Mac to justify their retention bonuses while the entities were losing money. Fannie Mae awarded a total of $4.4 million in retention bonuses to four of its top six executives in 2008. Freddie will release its payments to top executives in April. �Just as with the extravagant bonus pay at AIG, it�s important to make sure that taxpayer support isn�t enabling unreasonable compensation arrangements that would never have been possible without taxpayer assistance,� Grassley said. Voting for the House measure were 243 Democrats and 85 Republicans; six Democrats and 87 Republicans voted against it. A two-thirds margin was required under a fast-track procedure that barred amendments by opponents. �Public Outrage� �The House vote absolutely reflects public outrage,� said Barry Burden, director of graduate studies in political science at the University of Wisconsin in Madison. �It is populism at its most intense.� The Senate bill would tax retention and performance bonuses paid to foreign workers of U.S. companies. The 70 percent excise tax, split between employee and company, would be non- deductible. It would apply to 100 percent of any retention bonus and any other bonuses, including those that are performance- based, over $50,000. Certain stock options that vest for at least three years would be exempt. �I wish we didn�t have to do this, but the administration didn�t stop the bonuses this year,� said Grassley. Using bailout dollars for bonuses after companies have been run into the ground adds insult to injury against taxpayers.� House Republican Leader John Boehner of Ohio opposed that chamber�s measure, demanding to know who added language to the $787 billion economic stimulus bill last month that protected executive bonuses promised before Feb. 11. �Political Charade� Boehner called the measure a �political charade� and said, �Why don�t we just get it all back?� He said Republicans offered an alternative requiring the Treasury secretary to devise a plan within two weeks to get all the bonus money back. The House bill was drafted yesterday as AIG Chief Executive Officer Edward Liddy told a House Financial Services panel that he asked employees who got bonuses over $100,000 to repay half. Employees who made bad trades that triggered the company�s meltdown have been fired and received no bonuses, he said. To contact the reporter on this story: Ryan J. Donmoyer in Washington at [email protected]

Considering AIG alone, who do they think is going to do their business of winding down their portfolio? I don't know how they're going to be able to operate. Certainly NO ONE else is going to leave their jobs to go work for AIG. Anyone who does is probably a moron.

Outside of the AIG issue, the Treasury department FORCED the top banks to take TARP money as a part of its CPP program. This populist backlash will now impact ALL of the Feds other programs designed to stimulate private investment in partnership with the government because who is going to want to participate in these federal programs that are going to be subjected to this level of scrutiny and punitive damages?

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Originally posted by occrider Dude who cares about Manhattan real estate. This bill is sooooo stupid on so many more levels. Allow me to outline a few salient points: Considering AIG alone, who do they think is going to do their business of winding down their portfolio? I don't know how they're going to be able to operate. Certainly NO ONE else is going to leave their jobs to go work for AIG. Anyone who does is probably a moron. Outside of the AIG issue, the Treasury department FORCED the top banks to take TARP money as a part of its CPP program. This populist backlash will now impact ALL of the Feds other programs designed to stimulate private investment in partnership with the government because who is going to want to participate in these federal programs that are going to be subjected to this level of scrutiny and punitive damages?

From the article you posted "It wouldn�t apply to foreign workers of U.S. companies"

Um, where the fuck do people think those working in the AIG Financial Products division that got these retention bonuses (the ones that everyone is outraged about) live? In London!!! The idiocy of our Congress, especially the House, never ceases to amaze me.

And why wouldn't people want to work for AIG? I mean, who wouldn't want memos sent around about heightened securiy, uniformed officers patrolling, death threats involving their families being executed with piano wire, etc. I mean, what's not to love?

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Originally posted by occrider Dude who cares about Manhattan real estate. This bill is sooooo stupid on so many more levels. Allow me to outline a few salient points:

Totally agree--it was just an article that crossed the tape while I was writing that.

In a similar vane, Tom Gallagher had a great quote the other day when he said, "Investors feel like they are being deputized to form a posse today, only to be arrested for being vigilantes tomorrow."

One can only hope that Obama rises above the collective "wisdom" of our Congress and does the right thing here.

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Originally posted by Groundhog Boy And why wouldn't people want to work for AIG? I mean, who wouldn't want memos sent around about heightened securiy, uniformed officers patrolling, death threats involving their families being executed with piano wire, etc. I mean, what's not to love?

... AIG employees are now being harrassed by people outside their own homes. A dishonest electorate, out of their own incompetance, has drummed up this anger against individual citizens at their own homes now. While this is happening, Obama is fillig out NCAA brackets and going on Jay Leno... and Barney Frank for no good reason won't tell the AIG CEO that he won't release the names of the individuals receiving bonuses to the public thus ensuring their safety. The protests should be in Washington, not at the homes of private citizens.

At first, I was 100% against any bonuses at AIG. Then after Liddy's testimony, I understood the rationale behind them, and I am against the 90% tax.

I doubt any in Congress have even considered the ramifications or unintended consequences of this "legislating by anger" route that they're pursuing.

This tax now disincentivizes institutions from accepting TARP money (not to mention the ones that were compelled to take the money by the government). These institutions will now reject TARP money and will have to try to raise equity capital from private investors so they don't have the government micromanaging their operations. All of the private money could thus be diverted away from the TALF, which was one of the Fed's most hopeful programs to re-start the securitization process to get capital and credit flowing again...

Not to mention the clearly questionable constitutionality of the legislation these buffoons in Congress are trying to pass. The people who received the bonuses did nothing illegal. They had LEGAL binding contracts in place and now the government is trying to negate contracts which shakes the very core of legitimate business practice. We don't have to like the fact that bonuses were paid, or that they were insultingly large, but we don't need to take action that threatens the sanctity of our economic foundation.

Article 1, Section 9, Clause 5 - United States Constitution
"No bill of Attainder or ex post facto law shall be passed."

Congress has stepped waaaay over the line. As BO said, they need to focus on closing the door before the horse is out of the barn. That may be well and good, but the AIG horse is already out of the barn. All I see Congress doing is adding fuel to the raging inferno of public opinion right now. This does not help an already difficult situation.

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Originally posted by Shakka I doubt any in Congress have even considered the ramifications or Article 1, Section 9, Clause 5 - United States Constitution "No bill of Attainder or ex post facto law shall be passed."

While I am opposed to this 'tax' on bonuses, I don't think it violates the constitution, and in my opion definitely not the clause you cited. An ex post facto law refers to a law that is enacted to change the legal status of an already completed activity. In this case, the activity that was completed was the issuance of a bonus. The legal status of that activity would not be changed - i.e., AIG would still be permitted to pay and the employees would be permitted to receive the bonuses. The fact that it is being taxed at a higher rate doesn't change the legal status of the bonus.

Tax laws often apply retroactively. In most cases they apply retroactively so that market participants don't modify their behavior before the effective date of the law (e.g., a change in the capital gains rate would likely apply retroactively so that people wouldn't sell off their assets prior to the rate change - usually within the same year though). For example, a change in the capital gains rate would be introduced in a bill in June 08, with a retroactive effective date beginning January 08 to prevent a sell off of capital assets prior to the bills passage. The policy behind retroactive application is to prevent distortions in economic behaviors because of changes in tax laws.

A bill of attainer is much more specific than the pool of people to whom this law would apply. The most obvious bill of attainer would be a law that reads something along the lines of, "Bill Miller is prohibited from conducting [blank] activities." A law that potentially applies to thousands of financial service employees is far too broad to be considered a bill of attainer.


As you stated, though, this bill would have horrible ramifications throughout the financial sector. While I haven't read the text or summaries of the bill, if it generally applies to the employees (who make more than 250K a year) of TARP recipients (that received >5 billion), then an M&A banker at Goldman would be subject to that tax on his bonus for his M&A advisor services performed on a transaction totally unrelated to any derivatives trading. This is clearly not the right result. I could be wrong about the breadth of the law, but if my understanding of the law is correct, then the law is stupid! As distasteful as these bonuses may be, the solution is not to punish all bankers and provide significant disincentives for these firms. In any event, this law would just result in more creative compensation methods or simply higher base salaries. Our congress is shameful.

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Originally posted by jerZ07002 While I am opposed to this 'tax' on bonuses, I don't think it violates the constitution, and in my opion definitely not the clause you cited. An ex post facto law refers to a law that is enacted to change the legal status of an already completed activity. In this case, the activity that was completed was the issuance of a bonus. The legal status of that activity would not be changed - i.e., AIG would still be permitted to pay and the employees would be permitted to receive the bonuses. The fact that it is being taxed at a higher rate doesn't change the legal status of the bonus. Tax laws often apply retroactively. In most cases they apply retroactively so that market participants don't modify their behavior before the effective date of the law (e.g., a change in the capital gains rate would likely apply retroactively so that people wouldn't sell off their assets prior to the rate change - usually within the same year though). For example, a change in the capital gains rate would be introduced in a bill in June 08, with a retroactive effective date beginning January 08 to prevent a sell off of capital assets prior to the bills passage. The policy behind retroactive application is to prevent distortions in economic behaviors because of changes in tax laws.

Eh, you're probably right on this stuff--it's definitely more your field. I was reading this on another website this morning while I was rather incensed. This is what the guy said:

quote:

o you know what that means? The key is the word "attainder." Let's go to Websters: It's a 15th century word meaning "extinction of the civil rights and capacities of a person upon sentence of death or outlawry usually after a conviction of treason." A definition, this one from the Catholic Encyclopedia, describes "bill of attainder" thusly: "A bill of attainder may be defined to be an Act of Parliament for putting a man to death or for otherwise punishing him without trial in the usual form. Thus by a legislative act a man is put in the same position as if he had been convicted after a regular trial." Well, in this case the Congress isn't trying to put anyone to death ... they're just trying to steal some money. They are trying to deprive some individuals of property that is rightfully and lawfully theirs without accusing them of a crime and without the benefit of any trial ... except, that is, for this trial that has been taking place in the media for the last week. Well, there's that pesky little Constitution again. A man cannot be deprived of life, liberty or property without due process, and in our country due process means a trial before a jury of one's peers. Barney Frank et al are trying to take these people's money through legislative action without a trial. I would truly hope there isn't a federal judge in this country that wouldn't smack this idiocy down at the earliest opportunity. This isn't about whether or not those people deserved those bonuses. Perhaps not. But the bonuses were paid pursuant to a legally enforceable contract. The property is theirs. Now we have politicians who are trying to take it away just because they're unhappy and embarrassed because they didn't take care of this little problem before the bailout money was paid.

In any event, we can agree that it's horrible policy. And as I understand it, the Senate version is much more far reaching. It "only" levies a 70% rate that is split 35% between the company and 35% between the employee but applies to any company that has received at least $100M in TARP money.

quote:

Originally posted by Shakka Eh, you're probably right on this stuff--it's definitely more your field. I was reading this on another website this morning while I was rather incensed. This is what the guy said: In any event, we can agree that it's horrible policy. And as I understand it, the Senate version is much more far reaching. It "only" levies a 70% rate that is split 35% between the company and 35% between the employee but applies to any company that has received at least $100M in TARP money.

Umm....i screwed up describing bill of attainer. A bill of attainer would be a law that reads, "Bill miller is guilty of treason."

my bad! it's been a while since i last dealt with constitutional law issues unrelated to tax law (or criminal law).

attainDer!

quote:

Originally posted by Shakka attainDer!

werd - i be hungd over.

I would like to pass a warm and gentle "fuck you" to all executives like these (and you guys thought AIG was bad). Who gives a shit about "preventing" them from leaving - let them go - and how about promoting some other folks to do the job of restructuring (I am sure there will be people who would love to do it, plus executives get paid good money) - I am pretty sure its not that much of a back-breaking job. Plus tell it to the 1100 Nortel workers who lost their jobs since the bankruptcy was announced in January - and have been DENIED severance payments. In the bigger picture, many more employees have been terminated since Nortel started freefalling few years back.

http://business.theglobeandmail.com...al_gam_mostview

quote:

Eight Nortel chiefs to split $7.3-million in bonuses March 20, 2009 at 3:52 PM EDT Toronto � Eight senior executives at Nortel Networks Corp. will receive up to $7.3-million (U.S.) in retention bonuses to keep them from leaving the telecommunications giant while it restructures under bankruptcy protection. Bankruptcy court judges in Canada and the United States approved orders at parallel hearings Friday allowing the payments to be made if executives meet various performance objectives, including completing a court-approved restructuring of the company. The approval came despite objections from a Toronto lawyer representing about 60 of the 1,100 Canadian workers who have been laid off from Nortel and were denied their severance payments after the company filed for bankruptcy protection in January. Lawyer Eli Karp said the employees are dismayed to see large bonuses being paid at the same time the company is refusing to honour their promised severance costs. He argued it has left the workers forced to turn to government employment insurance for income. Nortel Nortel is operating under court protection from creditors. Nortel Networks Corp. The Globe and Mail �In the context of the global financial climate the way it is today, our clients object to millions of dollars of bonus payments being made,� Mr. Karp said. �Our clients are now on the government employment insurance payroll and at the same time, the company seeks to pay millions of dollars to its executives while leaving employees not receiving their severance payments.� Nortel would not reveal the names of the eight executives receiving the payments, citing confidentiality. But company lawyer Derrick Tay confirmed Friday they could receive up to $7.3-million if they achieve goals, including completing a reorganization plan. He said five executives in the U.S. would share about $5-million and the rest would go to three executives in Canada. Nortel has previously said chief executive officer Mike Zafirovski will not receive the retention bonus. The payments are part of Nortel's key executive retention program, which totals $23-million and covers 92 employees. The company has also adopted another retention program for 880 key professional employees with a maximum payout of $22-million. The retention plan received court approval on March 6, but the approvals did not include the payments for the top eight executives. Nortel's unsecured creditors in the United States asked that the payments to U.S. executives be delayed until the company had provided its 2009 budget plan. Mr. Tay told the Ontario court Friday the budget plan has been provided, and the company now can seek approval to pay the retention bonuses to the final eight executives in Canada and the United States. He said Nortel's top executives receive much of their compensation from programs such as a stock incentive plan, all of which have been cancelled since the company filed for bankruptcy protection. �Those programs have all been terminated and, therefore, employees of Nortel were in fact below market in terms of their compensation,� he said. �Therefore, it was necessary to put in some type of incentive program to ensure we keep the people we need to keep in order to have a successful restructuring.� Lyndon Barnes, a lawyer representing Nortel's board of directors, also urged Mr. Justice Geoffrey Morawetz of the Ontario Superior Court to approve the bonuses, saying the board cannot function without the advice of its experienced leadership team. He said Nortel's best hope of preserving its value and saving employees' jobs is to complete its restructuring. �The loss of senior management at this time may well dash the hopes of getting this done,� Mr. Barnes said. Mr. Tay also told the court Mr. Karp should not �whip up a frenzy� by suggesting the company's top executives are getting millions of dollars when there is �no evidence� to support this. He said 29 executives in Canada will receive $6.8-million in total. �I think we should all be responsible about what we say, especially in these times of heightened concerns about these matters,� he said. But during a break in Friday's hearing, Mr. Karp said he felt his comments were fair because he believes the 29 people are indeed Nortel's top workers and they are getting millions in total. �I don't know how many employees Nortel has, but it is safe to say there are thousands. The top 20-some to me are pretty senior.� Justice Morawetz said he would approve the bonuses because he had previously approved the executive incentive plan for all other employees except the eight top executives. �Although the amounts involved are not insignificant, it is necessary in my view to consider the plan in the context of the overall restructuring,� he said.

More good news: the CBO now says that Obama's policies will lead to deficits much worse than anticipated.

quote:

In a new report that provides the first independent analysis of President Obama�s budget request, the nonpartisan Congressional Budget Office predicted that the administration�s agenda would generate deficits averaging nearly $1 trillion a year over the next decade � $2.3 trillion more than the president predicted when he unveiled his spending plan just one month ago. And while Obama would come close to meeting his goal of cutting the deficit in half by the end of his first term, the CBO predicts that the nation�s annual operating deficit would never drop below 4 percent of the overall economy over the next decade, a level administration officials have said is unsustainable because the national debt would grow too rapidly. By the CBO�s estimate, for example, the nation�s debt would grow to 82 percent of the overall economy by 2019 under Obama�s policies, compared with a pre-recession average of 40 percent Senate Budget Committee Chairman Kent Conrad (N-N.D.) has said the gloomier CBO forecast would require �adjustments� to Obama�s budget, though he declined to specify what changes would be necessary.

http://www.usatoday.com/news/washin...it_N.htm?csp=34

... and I remember the outrageously outrageous outrage at Bush's $400 billion deficit spending.

these are the shananagans that come to pass when you have government trying to bud into private companies. especially when our government is as incompetant as our legislature is at the moment

quote:

Originally posted by The17sss More good news: the CBO now says that Obama's policies will lead to deficits much worse than anticipated. http://www.usatoday.com/news/washin...it_N.htm?csp=34 ... and I remember the outrageously outrageous outrage at Bush's $400 billion deficit spending.

the way krypton can turn almost any thread into an anti-iraq war tirade, you are equally skilled at raising points about obama that are mostly tangential (if at all relevant) to the main issues in the thread.

I'm not happy about 10 trillion in deficit spending over 10 years, but that's not the point of the thread.

Since it appears you selectively read the portions that support your personal views, here are a few quotes from that article for your reading pleasure. First, this quote discusses the main reason for the huge deficit:

quote:

The worsening economy is responsible for the even deeper fiscal mess inherited by Obama. As an illustration, CBO says the deficit for the current budget year, which began Oct. 1, will top $1.8 trillion, $93 billion more than foreseen by the White House. That would equal 13% of GDP, a level not seen since World War II. The 2009 deficit, fueled by the $700 billion Wall Street bailout and diving tax revenues stemming from the worsening recession, is four times the previous $459 billion record set just last year.

Here's a quote about the reliability of long term projections:

quote:

Long-term deficit predictions have proven notoriously fickle � George W. Bush inherited flawed projections of a 10-year, $5.6 trillion surplus and instead produced record deficits � and if the economy outperforms CBO's expectations, the deficits could prove significantly smaller.

Here's a quote by a white house budget staffer acknowledging that the budget would be unsustainable if the projections prove to be correct:

quote:

White House budget chief Peter Orszag said that CBO's long-range economic projections are more pessimistic than those of the White House, private economists and the Federal Reserve and that he remained confident that Obama's budget, if enacted, would produce smaller deficits. Even so, Orszag acknowledged that if the CBO projections prove accurate, Obama's budget would produce deficits that could not be sustained. "Deficits in the, let's say, 5% of GDP range would lead to rising debt-to-GDP ratios that would ultimately not be sustainable," Orszag told reporters.

Anyway, try to stay on point!



btw - just messin with you krypton.

quote:

Originally posted by jerZ07002 the way krypton can turn almost any thread into an anti-iraq war tirade, you are equally skilled at raising points about obama that are mostly tangential (if at all relevant) to the main issues in the thread. I'm not happy about 10 trillion in deficit spending over 10 years, but that's not the point of the thread (FYI - if you actually read the article the administration admits that if the CBO projections are correct the budget is not sustainable). Anyway, try to stay on point! just messin with you krypton.

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