Bonfire of the Trivialities

[dgriffin]

Bonfire of the Trivialities



President Obama is standing by embattled Treasury Secretary Timothy Geithner and defending the administration's role in the AIG bonus fiasco.


By Charles Krauthammer
Friday, March 20, 2009


A $14 trillion economy hangs by a thread composed of (a) a comically cynical, pitchfork-wielding Congress, (b) a hopelessly understaffed, stumbling Obama administration, and (c) $165 million.

That's $165 million in bonus money handed out to AIG debt manipulators who may be the only ones who know how to defuse the bomb they themselves built. 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.

For this we are going to poison the well for any further financial rescues, face the prospect of letting AIG go under (which would make the Lehman Brothers collapse look trivial) and risk a run on the entire world financial system?

And there is such a thing as law. The way to break a contract legally is Chapter 11. Short of that, a contract is a contract. The AIG bonuses were agreed to before the government takeover and are perfectly legal. Is the rule now that when public anger is kindled, Congress will summarily cancel contracts?

Nor has the president behaved much better. He, too, has been out there trying to lead the mob. But it's a losing game. His own congressional Democrats will out-demagogue him and heap the blame on the hapless Timothy Geithner.


www.washingtonpost.com/wp-dyn/content/article/2009/03/19/AR2009031903041.html


But .... you would think there's right and wrong. Still, Krauthammer has a point. Are we going to allow the government to break its own laws? Who's next?

[frankcor]

Well, at least Dave and Charles get it.

[gski]

It's called playing both sides of the street, or in political terms, normal, talking out of both sides of your mouth!

Write the changes in a bailout bill, deny when caught and then blame it on someone else!

The Chapter 11 you speak of it what's been suggested be done with a lot of the current financially troubled businesses. Why? It means that those in charge can be thrown out! It was done a number of time in the Airline industry and most have survived.

The issue here is that it's a larger scale. The problem? Those in charge who have screwed up royally can still be left in charge to ruin another day.

In AIG's case, there's already a newbie running it. The bailout stated that bonuses that were signed after the February 09 date were a no no. If it was before it, then that was ok.

So the politicians get to scream. My problem? How do you pay bonus on a negative performance? If it were you or I, there is no bonus. Nice sweetheart contract they have.

Maybe we can do the same thing with our Congress. When they screw up...throw them out immediately! Oops that's what elections are for and the same folks keep getting re-elected.

Government has been breaking it's own laws for far too long, the only difference now is that they are having the audacity to do it in plain site and an awful lot of people are catching on!

[dgriffin]

I haven't seen anything yet that provides an actual example of a bonus and its justification (from the point of view of the "bonee.")

There are certainly instances when individual goals set for an executive are met and his bonus paid to him at the same time the company doesn't make its overall objectives. In the rarefied world of Executive Compensation, it is standard practice for each executive to contract yearly for certain numbers, like units sold, profit percentage increases, etc., and these targets may be local to his own operation, although often company profits are set as a gate to the whole process, and nobody gets anything if the company comes out in the red. But not always. If you hire me to increase widgets sales and promise me a $1 million bonus if I do such to the tune of 30%, you'd better pay up even if rest of the company is tanking due to poor investments.

I thought that arrogant-looking bastard John Thain, ceo of Merrill Lynch, was not out of of line requesting a $10 million bonus for setting up Bank of America to buy his company. The media was outraged ... what's new? ... but it is a standard business practice for corporations to pay a "dealmaker" millions to find buyers and broker such deals. Thain went beyond his ceo contract to do the deal, possibly, and his $10 million request was less than any other dealmaker would have asked.

Anyway, I'd like to see one of the AIG contracts and be taken through the logic of why the payee thought he should get his bonus.

[dgriffin]

Mar 20, 2009 6:01:51 GMT -5 frankcor said:

Well, at least Dave and Charles get it.

Happy for the support, but I'm not sure which side I'm on.

[frankcor]

The AIG bonuses were to keep the employee on the job long enough to wind down the awful contracts that had been dumped in his lap. Essentially, it was to keep them working until they could be fired without costing the taxpayers even more.

They were not performance bonuses.

They were not paid to the people who got us into this mess. They are for the people working to help get us out of this mess.

But you won't hear any of this from our congressasses.

[dgriffin]

THanks for that. Interesting. And not surprising, actually.

[dgriffin]

gski wrote: "The Chapter 11 you speak of ..."

Hi, gski. Those were Krauthammer's words from his column I posted at the top of the thread. My comment was italicized at the end of his article.

I like your thoughts on Congress.

[frankcor]

"If you decide to do nothing again, then buy a gun. You're going to need it."

[clarencebunsen]

frank,
Who is this guy & to where do I have to move in order to vote for him? This reminds me of Newt's Contract on steroids. I would much rather send this to BHO than my used tea bag.

Dave, Could we use the term "bonusee" rather than "bonee"? I'm afraid it offends my delicate sensibilities and lately I often feel that I am the "bonee."

[frankcor]

Sorry, Clarence, he's an actor, not a candidate -- Bob Bosso, a native of Brooklyn. He plays a fantastic Thomas Paine.

[dgriffin]

I liked, "if congress were a business, they'd all be in jail."

Bonusee it is. Bonee was a boner. Er.. a bummer.

[clarencebunsen]

In that case can we elect Bob Basso's teleprompter to represent the 24th District? Which reminds me, I've been planning to download Common Sense and add it to my reading list.

If only it were possible to download common sense.

[frankcor]

A copy of the letter I sent to Michael Arcuri this morning:

Subject: The ECONOMY! (why would you not have that as a subject choice on the drop-down form on your web-page??)

Mr. Arcuri, you displayed a complete lack of knowledge in the following statement from your press release dated 3/19/2009:

“The American people are outraged that taxpayers’ hard-earned money would be used to pay undeserved bonuses to the very executives whose irresponsible risk-taking created our current financial crisis,” Arcuri said.

I don't work at the Capitol or have a staff to do my research. The tools I have are simple: the Internet and C-SPAN. After working all day on March 19, I returned home to watch a repeat of Mr. Liddy's testimony before the house panel on C-SPAN.

The bonuses you want to confiscate were NOT paid to the "very executives" that created our crisis. If you had attended the hearing, you would understand that those executives were fired when you used my money to bail out AIG.

In fact, the bonuses were paid to the people who are working to wind-down the $1.6-trillion portfolio of complex derivative contracts in which the American taxpayers are now an 80% owner. Breaking the contracts intended to retain their services will likely result in their resignations.

Your action to illegally confiscate those bonuses has placed the taxpayers' so-called investment in greater peril. The odds of us getting any of that money back are diminished by the posturing you evidenced in your statement.

Yes, the American people are outraged, as you say. But you will learn that the target of our outrage will be the staggering cost of your poorly informed decision to punish the people who are working to get us out of this crisis. Please start paying better attention.

[dgriffin]

Hahahahaha! That last line is PERFECT!

Great letter.