Saturday, March 21, 2009

Fauxrage (and Blaziness)

I will preface this post with the following statement: I do not believe I have adequately followed this week's AIG BONUS SCANDAL OMG story so that I might be able to comment on it with a strong grip on all of the facts surrounding it. With that said, I think I can offer some legitimate commentary. You have been hereby forewarned of any factual misinterpretation on my part. You have also been hereby forewarned that the following is extremely sloppy work by my standards, and I apologize in advance for my blaziness (web log laziness).

The retroactive 90% tax to recoup bonuses awarded through taxpayer money that recently passed the House in a fit of (silly and wholly avoidable) righteous congressional outrage is unconstitutional. It passed last week with strong bipartisan support and will likely pass in the Senate as well, riding the wave of similar vehement sentiment. I sincerely hope the President does not sign it into law, but if he does, the courts must strike it down.

The President and his Treasury Department did the right thing in tweaking the language of Sen. Dodd's ARRA provision designed to prevent the collection of bonuses by Wall Street executives. Had the provision been left unchanged, companies such as AIG could easily take legal recourse to reclaim their due bonuses, possibly using public money to sue (which is exactly what they're doing now), adding more cost to the taxpayer.

The Obama Administration is under fire for their apparent strong-arming of congressional Democrats like Dodd to protect Wall Street bonuses. They did the right thing. The administration protected the right for private employees to collect their bonuses, many of which are contractually obligated. Here's why these executives still deserve our ire: they shouldn't be asking for them. These individuals knowingly overleveraged their companies through rampant securitization and...well gosh, you all know the story, they woefully mismanaged their firms and effed up everything for us. These people may be guaranteed their right to collect these bonuses, but they damn well shouldn't. I find it amusing that guys like Vikram Pandit, the CEO of Citigroup, have reduced their annual salary to $1, yet still demand payment of "earned" bonuses (and even order lavish renovations of their offices) all at the expense of the taxpayers.

When the President ordered that compensation for executives of companies receiving taxpayer money would be capped at $500,000 (apparently "bonuses" don't count as "compensation," a ridiculous distinction which I would like both the administration and at least one corporate executive to attempt to defend), he was blasted by some on the right for using government authority to intrude in the marketplace. The argument in favor of the President's order remains the same today as it was two months ago; when the public hands out its own money, the public dictates the rules. I find it strikingly hypocritical that same Republicans who criticized the President for attempting to limit executive compensation ended up voting for the recently passed bonus tax (but only rushed to vote in favor after it was clear the bill would pass with Democratic votes alone).

This past week's news cycle has been dominated by virulent outrage over AIG and executive bonuses which has inevitably recycled the whole debate over bailouts and the stimulus package. I have no outrage left. It is a useless and trite emotion at this point that is too often employed to rile up the already severely misinformed average viewer. The taxpayer has been royally owned. Let's accept it, move on, and work to ensure it never happens again.

1 comment:

  1. I've actually managed to follow the AIG bonus scandal somewhat closely. I mean, if religious viewing of Countdown and The Rachel Maddow Show with a bit of side reading amount to anything even remotely akin to "closely."

    I do have to disagree with your belief that the Senate will pass the retroactive tax. It's so blatantly unconstitutional that I don't see how they possibly could. It would be such an egregious abuse of power, I just refuse to believe it. Even if it does pass, President Obama won't sign it into law. As I'm sure you know, or will read about shortly given your addiction to Politico, he's already downplaying the scandal on the grounds that it's nothing but a distraction from the actual, legitimately serious budget issues.

    On a related note, most of the AIG executives have returned their bonuses.

    It's my understanding that Vikram Pandit made his ridiculous, "I'll accept only $1 in compensation this year" statement having already received about $30 million in compensation several months ago. He not so cleverly phrased his statement in the future tense, not that it really matters. If it's any consolation at all, most of the salary was paid in the form of AIG stock, so it very well might only be worth about $1 at this point.

    I'm not even remotely familiar with Senate legislation policies, but from what I understand, President Obama intends to do some serious re-regulating of the financial industry. Most importantly, the legislation will be written in such a way that it'll only require a majority of votes in the Senate, rather than 60 votes, which it surely wouldn't get. I forget what that specific form of legislation is called, but you probably know. I mean, all this assuming the "conservadems" don't succeed in messing everything up.

    ...I'm pretty sure all of that is factually accurate, but I wouldn't bet anything substantial on it. After all, politics is hardly my forte.