I do not give a fuck about any "contracts" that award huge bonuses to companies taking stimulus $$$

[Hugabear]

These assholes have a lot of nerve to be whining and crying about a piece of paper that says they're entitled to hundreds of thousands of dollars in bonus money. So fucking what? How many contracts did THEY break as they ran their companies into the ground? How many people did THEY fuck over? How many people lost their jobs as a result of THEIR negligence and ineptitude?

[Laelth]

1. Nor does the law.

According to the Supreme Court (since FDR), the government may violate freedom of contract as long as the government has a "rational basis" for doing so. Employment contracts are not sacred. Given that we own 80% of AIG, I think we have a "rational basis" to pay them what we think is fair, regardless of what their contracts say.

:dem:

-Laelth

[DeepBlueC]

2. they have a right to resign and take a job with a future...

the bonuses are to encourage them to stay until they close the book on their contracts, essentially until they finish working themselves out of a job. If they don't stay on a job that requires daily managing of trades, the roof may cave in on Liddy's entire plan to get that Department out of the hole that it is in. That could set off a chain reaction that will bring down 1.6 trillion of liabilities. That is why on balance he determined that the risk of doing so was too great. I tend to agree. You can break the contracts, accept the risk of lawsuits, but can you get this place out of the hole it's in if the key trading staff chooses to cut their losses and leave for a job with an actual future? They have books that have to be managed with daily trading moves. When they go what happens while HR is interviewing replacements? Big scary stuff is what.

[Laelth]

3. I trust the President on this one.

I'd rather those executives stay. I'm not too upset about paying them bonuses. But the "sanctity of contracts" argument is malarkey, imho.

:dem:

-Laelth

[DeepBlueC]

4. but it isn't just that ...

I'm pretty sure they'd take it to court, but they would also take themselves to some other place and leave poor Liddy without the people he needs to do the job he isn't getting paid to do. But the Congress has problems of its own and that is managing the populist rage. They decided they could not beat them so they would join them. I blame a press corps that relentlessly goes after the shiny objects. This, for instance, is where Chris Matthews for one loses all perspective. "When did they know?"!!!! As I see it it doesn't matter. It's a choice from which one recoils but it is the most prudent and the most economical. That's what Liddy said and he is the only one making sense lately.

[Laelth]

6. I'm with you, and the press has been irresponsible.

But what's new? Personally, I am enjoying the populist rage. If this is what it takes to get the people fired up and get behind the President, so be it. I still think that the execs who lost their bonuses would lose in Court if they did sue. I am not making an argument about the best course of action. That's for the President to decide, not me. I am merely giving my opinion about the "sanctity of contracts" argument. I think it's malarkey, from a legal perspective. Of course, I practice in an "employment at will" state. Perhaps some state law would protect these employees, but I am not aware of any Federal law that would. Even if there were such a law, Congress could change it at will.

:dem:

-Laelth

[DeepBlueC]

5. whether the execs would or would not prevail

don't you think they would take it to court? Frank asked a good question: whether AIG would have to pay for their lawyers if they sued...

[Laelth]

7. For the bigger execs (ones with big bonuses), yes. They probably would sue.

Some attorney would be willing to take that case (even if it is malarkey) just because of the large amount of money involved. I can't imagine why AIG would have to pay attorneys' fees in that case, however.

:dem:

-Laelth

[JDPriestly]

10. If they sue, there is bound to be a countersuit alleging some kind of charge

that would permit a lot of discovery. Who knows what these guys have done, but they probably would not want the world looking at whatever it is. The guys who brought down AIG are not innocent victims. They operated a fraudulent scheme. It's very much like the Enron bunch only far worse.

[Laelth]

12. Most of the people who really made the bad, risky deals have left.

It seems the people who remain have little to hide (and that't why they stayed).

Or, so argues Ed Corson here (based upon his reading of a Washington Post article): http://www.macon.com/203/story/656130.html

:dem:

-Laelth

[JDPriestly]

14. If there is a lawsuit (or a criminal investigation),

we will out who was really responsible.

[JDPriestly]

9. Pay them $8.00 per hour and give them modest bonuses if they

get AIG back in the black. Any moron could lose money trading the way they did. They blew it. Send some average Joes with GED diplomas in there and they could do just as well.

[dysfunctional press]

8. i don't give a fuck about the bonuses...

they amount to less than 1/10 of 1% of the amount of money we've loaned them so far.
the valid contracts should be honored.
if they want to change the pay structure going forward, that's fine- let the people decide if they want to stay or go...
but it just isn't right to retroactively change the rules- those people have made decisions and financial commitments based on the amounts that they have contractually earned.

[BzaDem]

11. The whole point of the bailout

is to avoid having AIG break contracts. Because if AIG fails (and therefore breaks its contracts), tons of banks with contracts with AIG could also fail, collapsing the entire system. Not to mention the 30 million customers in the US who have been paying for insurance policies through AIG all of their lives who would then get nothing.

We should not throw out the rule of law because you happen to be angry at the result of the current laws.

The basic problem is that we only have two solutions under the law right now to deal with faltering financial companies.

The first is to let them go bust. This would let a bankruptcy judge void contracts and pay debtholders according to a hierarchy (secured bondholders get made whole before unsecured bondholders, and both are made whole before shareholders). Under this scenario, the bonuses would not go out. However, under this scenario, our financial system could collapse.

The second is to prevent them from going bust by bailing them out. This would prevent the financial system from collapsing. However, this also means the company is still technically solvent (until we stop bailing them out and they go bust). Therefore, all contracts are still valid, and any breach of contract would be resolved through the normal lawsuit process. So under this scenario, either AIG gives bankers their bonuses or a court orders AIG to give bankers their bonuses (and confiscates the money from AIG if it doesn't comply).

The solution to these types of messes in the future is probably to create a third option, somewhere in between. Such an option would allow the government to have more control over who gets paid without causing a massive collapse of the financial system.

[DeepBlueC]

13. thank you

People are losing sight of the Big Mission here. That has got to succeed. The solution you mention is one that Obama has talked generally about. But that is down the line. In the short term all of te choices are bad to some degree but as Obama says we have to get through this and keep our eyes fixed on the goal.