AIG planning to sue gov - Grrr!

[ImFiddY]

Jeez, I'm a little disappointed you couldn't describe it to me yourself.

I did do the search, which referenced the article (article 1, section 9). Which simply states "no Bill of Attainder or ex post facto Law shall be passed." Then I searched for "Bill of Attainder:" "an act of the legislature declaring a person or group of persons guilty of some crime and punishing them without benefit of a trial."

So it ain't gonna work. An excise tax is not the same thing as essentially convictiing someone of a crime. An excise tax is is "a type of tax charged on goods produced within the country."

I don't know what goods AIG produced, but it seems to me the "unconstitutional" argument should be laughed out of court.

I wanted you to do your own research. Obviously you did not do much of it.

 

[hiitdogs]

I wanted you to do your own research. Obviously you did not do much of it.

So why do you think it is unconstitutional?

 

[LauraMax]

I wanted you to do your own research. Obviously you did not do much of it.

Why would you want me to do my own research instead of explaining it on your own? That's rather odd.

Well let's see. I googled what you suggested & found the article number. I happen to have a pocket constitution (the declaration included) in my purse, so I quoted the phrase directly from the US Constitution. I then went to wiki & searched for bill of attainder, & copied & pasted from there.

So apparently that's not enough research for you. Please explain what I missed. OR, perhaps you could tell us exactly what research YOU'VE done?

 

[rjroubi]

Lauramax,

I hope these articles help explain it:

http://www.rightpundits.com/?p=3512

http://firstread.msnbc.msn.com/archive/2009/03/20/1846610.aspx

Believe me....I don't, in any way, want to see AIG get our money either, but they may actually have a very strong case.

 

[LauraMax]

Thanks Robin, it does explain it to some extent. I think the problem here is defining "bill of attainder." In your second link it quotes Madison: "Bills of attainder, ex-post-facto laws, and laws impairing the obligation of contracts" (italics are mine). So a bill of attainder is completely different than a law inhibiting contracts.

Both links also used the original intent argument. Original intent isn't used much anymore, except by the most extreme conservatives.

They might have enough of a case to actually make it to a courtroom, but I think they'd get slapped right back out.

It hopefully will be a moot point anyway, half the recipients have given back their bonuses. AIG is hoping the other half (who is apparently residing in Europe) will return theirs as well.

 

[rjroubi]

It hopefully will be a moot point anyway, half the recipients have given back their bonuses. AIG is hoping the other half (who is apparently residing in Europe) will return theirs as well.

Yes....so far most of those who received the biggest bonuses have given it back (the last time I looked it was 15 out of 20 of the top US recipients). I do hope the other recipients come around.

Although I know there is supposedly no interest in publishing the names of these people, I'm still wondering if the AIG execs are being forced or shamed into doing it with threats of publishing their names. Okay, I admit, it's just a wild scarey thought on my part.....but let's face it, there're a lot of kooks out there who may want to exact some sort of revenge and we all know it. Hmm....

 

[Govtgirl]

Really? A contract is a contract?? Sorry, I just got a good chuckle out of that!

All over the country companies are breaking their contracts, people are taking paycuts, have their bonuses cancelled, benefits reduced, are forced to take furloughs and unpaid times off, etc. and AIG can take our money but can't restructure those bonuses? Umh, yeah right!! ...

Yes, around the country private companies are breaking contracts, but the government is not supposed to. That is retribution, and simply unjust. Again, the govt agreed to the bonuses as part of the bailout plan, and now they are pretending to be shocked and outraged about it, and they are trying weasel out of it and tax all the bonuses more than they normally would.

The government cannot agree to something, sign on the dotted line, and then say "nevermind". At least, they shouldn't. If they did, nobody could beleive one word the government said. It would be a joke, or worse a dictatorship. "Oh, yes, Mrs Taxpayer, we said that we would only tax you $5000 this year? Sorry, we decided it should be $20,000 instead. Oh, I know we have a contract, but don't you know the government can break a contract whenever it wants to?"

Before the bailout was ever on the table, when AIG negotiated with its executives, they contractually agreed to give them bonuses. When AIG asked for bailout money, one of the stipulations was that they could honor the bonus contract with their executives and still take govt money. The government agreed to that.


Now, the government has to honor their agreement, period! If they didn't there would be no checks and balances whatsoever, and that's part of what our country was founded on. The government is NOT suppsed to be omnipotent! If they didn't want AIG to hand out bonuses, they shouldn't have agreed to it.

And by the way, I'm not yelling or angry or anything. Just making the point

 

[LaughingWater]

AIG would have to prove they are being punished in some way, while Congress will have to show it isn't "picking on" anyone...only correcting an error (which I suspect wasn't an error so much as something they thought wouldn't be picked up...just my suspicion though).

Regarding contracts in general: I know Carola has mentioned that contracts have been messed with before, but still...I can see why this proposed action makes some uneasy.

Sure, for some it may be political snarking against a Democratic Congress. But for others, they may truly feel threatened by such a public display of Congress' muscle. At some point, a contract should remain just that...a contract. If Congress can say, "Hey, we've rethought the whole thing. We want our money back.", then what stops my mortgage company from saying, "Hey, forget your 30 year term. We want your entire loan paid by next Tuesday."?

I suppose one could argue what Congress does can't apply to the general public and its contracts. *shrug* So perhaps there is no dangerous precedent.

Whatever happens, I hope it's interesting.

Edited to add: GovtGirl said it better than I did!

 

[LauraMax]

Very interesting points Lisa & Lori. Did the govmt agree to the bonuses? I didn't read the TARP bill so I don't know. I thought the problem w/TARP was that there weren't any stipulations in it for either side.

So I'm curious, if the govmt agreed to honor the contracts, did AIG & the other companies receiving agree to anything? I thought they'd agreed to put the money back into the economy through loans & such, which as I understand it has not occurred.

Then maybe Congress would be better off filing suit against AIG (and the others giving out bonuses) for contract violation?

I'm really enjoying this discussion (well, other than the "this is my opinion, google it to find out why" part). Very interesting stuff.

 

[LaughingWater]

So I'm curious, if the govmt agreed to honor the contracts, did AIG & the other companies receiving agree to anything? I thought they'd agreed to put the money back into the economy through loans & such, which as I understand it has not occurred.

Then maybe Congress would be better off filing suit against AIG (and the others giving out bonuses) for contract violation?

Excellent thought.

 

[carres1973]

Yes, around the country private companies are breaking contracts, but the government is not supposed to. That is retribution, and simply unjust. Again, the govt agreed to the bonuses as part of the bailout plan, and now they are pretending to be shocked and outraged about it, and they are trying weasel out of it and tax all the bonuses more than they normally would.

The government cannot agree to something, sign on the dotted line, and then say "nevermind". At least, they shouldn't. If they did, nobody could beleive one word the government said. It would be a joke, or worse a dictatorship. "Oh, yes, Mrs Taxpayer, we said that we would only tax you $5000 this year? Sorry, we decided it should be $20,000 instead. Oh, I know we have a contract, but don't you know the government can break a contract whenever it wants to?"

Before the bailout was ever on the table, when AIG negotiated with its executives, they contractually agreed to give them bonuses. When AIG asked for bailout money, one of the stipulations was that they could honor the bonus contract with their executives and still take govt money. The government agreed to that.

Now, the government has to honor their agreement, period! If they didn't there would be no checks and balances whatsoever, and that's part of what our country was founded on. The government is NOT suppsed to be omnipotent! If they didn't want AIG to hand out bonuses, they shouldn't have agreed to it.

And by the way, I'm not yelling or angry or anything. Just making the point

I have to disagree with this point. The government breaks contracts all the time. One example is when service members are kept longer than their enlistment because that is what the government needs. My husband and I had transfer orders to go to an Air Force base in South Carolina. At the last minute the government changed its mind and broke that agreement to send us to Delaware (boy, was I bummed!). Many "old-timers" who enlisted in the military, stayed in, and retired were promised "free healthcare for life." The government renigged on that contract and now many retirees now have to pay a yearly fee AND have to wait for all active duty and family members to get appointments first!

I could go on and on about how the government breaks contracts with its military men and women. Very sad!

Carrie

 

[LaughingWater]

Well, that stinks.



I suppose it may be less about contracts and more about levying a special, excessive tax on a specific group of people (in this case, the TARP beneficiaries).

Should Congress be allowed to tax anyone at a 70% or 90% rate whenever they think it's necessary? And how does one define "necessary"?

Congress may be safe in that they aren't picking on just any old company or industry ~ they are targeting (for lack of a better word) companies who took taxpayer money for a specific purpose.

 

[fitlulu]

Sure, for some it may be political snarking against a Democratic Congress. But for others, they may truly feel threatened by such a public display of Congress' muscle. At some point, a contract should remain just that...a contract. If Congress can say, "Hey, we've rethought the whole thing. We want our money back.", then what stops my mortgage company from saying, "Hey, forget your 30 year term. We want your entire loan paid by next Tuesday."?

By the way, are you aware that mortgage company's usually do put that in the contract? I've forgotten the term for it, but they can call up your loan at any time. Just an FYI.

 

[LauraMax]

If Congress can say, "Hey, we've rethought the whole thing. We want our money back.", then what stops my mortgage company from saying, "Hey, forget your 30 year term. We want your entire loan paid by next Tuesday."?

I'm pretty sure that, in order to re-think something, it had to have been thought about in the first place.

 

[Govtgirl]

I have to disagree with this point. The government breaks contracts all the time.

If this were true, does that make it right? And wouldn't you be condoning it by thinking it's ok for the govt to levy extra taxes against AIG employees despite what they agreed to?

One example is when service members are kept longer than their enlistment because that is what the government needs.

But that possibility is written into every service member's enlistment papers, so the government did NOT break any contract at all! It's just that when people sign up they don't expect it to happen, and the recruiter probably downplayed the possibility at the time, so they complain when it happens, but it is right there in black and white. I was in the Navy, and every member of my family was in the military. When you sign up, you know full well that the government can extend your enlistment up to a number of years/months. My recruiter told me I wouldn't have to cut my hair in boot camp; guess what, they chopped it all off. No, the "hair-cutting" provision wasn't in my enlistment papers!

My husband and I had transfer orders to go to an Air Force base in South Carolina. At the last minute the government changed its mind and broke that agreement to send us to Delaware (boy, was I bummed!).

Again, the government did not break an "agreement" with your husband because there was no contract to send your husband to South Carolina. That is why they are call transfer orders. The military orders you; you go. Again, that is what you sign up for in the military, it should be no surprise and nobody has the right to complain when it happens.

Many "old-timers" who enlisted in the military, stayed in, and retired were promised "free healthcare for life." The government renigged on that contract and now many retirees now have to pay a yearly fee AND have to wait for all active duty and family members to get appointments first! I could go on and on about how the government breaks contracts with its military men and women. Very sad!

Yes, the government changed their healthcare system, but the military members that signed up at the time of the old system were "grandfathered in". New enlistees (after a certain year of enlistment) weren't given free healthcare, but they knew that going in. My mother has this free healthcare, it is called "Tricare for Life". She is 84 years old, and joined under that agreement in 1950 during the Korean War (I beleive that makes her an "old-timer" as much as she'd be mad for calling her that!!) and was married to my father, an Air Force Vet for 26 years. Guess what, the goverment has honored that agreeement, as they should have, she has free healthcare for life, pays no fees and doesn't have to wait. But the media will probably never let anybody know about that.

Just getting the facts straight; what is reported in the newspaper and media can be wildly misrepresented!

And a "PS" to Carrie: I actually grew up at the Air Force Base in Dover Delaware, so I understand that it's not quite the same thing as South Carolina (where I was born---how ironic!!)

 

[hiitdogs]

If this were true, does that make it right? And are you condoning it by thinking it's ok for the govt to levy extra taxes against AIG employees despite what they agreed to?

I think it is absolutely ok to get the money back that those executives shouldn't have gotten in the first place. If that is by means of levying taxes on bonuses that are paid to employees of companies that have been bailed out by the taxpayer, I have no problem with it whatsoever.

The federal government and the taxpayer kept AIG from going under for the common good and now they are taking our money to congratulate themselves for their poor decision making over the past years. Just because it is technically legal what they are doing doesn't mean that we need to sit back and give AIG a free pass.

I have yet to see more information on why they would get bonuses anyway. The executives who got the bonuses were solely in the financial products devision that was responsible for the near collapse and reported a $ 62 billion loss. What kind of bonuses are not tied to the companies revenue and employee productivity. A bonus is to reward performance. What performance was there to reward? Driving the company and some would argue the nation into the ditch? Hardly a performance worth rewarding.

For a while AIG was claiming those bonuses were "retention bonuses" to keep people with the company. Really? You are paying to keep the idiots that brought the company to its knees. As if those guys in this economy would be so marketable that would jump ship if they didn't get paid big bucks to stay. Everyone in this economy is happy to just have a job, forget about bonuses. Not to mention that those "retention bonuses" were also paid to people who left the company. I guess they took that one back pretty fast and went back to claiming contracts are sacrosanct. I don't know, whenever I think AIG, I think liar, liar pants on fire

To claim that there was nothing AIG could do about those bonuses is insulting. It is AIG's business to assess and manage risk. AIG should know a little bit about leverage, they used it to make the argument that they are too big to fail. If they had gone bankrupt there wouldn't be any bonuses anyway. It is common for companies to renegotiating contracts when companies go through a rough time, it is a practice that has long been approved by the courts. They have enough leverage to convince these employees to renegotiate their contract or join the 8.1 % of their fellow Americans who are without a job already.

Bonuses are usually discrectionary to reward performance. A mandatory bonus doesn't sound like a bonus at all but instead yet another financial scheme to create wealth for a select group of individuals.

Do I have a problem with the congress trying to get the money back on behalf of the taxpayer? Nope! Should they have not made the mistake in the first place? Sure they shouldn't have but I'd be REALLY pissed if they threw up their hands in the air and said, oh well!!

As it has been reported that most of the executives have agreed to give back those bonuses but I won't believe it until I see it.

 

[Govtgirl]

I think it is absolutely ok to get the money back that those executives shouldn't have gotten in the first place. If that is by means of levying taxes on bonuses that are paid to employees of companies that have been bailed out by the taxpayer, I have no problem with it whatsoever.

Really? So, who gets to decide what amount of legally acquired money someone should and shouldn't get? (Yes, the AIG bonuses were legally acquired, it was part of the govt bailout agreement) So then, can any goverment official, at the behest of public opinion, decide what is or isn't right and then change it regardless of the contractual agreement? Wow, that's pretty scary.

I'm sorry, I just can't argue this point anymore, when nobody will acknowledge that AIG was only able to give the bonuses because the goverment agreed to it!

And I have the very strong feeling that if it had been the Bush adminstration that had done this AIG deal, the blame would be laid squarely at the Bush administration's feet (where it would rightly belong).

My question is, why is nobody holding the Obama adminstration accountable for making this AIG deal in the first place? They MADE THE DEAL and agreed to it!

Really, I just don't understand this. And I'm not a Bush fan, I'm just pointing this out......

 

[LaughingWater]

By the way, are you aware that mortgage company's usually do put that in the contract? I've forgotten the term for it, but they can call up your loan at any time. Just an FYI.

It depends. We just refinanced, and ours says just the opposite. There is no pre-payment penalty, and they cannot demand full payment early.

 

[toughYrun]

Govtgirl,

If it's any consolation, I've read through every post on this thread and believe that you have articulated the AIG issue in a straight forward manner. The problem here, as I see it, is that you are arguing with people who appear to be stuck inside an echo chamber. An argument that omits a critical premise (that the government *agreed* to allow AIG to pay the bonuses) is faulty, and to me, those who default to giving Obama and congress a pass are no different than those Bush stalwarts of the last 8 years.

 

[Govtgirl]

Oh, and to point out something....before somebody says "well, AIG shouldn't have asked to keep the bonuses as part of the bailout plan...."

They HAD to, or they would have gone bankrupt from the executives suing them for contract violations, Which, duh, would defeat the whole purpose of the bailout, In fact, the goverment probably would have insisted on AIG paying the bonuses:

If the gov't gave AIG the bailout money but told them they couldn't pay the executives the bonuses they had contractully agreed upon, then AIG would have been sued by those executives for breach of contract (and won). That would easily bankrupt AIG. So, AIG would have gotten billions of govt money and STILL been driven out of business because of the lawsuits!

How else could this have played out, if the government keeps insisting on bailing out companies that should have gone belly up? AIG should have been left to go belly-up!

And YES, I think that the government should STAY OUT of bailing out private companies, becaue this is the sort of BS that happens when they do!

I may work for the government, but I am a TRUE-BLUE CAPITALIST at heart!