Tuesday

AIG execs should be given their bonuses.



Yes, I said AIG executives should be allowed to get their bonuses. I am truly torn on this because in my heart I don’t think failure should be rewarded. Originally I was out there with the torches and pitchforks demanding this be prevented along with everyone else. I have changed my mind and that change is based solely on principle.

You have to decide which is more important; Personal emotion or the rule of law. The truth is that there are contracts in place that guarantee those executives their pay. Contracts are sacred and rightly so. Our whole system of government, economy, civil law and our word as a country are based on the sanctity of contracts. On the other side, it flies in the face of common sense to reward these failed and flawed business models.

Without the ability to trust that contracts will be honored there can be no order, no structure and no United States of America. Even our rights as citizens in this country are conveyed to us by contract, the constitution. I want nothing more than to punish the greed, recklessness and excess that most of these executives are guilty of but not at the expense of our core principles. Without contracts we are left with no legally enforceable method of holding people to their word.

The truth is that the government knew these contracts existed prior to lending obscene amounts of money to AIG. These bonuses were contracted over a year ago and widely publicized. The government included wording in the bailouts to allow these contracts to be honored. They bailed out these failing companies, which should have never been done, and by their own doing validated these contracts. If they disagreed with the already existing contracts they should have acted to resolve these differences before hand, before they agreed through legislation to honor them. These feigned outrages are nothing more than a distraction but the end result of all this could well be the loss of our nation’s credibility.

The way this should have been handled was with chapter 11 bankruptcy proceedings. This would have allowed the dissolution of these contracts in a legally acceptable manner. The government chose to bail them out instead which left these contracts intact. Now they want to dishonor these contracts and with it the very basis of business in the United States and remove any shred of credibility they had remaining.

The liberals and unions railed against chapter 11 for the car manufacturers for this very reason. If we are to believe the logic than we must honor the labor union contracts and the AIG contracts equally. We cannot allow disparate treatment of contracts under the law to satisfy political expediency. This opens a door that would lead to the government being the arbiter of what contracts may be honored and which disregarded.

If they can’t invalidate the contracts they are contemplating taxing the bonuses at 95%. This is ludicrous. The federal government is bringing to bear their full power against this small group of executives. This scares me to death and it should scare you as well. At what point do we find ourselves as members of a group that draws such an unwarranted display of power. They are planning to swat flies with scud missiles.

I know I will be vilified as defending the rich fat cats but I am only defending the rule of law. The sanctity of contracts represents such a fundamental underpinning to our Nation’s stability that they cannot be subject to the whims of the politically correct establishment or mob rule. It is distasteful in the most extreme sense of the word to reward these failed executives but it is far more palatable than the alternative; the evisceration of the rule of law.

4 comments:

  1. I think you have hit the nail on the head, I agree with you. If these contracts were known, then they should be honored. Also, what do we really know about these bonuses? Sometimes the word "bonus" is used to really mean commission that pays out at the end of a year or qtr. for bringing sales in the front door. It is also possible that a handful of executives could of made the bad decisions that led to the fall, but there are a bunch of people that worked hard and brought sales in that are also being blamed. Not to speak of how will they ever get that company out of the mess if they can not retain or hire superior talent that will have the choice to go somewhere else.
    It is easy for the public and the press to jump to conclusions based on headlines, but it might be a very different story if they had the details by analyzing the facts. I am sure there is more to it than what the press is telling us.

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  2. a contract is what it is...and if we void these because of the bailout issue we are giving up our rights to contract protections...we should run off the current administration for KNOWINGLY allow this to be done...should of gone through chap11 like you said...fire and arrest the the guilty...oops cant go after carter...beat and run from office the bunch during the bush era that did not stand up and do what was right when they had a chance and the power and votes to force the issue make the industry go back to intellegent banking practices...no a 500k mortgage on a 76k income and an arm is not intellegent...not everybody is entitled to own a home...sorry I wish we all could...

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  3. You say there are contracts that allow these execs to get their bonuses. Well aren't there just as many contracts and, hell, even a hierarchy of government CENTERED around the idea that the government should NEVER interfere with free enterprise?

    These guys accepted a handout from taxpayers. They, therefore, should be at the mercy of the taxpayers like the rest of our government (ideally) is.

    The other option is always to just not accept bailout money and GO UNDER!

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  4. I agree with you anonymous. They should have been allowed to go under or file chapter 11 but since the government bailed them out they validated those contracts. You can't have it both ways either contracts are sacred or they are not.

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