Congressional Contract Busting

Congress threw a tantrum today and sidestepped the Constitution in their zeal to punish TARP recipient AIG.

The object of their affections centered on AIG employee retention bonuses.

Executive bonuses for a few top personnel in the company came to light in recent days. Once the issue became front page news the President teleprompted to us his outrage, denounced the bonuses and proclaimed the contractually obligated payouts would not stand.

Just as swiftly the senior U.S. Senator from N.Y. Chuckie Schumer went on the air saying if the bonus recipients did not turn back the money they would be taxed the entire amount.

With record speed the House of Representatives worked up a bill that taxes the employees 93% of the bonus amount. The bill is headed for the Senate tomorrow where there is no scheduled committee hearings, just straight to a vote.

We can argue the competence of some of the bonus recipients but that would dismiss the larger issue, these awards or bonuses were contractual.

It looks like we have a government that has no problem running over contract law.

Even larger than the issue of legislation sponsored contract busting is the witch hunt atmosphere brewing in D.C..

This is state sponsored witch hunting. Watch as this expands to every company that accepted TARP money.

(Bank of America is defending their employees from Government snoops at the moment)

The Democrats have set the stage to review every bonus or reward for service, contractually ordained or not, to be scrutinized by a legislative committee.

The net effect is the best and brightest will avoid working for firms that accept government TARP funds. I think there are more than 250 financial firms that took government money, many actually forced to do so.

Every day in every one of those hundreds of firms bonuses are negotiated, i’s dotted and t’s crossed by attorneys. The only way to be competitive in business is to reward top talent. Ivy League MBA candidates readying for graduation this May are shaking over this. 200K in tuition and a scholastic lifetime of academic achievement for what?

Who would willingly go to work for a company where their work contract can be held up to public scrutiny, possibly putting them in personal danger AND their bonuses are taxed 90%.

How can B of A, Wells Fargo, Citigroup, or J.P Morgan attract the best and brightest when witch hunting interloping politicians are looking over their shoulder?

I am cynical by nature but I don’t want to turn into a conspiratorialist. If I were I would think this is the first shot off the bow towards a full fledged takeover of our financial system and beyond. Numb us now so the pain of nationalized health care will be blunted.

Side note, I was listening to a Columbia University Medical School professor speak on the television the other day saying up to 1/2 of the doctors he knows want to retire, now!

Wonder why? Don’t think past the obvious, they see the nightmare of national health care in the distance. Are we ready to wait 8 hours in line for a chest X-ray?

I’ll quit ranting in a minute…. Let’s agree these AIG bonus recipients don’t deserve the money. Setting that aside if I was one of these executives I’m dialing up my lawyer tonight.
If it took my last dime I would litigate this to the U.S. Supreme Court and quick (before that branch of the government is compromised) and fight the fight our Founding Fathers would expect.

Finally, AIG shipped between $23 billion of the TARP money to foreign banks? Where is the outrage? I’m not proud of a government that goes out of its way to hurt American citizens yet overlooks taxpayer money going to French and German bankers.

How much of the money headed off our shores is destined for employee bonuses?

1 Comment

  • R.Eder says:

    And how is it possible that it’s ok for the Hollywood Crowd and Ball Players, who are not creating any jobs, to make millions of Dollars, but a CEO of a Company who employes people, works 24/7 is only allowed to make a limited amount. This is NOT socialism, it’s Communism!