AIG isn’t the government and couldn’t just ignore the law and get away with it like the government apparently can. They would have been successfully sued into nonexistence if they had tried to illegally break their contracts!
Yes, the Feds have the power, but AIG does not. And the Feds chose to use their power to explicitly protect AIG’s contractual obligations rather than use their power the prevent the bonuses!
What’s so difficult to understand about what I’m saying?
The distinction between AIG and the Feds has become somewhat blurred of late:
Fed rescues AIG with $85 billion loan for 80% stake
Yeah it’s too bad esteemed officials like Dodd and Geithner saw fit to explicitly approve of the bonuses with their exemption. :smack:
Again, do you really think that if the officials at AIG had reneged on their contracts, that they would have been able to get away with it in court?
Yup, if their owners, the Feds, had told them to.
OK, I have to ask about this.
Say I am an AIG exec and I did not get a bonus I feel was contractually owed. I take AIG to court over it and win. (Ignoring the fact I may have to avoid people storming the courthouse with torches and pitchforks)
What could I collect, seeing as how the division is defunct? Would I be able to collect from the insurance divsion? Is there really anything there to collect? Do they have any assests that were not part of the bailout? If the government deems this insurance company too vital to fail, would it allow this payout? Would it OK the payout, but delay it until AIG was back on it’s feet?
Side question: Has any company actually been sued out of existence?
Problem is that their owners, the Feds, didn’t.
And the suggestion that the Feds, presently under the control of the Democrats, should monkey around with legislation in order to do a take-back is, IMHO, worthy of the God-Damned Republicans, NOT us.
Does LOOK magazine count?
How about Bryco Firearms?
Just to be clear, it’s the Federal Reserve that bought ito AIG. Strictly speaking, the Fed is not the federal government, strange though it sounds.
Monster104’s point is simply this; while the federal government can take away the bonuses, AIG could not do so by itself. The government makes the law and enforces it, so they can do apretty much anything they want; that’s why civilized governments have checks and balances, to keep the government from go nuts using is legislative and enforcement powers. AIG, a private entity, can’t do anything it wants. Had AIG merely cancelled the bonuses they would have been sued, and would absolutely have lost, since they wouldn’t have had any case.
That’s true, but contrary to what Monster104 would have us believe, they chose not to do it not because they could not do it, but because they did not want to do it.
Legally binding contracts aren’t like the laws of thermodynamics, with the right forces applied they can and are modifiable.
It’s all a mater of degree. We’re talking about a lot more money than we were the last time around. last time, I thought the risk was deflation.
They certainly seemed to have taken care of that worry, havent’ they?
Ya, I feel so much better now. Deflation followed by inflation and a lost decade are looking more and more likely. …
Ok. We need an american lawyer to answer this in full but, as lawyer I can assure you that while contracts are to the signing parties as the law itself, and thus have to be honoured this doesn’t mean that there are no exceptions to the rule.
2.- We call it abuse of law and I think you call it “inadequate consideration”, if I promise to pay you millions of dollars and you don’t promise something in return, then the contract is not valid. This usually happen when one party is “stronger” than the other and can force the other to an unequal bargain.
If the value of your promise is significantly less valuable than the one of the other party, this applies as well.
Of course, I am sure that neither applies to this particular case… after all AIG is a solid enterprise and the bonus recipient didn´t have the power, (much least interest) to force the company to enter this contracts
On the plus side, after a decade of double-digit inflation leading to the $3 bottle of soda,
maybe dollar coins will finally catch on. (I’m betting we still keep making pennies, though.)
Tim Geithner requested the exemption because of the risk of lawsuits, according to Bloomberg, and the relevant tidbit I’d like to quote here:
I’m arguing they chose not to do it for a bit of both reasons you list there, plus my conspiracy-oriented side of me would like to believe a healthy bit of some nebulous ulterior motives.
Yes, by no means am I an expert on American law, especially really niche stuff like this - I’m just going by what I’ve read up on over the years as a sort of past-time. Though I do like to think of myself as being more interested and read up than the average layman, but I will not pretend I know the answers to your questions. 
It turns out that I was right. The one dollar salaries are not just for Liddy.
Here is the resignation letter from “Fred.”
Www.nytimes.com/2009/03/25/opinion/25desantis.HTML?pagewanted=1&_r=1&emc=eta1
A must read for any participant in this thread.
I’m certain the response will be a shrug and some comment about how Jake (a.k.a. ‘Fred’) is just a rich fat cat, how he deserved 14 hour days working for a dollar to fix a mess he didn’t have anything to do with (though of course, he works at AIG…so it MUST be his fault somehow), and a snide remark or two about how he won’t be able to find a job anywhere else, implying that ‘Fred’ should just be happy to soldier on for a buck at the beck and call of The People™ and he should be grateful The People are giving him that buck.
I note with no little irony that after doing his part to inflame the situation in the last 2 weeks that Obama has done a complete about face and is now in frantic mode trying to calm down the witch hunting atmosphere…and has said that if Congress were to pass legislature to seize the 90% of the bonus thingy that he won’t sign it (yeah, this happened yesterday but I’ve been away). Of course, if enough Fred’s decide to give the American people, AIG and our wonderful elected officials the one finger salute then we will lose a good chuck of that $100 BILLION investment when AIG goes completely tits up and takes on water.
I’m sure many in the thread will feel righteous justification…after all, it’s about the principal of the thing, not the money, ehe? Fuck that $100 billion plus…we were talking a $165 million in BONUSES to RICH FAT CATS!!!
Stupid bastards…
-XT
If he didn’t do anything wrong why is he donating the money?
You are kidding…right?
-XT
I note that you seem to have misplaced your usual skepticism, you take this fellow at his word without any question, and apparently expect that we should as well. Since it simply can’t be a matter of it fitting neatly within your set of opinions, we are left to wonder why?
For instance, his proclaimed innocence on this whole “credit default swap” fiasco. He is an executive VP for the Financial Products area, specializing in commodities and equity. He claims to have no responsibility for these decisions. Well and good, but did he have no knowledge? Was he entirely ignorant, or did he keep a discreet silence? These toxic instruments were cobbled together in the division of which he was Ex. V.P., and he knew nothing about them?
Perhaps not, it appears this Cossano fellow was anxious to keep it all under wraps and compartmentalized. Might be willing to buy that, if offered evidence.
But you don’t require any evidence, he bats big brown innocent eyes your way and the matter is settled!
And this whole “$1 a year” thingy. He was expecting a “bonus” of $700,000, apparently. This doesn’t count? That’s not money? Are we to applaud his noble self-sacrfice, working 10 hour days for a mere three-quarters of a million? Do you know anybody who wouldn’t leap at the chance to work such hours for such pay? Well, maybe you do. I sure don’t.
Mind, I’m not indicting here, this is the first I’ve heard of him. First you’ve heard too, I venture to guess. All I’m saying is that if you accepted my assertions with the same open credulity you accept his, you might well be the proud owners of a historic bridge.
Stated baldly…it fits neatly within my set of opinions, obviously. Same reason why you toss out your own logic whenever some nugget that conforms to your own world view comes up.
You are right, of course…I have no external reason to believe his story, or even that the letter is by a real person or is a real letter (though I assume it wouldn’t have been printed where it was if it was a complete fabrication…though, news media being what they are it’s always possible). By the same token, you have nothing to base your own knee jerk reaction on except the same (though opposite) set of your own opinions and world view. Interesting the way that works, no?
Go back and read through your Mudraker cite earlier…it’s entirely plausible that this guy (if he is real of course) had no knowledge of what was going on. It’s fairly clear FROM YOUR OWN CITE that Cassano was playing things pretty close to the vest, had cut out whole sections of the company from what was going on…and didn’t seem to know even himself what the fuck was going on or what the extent of the risks were.
Cassano. And it’s in your own cite from earlier in the thread.
Ah…well, as to that, I’d say that, based on my own reading of what happened (and based on several cites you helpfully provided up thread), I’d say that the linked letter is plausible. True, I have no external evidence corroborating the story, or even verifying the guy is a real person or the letter a real letter. I have to fall back on the hope that the New York Times did the donkey work to corroborate it, and look at the content in light of plausibility and my own reading of the situation.
What are you using btw? Entrails? Magic Mirror? Innate and in-depth knowledge of the financial, economic, social and political situation in general and AIG specifically?
I know several people who wouldn’t leap at such a chance, yes…especially in light of the current very ugly situation. You know, all those death threats and other playful actions by our wonderfully well informed citizens and representatives. Some of them in this very thread.
To be sure. And your own skepticism on this is refreshing, considering that this isn’t always the case with you, depending on the subject matter. You really should try that whole ‘remove the mote from your own eye before pointing out the one in mine’ thingy though…it would be much more convincing.
-XT