"Unconscionable"

Nancy Pelosi strikes the right tone in this statement posted at The Gavel suggesting possible congressional action against AIG.

While American workers see their wages decline and face record job losses, it is unconscionable that AIG, which is receiving more than $170 billion in government assistance, would permit such extravagant executive compensation practices without any accountability to the taxpayer.

I have asked Chairman Barney Frank of the House Financial Services Committee to examine options that are legally available to recover taxpayer funds of companies that abuse the privilege of taxpayer assistance.

I call upon the executives at AIG to right the wrong they have done to American taxpayers, who are footing the bill for the most expensive government rescue in history. They should renounce the bonuses and refuse the excessive retention pay they previously agreed to.

Congress, working with the Obama Administration, has put in place tough executive compensation and responsibility measures to ensure that taxpayers are protected and we will continue to take all action necessary to ensure transparency and accountability.

The administration's impotence in the face of AIG's outrageous bonus announcement is disappointing to say the least. Pelosi here is suggesting that Congress can make AIG pay, showing that Pelosi has a sharp ear for the mood of the country, which can be summed up with two words: "pitchforks" and "torches." But can they actually do something about it. Let's hope so.

Tags: AIG, Nancy Pelosi (all tags)

Comments

53 Comments

Re: "Unconscionable"

I join you in your outrage, but it sure looks like, as I've seen, these bonuses were contractually obligated.  Terrible contracts, like making a contract to pay $1,000 for a bag of potato chips, but when made between competent parties, a perfectly valid contract.  I guess I fear that if Democrats go at this too much but then don't do anything about it (they can't, it looks like), won't that just lead to a populist backlash against Dems?

I would love to see financial firms be more heavily regulated with regards to compensation moving forward - there is no logical reason for the bulk of these people's compensation to be paid in "bonuses."  It ceases to be a bonus when it's an expected part of your compensation.  It seems like these firms are having trouble differentiating between "bonuses" and "commissions" if you ask me, but I guess the problem is that a commission is tied to a measurable goal but, in the twisted financial world, a bonus is merely tied to whether or not they like you.

by auronrenouille 2009-03-15 06:56PM | 0 recs
Re: "Unconscionable"

Even if these payments are contractually obligated I think a judge can toss that on "unconscionability", "public policy", or "fundamental change in circumstances".

by lowdog 2009-03-15 08:19PM | 0 recs
Re: "Unconscionable"

I'm not a contracts person, but aren't those standards applied using the facts as they existed when the contracts were entered into?  Serious question, contract law not being my favorite domain, I'll put it that way ;p.

Although I guess now that I dig through my poor brain, perhaps this would be a good place to apply impracticability of performance.  Don't mind me whilst I think out loud.

by auronrenouille 2009-03-15 08:31PM | 0 recs
Re: "Unconscionable"

 There is a simple business way that this could have been handled, and if you ask any corporate exec, they will say the same thing- renegotate the contracts.  As a stimpulation of receiving funds , there could have been a requirement to renegotiate contracts about bonuses. And as for claims they would lose talent- we are in a buyers market for the work force, and even more so for the banking industry. Where are they going to go? This is why the claims by the bankers that they don't want the money because of stipulations is a joke. There aren't any stipulations there that will hurt them.

by bruh3 2009-03-15 09:03PM | 0 recs
Re: "Unconscionable"

Sounds good on paper, but how do you police that?  Where are the resources, what is the method you use?  Sure, the business could go to the employee and say "We need to renegotiate" and the employee says "I don't care, I have a job that comes with certain obligations on your part, and I like it, and I'm not re-opening negotiations."

By the way, at-will employment doesn't help you here.  You could fire anyone who objects, but firing someone to avoid paying their bonus is often considered wrongful discharge at state levels.

Are you going to have the IRS or Treasury have agents come in and interview everyone who receives a bonus?  Find hundreds of contract lawyers to review contracts?  By the time you identify an enforcement mechanism, you may as well move on with your life and use that money in a more stimulative fashion.

In addition to that, some of these bonuses that came through were for 2008 obligations, and nobody has any incentive to re-open that.  The litigation that would result would be more expensive than paying the bonuses.  We need to face reality here.

I don't disagree that the current situation is untenable, but we need to move forward rather than dwell on how we can rectify the past.  Moving forward, Congress and/or the Treasury can explicitly dictate what terms a company may offer in an employment contract, which is what's going on.  Much easier to deal with this before the contract was entered into, and much more effective.  Not only that, renegotiating agreements in this climate will unfortunately be very easy - nobody wants to be out of a job.  Good for people complaining about executive compensation, bad for Unions who will be taking it in the shorts.

by auronrenouille 2009-03-16 12:35AM | 0 recs
Re: "Unconscionable"

Most people would settle just to get their job in this economy.

by bruh3 2009-03-16 12:52AM | 0 recs
Re: "Unconscionable"

I am going to bed. The point is to call their bluff rather than following the  same path of insanity. if you believe these executives would truly leave their job over a one year bonuses, then I got a bridge to sell you. Who else would have them? Not many.

by bruh3 2009-03-16 12:57AM | 0 recs
Re: "Unconscionable"

No, I suspect they would stay in their jobs and sue.

by auronrenouille 2009-03-16 02:21AM | 0 recs
Yes, they would...

I hear the outrage, but as I said in the first of these outrage diaries, you're looking at hundreds of lawsuits.

And, if you fire these people, MORE lawsuits?

Some of them may have termination clauses in their contracts.

We MAY want to pick this fight, but in the end, these are legal contracts, EVEN IF AIG is immediately put into receivership, the lawsuits will come.

by WashStateBlue 2009-03-16 05:11AM | 0 recs
Re: "Unconscionable"

there is basis for them to sue if they renegotiate the contracts.  Not really sure at this point what you or others are talking about other than theorectically they could sue. Yes, any suit cold be brought but the likely of having effect given a binding renegotiated contract is nil. THe same as with the unions renegotiating their contracts. This is not complicated. Companies do it all the time. The only reason people are trying to complicated the idea is that its politics.

by bruh3 2009-03-16 07:29AM | 0 recs
I agree

I'm dubious of Congress tapping into the pitchfork and torches vibe. Mobs are fickle and just when you think they're on your side, they have a habit of turning against you. They also tend to burn down houses and lynch people, so you know, maybe everyone should just calm down a bit. I think rather than pretending these people are evil pirates who we need to put in jail, we should put our energy into using this moment to try to reform big-C capitalism so it's less risky and more equitable. Executive compensation is our version of "earmarks". It's easy to rile up people about it, but it's not the cause of the problem. The reason people are pissed about the economy is not that other people are rich who don't deserve to be. This is the land of Britney Spears, we have come to terms with talentless imbeciles getting piles of money. People are angry because they don't have houses, healthcare, transportation, etc.

by riboflavin 2009-03-15 08:35PM | 0 recs
Re: I agree

Yeah, I agree - it's not that the ceiling is too high, it's that the floor is too low. :(  We would do better to use this period to push through single-payer healthcare, much like FDR pushed through his social programs in the context of the Depression.

by auronrenouille 2009-03-15 08:40PM | 0 recs
Maybe this'll put 'em in a better mood...

The $100 million to $200 million in bonuses is absurd...but it's got nuthin' on the $2 trillion TALF subsidy about to be sold off to a totally unregulated hedge fund industry...and for them, abso-freakin'-lutely NO compensation limits, whatsoever?

What's wrong with this picture?


Fed Eliminates Compensation Limits for TALF Program
By Scott Lanman

March 3 (Bloomberg) -- The Federal Reserve and U.S. Treasury eliminated executive-compensation limits for companies that bundle loans accepted under a new $1 trillion program, indicating the rules may have hampered efforts to start the plan.

The rules won't apply to the Term Asset-Backed Securities Loan Facility out of "desire to encourage market participants to stimulate credit formation and utilize the facility," the New York Fed said in a document on its Web site today. The government separately said it will expand the TALF to support vehicle-fleet leases and loans for business, construction and farm equipment.

The change suggests the government doesn't intend to apply compensation limits beyond firms that receive direct investments from the Treasury's $700 billion bailout fund. Officials have yet to announce whether such requirements will be imposed on firms participating in a separate effort to remove as much as $1 trillion of distressed assets from banks' balance sheets.

"Just like salesmen toward the end of the month get kind of worried if they're not meeting their quota, the Federal Reserve has got to worry," former Fed monetary-affairs director Vincent Reinhart said. Today's moves are "an attempt to make the facility more accommodating," said Reinhart, now a scholar at the American Enterprise Institute in Washington.


by bobswern 2009-03-15 07:03PM | 0 recs
TPM Tells Us It's A Bigger Story, Tho...

WSJ Says It's $450mm...

"AIG Pays $450 Million In Bonuses"


AIG Pays $450 Million In Bonuses

American International Group Inc. will pay $450 million in bonuses to employees in its financial products unit. That division was at the heart of AIG's collapse last fall, which compelled the U.S. government to provide $173.3 billion in aid to keep it running.

Chief Executive Edward Liddy told Treasury Secretary Timothy Geithner in a letter dated Saturday that the next payments to employees of the financial products unit -- whose woes caused massive losses at the giant insurer -- are due on Sunday, and added "quite frankly, AIG's hands are tied."

Those payments are in addition to $121.5 million in ...

But, TPM says it's $1.2 billion w/$450mm going to sellers of toxic trash...

"Just Gets Worse"


Just Gets Worse
03.15.09 -- 2:40PM
By Josh Marshall

The first reports said either $100 million or $170 million in bonus payments. But there was a lot of unclarity about what kind of bonuses they were and how many were going to the folks at AIG 'financial products' division, where they wrote those credit default swaps that blew up the company and will likely cost taxpayers hundreds of billions of dollars.

But the Journal says the number is actually $450 million to execs at the financial products division and a $1.2 billion spread across the whole company.

As you can see, despite the fact that this relatively small division of the company created almost all the loses, it's still drawing in a vastly disproportionate share of the cash bonuses.

by bobswern 2009-03-15 07:54PM | 0 recs
Can they do something?

No. They may want to and I think they all want to, but there's nothing they can legally do to stop it.

The administration and Congress are looking for any legal means. It looks like they have been able to keep big bonuses from being paid out in the future...but like I said, we are angry not because the administration did nothing to stop it, but because they can't.

In the end, I haven't really heard anyone talk about it today in the frame of "Why is Obama not stopping this?" instead it's being framed as "These people (AIG) are screwing us and our government" So the effect to Obama's popularity will probably be minimal...except on the blogs.

by DTOzone 2009-03-15 07:10PM | 0 recs
Re: Can they do something?

Wrong. They can pass a bill right now to address this,b ut they won't because Obama's team does not want these limitations.  We just had this conversation in the other diary in which you ignore the point that they can place all sorts of stipulation- including rengotiation of third party contracts, but choose not to do so. This lie may comfort you that they can not, but it is a concious choice to not do something.

by bruh3 2009-03-15 08:28PM | 0 recs
Sure they can

if they want to cross Constitutional boundaries. Your conversation on the other diary was lovely fantasy, but they can't do anything about these contracts without risking a court battle that may cost more money than the bonuses.

But I expect you to ignore that and keep living in your la la land...you seem to like it there

by DTOzone 2009-03-15 09:31PM | 0 recs
Re: Sure they can

Huh? What the hell are you talking about? there is no con law issue here. The only thing I can guess you mean is some kind of ex post facto issue, but that's also false.

the govt can subject any future arrangment such as doling out additional money as Obama just did and is about to do with AIG to any stipulation that it wants as long as its going foward.

That means at the time that Obama entered office he could have authorized stipulations on AIG and any recipents seeking additional funds. This issue as late as the Stimulus Package came of with executive pay. Obama could have placed requires through Geithner under the existing TARP on executive pay, but Congress wanted to go further so they did. But that did not prevent Obama from doing the same thing.

AIG just  asked for additional funds in the last 2 weeks. If Obama had wanted to impose stipulations requiring renegotiation of contracts, he could have done so before doling out the money. There is no con law question about renegotiation of contracts as a stipulation because the banks are not required to take the money. This , again, is Geitner's mindset.

Again, he choose not to do so.  Your bullshit may work on the general public who does not understand this, but I am following the structure of the transaction. You are either lying or ignorant. Either way, I have no idea why you think this is a con law question given the critique.

by bruh3 2009-03-15 10:15PM | 0 recs
Re: Sure they can

actually you know- I just realize something. You really don't care what the facts are. As I said before- this begins and ends with you defending Obama.

by bruh3 2009-03-15 10:16PM | 0 recs
Please give an example

Of where Congress has gone into to a legal US corporation and nulified legal employment contracts?

Unless this is treason, as legal defined in the consitution, that bill would get wacked at SCOTUS, probably even Ginsberg would vote to throw it out.

Also, as horrid as it seems, you can't even say these people were committing FRAUD, because Congress made what they did perfectly legal.

That's the outrage, what got us here.

Your outrage is correct, but, the outrage is because they did NOTHING for years about this.

Spend your time asking, Why isn't Phil Gramm in prision....

Not, Why isn't Obama stopping this NOW?

Or Congress.

Congress CAUSED THIS!

Look up the Gramm-Leach-Bliley Financial Services Modernization Act, THAT is the outrage!

by WashStateBlue 2009-03-16 05:58AM | 0 recs
Re: Please give an example

please read what I wrote because its not what you are saying that I wrote

by bruh3 2009-03-16 06:59AM | 0 recs
Re: Please give an example

and by the way- even with you getting my point wrong, whatever you are talking about is kind of b.s. legally speaking there is no con law issue here. if you don't get that, it's not my job to explain it.

by bruh3 2009-03-16 07:00AM | 0 recs
Wimpy, Bruh, Really wimpy....

It IS your issue, you want Congress to do something, see ALL your posts here.

I made the point, show me ONE time SCOTUS has upheld a Law that goes into a legal corporation and overturns legal employment contract.

You do this a lot Bruh...

This "well, if you don't get it, that's YOUR issue..."

We GET YOU ; we are disagreeing, and asking you to present some proof of your position.

You take that ulimate debators shell game..

That it's OUR problem to prove you wrong?

Sorry, that's BS, and you know it.

You made the assertition,  you back it up with fact.

by WashStateBlue 2009-03-16 07:59AM | 0 recs
Re: Wimpy, Bruh, Really wimpy....

Reality check on the evolving story:

"Obama Tells Geithner to Block A.I.G. Bonuses"

http://www.nytimes.com/2009/03/17/us/pol itics/17obama.html?_r=1&hp

Next up, they will stipulate on any future payments limitations on bonuses as I have described.

I am not debating you. I am telling you that you are don't know wha tyoua re talking about. It's really that simple.

by bruh3 2009-03-16 08:38AM | 0 recs
Did you READ the article....

White House officials said that the administration is not looking to take A.I.G. to court to stop the company from paying out the bonuses. But they said the Treasury Department would be trying to figure out what they can do to block A.I.G. from making the payments within the legal confines of A.I.G.'s contractual obligations to the executives.

Look, Obama knows the firestorm this is causing.

They have NO LEGAL recourse, they are trying to leverage AIG, they are looking desperately.

Come on Bruh, I am not a lawyer, you are not one.

THESE PEOPLE have the best lawyers available, if there was a legal way to stop this, they would be heading that way now...

So, they MAY try something, but, as that article said, they are NOT going to court to stop this.

Because, they don't have a legal leg to stand on to nullify those legal employment contracts.

by WashStateBlue 2009-03-16 09:04AM | 0 recs
Re: "Unconscionable"
The effect on Obama's popularity will be minimal, except in the blogs.
So what else is new?
by spirowasright 2009-03-15 08:14PM | 0 recs
Re: "Unconscionable"

yes, because popularity and ratings define whether or not this is the right policy decision.

by bruh3 2009-03-15 08:28PM | 0 recs
Re: "Unconscionable"

Geez. I am getting to the point, I am afraid to read the paper.

by Charles Lemos 2009-03-15 08:51PM | 0 recs
Bull. Fucking. Shit

Nancy Pelosi and most of the rest of DC signed onto this package.  No one knew exactly how it would go down, but we would all get screwed one way or another in this deal.  Period.

Tangent time:

The housing bubble, the credit card lifestyle, and the ensuing bailout were all completely predictable disasters to anyone willing to look at it honestly.  I am not a smart person, and I could tell from a very long time ago that all three of the above items were bad ideas and signaled something fundamentally wrong.  At some point, you realize that nothing was being done or said about this stuff because the people involved were making serious bank off of this.  It was not a failure of intelligence or of knowledge.  It was a failure of leadership.

Tangent continues....

This is why people like Sarah Palin have any place in our national discussion.  There is a sense among many people that the brain-trust of this country has failed spectacularly.  And so, she symbolizes a rebellion against that brain trust.  People like Nancy Pelosi and Barney Frank are supposed to know better than this.  And they do.  But they have allowed themselves to become tools of the things they are supposed to be overseeing.  So, the brainless-trust gets footing in the national discourse.

by the mollusk 2009-03-15 09:55PM | 0 recs
YES!!!!!!!!!!!

Where were Nancy and Barney Frank when this was going down years ago....

Barney is from NY, where ALL THESE fat cats live.

And, Nancy, well, Money talks.

Sorry, all you folks, "Congress can pass a bill", what they HELL are you talking about.

If Congress goes into into a legal US corporation and nulifies existing contracts, unless this about a state of war or treason, expect this to go the the SCOTUS and lose.

BIG TIME. Even the Liberals will throw that bill out.

Christ, what are you people thinking?

You sound like Republicans, anyone suggestion that....

by WashStateBlue 2009-03-16 05:20AM | 0 recs
Re: YES!!!!!!!!!!!

wrong. the Court decided a long time ago that Congress can pass legislation that interferes with private contracts.

in fact, pretty much anything congress passes has at least the potential of interfering with private contracts.

now, it would excuse the AIG employees of their further obligations, and they would be entitled for "fair" compensation for services already rendered. but Congress certainly can interfere with contracts.

by jeopardy 2009-03-16 07:48AM | 0 recs
Ok SHOW ME

A case involving a LEGAL EMPLOYMENT Contract....

Sure, congress can abrigate contracts that clearly are illegal or unconsitutional.

Why are THESE examples of this?

Yes, you are correct. AIG can fire these people but if they have employment contracts, you would have to prove Fraud to disclaim their owed back-pay.

If the company is NOT in receivership, which is it NOT, those claims would stand in court.

There IS NOT FRAUD, because what those employees did, while HORRID by any standards, was within the law.

Look, it's all a moot point, unless we see congress do anything..

WHICH THEY WON'T...cause they know, they will not stand up in court.

by WashStateBlue 2009-03-16 08:05AM | 0 recs
Re: Ok SHOW ME

an example? well, pretty much any time Congress or the Federal Government does anything. bans unpasturized cheeses? interfererence with contracts people had to import pasturized cheese.

really, just about anything you can think of

by jeopardy 2009-03-16 08:12AM | 0 recs
Not relevant....

That is NOT the same as a legal employment contract INSIDE a corporation doing legal business.

The closest example I can think of is employment discrimination cases, where women are paid less then men, but EVEN SO, that is a ways away from them nulling a legal employment contract without fraud on the part of the parties.

As I said, I am an amatuer, NOT a lawyer, but I do have an obsession with SCOTUS, and buds who DO know this kind of stuff.

Will report back with the skinny when I hear back....

by WashStateBlue 2009-03-16 08:16AM | 0 recs
Re: Not relevant....

Like I said, you don't know wha tyoua re talking about.

by bruh3 2009-03-16 08:39AM | 0 recs
Re: "Unconscionable"

You are wrong.

Congress certainly can interfere with private contracts, because of a little thing called the Commerce Clause.

It's only the states that cannot.

http://supreme.justia.com/us/294/240/

"(f) Private contracts must be understood as having been made subject to the possible exercise of the rightful authority of the Government, and their impairment, resulting from such exercise, is not a taking of private property for public use without compensation, or a deprivation of it without due process of law. Pp. 294 U. S. 304-305."

by jeopardy 2009-03-16 07:43AM | 0 recs
Re: "Unconscionable"

remember, the administration did something similar re: private contracts by limiting executive pay for banks that take bailout money.

i find it very interesting that the media didn't have any law profs on the air yesterday, but instead just repeated AIG and politician talking points.

by jeopardy 2009-03-16 07:45AM | 0 recs
Those were all GOING FORWARD

Examples, and, again, the CEO's agreed to it.

That was part of a NEW agreement, that they were party to.

You want this money, you do this.

The employees negotiated at the time, and NOTHING has been offered to them, as it was to the CEOs to get them to "change the terms" of their legal contracts.

The reason NO profs are on the air is, this is as not clear cut as you all are making it out to be.

In fact, the LAW is on the side of these employees.

Sure, congress could take some retroactive bill, WHICH probably the Republicans would kill in the senate, along with our so called moderates....

Then, if would start lawsuits and court challenges for the next 2-3 years.

Moot point, ain't gonna happen.

by WashStateBlue 2009-03-16 08:10AM | 0 recs
Re: Those were all GOING FORWARD

no, the law is NOT on their side.

I quoted a supreme court case that is still good law.

the Court hasn't been striking down federal action because of interference with private contracts since the lochner era (early 1900's)

by jeopardy 2009-03-16 08:13AM | 0 recs
OK, I sent my buds who work for SCOTUS BLOG

and the OYEZ project some mail, asking them for a SCOTUS case that might have relevance.

When I get something, I will do a thread.

I may be wrong, but at least since I have been following SCOTUS, I can remember NO case where the Congress was able to abrogaite a legal employment contract where fraud or some other underying crime was not involved.

by WashStateBlue 2009-03-16 08:12AM | 0 recs
Re: OK, I sent my buds who work for SCOTUS BLOG

I cited a supreme court case that says that Congress can pass legislation that interferes with Congress.

btw, it's the States that can't, and even then it's only intermediate scrutiny

by jeopardy 2009-03-16 08:18AM | 0 recs
I am not arguing the Commerce Clause doesn't exist

I'm just saying, that case is miles away from this one.

Look, I have thrown this to the legal beagles I know, I will report back what they say...

Of course, that will only be THEIR opinions but more well informed then mine.

Out till later, till I get some additional info.

IF I get something I will start a full diary on the question.

by WashStateBlue 2009-03-16 08:28AM | 0 recs
Re: OK, I sent my buds who work for SCOTUS BLOG

He's arguing he's right despite the facts because wel this involved Obama, so facts don't matter.

by bruh3 2009-03-16 08:41AM | 0 recs
FACTS?

What facts have you presented me with?

That the commerce clause has been used to extend Federal Juristication over laws that are constitutional the rights of the states?

That's a fact.

What is NOT a fact is that you have shown me proof where, tested in court, the US congress can aborgate legal employment contracts NOT involving Fraud or breaking another law.

The fact Congress stepped in the case of a company involved in FOREIGN trade, that is their place.

And, who said this has anything to do with Obama?

You are calling on CONGRESS to do something?

Unless you are suggesting Obama do a signing statement overturning those bonuses?

You want a constitutional fight, that's it right there.

Would be interesting, but not gonna happen.

by WashStateBlue 2009-03-16 08:57AM | 0 recs
Re: FACTS?

if you say so. but we both know you are making it up.

by bruh3 2009-03-16 09:00AM | 0 recs
Re: FACTS?

To gild the lilly- someone who knows a thing or two more than you or I about labor, Robert Reich, discussing the subject:

http://www.huffingtonpost.com/robert-rei ch/the-real-scandal-of-aig_b_175105.html

Basically your argument is what he describes as sophistry.

by bruh3 2009-03-16 09:05AM | 0 recs
Re: FACTS?

One more bit of "non-facts" by me to demonstrate you don't know what youa re talking about from a knowing nothing from Yale Law School:

http://www.huffingtonpost.com/aaron-zeli nsky/larry-summers-stop-the-ai_b_175151. html

"Larry Summers: Stop the AIG Bonuses. Yes You Can."

by bruh3 2009-03-16 09:09AM | 0 recs
Re: This is disingenious

Yeah, I really could careless what you think.

by bruh3 2009-03-16 11:34AM | 0 recs
OK, BRUH, I said I would get back from someone

Who actually studies this stuff at the SCOTUS level, because we KNOW you are doing your usual trying to shift the question at hand...

But, the questions is not IF congress Can PASS that bill,  but if it stands up in court.

Now, We are ALL just speculating.

The difference is, he teaches course in the SCOTUS, so just maybe he knows more then you or I:

Ok, here's my first hit back from a REAL lawyer:

A friend, who works for OYEZ, and is an actual constitutional guy...

1) The Commerce Clause allows the federal govt to regulate interstate commerce, and I don't think that clause could be (or has been) used to impair contracts in any case like this.

2) There's a Contract Clause, but it applies to the states, not the federal govt.  So if Congress passed a law that somehow invalidated AIG employment contracts, I don't think either the Commerce Clause or the Contract Clause could stop them.  The most likely ways to stop Congress would be the 5th Amendment, claiming a Due Process violation, or maybe the 14th, claiming an Equal Protection violation.

Since the 1930's, the Court has moved away from the notion that contracts are sacred.  For example, they allowed states to pass laws that modified loans, in order to prevent mass foreclosures.  That was in almost direct contradiction to the Contract Clause, but the Court allowed the states to do it anyway, provided the laws in question passed a balancing test, where any interference with the contractual rights was sufficiently limited, and the government's interest was sufficiently great.

Here, I'm sure lawyers for the AIG employees could and would make strong due process, takings clause, and equal protection arguments.  The challenge for the government would be to pass a similar balancing test, and show that there would be significant national harm if these payments weren't blocked.

I'm not sure how the govt shows that harm.  These payments are certainly irritating, but harmful?    They also seem stupid -- what kind of employment agreement doles out fat bonuses when either the company and/or its employee have performed poorly?

But claiming AIG was stupid is not going to sway the SCOTUS as currenly made up to uphold this law if Congress passes it.

Also, more to the point, that kind of bill doesn't get through Congress is my take.

The will of the Senate, to give Congress power to go into the bowels of a US corporation and set this kind of precedent, in spite of their bluster in response to angry calls from their consituants is going to be lacking. They will fume and storm but they know, that kind of a bill probably doesn't get out of committee. They are covering their butts with the public.

It sounds like the States, i.e. Como in NY is trying to see if the payments are fraudulent, and that has actually more potential traction. The states are more likely to want to regulate commerce in these cases, in order to protect the consumer, i.e in this case, the share-holders.

To recap, I think you're right -- SCOTUS would not permit this kind of action, but not because Congress doesn't have the power. Congress does have the power; but only if they could show an urgent national concern that clearly outweighs usual due process or "takings" concerns -- I doubt they could here.

by WashStateBlue 2009-03-16 10:28AM | 0 recs
Re: OK, BRUH, I said I would get back from someone

To recap- try this with someone who does not understand you are bs'ing.

by bruh3 2009-03-16 11:36AM | 0 recs
Re: OK, BRUH, I said I would get back from someone

and more legal analysis from people who are actually publically known to be lawyers versus your "friends" essentially saying what I said:

http://www.talkleft.com/story/2009/3/16/ 145821/666

by bruh3 2009-03-16 11:47AM | 0 recs
They are agreeing with ME!

So what can the federal government do here? With respect to these particular bonuses, my own view is very little. The government, it is true, is an 80% shareholder of AIG and could , one assumes replace management almost immediately and stop the bonuses. But it looks like the legal case for paying them is strong. Short of forcing AIG into liquidation, I am not sure what legal recourse there is here.

Where does that agree with you or contradict what I am saying.

The Federal Government is handcuffed here.

Congress CAN try something, but again, it will lose in Scotus.

So far, I am looking for someone you can link with a legal argument that the Feds can stop this?

Como, at the state level has the best shot, period.

by WashStateBlue 2009-03-16 12:10PM | 0 recs
Re: They are agreeing with ME!

Did you read the entire post? Do you understand what I wrote before? I continue to question your understanding of my point about renegotiating the contracts based on leverage.

by bruh3 2009-03-16 12:47PM | 0 recs

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