Tweet This Weeks Cause De'Jour
Like any restaurant will do, our leaders in Washington will find some populist cause that they believe will appeal to the people on Main Street, and focus on it ad nauseum, almost as a smoke screen designed to take our minds off of the real crisis at hand.
Cause Célèbre: Bonuses paid to the executives at AIG
- Is it wrong that the very employees that created the products that helped to sink the firm are now being rewarded with large bonuses? Absolutely.
- Are there contracts in place that mandate that they be paid? Yes.
- Are there possibly laws that can be used to challenge these bonuses? Yes.
- Is the amount of the bonus pool a relative drop in the bucket compared to the amount of money that has been thrown into the black hole that is AIG. Yes.
- And now for the final and most important question: Is Washington incredibly opportunistic, hypocritical and bombastic? Oh Yeah!!!
No surprise there, but every time it happens and Chuck Schumer races to the cameras it is enough to drive you wild. Or at least me.
Was I the only one that thought that Barney Frank should take his own advice when he said:
"House Financial Services Committee Chairman Barney Frank, D-Mass., also was angered by the AIG payouts, according to news reports. Appearing on NBC’s “Today” show, he said the payments amounted to “rewarding incompetence.”
“These people may have a right to their bonuses,” Mr. Frank reportedly said. “They don’t have a right to their jobs forever.” (Investment News)
How about the clip below that has Senator Grassley calling for executive suicide.
With all of the politicians calling for executive heads, is it possible that they are in some way sharing in blame? These are excerpts from an article that would seem to suggest they are, although their indignation is always saved for others.
...In fact, it was a law approved by Congress in 2000 that allowed companies to place tens of trillions of dollars of these risky credit default swap bets...
...But strong opposition to the proposal from then-Fed Chairman Alan Greenspan and senior Clinton administration officials sank the idea. On Dec. 21, 2000, President Clinton signed into law the Commodity Futures Modernization Act, which further eased restrictions on derivatives like credit default swaps...
...“For at least 150 years, these sorts of gambling contracts were unenforceable if they weren’t traded on an exchange,” said Stout, the UCLA professor. “We eliminated 150 years of insurance regulation and derivatives regulation all in the name of rocket science and financial engineering..." (MSNBC)
Finally, what did Tim Geithner know and when did he know it?