Economic Credibility Gap: Obama Defies His Own Economic Team, Demands Move to Block AIG Bonuses

by: David Sirota

Mon Mar 16, 2009 at 13:10


Wall Street and Washington insiders like Larry Summers and Tim Geithner have spent the last few weeks telling America there's supposedly nothing that can be done to stop bailed out banks from using our taxpayer money to subsidize executive bonuses. As the New York Times reported this morning, Summers specifically "suggested that there was little if anything the government could do to stop [AIG's bonuses], seconding the conclusion of Treasury Secretary Timothy F. Geithner." Now, President Obama has publicly contradicted them, signaling a major schism in the new administration:

Obama Orders Treasury Chief to Try to Block A.I.G. Bonuses

By HELENE COOPER
Published: March 16, 2009

WASHINGTON - President Obama vowed to try to stop the faltering insurance giant American International Group from paying out hundreds of millions of dollars in bonuses to executives, as the administration scrambled to avert a populist backlash against banks and Wall Street that could complicate Mr. Obama's economic recovery agenda.

The differing messages from the Obama administration suggests the potential for a major economic credibility gap whereby lower-tier functionaries like Summers and Geithner are saying one thing while the president is saying something entirely different. It raises a very serious question: Who is in charge - the president or the Washington and Wall Street insiders he put around himself?

I don't think we really have an answer.* Though it is certainly good news that the president is taking the more rational and populist line in this divide, it's a huge problem that he's allowing people to speak for his administration who seem to be directly undermining his wishes - in this case, his wishes to stop banks and insurance companies from ripping off taxpayers. That's not "team of rivals" - that's the Team of Zombies creating mixed messages, which reinforce the idea that this administration still refuses to answer the fundamental question: Which friggin' side are you on?

*By the way, I once thought this all might be a super secret pony plan whereby Obama is good cop and Summers/Geithner are bad cop/stupid cop. Now, I don't think that at all. When the Summers/Geithner insist that nothing can be done, and Obama insists that they better do something, that's not good or smart messaging, and therefore likely not pre-planned strategy - it's just having no message at all, and that's bad.

David Sirota :: Economic Credibility Gap: Obama Defies His Own Economic Team, Demands Move to Block AIG Bonuses

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Economic Credibility Gap: Obama Defies His Own Economic Team, Demands Move to Block AIG Bonuses | 69 comments
Geithner's on the ropes (4.00 / 3)
I see absolutely no downside to ratcheting up the pressure on him, and a large upside if it ends with his resignation.

Ask your representatives to demand his replacement. I would suggest Thomas Hoenig as a worthy replacement: http://krugman.blogs.nytimes.c...

It may not result in getting rid of Geithner, but remember: the first rule in negotiation is to ask for what you want, not for what you think is feasible.

And with Geithner being overruled from above (Obama), undermined from below (Hoenig is the President of the Federal Reserve Bank of Kansas), and attacked from the side by Congress, there is a real chance of at least severely restricting his influence over Obama's policy.

Summers too (4.00 / 8)
Summers is the real Grima Wormtongue here. Geithner is a hapless dope by comparison.

These guys are just such a disaster.

Conduct your own interview of Sarah Palin!

[ Parent ]
This has always been the problem (4.00 / 3)
with Obama surrounding himself with creatures of Wall St like Summers and Geithner. We already heard about a rift within the administration regarding the financial crisis and dealing with the banks. Obama's close advisors like Axelrod were in favor of nationalizing the banks but Geithner basically pleaded and ended up having his way. It's a problem, and hopefully Obama starts noticing that he needs to be more assertive on this front.  
Nationalizing (4.00 / 1)
I mostly agree with this, but have two points.

1) Geithner is the guy who would have to handle the nationalization.  Any manager would hesitate to take an action when the person responsible for implementing the action is against it, explaining all the difficulties and why it might not work out so well.

2) The stress tests are still running.  It makes some sense to figure out exactly what shape each institution is in before nationalizing the bad ones.

Personally, I still expect some nationalizing to occur and all Geithner has done is delay the inevitable.

----

Some have suggested taking receivership of all the major banks at the same time, stopping stock trades on those companies and then analyzing each over a period of weeks or so.  In such a scenario, some of the banks might just be recapitalized a bit and released back into the wild.  Others would go through full bankruptcy type proceedings, wiping out shareholders, replacing management and so on.

That certainly sounds like the best choice to me.

[ Parent ]
There is some trepidation, for sure. (4.00 / 2)
It seems to be a daunting task to "take over" these gigantic financial institutions.  But the idea, if I understand it correctly, is to break off the good parts of the banks from the bad parts (bad = what used to be, pre-deregulation, the investment banks.  I think the old commercial banking sections are okay.  So, a financial rescue team needs to be in place to take over management of only the bad divisions, evaluate what is there, and reorganize it to provide a sound economic service, again.

Since deregulation, these entities have grown very large through acquisition and merger.  I think this is by design, since the goal of the "free marketers" is to create a world feudal society.  I'm not saying it would easy, but it is not as enormous as the insiders would have us believe.  Besides, it is vital to democracy to undo these monopolies and return to a regulated market economy.

With respect to the stress tests, I suspect this is just more of the smoke screen to allow the continued concentration of wealth.  Robert Oak has an interesting post at EP which suggests that the banks already know whether they are solvent or not.  Watch the push for changing accounting rules which is currently in its early stages.  This is the magic of making insolvency look like solvency.  And of course, the games should go on!!

"We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can't have both." - SCOTUS Justice Louis Brandeis

[ Parent ]
basically obama is bs IMO (3.20 / 5)
like you point out David, he's the one that appointed summers ... who appears to be geithner's cheney and also  geithner, orszag, furman and all the other rubinites that were connected to this whole deregulation pro-wall street sell-out "ethos" that led to this mess.  So, c'mon, the top student in his class at law school at harvard doesn't understand the nature of these people when we do?  That's absurd.  Of course, we got the obama song-and-dance and stern talk that will likely lead to absolutely nothing.  How the hell are they going to get the money back anyway?  I'd imagine almost everyone of these invaluable traders cashed their checks.

The theatre of the absurd's leading role was played by summers this past Sunday where he professes outrage, blames the lack of governmental oversight on the whole mess, says nothing can be done becoz these were legal contracts and then blathers about the rule of law. that piece of garbage summers played a very active role in the deregulation that led to this mess ... with the leading role in that fiasco being the democrat's party economic hero robber rubin who was a lead economic advisor to the obama campaign ... and then him and Giethner played an active role in making sure that none of the limits on bonuses for these companies were retroactive actually hectoring Dodd on wall street's behalf. and don't even get me started at the absurdity of a representative of mr. hope/mr. retroactive immunity for the telcoms/mr. "let's just move along and forget about past war crimes" talking about the sanctity of the rule of law. it's obvious to this graduate of harvard law school the rule of law is one that is only to be used AGAINST the citizens and FOR his big campaign contributors and plutocrat pals exemplified by the dichotomy of the aig and uaw situations.

remember this:  who appointed these people to his economic team that have represented wall street interests their entire life?  that is the one that is ultimately responsible for this aig bonus bs.

Z  

Ben Nelson in Harold Ford Jr.'s body (4.00 / 3)
whose schtick has been Red + Blue = Purple, can't we all just get along.

No we can't, Barack.

America was the one place where the people had the aristocrats by the balls... and we let them get away.

[ Parent ]
and when you talk about the wall street interests that obama invited ... (4.00 / 2)
... to infest his cabinet, don't forget his chief of staff emanuel.

Z

re (0.00 / 0)
Wall Street and Washington insiders like Larry Summers and Tim Geithner have spent the last few weeks telling America there's supposedly nothing that can be done to stop bailed out banks from using our taxpayer money to subsidize executive bonuses. As the New York Times reported this morning, Summers specifically "suggested that there was little if anything the government could do to stop [AIG's bonuses], seconding the conclusion of Treasury Secretary Timothy F. Geithner."

common, that's a load of crap for summers/geithner to say

how much is the total bonus? say 100 million?

levy a tax in that amount

Dear goodness, calm down (0.00 / 0)
Obama, like FDR and Lincoln, enjoys having people around who disagree with him. There's nothing wrong here (about the disagreement). And Obama once again comes down on the right side.
Uh, no (4.00 / 6)
When one branch of an administration tells the public "nothing can be done" and another branch of that administration says something can be done, that's not a "team of rivals" - that's straight-up mixed messages that reinforces the idea that this administration hasn't answered the fundamental question: Which friggin' side are you on?
[ Parent ]
No, it isn't (0.00 / 0)
Almost ever legal expert I've talked to in the past 24 hours agrees with Geither and Summers that nothing can be done. I don't expect the President to come out and tell the public that...I expect him to say "We'll find something" and then look for some creative way to go around the law (i.e. Pelosi's tax idea).

It's more than likely whatever he does will end up in court with the government losing and having to pay the bonuses anyway.

But on the face of it, nothing can immediately be done. The message coming out of the White House can be spun however you want to spin it...you can say it's mixed, or someone else can say it's "Nothing can immediately be done, but we're looking at any available options"

[ Parent ]
re: nothing can be done (4.00 / 1)
can't they levy a tax equal to the bonus amount on AIG?
[ Parent ]
Probably not constitutionally (0.00 / 0)
but they can do it, take the money and then let it get sort out on court. The courts will probably say that's an unfair tax.

One way or another, this will end up in court, unless AIG's employees willingly allow the government to take their bonuses away. There are some arguments the government can make on their behalf. They could try to argue that the bonuses are "unreasonable" under the legal precedence of Gordy Tire vs. United States, but that doesn't take into account the fact the contracts were agreed to before the economic crisis and this couldn't be considered "unreasonable" at that time.

Most of the people I spoke to think it's nearly impossible for the government to if it goes to court, but maybe that would be the better political solution...even though it'll cost taxpayers more money.  

[ Parent ]
so the difference with UAW is that UAW agreed to have their contract altered? (0.00 / 0)

[ Parent ]
yeah (0.00 / 0)
Well also because the UAW had more to lose. The UAW could have said no, but they don't have the leverage with the government AIG has.

Allowing GM to fail would have hurt the UAW more then the country as a whole, but allowing AIG would completely have caused a worldwide depression. AIG execs knows this and is able to dick us around because of it. They don't care about the economy or their companies. UAW cares about the industry and the economy.


[ Parent ]
Why and how... (0.00 / 0)
...would letting AIG fail cause a worldwide depression?
[ Parent ]
AIG is the largest insurance company in the world (0.00 / 0)
with millions of customers. If they fail, hundreds of banks would fail one by one around the world, among other institutions and pension funds. Tens of Millions of people would immediately lose thier jobs, their pensions, their savings.

Another example, if you have AIG life insurance, your life insurance disappears. Your car insurance disappears. Your home insurance disappears. AIG operates under many different names too so many of us are customers of AIG and may not know it.

The problem IS that AIG is too big to fail and because we spent the last 40 years undoing regulations that were supposed to prevent that from happening, we have to deal with those consequences today. Rememner Lehman Brothers? Imagine that x 100, that's what would happen if AIG fails. A lot of companies rely on the survival of AIG.

AIG has a lot more power than our government.  

[ Parent ]
Bullshit (0.00 / 0)
If banks fail, then FDIC kicks in to cover deposits up to $250,000 (not bad). If people lose their life, home, or car insurance, big deal. They can go to another insurer. The idea that AIG is too big to fail has ONLY to do with it being too big to fail for those who have millions to lose. That's not anyone I know. It's probably not anyone you know. It's probably very few people. And, if they're all we're worried about, let AIG go down.

No offense. Thanks for attempting to explain. But your explanation is the same crappy explanation that's been given now for months and all it adds up to is that rich people are worried about losing their personal wealth. Well, there's not enough of them that I feel we need to be so concerned. Fuck 'em. Let AIG burn.

[ Parent ]
That's complete bullshit (0.00 / 0)
AIG has almost a monopoly on the insurance industry. It's not as simple as you make it out to be. Even the most progressive economists admitted to that what you said was wrong. Rich people aren't the only ones who would be effected by AIG failing, that's wrong...actually they probably wouldn't be hurt much at all.  
[ Parent ]
thanks (0.00 / 0)

[ Parent ]
BS (4.00 / 6)
Under bankruptcy protection, these bonus commitments would receive precious low priority in terms of paying off the companies creditors.

It might be the case that doing something about it would require a revision to the charade of AIG being an independent company rather than an insolvent ward of state.

But bankruptcy is the model that should be used for dealing with AIG right now, and under bankruptcy these bonuses would have very little chance of being payed.

[ Parent ]
It's really that simple (4.00 / 4)
AIG is a ward of the state right now, at least the Financial Products part. The fact that they're insolvent means that they won't be able to deal with some of their contracts. The idea that the entity keeping them afloat (the taxpayer) has no say in which contracts are first in line is a fucking joke.

Conduct your own interview of Sarah Palin!
[ Parent ]
We they would have to file for bankrupcy first (0.00 / 0)
legally, we can't "act like" they're in bankrupcy.
[ Parent ]
Not really (4.00 / 1)
Did GM have to file for bankruptcy before being forced to renegotiate their contracts?

Conduct your own interview of Sarah Palin!
[ Parent ]
No, but they could have fought it (2.00 / 2)
If AIG execs agree not to take the bonuses, then there's no problem. GM agreed to the provisions. The big reason is GM doesn't have the leverage AIG has.

Essentially AIG's rationale is "give us what they want or watch the economy go into depression." We can all pretend like that's not true, but it is.

[ Parent ]
Hmmm (4.00 / 2)
Whatever happened to "we don't negotiate with terrorists"?

Conduct your own interview of Sarah Palin!
[ Parent ]
Well that only depends (2.67 / 3)
on how much damage the terrorists can do.

Let's face it, if the terrorists were dangling a hydrogen bomb over New York City, we'd negotiate with them, but when they're only threat is the off chance they can get a bomb into a subway, well, fuck them.

If you want to liken businesses to terrorists; AIG is dangling an H-bomb over NYC.  

[ Parent ]
Oh, stop (0.00 / 1)
You don't know what the fuck you're talking about.
[ Parent ]
yes he does (0.00 / 0)

[ Parent ]
Uprated by HR abuse (0.00 / 0)
Neal, wtf is your problem?  
[ Parent ]
here's an idea... (0.00 / 0)
why not just tell the american public the truth!!!

why not explain who contract law 101 works in america.  that if you have a contract between two parties then that contract should be honored under our american system of justice.  The media tells the public that AIG just paid out 165 million in bonuses with taxpayer money but they don't go on to explain that there are contracts behind these payouts as a source of income for many of the recipients who are on some sort of commission based pay structure.  

Should the government go in there and void someone's contract?  that's not a question for me to answer, however, it does go against every legal pricipal this country was founded on.  The government can't just pick and choose what contract to void and which one they should honor.  Just think what would happend if our citizens decided to do the same.

this is nothing more than a dog and pony show by the administration.  these contract are perfectly legal and should be paid out.  if they had any brains, they should have stipulated as a condition of receiving any bonuses, each recepients name and contract would be submitted to the treasury department for verification.

[ Parent ]
Like it or not (4.00 / 1)
the government does it all the time. Granted, it's usually the Judicial rather than Executive branch doing the picking and choosing, but that's exactly what bankruptcy protection is designed to do - choose which of an insolvent company's creditors get paid and at what rate.
[ Parent ]
That is correct (0.00 / 0)
but usually, the first ones to get paid are the employees.  

they should have pre-conditioned any salary or bonus structure in similar fashion to the pre-condition of the UAW and GM/Chrysler.  

Not sure why this didn't happen.

[ Parent ]
lol (0.00 / 0)
explain contract law to America...oh yeah, that'll work.

President Obama can stand there and give a lecture on contract law and the only thing that will be flashing on every TV screen and Newspaper in the country is "President says he's powerless against AIG." and endless roundtable discussions about him being weak or indebt to corporate interests.

I would imagine Sirota and Bowers would be writing diary after diary about that.

No, he's going to try something illegal to satsify the public interest and then lose in court, end up paying the bonuses anyway, but at least he can argue he tried.  

[ Parent ]
Clap louder? (0.00 / 0)

[ Parent ]
the non-wall street team of rival (4.00 / 3)
and where are the non-wall street economic "team of rivals" seated at the table?  Well, it is a team of rival actually and that is team volcker who has been relegated to a windowless office in the far corner of the administration and whose invite to the table always is perpetually "in the mail" ... according to larry summers.

Z

[ Parent ]
If AIG has to give back bonuses (0.00 / 0)
Scumbag Congress should have to give back 9 billion in earmarks.

Too bad Obama didn't "DEFY" Congress on that.

If Obama is going to be more (4.00 / 3)
than just the latest in a long line of liar-politicians (we will still be heavily in Iraq in 2011...) then he has to "Crash the Gates", not be the friend of Versailles.

There is a gap forming, not just between what Obama promised and what he can deliver, or between him and The Establishment, but between what Obama knows he must do and what he does.

and although I'm just a citizen and obama does not open up to me ... (2.67 / 3)
... on these matters, I can still use my brain and figure out what was likely the main reason that obama appointed these rubinites after their obviously failed policies led to the mess that they are now supposedly trying to dig us out of:  because their ties to wall street will likely help continue funneling dollars to obama's reelection campaign and the democrat party in general from wall street.

Z

"try" is nowhere near good or strong enough -- this is a crock -- (4.00 / 3)
if he really wanted the money back or the bonuses stopped, telling staff "to try" is less than the very least he could do -- it's actually not doing anything, in fact.
and it's not the bonuses, but the actual money we're feeding all these corps -- (4.00 / 1)
bonuses are just a distraction the administration is all too willing to exploit while the trillions keep flowing to companies that should not be getting any of it.
[ Parent ]
Wow! another Obama hate fest at Open Left (4.00 / 1)
Somehow I'm not surprised.  Even when he does what you guys want, it's just somehow not quite pure enough

Now it's time for someone to say that I blindly follow "Dear Leader" and for another (perhaps the same poster) to tell me to stay off this blog.

you'll be surprised what you can see when your head ... (0.00 / 1)
... is not lost up a donkey's or an elephant's ass.

That is just a general comment ... I don't know you, maybe you are not that way.

Z

[ Parent ]
Must we go through this again? (4.00 / 1)
So you think the strategy of having two public officials say one thing and obama himself saying another while simultaneously failing to prepare for such a contingency is a good strategy? Then say so. Or, you can attack people for having different opinions then your own. It appears that you are the hater here, not OL.  
[ Parent ]
Obama's fucking up (0.00 / 0)
Hard to admit, but he begins to appear clueless on this. Hundreds of billions to the very companies that have caused a global recession. Hundreds of millions in bonuses to the people who work for these companies? Hard to defend.

He gives good speech. Does he have convictions? Courage to fight for them? He's got a long way to go to prove it if he does.

[ Parent ]
it is all about headlines for obama (4.00 / 1)
obama fights back against the bonuses ... but it is too late to do much about them, obama no longer uses the term enemy combatants ... but keeps the same policies with dealing with the now non-enemy combatants, obama is against signing statements ... but he uses them days later, obama is for the rule of law ... unless it has to do with the telecoms or the part illegalities of the bush administration ..........

Z

Obama worries about a populist backlash. (4.00 / 3)
What a surprise that his team of corporate hacks (Corporate Tim, Corporate Larry) have followed corporate policies that disgust everyone. If Obama had taken his tongue out of AIG's backside long enough and looked around perhaps he might notice that a lot of Americans are appalled by the corporate policies and excesses and  his  bailout of  the rich arrogant criminal  class that Geithner and Summers represent.
Its not bad messaging. (4.00 / 1)
When the Summers/Geithner insist that nothing can be done, and Obama insists that they better do something, that's not good or smart messaging, and therefore likely not pre-planned strategy - it's just having no message at all, and that's bad.

Nopw Obama can say, I tried it with these middle muddle of the roaders, I have been "centrist what ever that means" and now I want something better. This allows him to step out from the pack of this part of his Cabinate and say, maybe we ned something better than this, I am personally on your side, I agree with you.

In terms of Obama being so far in front of even his team that everything happens only as planned, well you are right, but thats not what we'ed expect from any other merely mortal Presdient. I think people wnat a President that tries the expected, or known cures first, then makes corrections if necessary. He didnt run on the collapse of the economy, but he is doing what he needs to do. Thinking acting on his feet.

I am glad he is doing this. I hope he does it more.

--

The government has a defect: it's potentially democratic. Corporations have no defect: they're pure tyrannies. -Chomsky

Let's hear Labor (0.00 / 0)
I hope we get to hear from Labor folks about this in the form of "bloody murder" type screaming. The government managed to predicate the auto bailout on renegotiating UAW contracts. Money was basically taken out of the pockets of blue-collar auto workers to pay for bonuses at AIG.

Conduct your own interview of Sarah Palin!
I fail to see (0.00 / 1)
how you can distiguish from taxpayer dollar going to keep UAW jobs and taxpayer dollars going to pay legally contractual bonuses.  

Yes, they make differnet amounts however, these are the jobs they are in.  And the fact is that they really bailed each other out.  Both the auto maker and the AIG employee pay taxes and at much different rates I would imagine.  Those same taxes are going back into the economy.  So, if an AIG employee made a 500K bonuses, you should have some comfort in knowing that they will be taxed at 35% which will go to pay for part of the UAW bailout.  

Whats the issue?

[ Parent ]
Double standard (4.00 / 3)
The UAW had to renegotiate their compensation, the AIG execs did not. The UAW had to take a haircut, but the knuckleheads selling the default swaps that created this mess get BONUSES.

Conduct your own interview of Sarah Palin!
[ Parent ]
I'm going to be hopeful that 'the buck just stopped' (4.00 / 1)

Obama is posturing (4.00 / 3)
nothing but words.
and Obama's own words undercut all justification for giving AIG anything at all -- "in financial distress due to recklessness and greed." (4.00 / 1)
that's what he said --- so why the hell are we giving them billions to begin with?
[ Parent ]
"pursue every single legal avenue", but "the administration is not looking to take A.I.G. to court" (4.00 / 1)
this is entirely bs.

... "In the last six months, A.I.G. has received substantial sums from the U.S. Treasury," Mr. Obama said. He added that he had asked Treasury Secretary Timothy F. Geithner "to use that leverage and pursue every single legal avenue to block these bonuses and make the American taxpayers whole," The New York Times's Helene Cooper reports from Washington. ...

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.

...

-- http://dealbook.blogs.nytimes....
Well considering (0.00 / 0)
the cost of taking them to court and losing would be more than paying the bonuses, I'm not sure why this is such a bad thing.

Basically what you're saying is the administration doesn't want to break the law?  

[ Parent ]
You think... (4.00 / 2)
...legal action against AIGFP would turn up no illegal activity? Your premise seems to be that AIGFP is pure when it's apparent that their operation over the past many years was corrupt. They were not just reckless and greedy, their activity may yet sink the global economy. Yet you defend this as if this was all just ordinary; a status quo. It's not. It's an extraordinary circumstance where millions of US taxpayer dollars are on the line for the bonuses; hundreds of billions for the total bailout. AIG wouldn't have a leg to stand on in any court where it tried to appeal a ruling against it.
[ Parent ]
What did they do that was illegal? (0.00 / 0)
stupid, yes, but what was illegal?
[ Parent ]
Let's rescind the bonuses... (4.00 / 1)
...and we'll find out.
[ Parent ]
Cuomo apparently isn't yet convinced of this (4.00 / 2)
I'll wait to see what the final opinion of the NY Attorney General is on that point. Suffice it to say, I don't trust Geithner or Summers to have done anything more than to yell at the AIG execs and get them to repeat 10 or 20 times that their lawyers concluded the bonuses had to be paid. It is possible that the Treasury lawyers honestly went over the contracts and came to their own conclusions that these bonuses genuinely had to be paid - but if Cuomo doesn't seem to believe that, why should we?
[ Parent ]
Well all Cuomo wants is names (0.00 / 0)
I'm not sure what Cuomo plans of taking them to court over, he said he wouldn't comment on if he was seeking investigations, but it seems to me all he wants to do is get the names of those receiving bonuses so they can face public scrutiny.

Basically he's looking for AIG to name those getting the bonuses, so his office can publish them and you can read that "Joe Smith of 5 Wysteria Lane in Westport, Connecticut" is getting a bonus and those of us near Westport can do stand outside his house and make his life miserable.  

[ Parent ]
Interfere Retroactively (we did it for Telecoms!) (4.00 / 2)
If congress can retroactively immunize the Telecoms from prosecution for violating our 4th amendment rights and helping the government to spy on us, then congress can EASILY retroactively break AIG's contracts that provide obscene bonuses to the incompetent financial big shots who've devastated our economy.
 
Actually no they can't (0.00 / 0)
it doesn't work that way. The constitutional question isn't whether or not Congress can do something retroactively, it's about whether Congress and the administration can break a legal contract agreed to before the government put money into AIG. There was no legal agreement being broken when Congress gives telecoms retoractive immunity. Retroactive immunity is given by prosecutors all the time.

[ Parent ]
retroactively immunize AIG from lawsuits from the affected bonus receivers (4.00 / 1)
Done.

Not really, but surely something can be done, NFR?

[ Parent ]
Actually probably not (0.00 / 0)
the truth is it's likely Summers is right and nothing can really be done, but they sure look like they're willing to look at every possible opportunity.

There's a reason Feingold asked to administration to find "legal means" and didn't suggest any off the bat...because the obvious means aren't legal.  

[ Parent ]
Except (0.00 / 0)
On the Telecoms, the legal agreement that congress (not a prosecutor)broke was in our 4th amendment guarantee against unreasonable search and seizure and a judge may eventually nullify the retroactive immunity (at least since there wasn't a 2/3 congressional vote to change the amendment itself).
But you may very well be right about the administration's and congress's legal difficulties in retroactively breaking AIG's bonus contracts.  Maybe if the govt. scrutinizes the contract(s), finds fraud or a comma out of place, they can have it nullified.
[ Parent ]
What constitutional question? (0.00 / 0)
If a state were doing this, it would raise a problem under the Contracts Clause.  But we're talking about the federal government. The Contracts Clause does not apply.

Are you saying it violates some other constitutional provision? Which one?

Politics is the art of the possible, but that means you have to think about changing what is possible, not that you have to accept it in perpetuity.

[ Parent ]
On the Telecoms (0.00 / 0)
The constitutional question (4th Amendment) was regarding the Telecoms and retroactive immunity granted by congress.  Nothing to do with the bonuses.  I have 2 paragraphs in that reply because we were talking about congress doing something retroactive and where these actions could apply.
[ Parent ]
Economic Credibility Gap: Obama Defies His Own Economic Team, Demands Move to Block AIG Bonuses | 69 comments
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