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If it weren't for the American taxpayer bailing them out, would those bonus contracts still be honored?

KyCardinalFan wrote:

Love it.

TimeForGuinness wrote:If it weren't for the American taxpayer bailing them out, would those bonus contracts still be honored?

Without the bailout, AIG would probably be in bankruptcy, and bankruptcy laws make it pretty easy to throw out contracts. But without a bankruptcy, it seems like AIG's options to get out of the contracts would be limited.

Here's an interesting write-up on what AIG could do:
http://blogs.wsj.com/deals/2009/03/19/a ... them-back/

I'm sure these guys are scumbags, and they probably don't 'deserve' the money, but as ol' Clint would say, "deservers got nothing to do with it". We spent 8 years harping on an administration for stomping on our civil liberties... and what do some people want the new administration and/or Congress to do? Use the government to nullify legally binding private contracts without using the bankruptcy process. It may feel good, but I don't think it's Constitutional.

Now, that isn't to say that AIG can't do certain things on their own, as explained in the WSJ interview. But for whatever reason, it seems like they want to hang on to as many of these employees as they can.

maddash wrote: Use the government to nullify legally binding private contracts without using the bankruptcy process. It may feel good, but I don't think it's Constitutional.

When massive amounts of government funds are used to prevent bankruptcy, I think it makes it a special case where the government has a lot of say in the company's operations. In effect, they should become the largest shareholder in the corporation.

Popeye_Card wrote:

maddash wrote: Use the government to nullify legally binding private contracts without using the bankruptcy process. It may feel good, but I don't think it's Constitutional.

When massive amounts of government funds are used to prevent bankruptcy, I think it makes it a special case where the government has a lot of say in the company's operations. In effect, they should become the largest shareholder in the corporation.

These contracts were signed before the government took 80% share of AIG. Are people really ok with the government suspending what are apparently Constitutional laws regarding private contracts simply because they're mad? Doesn't that seem like an abuse of power?

IMO, these matters should be left to the private parties, and if need be, the court system. Let the people who are supposed to sort it out, sort it out. The Congress and/or Administration has no business in this.

maddash wrote:

Popeye_Card wrote:

maddash wrote: Use the government to nullify legally binding private contracts without using the bankruptcy process. It may feel good, but I don't think it's Constitutional.

When massive amounts of government funds are used to prevent bankruptcy, I think it makes it a special case where the government has a lot of say in the company's operations. In effect, they should become the largest shareholder in the corporation.

These contracts were signed before the government took 80% share of AIG. Are people really ok with the government suspending what are apparently Constitutional laws regarding private contracts simply because they're mad? Doesn't that seem like an abuse of power?

IMO, these matters should be left to the private parties, and if need be, the court system. Let the people who are supposed to sort it out, sort it out. The Congress and/or Administration has no business in this.

I agree. I have a visceral hatred of the notion of the government managing a private enterprise. It is just so maddening that the AIG executives are so tone-deaf right now. It is hard to fathom the world that these folks live in--and I went to B-school with a lot of these types.

maddash wrote:We spent 8 years harping on an administration for stomping on our civil liberties... and what do some people want the new administration and/or Congress to do? Use the government to nullify legally binding private contracts without using the bankruptcy process. It may feel good, but I don't think it's Constitutional.

Private contracts get broken all the time, terms are changed, etc. AIG is essentially bankrupt; it's just that that the process is not being handled through the usual means due to systemic risk to the financial system. In such a case, it makes sense to treat these contracts just as you would with a bankrupt company. Are you seriously comparing the Constitutional duty to pay off millions to derivatives traders who destroyed their own company to prohibitions against detention without charge, mass eavesdropping, etc?

NPR said that the are introducing legistlation that would tax bonuses to companies that took bailout funds (two different bills) at either 90% or 70% depending on the amount of money the company received.

Arthur Dent wrote:

maddash wrote:We spent 8 years harping on an administration for stomping on our civil liberties... and what do some people want the new administration and/or Congress to do? Use the government to nullify legally binding private contracts without using the bankruptcy process. It may feel good, but I don't think it's Constitutional.

Private contracts get broken all the time, terms are changed, etc. AIG is essentially bankrupt; it's just that that the process is not being handled through the usual means due to systemic risk to the financial system. In such a case, it makes sense to treat these contracts just as you would with a bankrupt company. Are you seriously comparing the Constitutional duty to pay off millions to derivatives traders who destroyed their own company to prohibitions against detention without charge, mass eavesdropping, etc?

I'm seriously saying that private contracts are protected in our Constitution.

maddash wrote:

Arthur Dent wrote:

maddash wrote:We spent 8 years harping on an administration for stomping on our civil liberties... and what do some people want the new administration and/or Congress to do? Use the government to nullify legally binding private contracts without using the bankruptcy process. It may feel good, but I don't think it's Constitutional.

Private contracts get broken all the time, terms are changed, etc. AIG is essentially bankrupt; it's just that that the process is not being handled through the usual means due to systemic risk to the financial system. In such a case, it makes sense to treat these contracts just as you would with a bankrupt company. Are you seriously comparing the Constitutional duty to pay off millions to derivatives traders who destroyed their own company to prohibitions against detention without charge, mass eavesdropping, etc?

I'm seriously saying that private contracts are protected in our Constitution.

Is a bankruptcy exception mentioned in the constitution? I honestly don't know......... I'm just wondering what the difference is between bankruptcy and what's being suggested here.