Senator Ron Wyden says that the furor surrounding AIG’s bonus payments could have been avoided had the Obama White House and members of Congress simply backed legislation that he and Sen. Olympia Snowe introduced more than a month ago.
In an interview with the Huffington Post, the Oregon Democrat noted that during the crafting of the stimulus package, he and his Republican colleague from Maine introduced a provision that would have forced bailout recipients to cap their bonuses at $100,000. Any amount paid above that would have been taxed at 35 percent. The language made it through the Senate, but during conference committee with the House, it was inexplicably removed.
“The reality is, had that legislation been passed it would have been a very strong disincentive to anybody paying out bonuses in the future,” said Wyden. “Earlier, the President had denounced those bonuses that came at the end of the year. And when Senator Snowe and I said it is not enough for those in elected office to say it was wrong, that they have got to have a plan to have them pay it back, we were able to get legislation through the United States Senate. Not a single United States Senator was willing in broad daylight to stand up and oppose our bipartisan amendment… but it died in conference.”
Looking back, Wyden still laments the missed opportunity, saying that it remains unclear who got the language stripped — “it didn’t die by osmosis…”
“I will say that I talked to most of the key members of the Obama team and I was not able to convince them of the value of the amendment that I authored with Senator Snowe,” he recalled. “I think it is unfortunate. I think it was an opportunity to send a careful, well-targeted message, which would have communicated how strongly the administration felt about blocking these excessive bonuses. I wasn’t able to convince them.”
So, any proof in print, yet – who removed the amendment?
I guess I don’t understand how this would be a deterrent. how is taxing anything over $100,000 at 35% going to deter someone from taking a $1 million dollar or higher bonus? don’t you still end up with a whole lot more money than most of the rest of us who didn’t wreck the economy make in 2 or 3 or 5 years?
It misses the point. The point is “Why does an employee who ran AIG in to the ground, and not even there anymore, get anything at all?”
Who was in the conference committee?
More important was the amendment that said that all bonus plans put in place before Feb 11, 2009 were sacrosanct. Chris Dodd stands accused of putting that one in there.
And who stripped out the provision from the stimulus bill that E-Verify was to be used to keep illegal immigrants from getting jobs under the bill?
# 2 Ron Larson said, “It misses the point. The point is “Why does an employee who ran AIG in to the ground, and not even there anymore, get anything at all?””
Because of a legally enforceable, mutually agreed upon civil contract.
Again, the provision that Dodd or whoever slipped into the stimulus bill:
The prohibition required under clause (i) shall not be construed to prohibit any bonus payment required to be paid pursuant to a written employment contract executed on or before February 11, 2009, as such valid employment contracts are determined by the Secretary or the designee of the Secretary.
Well the whole stimulus bill is unconstitutional thanks to Rep Clyburn, and if there is no severability claus, then the whole stimulus is thrown out and this provision is also eliminated.
Not to defend AIG, but they’re a huge company with many divisions. Some divisions are doing well, but the derivative insurance group is the one causing all the trouble. If my division did well with ethical and reasonable business practices, should I be punished?
#8, but what if the bonuses are to employees in the same division that caused all the problems?
#6 The UAW had contracts too. How come when it’s a blue collar worker a contract can be altered but when it’s a stock trader it’s locked in place?
#8, Now, now, now – You are starting to sound like a Libertarian.
Personally, I think they deserve whatever they get. You take money from someone, they become boss. AIG might as well bend over.
# 10 stopher2475 said, “How come when it’s a blue collar worker a contract can be altered but when it’s a stock trader it’s locked in place?”
They can’t be unilaterally altered. What are you talking about?
MikeN…uhh, is that supposed to be a trick question?
#10 My understanding is that the UAW is in negotiations with the auto companies about their contracts. The only way I know of for the auto companies to unilaterally break the UAW contracts is to declare bankruptcy and ask the courts to break the contracts.
This would’ve been nearly pointless. Anyone making over $150k is already taxed at 33%, and anyone making over $350 is taxed at 35%. If your bonus itself is $100k or more you are probably already in the top tax bracket.
Unless they mean they are going to tax it twice.
MikeN, interesting that you bring up constitutionality while we have members of Congress now talking about targeting individuals with a new tax, to be enacted after the fact, to recoup the money.
# 10 stopher2475 said, “How come when it’s a blue collar worker a contract can be altered but when it’s a stock trader it’s locked in place?”
They can’t be unilaterally altered. What are you talking about?
I’m not talking unilaterally but why aren’t AIG executives held to the expectation to “come to the table” that other industries are. I just think there’s a double standard being applied here.
More on “The sanctity of AIG’s contracts”:
http://www.salon.com/opinion/greenwald/2009/03/16/aig/index.html
#16–SL–very good point, and I agree. I think the tax as described is an illegal taking.
Now—I think I would do it anyway and make the crooks sue me. That assumes the bonus receivers are even Americans and not Brits.
This really highlights the gap between “justice” and “the law.” Or am I just a frustrated oligarch of one?
#13, no I’ve read that the bonuses are to employees in the problem division, bot other divisions.
#10, the union contracts are helping to bankrupt the autoworkers. Giving out retention bonuses helps to keep valuable employees that keep the company from going bankrupt.
# 16 Sea Lawyer said, “MikeN, interesting that you bring up constitutionality ”
Wasn’t there some recent proposal to give voting House seats to non-states? Probably got rolled into a spending bill. Who needs the Constitution anyway?
Yea, and Obama supports the house seat for DC bill idea as well. He’s supposed to be a constitutional law professor.
# 22 MikeN said, “Yea, and Obama supports the house seat for DC bill idea as well. He’s supposed to be a constitutional law professor.”
Figures. Already to violate his oath of office. What a scumbag.
I have never seen such a bunch of uniformed nitwits.
a) the bonuses were to the same division that created the problem – they are based in London.
b) if the government didn’t give AIG money they would have gone bankrupt and all the contracts would have been void anyway, so everything should be in play.
c) Dodd had nothing to do with this and is being scapegoated by the whitehouse. See Glenn Greenwald’s comments on this.
d) Finally, the Senate is known to be the greater corporate whore, as also evidenced by pulling the e-verify clauses in conf. as well.
So who put in the billions in earmarks? Obama said that was small potatoes and not worth worrying about, but this is? Both are taxpayer money. Why does AIG money get all the hate?
Jon Stewart was right when he told Jimmy Carter
‘you’re responsible for everything.’
Carter’s Community Reinvestment Act paved the way for these bank failures by pressuring them to lend to poor people.
http://boston.bizjournals.com/boston/stories/2009/03/16/story3.html
#26, Here’s my favorite (ironic) part:
The problem, according to FDIC data, was that from late 2003 through mid-2008, East Bridgewater Savings made an average of 28 cents in loans for every dollar in deposit — a sharp contrast to the 90 percent average loan-to-deposit ratio among similar banks, the paper reported.
http://tinyurl.com/cqvkzv
Everyone has been talking about greed causing the current crisis. Yet here is a bank that is not greedy, taking around 1/3 what other banks accept, and they are punished for it.
Lyin’ Mike,
You have to be the most misinformed ijit out there. Whatever your ditto head leader offers up you swallow.
Where in the Constitution does it state that Washington DC is not entitled to have a voting member? Why should they be less American then everyone else.
How valuable are these employees if they drove the company into the ground? Most people would rather they be fired.
The CRA forced the banks to stop prejudicial lending where loans were denied because of a person’s race, NOT their ability to repay the loan.
For those of you that have worked OVER time.
HOW many of you GOT the overtime..and not paid it INTO TAX??
Working over time, LESS than 8 hours, sends ALL your over time to TAX.. As you hit a higher tax frame. After 8 hours, its nice money.
When these guys SIGNED the contract for the money, I would of made it SO HARSH, that signing was the last thing they wanted to do.
ALL the regulations that had been deropped in the last 20 years, WOULD RETURN..
This is like ASKING your father(after you have left home) for money..AFTEr he taught you haw to SAVE, and use your money.. He is going to SIT you down, find OUT what you DID, lecture you ON WHAT YOU DID WRONG..
The whole furor over bonuses is stupid. AIG is contractually obligated to pay them. They owe those bonuses just as much as they owe rent, electricity bills, or anything else they have committed to pay.
Some of the people getting the bonuses are no doubt “part of the problem” but that has nothing to do with anything.
If we want our economy to prosper, the very LAST thing we should do is go around voiding contracts because it’s red meat to the hoi polloi.
Same for the mortgage cramdown provision – how much more @#$%@ stupid a move could we POSSIBLY THINK OF than to stick mortgage providers with a new form of uncertainty.
It is so breathtakingly stupid and counterproductive it’s almost enough to make me start formulating conspiracy theories.