and Goldman Sachs.

http://www.reuters.com/article/businessNews/idUSN1548789520090316?feedType=RSS&feedName=businessNews

93 billion to European Banks but Cuomo wants to know which AIG "employees" received 165 million in funds????? Can you say "smoke and mirrors". This administration is kinda inept it seems.

Linke article doesn't concern any payments to European banks during this administration. Who are you blaming. Give em a year. then you'll have articles you can blame them for. They can't fix this problem and they will not look good whatever they do.

Which "this administration" is Cuomo a part of? Last I checked he was AG of New York State, not a federal prosecutor. Do you know what his jurisdiction is to follow what kinds of claims?

Also, if AIG is contractually obligated to pay European banks for obligations it owes them, then it's contractually obligated. And failure to pay might be what would make it go under and endanger the entire fiscal system. I don't know if that's true or not, but it might be a good idea to find out before making claims of incompetence.

This may be a bit of thread deviation. It seems that Cuomo is taking the same path to the governorship that Spitzer took -- hardass investigation and prosecution in the financial sector. He may well succeed.

Pretty funny listening to Chris Dodd rail against the $165 million bonuses for AIG when Chris Dodd authored the legislation that protected such bonuses. While the Senate was constructing the $787 billion stimulus last month, Dodd added an executive-compensation restriction to the bill. That amendment provides an
exception for contractually obligated bonuses agreed on before Feb. 11, 2009 -- which exempts the very AIG bonuses Dodd and others are now seeking to tax.
Tidy since Dodd was AIG largest recipient of campaign contributions and AIG's home office is in Dodd's state, CT. Now Congress wants to put a 91% tax on these bonuses? Something is fishy here.

First, it would be helpful to provide citations so that the sources can be verified. I found one at the NY Times.

Second, Dodd's amendment doesn't appear to me to be AIG-specific. There are good (conservative) reasons for government not to interfere with contracts already in place; who is going to work for these companies if the government can step in at any time and say "Sorry, we've decided you're not getting squat"? If government wants to set the terms going forward, that's another thing. I do think it's terrible that the folks who got us into this mess may get large sums of money. But I don't think that making the preexisting pay agreements of everyone at these large firms subject to the vagaries of the government is going to help the situation. (Also, it's important to keep in mind that the pay structure in the financial services industry is not like most jobs. Many if not most of them get most of their pay in "bonuses" instead of salary to the extent that the bonuses take the place of salary. I think that should change, and hopefully it will, but unfortunately that's the system we have now.)

Second, if Dodd tried protecting AIG because the home office is in Dodd's state, then it's an unfortunate but natural outcome of a representative trying to protect his own. If the rest of Congress wanted to shoot down the exception, it could have done so.

Third, if he did it in response to campaign contributions, then it is pretty darn unseemly. All the more reason to support public campaign financing; then we wouldn't have these problems. Campaigns can be paid for by our money or by AIG, Exxon, and ADM. Got to pick one, because no one's money is not an option.

And if he's switching sides in response to public outrage, then, well, welcome to politics 101.

Daniel's points are quite good and well stated as usual. Congress would do well to let this go -- no company is likely to make a similar move in the foreseeable future, given this raised stink. The proposed tax seems unconstitutionally ex post facto.

As outrageous as bonuses are at AIG (and they are) they are not what the congress needs to be focusing on right now. The real unresolved issue is how to sell off the parts of AIG to enable the company to get the funds to pay back the 170 Billion to the US Gov (you and me)

To date, no significant sales of AIG have been made, and I don't see any definitive plans in place to do so. Quibbling about $165 million in bonus is not going to get back $170 billion in loans, which are in serious jeopardy unless a definitive plan is in place for recovery of those funds. This is why the Federal Government is only going to screw this up even more as they have a poor lack of direction.

Don't worry the wizard of smart, Tim Geithner, is on the job! (sarcasm)

I agree that the bonuses, as ridiculous as they appear to be, are trivial compared to the main issues. However, I don't know enough to evaluate the probability of recovering whatever portion of the loans one cares to name. I never expected us taxpayers to come out even; I thought the justification was that we'd come out even further behind without the loans.

As for alicex4's comments about Dodd and AIG, Dodd was on Hardball today and was asked the very same questions that she was asking. I'll edit this post to include a link to the transcript when it becomes available.

--------------

Here's the Hardball link. Dodd is towards the end. And you can hear an NPR piece on Dodd from All Things Considered.

Personally, I'd kind of like to give them their bonuses...and then fire them all.

Any better ideas than what Geithner has done so far? Seems to me that I haven't heard anything else from most people except to let the institutions fail--and possibly, if not probably, bring the economy crashing down with it.

He's got a tremendous amount on his plate, and he's trying to negotiate the problem of avoiding politically unpalatable "nationalization" (and the problem that one nationalization could undermine confidence and lead to an otherwise unnecessary series of them) with the problem of providing enough capital so that the system doesn't collapse. Not an easy job, even for those who are brilliant, and not necessarily a situation that has a good solution no matter how bright one is.

With my admittedly limited knowledge, I haven't been happy with everything Geithner has done, but I also haven't heard very many people offering responsible alternatives.

Not that I'm an expert in this area, but more people seem to be questioning whether it's an unconstitutional Bill of Attainder. Prof. Lawrence Tribe, who is an expert (though only one of many) thinks it's probably OK.

Prof. Tribe wrote, "The fact that the individuals subject to the tax in its retroactive application would in principle be readily identifiable would not suffice to doom the tax either from a bill of attainder perspective or from a due process perspective."
He mentions nothing about the ex post facto nature of a tax on income legislated after it's earned. Cleverly written legislation can escape the attainder accusation.

Tribe says elsewhere that ex post facto laws apply only to criminal punishments. "The Ex Post Facto Clause applies exclusively to criminal punishment and poses no difficulty here. And the fact that the measure contemplated would operate retroactively as well as prospectively doesn't distinguish it from any number of tax and other financial measures that the Supreme Court has upheld over the claim that fundamental fairness precludes retroactively undoing contractual obligations."

I don't know if Tribe is right, but he's the best legal authority I've managed to find (others are welcome to google at will). Most of the discussion online is by people who don't know much about the matter. And it does seem to me that Congress can set tax rates however they want for any income earned this year, regardless of when in the year it was earned and when in the year they passed the law setting the new rates (though again I admit no expertise here). Congress has frequently allowed some tax issues to linger pretty late into the year, though perhaps they usually involve whether to extend a tax break (such as the AMT patch) rather than letting it expire according to existing law.

The rain beats down on a small Irish town. The streets are deserted. Times are tough. Everyone is in debt and living on credit. A rich German arrives at the local hotel, asks to view its rooms, and puts on the desk a €100 note. The owner gives him a bunch of keys and he goes off for an inspection.

As soon as he has gone upstairs, the hotelier grabs the note and runs next door to pay his debt to the butcher. The butcher hurries down the street to pay what he owes to his feed merchant. The merchant heads for the pub and uses the note to pay his bar bill. The publican slips the note to the local hooker who's been offering her services on credit. She rushes to the hotel to pay what she owes for room hire. As she puts the €100 note on the counter, the German appears, says the rooms are unsuitable, picks up his €100 note and leaves town.

No one did any work. No one earned anything. Everyone is out of debt. Everyone is feeling better. And that is how a bailout works.

That's a nice story, but doesn't it assume that everyone who gets the money is in debt (equally in debt, in fact) and that money gets back to the hotel? If the butcher doesn't owe any money to the feed merchant, then he pockets what he's owed, there is no further chain, no one else gets out of debt, and the German is pissed off because his money was stolen.

Indeed, if all the people in the story are equally in debt in the manner described, they could all just agree to forgive each other's obligations and you wouldn't need the wealthy German at all. If I owe you $100 and you owe me $100, we don't need to pass bills between us to just say "OK, we're even." The chain in the story is more complicated, but it's the same idea.

Indeed, if all the people in the story are equally in debt in the manner described, they could all just agree to forgive each other's obligations and you wouldn't need the wealthy German at all. If I owe you $100 and you owe me $100, we don't need to pass bills between us to just say "OK, we're even."

Right; you get the idea. But the point is that all these debtors aren't in the same place so that debts can be mutually cancelled, so it takes a "token" of a 100 euro note, counterfeit or not, to do the job.

What part of the bailout replaces the salary my wife's been missing for the past 21 months?

Bailout schmailout...jobs have been lost. I could give a rat's F'in ass if banks now own undervalued houses instead of the stream of payments that they are supposed to be worth. And if I see one more new large SUV model with a GM badge on it after that "too big to fail" corp. ran itself rightly into red ink...grrr!!

Have you been to the market lately? High prices and less selection is what I am noticing. The aisles are noticeably wider, especially in produce. Is it weather related, petroleum related? Either way consumers must deal with the end product of 2.99lb parsnips.

Your world view is based on the price of PARSNIPS??

Your world view is based on the price of PARSNIPS??

To paraphrase William Blake:

To see the world in a parsnip, and to see heaven in a bailout, hold infinity as a debt ceiling, and eternity in an explanation.



(To read the original poem, click here.)

Parsnips, turnips, cauliflower are all super expensive now. Never used to be the case, especially since they are cool weather crops. Leeks and fennel are also expensive. Can I help it if I like to cook?