Obama is livid because the insurance giant which is now effectively owned by the US government (that is, US taxpayers), says that it is legally bound to pay millions of dollars of bonuses to the very traders who devised and sold the products which bankrupted the company.
And Obama is being lambasted by the Republicans for the 'exploding cigar' of AIG:
"AIG is the cigar that keeps exploding in Barack Obama's face. The giant insurance wreck is effectively owned by U.S. taxpayers, who've already bailed it out four times, to the tune of $170-billion (U.S.). Now they've discovered they're on the hook for $170-million in "retention bonuses," payable to the very idiots who crashed the company in the first place. On top of that, the most powerful men in the U.S. government say they can't do anything to stop it. No wonder the public is in a lynching mood. "The AIG execs are rubbing our noses" in it, wrote one inflamed citizen. In an effort to get ahead of the public anger, Mr. Obama's top propeller-heads fanned out to the weekend television shows to voice their disgust."
Obama wants his government to do everything legal to roll back the bonuses. And he and others wring their hands and say that the government – which has invested more in the failed AIG and other banks than most countries have as their GNP – is powerless to change contracts which were entered into before the government granted such aid to these bankrupt entities.
This is nonsense.
What Obama can do is send legislation to Congress which requires all such bonuses granted to recipients of government aid since, say January 2007, to be repaid or not paid, whether or not the companies have entered into any contracts with their officers before government aid was granted.
There will be an uproar over the sanctity of contract, but that too is nonsense. When companies go into bankruptcy proceedings, the laws allow the courts to set aside contracts in the interests of helping the bankrupt companies to survive.
So there is precedent for legislating the return or non-payment of bonuses in the case of AIG and others.
The only thing really needed is courage on the part of the president and of Congress.
Or are these people so deeply into the pockets of special interests that they dare not do what is right?
