Why Are AIG’s Contracts Sacrosanct But Not Union Workers’ Contracts?
Why Are AIG’s Contracts Sacrosanct But Not Union Workers’ Contracts?
Yesterday on ABC’s This Week, Larry Summers, head of President Obama’s National Economic Council, called insurance giant AIG’s plan to pay out $165 million in bonuses “outrageous” but insisted there was little the government could do about it. This despite the $170 billion in taxpayer funds that have been given to AIG. Summers cited the sanctity of contracts:
SUMMERS: We are a country of law. There are contracts. The government cannot just abrogate contracts. Every legal step possible to limit those bonuses is being taken by Secretary Geithner and by the Federal Reserve system.
Summers said that efforts by Treasury Secretary Tim Geithner had successfully “scaled back” the bonuses, but AIG chief Edward Liddy, defending the bonuses, told Geithner, “quite frankly, AIG’s hands are tied.”
Of course, not all contracts are sacrosanct. When Detroit’s Big Three arrived in Washington last year to plead for federal bailout funds, the right wing demanded that the United Auto Workers ignore their contracts and accept “steep cuts in pay and benefits” — on top of the cuts they already shouldered in 2007. The UAW agreed to “make major concessions in its contracts,” acceding to most of the right’s demands:
UAW President Ron Gettelfinger emerged from the meeting to say the union would rework a retiree health care trust fund, eliminate the union’s maligned jobs bank program…and cut additional measures that would loosen the union’s trademark job-security protections.
Along with other commenters, the American Prospect’s Robert Kuttner pointed out the government’s double standard on contracts, telling George Stephanopoulos yesterday, “You don’t think when the auto workers come in as part of the auto rescue deal, they’re not being asked to abrogate contracts? Of course they are.”
The Obama administration also supports rewriting mortgage contracts. It “has moved aggressively to pressure lenders to renegotiate the terms of mortgages,” and Obama supports an idea to allow bankruptcy judges to change the terms of a mortgage to help homeowners stay afloat.
To his credit, Obama today ordered Treasury Secretary Tim Geithner “to use that leverage and pursue every single legal avenue to block these bonuses.” But it’s still clear that while workers’ contractual benefits can be eviscerated in the name of bailout eligibility, millionaire bankers’ bonuses are a more sacrosanct part of “a country of law” where “there are contracts.”
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Yes, Liddy should be forced to resign. Right now. And AIG’s credit default swap gurus should follow him out the door. Right now. No severence, no golden parachutes, no retirement plan, no benefits.
Let them wait in line for unemployment, and hope for some form of national healthcare in the near future.
Of course, these bastids aren’t broke, not even close. Because they got their money out before the dam broke. They knew it was coming because they masterminded this particular ponzi scheme.
I think We the People need to have an AIG shareholders meeting to vote on all aspects of this national corporation. Now.
PEACE
March 16th, 2009 at 5:03 pmWe could always pay the bonuses due to the writers of credit-default swaps, then fire them, then put them in jail– 1,2,3.
March 16th, 2009 at 5:05 pmOh I’m sure the Republican’ts and Righties have allllll kinds of EXCUSES for that…
because that’s different….
March 16th, 2009 at 5:09 pmAIG needs the bonuses to retain talent (so they and others say).
Talent that drove them to near bankruptcy.
WTF is wrong with this picture?
It’s like the NY Yankees saying we need to retain a .198 hitter or 3-20 starting pitcher to ensure we suck again next year.
March 16th, 2009 at 5:11 pm.
Heck-of-a-job agreement…
.
March 16th, 2009 at 5:11 pmThe government cannot just abrogate contracts.
This is complete rubbish.
Of course governments can “just” abrogate contracts; they do it all the time.
Specially if the people whose contracts are going to be terminated don’t have the political connections, or the money to make their voices heard.
March 16th, 2009 at 5:11 pmObama is planning to block that bonuses.
March 16th, 2009 at 5:12 pm.
Joy Bahar said:
.
March 16th, 2009 at 5:13 pmGregor Samsa Says:
The government cannot just abrogate contracts.
This is complete rubbish.
Of course governments can “just” abrogate contracts; they do it all the time.
Specially if the people whose contracts are going to be terminated don’t have the political connections, or the money to make their voices heard.
Talk about hitting the nail on the head..Great comment. Union contracts are violated all the time.
March 16th, 2009 at 5:14 pmLarry says , There are contracts , We are a country of Law , … and girls don’t do the arithmetic and science so good …. Go away Larry
March 16th, 2009 at 5:14 pmEmployment contracts have clauses for termination, especially for cause.
Congress makes laws. This sounds like the “we had to let Lehman fail” argument. It doesn’t hold water.
March 16th, 2009 at 5:17 pmNo one remembers PATCO?
No one remembers Nixon/Agnew’s blanket abrogtations??
No one ever been screwed by an Extended Warranty.
Wow, those Righties have an even lower opinion of America’s intelligence than I do.
March 16th, 2009 at 5:19 pmCuz the AIG brokers are mostly white people, and mostly males?
While union workers are a motly, polyglot bunch of hippies, women, mexicans, blacks and the like.
Duh…
March 16th, 2009 at 5:20 pmtombaker Says:
No one remembers PATCO?
You are absolutely right, How easily we forget. Reagan simply threw the PATCO contract out the window and fired all of them.
March 16th, 2009 at 5:21 pmI think Summers and Geithner are Bushie moles and are hell bent on destroying Obama’s presidency.
I don’t trust either of these two sacks of crap.
March 16th, 2009 at 5:22 pmBTW, aren’t “bonus contracts” performance based? Since when are they just another way of adding salary? We know that bonuses are “taxed differently” than one’s salary so what the hell is going on here?
If they are legitimate bonus contracts, they are based on one’s performance and/or the company’s profits.
This is pure and utter bull%hit, folks.
March 16th, 2009 at 5:23 pmDon’t mess with contracts by and for the rich. For anyone else, contracts are just playthings to make you think your rich.
March 16th, 2009 at 5:26 pmThat’s funny. I thought the argument was that Republicans shouldn’t be making sweeping criticisms of the stimulus spending and rejecting it outright based on how 1-2% of it is spent on what they consider wasteful spending.
Now supposedly we’re supposed to be outraged at how 0.1% of the AIG money is spent.
WTF do any of you care? You have absolutely no opinion on any of the other 99.9% of it is spent. If we tried to make a clearer example of cherrypicked BS outrage, we’d run out of digits. We’d have to argue we were outraged by the 0%.
March 16th, 2009 at 5:26 pmSurely if you paused for merely seconds more before posting, your bran could tell you that “this would depend on the contract”. Or maybe not.
March 16th, 2009 at 5:28 pms3n says: something, not sure what the point is.
March 16th, 2009 at 5:29 pmWell, how could I make it any clearer?
March 16th, 2009 at 5:34 pmYou understood the numbers, right? That we’re talking about being outraged over how 0.1% of this money is spent while having no opinion about the 99.9% of $170 billion dollars.
“your bran could tell you”
I meant to write “brain”, but I think this stands. Even your breakfast cereal knew this.
March 16th, 2009 at 5:34 pm20 – I guess the gist if it was that we should be OK with our TARP money being spent on treats to reward the guys who made the bailout necessary in the first place, which is apparently something you should get a treat for.
“I’m going to go get shitfaced at happy hour then run into a light pole and wreck my car.
When I get back, I think it would be appropriate for someone to have a check for $50K waiting for me.
Any objections?”
March 16th, 2009 at 5:37 pmThis situation reminds me of the military contractor (KBR? don’t remember) who in essence held our soldiers hostage by saying that if we attempted to recoup any of the money from overpayments, they would just pack up and leave our military high and dry.
At the time, I thought we should have called their bluff. And I think we ought to call AIG’s bluff.
As a taxpayer, I’d rather see that $1+ billion go to hiring lawyers to defend the government agaist lawsuits filed by the execs who don’t get the bonus they feel entitled to than to actually pay the bonus money. Make their names and faces publc.
PEACE
March 16th, 2009 at 5:37 pms3n,
If I were to sink your portfolio…
… Would you pay me a bonus?
.
March 16th, 2009 at 5:38 pms3n, maybe your breakfast cereal would know it. Sounds like snap, crackle, pop put together that idea.
March 16th, 2009 at 5:38 pms3n… did you take a look at the headline?
Why should we honor these contracts but cut the pay and benefits promised to Union workers by CONTRACT?
March 16th, 2009 at 5:38 pmIt’s funny. When I mentioned this story to my Republican neighbor yesterday, he just started ranting something about Barney Frank’s salary.
March 16th, 2009 at 5:39 pmMaybe s3n is stopped up.
March 16th, 2009 at 5:39 pmSmart SOA Social Net. aka s3n spews: sumore
The plain fact that you have NO idea what I or millions of others are outraged about is apparently LOST on you. But by all means, carryon.
March 16th, 2009 at 5:40 pmsince they are over 3/4 owned, just nationalize the peckerwoods, shred the contracts and start from scratch.
March 16th, 2009 at 5:40 pmThey’re begging to be nationalized. Under the circumstances, I think any “extra money” they have should either be voluntarily renounced, or seized while investigations for fraud are launched. Losing 62 million dollars requires more than just talent.
March 16th, 2009 at 5:41 pmNo, I’m also pissed that AIG is giving billions of our taxpayer dollars to foriegn banks. But, I’m sure you are cool with that too.
March 16th, 2009 at 5:41 pms3n:I thought the argument was that Republicans shouldn’t be making sweeping criticisms of the stimulus spending and rejecting it outright based on how 1-2% of it is spent on what they consider wasteful spending.
No, the argument of the post is that AIG’s ‘legal argument’ is not absolute and that the Government’s apparent acceptance of that argument is thus not also absolute as the Government has the legal power to dictate the terms AND EXECUTION of the contract that AIG and it employees and officers currently depend upon to retain their jobs and income.
AIG is trying to divert the argument, as are you.
March 16th, 2009 at 5:42 pmRepublicans motto:
March 16th, 2009 at 5:42 pmRich people’s contracts – sacrosanct
Workers/middle class – rip them up
Sorry that’s 62 billion dollars.
March 16th, 2009 at 5:43 pmMake them sue for their stinkin’ bonuses. They can tell a tax paying jury all about how much they deserve millions of their tax dollars for losing billions.
March 16th, 2009 at 5:46 pmJust out of curiousity, if any regular people got say, half a million to start a business or buy a house and instead took the money and blew it on a binge in the Dominican Republic, what would be the lenders response?
Did you have a good time?
March 16th, 2009 at 5:47 pmWhy Are AIG’s Contracts Sacrosanct But Not Union Workers’ Contracts?
That’s too easy.
Who is more likely to donate to Republican politicians?
See that wasn’t so hard.
March 16th, 2009 at 5:47 pm.
So does this mean that (R)ushpublickin’s favor paying striking workers their “CONTRACTED” wages?
.
March 16th, 2009 at 5:47 pmThe retention argument fails me as well… if these executives who drove AIG into the ground would leave if they don’t get the bonuses, who’s hurt?
Doesn’t that save us the cost of the bonus and the time necessary to fire them?
M.B.A.= Mediocre but Arrogant.
March 16th, 2009 at 5:48 pmWe really should change the terminology on ‘donating to political campaigns’.
Just be honest and call it Rent-a-Dork.”
March 16th, 2009 at 5:49 pm.
Obama’s on the People’s side.
http://www.msnbc.msn.com/id/29714402/
.
March 16th, 2009 at 5:51 pmActually, I do.
Your presumption is supposed to get a pass, while the proportiality of outrage expressed by others is not?
Clunky move.
March 16th, 2009 at 5:52 pmI suspect that this is the Obama administration strategy on this and other issues.
March 16th, 2009 at 5:53 pmStay a step or two behind the public. When their outrage becomes sufficiently loud, then take the action desired in the first place — If Obama comes down too hard initially, he belies his normally calm demeanor.
This has him pissed but he will let the current of public opinion push the issue. I expect to see paybacks of some of these bonuses – and I expect to see resignations and/or firings — just not this week.
#21 s3n Says You understood the numbers, right? That we’re talking about being outraged over how 0.1% of this money is spent while having no opinion about the 99.9% of $170 billion dollars.
No we aren’t. That’s just you trying to redirect the thread for your own agenda.
March 16th, 2009 at 5:54 pmbelac Says: M.B.A.= Mediocre but Arrogant.
or Malfeasance Blessed by Arrogance?
March 16th, 2009 at 5:56 pms3n says
“WTF do any of you care? You have absolutely no opinion on any of the other 99.9% of it is spent. If we tried to make a clearer example of cherrypicked BS outrage, we’d run out of digits. We’d have to argue we were outraged by the 0%.”
Outrage, like beauty, is in the eye of the beholder. I’m sure, s3n, you were outraged when your crayons broke while writing to Santa last year. In my opinion it is not the percentage of the money going to bonuses that is outrageous but any bonuses being paid at all. AIG is in the mess they are in because of their management. And you have no problem rewarding them for mis-management? BTW s3n, if, God forbid, a member of your family was raped I suppose you wouldn’t be outraged. After all, rape is a very small percentage of crimes committed in the US.
March 16th, 2009 at 5:59 pmhow about MBA= Mighty Bad at Arithmetic.
March 16th, 2009 at 6:00 pmWho is more likely to donate to Republican politicians?
See that wasn’t so hard.
March 16th, 2009 at 5:47 pm
Edit: Who is more likely to donate to
Republicanincumbent politicians?See that wasn’t so hard.
March 16th, 2009 at 6:06 pmI believe that GW Botch was the first MBA (Moronic But Arrogant) to serve as President and lookey what we got!!!
My boss almost has an MBA and he’s the weakest link on our team…Jeezz…
March 16th, 2009 at 6:12 pmNationalize them. Then put those *crooks* into jail.
March 16th, 2009 at 6:13 pmold-norm,
jeez, that was a brutal analogy—and yet I’ve no sympathy for s3n.
March 16th, 2009 at 6:16 pmCheers! :D
s3n says:
Well, how could I make it any clearer?
You understood the numbers, right? That we’re talking about being outraged over how 0.1% of this money is spent while having no opinion about the 99.9% of $170 billion dollars.
________
Unfortunately for you, you are wrong.
People are outraged over the principle of the matter whether that involves 4 trillion bazillion gazillion dollars or just one damned red cent.
Principle which you seem to lack an understanding for.
March 16th, 2009 at 6:33 pmTime to nationalize and start writing pink slips.
March 16th, 2009 at 7:04 pmWhy! Do you have to ask why? Because the Criminals Bush and Cheney and the RepubliCons turned America into a criminal nation, that can not be restored; until they are behind bars.
March 16th, 2009 at 7:23 pmCorrect me if I’m wrong, but in the corporate world, don’t the company’s stockholders have to vote before bonuses are awarded? Since we own 80% of AIG, shouldn’t you and I have had to vote to give out these bonuses.
I agree with Zooey. We need to Nationalize AIG, fire it’s corporate officers, get the bonuses back and then break up the company to re-sell.
We have to do something to regulate corporations in this country so that we are never again told “it’s too big to fail”.
March 16th, 2009 at 8:13 pms3n says:
Well, how could I make it any clearer?
You understood the numbers, right? That we’re talking about being outraged over how 0.1% of this money is spent while having no opinion about the 99.9% of $170 billion dollars.
It’s kind of hard to be outraged about how AIG spend the money we gave them because they haven’t yet told us much about what they did with it. When that happens, I’m sure there’s going to be a lot more outrage going on.
March 16th, 2009 at 8:16 pmAH come on…this is simple:
UAW contracts are for a living wage
AIG bonuses needed to keep the “best and brightest”
see the difference?
Obviously the bonuses can’t possibly be abrogated because the obscenely wealthy then might not be able to live the lifestyle they so richly deserve. UAW commoners paying the rent and putting food on the table – no comparison.
March 16th, 2009 at 8:41 pmLarry Summers and Phil Gramm pushed to deregulate banking during the Clinton administration. Odd, he is playing a part in fixing the problem he was a major player in causing. Obama is not doing well in his picks. We could have voted in Hillary for these same criminals who gave us NAFTA. WE wanted change not retreads.
March 16th, 2009 at 8:48 pmThis post is disingenuous, misinformed at best. The Bush Administration wasn’t alone in passing the bailout bills last fall. The Reid and Pelosi Side Show supported it whole heartedly too. In fact, the only faction in Congress who didn’t agree to the bailout and its terms was the House Republicans. Of course, that doesn’t fit into the broad-brushed Republican blame inherint in this post, but then let’s not let truth get in the way of a good entry.
Furthermore, what does this say of the Obama Administration if the Huffington Post is correct? If the federal government is essentially the majority shareholder, does that not make Obama an enabler? Or is the Huff Post lying?
March 16th, 2009 at 9:41 pmHell yeah!
Do what is needed to save our money and to avoid a depression.
repugs can call it what they want.
Our government should take over immediately. These crooks need a respected financial model and that should come from the government. AIG+arrogance+greed+lies=crooks.
aig is still partying while we sacrifice.
aig is laughing all the way to their bank.
Are all these crooks mini-madoff?
Say bye bye repugs. This isn’t a joke.
March 16th, 2009 at 10:20 pmThe reserve is privately own; there won’t be an conflict of interest?
March 16th, 2009 at 10:24 pmLet’s see we pay them mega salaries for wiping their asses.
Now we are paying them bonuses for flushing the toilet.
I believe these crooks are undermining and marginalizing President Obama initiatives.
March 16th, 2009 at 10:53 pmTAX ALL SALARIES OVER $1.0 MILLION AT 80%
All this argument over bonuses and outrageous salaries wouldn’t be here if we taxed the crooks ripping off corporate America and shareholders. Obama shoud work with congress to raise marginal tax rates on all incomes over $1.0 million to 80%!
And just don’t stop at the big salaries. Also tax their short term profits (trading derivatives all day) at 90%. Make it absolutely un-economical to make such short term money.
TAXES ARE THE BEST WAY TO STOP THIS BEHAVIOUR
March 16th, 2009 at 11:15 pmThis isn’t about performance. It’s about personnel.
If you can work for anyone other than the basket-case AIG and get a bonus regardless of how bad you fark up, why would anyone work for AIG if they didn’t pay bonuses?
Unlike the auto-workers, people working in finance can actually go work for another viable financial institution.
I have no idea why anyone would highlight auto-workers when complaining about a company you just bailed out. There’s no less viable industry in the US that’s needed more bailouts than the automakers. You should consider yourself lucky you have any employment contract at all.
March 17th, 2009 at 5:55 amAnd which you seem to be lacking a precedent for.
March 17th, 2009 at 5:59 amCare to point me to anyone who backed Republicans citing this exact same principle when objecting to the entire stimulus spending?
I did actually make that comparison for a reason.
No kidding. Hence my comparison to the 2% the Republicans cited when trying to derail the stimulus spending.
Seriously, is there anything I won’t need to explain 3 times here as though this is the slow class?
Nobody said they were being rewarded for performance. But I certainly wouldn’t in response to an article which compares this to the contracts of auto-workers.
You have no problem rewarding the auto-industry with the same thing for the same mis-management on far greater, longer scale?
What are auto-worker’s contracts other than the most thinly veiled form of government-sponsored unemployment benefits. They’re the 21st century equivalent of the steam engine workers.
My, you’re certainly the big thinker aren’t you.
March 17th, 2009 at 6:11 ams3n Says:
old_norm Says:
In my opinion it is not the percentage of the money going to bonuses that is outrageous but any bonuses being paid at all.
No kidding. Hence my comparison to the 2% the Republicans cited when trying to derail the stimulus spending.
O.k. You are being dishonest here. You are trying to frame this as having to do with %’s, when it is not about that at all. Drop your 2% and .1% charade — its a load of crap. The republicans complained about earmarks (though practically ALL of them had inserted their OWN). So, in the concept of “not wanting to wastefully spend money, regardless of the amount” we are in agreement. But your use of the hypocritical republicans as a comparison fails you.
Seriously, is there anything I won’t need to explain 3 times here as though this is the slow class?
You are not “explaining” anything — you are presenting false arguments based on false or unconnected premises.
AIG is in the mess they are in because of their management. And you have no problem rewarding them for mis-management?
Nobody said they were being rewarded for performance. But I certainly wouldn’t in response to an article which compares this to the contracts of auto-workers.
You have no problem rewarding the auto-industry with the same thing for the same mis-management on far greater, longer scale?
These checks we are talking about are refered to, by the corporate world, as “bonuses”. Now, a bonus, in the real world of intelligent people, IS always performance related (you do not get a work bonus for doing a lousy job, and even if you do a great job yet the business does poorly then you get no bonus). That is why it is called a “bonus” — something extra as a reward. Of course, the execs call these amounts “bonus” because of some tax-dodge that they are playing with, which, in itself, is immoral and ought to be illegal. It is certainly UNPATRIOTIC to avoid paying taxes, espescially in ‘wartime’.
And you miss the entire point of the comparison the the recently bailed out auto industry. The comparison is NOT contract for contract — it is displaying that “contract” does NOT mean “unchangeable and sacrosanct”, as the execs are arguing, because, AS CVLEARLY DEMONSTRATED WITH THE RECENTLY BAILED OUT AUTO INDUSTRIES CONTRACTS CAN BE REWRITTEN. THAT is the whole point and ONLY point of the comparison. The argument that contracts cannot be re-written, and that “our hands are tied” is a bunch of bull s#it.
What are auto-worker’s contracts other than the most thinly veiled form of government-sponsored unemployment benefits. They’re the 21st century equivalent of the steam engine workers.
How the hell is an EMPLOYMENT CONTRACT a “government-sponsored unemployment benefit”? That is just some lame talking point that you have as you defend the corporate masters who allow you to lick their taint. What the hell are you even talking about? This is a completley moronic statement, and displays that YOU hold a disdain for the average worker.
BTW s3n, if, God forbid, a member of your family was raped…
My, you’re certainly the big thinker aren’t you.
Nice. Hey, s3n you big thinker you, let’s take the same argument in a broader sense. YOU wanted to argue that this is all about a fraction of a %, and that we should be ignoring THIS issue because it is such a small %. So — if you or a loved one (assuming you have any loved ones that you don’t have to inflate) are the victim of a crime that is only a small % of the crimes that are commited, shouldn’t you then ignore that crime? THAT was the point being made, which you choose to ignore because it shoots holes in your % argument, NOT that that is necessary since your % argument is so far off the point that it is stupid.
Nice try to derail the arguments here, and nice of you stopping in so late to respond — figured you’d get the last word, eh? Awww. Maybe if you slip back in here you can still get the last word… maybe….. never know when I might be lurking……
March 17th, 2009 at 8:58 amI said:
“BTW s3n, if, God forbid, a member of your family was raped…”
sn3 said:
“My, you’re certainly the big thinker aren’t you.”
Well I am certainly humbled by your totally lame come back. You keep saying the AIG bonuses are not performance related. But, they are retention bonuses. Is it your contention that retention is not related to performance? Then you totally misconstrue the issue by comparing auto employees to AIG executives.
s3n said:
“You have no problem rewarding the auto-industry with the same thing for the same mis-management on far greater, longer scale?”
Who in this discussion has advocated or defended bonuses for the auto industry execs?
sn3, you don’t answer points made by others you just repeat your initial, misguided responses or change the argument. Try to respond directly to points made by others and maybe you won’t be the butt of so much criticism and ridicule next time.
CageyCretin dissected your delusional arguments perfectly. Follow his/her example in proper debating and you’ll not look so foolish to so many people.
March 17th, 2009 at 11:22 ams3n Says:
And which you seem to be lacking a precedent for.
Care to point me to anyone who backed Republicans citing this exact same principle when objecting to the entire stimulus spending?
I did actually make that comparison for a reason.
March 17th, 2009 at 5:59 am
__________
Don’t be such a dullard–I am obviously talking about PEOPLE as my post CLEARLY says. I could give a $hit less about Republicans or any politician’s opinion in this context.
March 17th, 2009 at 12:07 pmDon’t be such an idiot.
#69 CageyCretin Says:
#70 old_norm Says:
____________
Yay!!!!
March 17th, 2009 at 12:24 pmTOOLS, you know who you are.
Read this
Specifically this part.
The company and some federal regulators have said it was obligated by contract to make the payments. Cuomo said the bonuses might have been fraudulent if AIG officials knew the company couldn’t afford them.
Cuomo said that despite their contracts, Financial Products employees agreed to take 2009 salaries of $1 in exchange for receiving their retention bonus packages. He said the fact AIG could negotiate the terms of the payments “flies in the face of AIG’s assertion” that it had no choice but to make the contractual bonus payments.
“You could argue if the taxpayers didn’t bail out AIG, those contracts wouldn’t be worth the paper it’s printed on,” he said Monday.
BOOM!
March 17th, 2009 at 3:37 pmContracts are broken every day of the week. Now STFU!