Dodd admits role in AIG loophole

Looks like he wasn't quite wringing his hands and cackling evilly but his staff was involved in helping executives keep their huge (taxpayer-funded) bonuses.

Link

Credit where credit is due:

He said on MSNBC's "Hardball" that it was done at the request of administration officials.

With the rationale being that the employees would sue the company for breach of contract and win, getting even more money (which is, of course, true). There's only one way to prevent this sort of thing from happening, and that's not to give them the money in the first place. Complaining about how they spend after they have it is limpid and pointless.

Unless the government law has the power to void certain forms of existing employment contracts, which is always possible. The good thing about being in a position to write the laws is that you're only limited by the constitution, and making a constitutional claim out of this strikes me as a tough row to hoe.

Funkenpants wrote:

The good thing about being in a position to write the laws is that you're only limited by the constitution

And even then, not so much these days.

I don't suppose we can eminent domain their money and pay them fair market value in derivatives at book value?

Quintin_Stone wrote:

And even then, not so much these days.

Extraordinary rendition for derivatives traders? Hmmmm, for once the prospect of government jackbooted thugs breaking down doors in the middle of the night doesn't seem so bad....

So the corporations will spend more of our taxpayer dollars hiring lawyers to fight this, the state will use more taxpayer dollars on its own lawyers, and it'll be tied up in court long enough for the executives to find some other loophole through which to get their money. By the time we have a verdict the economic crisis will be over and thank goodness because it'll take another round of lawsuits and wrist-slapping to get the executives to actually pay up.

Yeah, I'm cynical!

Funny how no one worried about upholding existing contracts when it came to the unions though, isn't it?

Though the "blame Dodd" thing is just shockingly, outrageously false, as Glenn Greenwald has documented:

The controversy of the AIG bonuses -- which, strictly as a quantitative matter, is rather trivial in the scheme of things -- illustrates how warped our political discourse is. Here is the hierarchy of positions regarding executive compensation limits back in February:
  • Chris Dodd -- advocated full-scale, no-exceptions limits on executive compensation for bailed-out companies
  • Obama administration -- supported limits but advocated exceptions for already-existing employment contracts
  • GOP leaders -- opposed all executive compensation limits as Socialist tyranny

Yet everything is exactly backwards in this controversy. The Obama administration has been trying to blame Dodd for the carve-out that allowed the AIG bonus payments, a carve-out that came into being because Geithner/Summers demanded it and because they opposed the limits Dodd wanted as too onerous. And now, the GOP -- which opposed limits of any kind -- wants to blame the Obama administration and Dodd because the limits weren't stringent enough to stop the AIG bonus payments. And the media is playing along perfectly, having clearly decided that the person who led the way in fighting for absolute compensation limits -- Dodd -- is the real villain responsible for the AIG bonuses.

Just so all of you can know before you continue with "Wall street people are evil" is that I work for a wall street firm, the majority of my salary comes from a bonus and I will not get it this year. I work 6 or 7 days a week for 10-12 hours each day.

Ulairi wrote:

Just so all of you can know before you continue with "Wall street people are evil" is that I work for a wall street firm, the majority of my salary comes from a bonus and I will not get it this year. I work 6 or 7 days a week for 10-12 hours each day.

I'm curious as to why you'd work in a job where the majority of your income is in the form of a bonus. It seems like that's a real risk considering that bonuses aren't always received.

How does that pay structure work? I'm used to the world of hourly wages or salary, with quarterly incentives based on sales figures. I have never received a bonus, much less have it make up the majority of my wages.

Ulairi wrote:

Just so all of you can know before you continue with "Wall street people are evil" is that I work for a wall street firm, the majority of my salary comes from a bonus and I will not get it this year. I work 6 or 7 days a week for 10-12 hours each day.

I promise that your disclosure of that fact will not change my opinion in any way.

Ulairi wrote:

Just so all of you can know before you continue with "Wall street people are evil" is that I work for a wall street firm, the majority of my salary comes from a bonus and I will not get it this year. I work 6 or 7 days a week for 10-12 hours each day.

Ulairi is evil!

adam.greenbrier wrote:
Ulairi wrote:

Just so all of you can know before you continue with "Wall street people are evil" is that I work for a wall street firm, the majority of my salary comes from a bonus and I will not get it this year. I work 6 or 7 days a week for 10-12 hours each day.

I'm curious as to why you'd work in a job where the majority of your income is in the form of a bonus. It seems like that's a real risk considering that bonuses aren't always received.

That's the pay structure we only get paid based on our expense ratio to manage the funds. They pay us based on bonus because if you are a high achiever, it is great. There is risk but there is government induced risk. If i suck, I lose my job. The government shouldn't be there to say 'Ulairi, you worked too hard and did to well, we want that money because you're a fat cat'.

Who knew that wall street people are much like waiters and waitress?

Any chance you can negotiate a contract for a regular living wage instead of bonuses?

Funkenpants wrote:
Ulairi wrote:

Just so all of you can know before you continue with "Wall street people are evil" is that I work for a wall street firm, the majority of my salary comes from a bonus and I will not get it this year. I work 6 or 7 days a week for 10-12 hours each day.

Few things in response.

1) Lots of people work hard work as hard for a lot less money than what Wall Streeters get. So you're not alone in feeling like your current pay doesn't match your effort.

2) You're also working in an industry that managed to systematically screw itself up so badly that it requires a taxpayer bailout of greater than biblical proportions. Plus, I'm personally out thousands of dollars in retirement savings because of bankers sh*tty management decisions. I suck it up, because that's the nature of the business. But that also means I'm not well disposed towards sympathy for bankers losing bonuses for a little while.

3) You still have a job in an industry that is currently sucking at the government teat and has been shedding workers like crazy. My cousin's husband is close to getting canned from his division at Citibank, and he's screwed if they let him go.

That's fine. I'm not complaining about my bonus being removed. My point is that it is very easy for people to think of everyone on wall street as some guy in a penthouse with a high dollar call girl.

My company didn't want the money it was forced fed to us. If the government wants to decide how the money is used, then they should take the companies over and run them top to bottom.

Ulairi wrote:

Just so all of you can know before you continue with "Wall street people are evil" is that I work for a wall street firm, the majority of my salary comes from a bonus and I will not get it this year. I work 6 or 7 days a week for 10-12 hours each day.

Few things in response.

1) Lots of people work hard work as hard for a lot less money than what Wall Streeters get. So you're not alone in feeling like your current pay doesn't match your effort.

2) You're also working in an industry that managed to systematically screw itself up so badly that it requires a taxpayer bailout of greater than biblical proportions. You should blame your fellow Wall Streeters for putting you in a position where the industry is vulnerable to political meddling.

3) You still have a job in an industry that is currently sucking at the government teat and has been shedding workers like crazy. My cousin's husband is close to getting canned from his division at Citibank, and he's screwed if they let him go.

4) I suggest you unionize. Then stick it to The Man.

My point is that it is very easy for people to think of everyone on wall street as some guy in a penthouse with a high dollar call girl.

You're not? Then our sleepover is CANCELLED!

Ulairi wrote:

That's fine. I'm not complaining about my bonus being removed. My point is that it is very easy for people to think of everyone on wall street as some guy in a penthouse with a high dollar call girl.

I revised my post to take out the reference to my own banker-induced losses. I didn't want it to seem like I was blaming you personally, or anything.

The problem with arguing that your own institution was forced to take the money, and therefore should be free of intrusion, is that even had it not taken the money it has benefited in many ways from government backstops of other institutions. Yeah, the brush is being used too broadly. But the enormity of the money involved in the crisis is just staggering. People are bound to be angry, particularly when many people are losing their own jobs.

Ulairi wrote:

The government shouldn't be there to say 'Ulairi, you worked too hard and did to well, we want that money because you're a fat cat'.

What if the government owns 80% of the company because it had to send your company a "blank cheque" so that the entire financial system stays afloat. Can they tell you what you can make then?

And this isn't about your company per say Ulari, its about AIG.

Mayfield wrote:
Ulairi wrote:

The government shouldn't be there to say 'Ulairi, you worked too hard and did to well, we want that money because you're a fat cat'.

What if the government owns 80% of the company because it had to send your company a "blank cheque" so that the entire financial system stays afloat. Can they tell you what you can make then?

Then they need to man up and run the company top to bottom.

If they want the banking system to be private then it's private and let it work. If they want to nationalize it, then do it.

I think everyone would prefer it if the bankers could run it themselves without it exploding.

Funkenpants wrote:

The problem with arguing that your own institution was forced to take the money, and therefore should be free of intrusion, is that even had it not taken the money it has benefited in many ways from government backstops of other institutions.

That's actually a tremendously good point. Had the government let AIG or Citi fail, I'm fairly sure all the rest of the top banks would have gone down as well.

Ulairi wrote:

That's fine. I'm not complaining about my bonus being removed. My point is that it is very easy for people to think of everyone on wall street as some guy in a penthouse with a high dollar call girl.

My company didn't want the money it was forced fed to us. If the government wants to decide how the money is used, then they should take the companies over and run them top to bottom.

The guys who get million-dollar+ bonuses tend to be, and don't try to tell me otherwise because even if they are paid ONLY with that bonus, they are still making a MILLION F***ING DOLLARS A YEAR.

LobsterMobster wrote:
Ulairi wrote:

That's fine. I'm not complaining about my bonus being removed. My point is that it is very easy for people to think of everyone on wall street as some guy in a penthouse with a high dollar call girl.

My company didn't want the money it was forced fed to us. If the government wants to decide how the money is used, then they should take the companies over and run them top to bottom.

The guys who get million-dollar+ bonuses tend to be, and don't try to tell me otherwise because even if they are paid ONLY with that bonus, they are still making a MILLION F***ING DOLLARS A YEAR.

a million dollars aint what it used to be.

Ulairi wrote:

a million dollars aint what it used to be.

From the perspective of someone who makes a fraction of that annually and has to really work to scrape by some months, it sounds like a whole f*ck of a lot from here.

Ulairi wrote:
LobsterMobster wrote:
Ulairi wrote:

That's fine. I'm not complaining about my bonus being removed. My point is that it is very easy for people to think of everyone on wall street as some guy in a penthouse with a high dollar call girl.

My company didn't want the money it was forced fed to us. If the government wants to decide how the money is used, then they should take the companies over and run them top to bottom.

The guys who get million-dollar+ bonuses tend to be, and don't try to tell me otherwise because even if they are paid ONLY with that bonus, they are still making a MILLION F***ING DOLLARS A YEAR.

a million dollars aint what it used to be.

That's a f*ck ton of money. Maybe they need to adjust their lifestyle and deal with it?

Ulairi wrote:
LobsterMobster wrote:
Ulairi wrote:

That's fine. I'm not complaining about my bonus being removed. My point is that it is very easy for people to think of everyone on wall street as some guy in a penthouse with a high dollar call girl.

My company didn't want the money it was forced fed to us. If the government wants to decide how the money is used, then they should take the companies over and run them top to bottom.

The guys who get million-dollar+ bonuses tend to be, and don't try to tell me otherwise because even if they are paid ONLY with that bonus, they are still making a MILLION F***ING DOLLARS A YEAR.

a million dollars aint what it used to be.

Yeah, that is probably not going to help make your point.

Ulairi wrote:

Just so all of you can know before you continue with "Wall street people are evil" is that I work for a wall street firm, the majority of my salary comes from a bonus and I will not get it this year. I work 6 or 7 days a week for 10-12 hours each day.

I'm going to come off as an ass, and I apologize in advance for it, but it has to be said.

I've been told for years by conservatives that if I have a problem with the way things are, with not being treated fairly for the hours and hours I put in at work due to the gutted version of the Fair Labor Labor Standards Act that the Bush administration passed, that if I don't like it the beauty of our system is that I can just get a better job.

On top of that, guys like me aren't getting a bonus this year because our companies were negatively impacted by the irresponsible and unethical actions of the financial industry, particularly the traders and management in the market segments of those companies.

Even further, these bonuses are coming from my tax money.

Finally, as this law notes, the bonuses will only be impacted for employees earning over $250k/year as their salary (which already puts them solidly into the top 5% of household earnings nationwide).

With all these conditions given, all I can say is that I won't be shedding a tear for anyone impacted by this tax on bonuses. My bonus is just that, a bonus, but with my modest (though decently livable) income, that bonus is a significant factor in enabling me to pursue any purchases/investments beyond my non-exorbitant monthly budget.

So no, I don't think you're evil Ulairi. I don't even think most of the people that will be impacted by this are evil. However, given the full scope of the situation and the limits upon who will be impacted, I have no reason to waste a moment of time feeling sympathy for those whose bonuses will be taxed under this law. They'll be more than fine, and even with a 90% tax on their bonus, will still be significantly better off than most of the rest of America.