'The government has failed us big time'
Monday, March 23, 2009 E-Mail this story Free Headline Alerts
By Ed Koch
The American people seem to be shell shocked, a term from World War I. Last week, Americans were infuriated by the news that several hundred employees of A.I.G. had received $165 million in bonuses after A.I.G. had received $170 billion in public funds under the Troubled Assets Relief Program (TARP) to bail the company out and prevent its bankruptcy. The monies being are passed through by A.I.G. to provide insurance payments to some well-known Wall Street institutions, including Goldman Sachs, Merrill Lynch, Citigroup, Bank of America and Wachovia and several foreign banks as well.
A.I.G. is widely viewed as one of those Wall Street companies that brought the United States economy to its knees, a company that would be bankrupt without TARP funding provided by the Congress with the consent of two Presidents — George W. Bush and Barack Obama – and two Treasury Secretaries — Hank Paulson and Timothy Geithner: a bipartisan effort. The public saw with their own eyes Senator Chris Dodd, Chairman of the Senate Committee on Banking, Housing and Urban Affairs, state during a television interview that he had nothing to do with writing language in pending legislation that authorized the payment of bonuses to A.I.G. employees. Dodd was fingered by the staff of the office of the Secretary of the Treasury, as in fact being the person who wrote the enabling language allowing the bonus payments, with their urging.
To make matters worse, we then learned that the amount of the bonus payments was underestimated — it has now grown from $165 million to $218 million. Furthermore, an increasing number of employees — now up to 400 — had received those payments.
The American public, unbelievably docile up to this moment, exploded with anger directed at A.I.G. employees for taking the bonuses and at the Congress and the President for enabling the bonuses to be paid. Then, everyone ran for cover with members of Congress who voted for the legislation and the President who signed the legislation vowing they would undo what had happened and denouncing A.I.G. and the employees who received the bonuses and demanding the money be returned. The House membership threatened if the A.I.G. employees failed to return the bonuses, they would be subject to a 90 percent confiscatory tax.
According to Reuters of March 21st, “President Barack Obama on Thursday welcomed a U.S. House of Representatives vote to tax bonuses to employees at companies getting federal bailout money, saying it ‘rightly reflects’ outrage at hefty rewards paid by American International Group Inc. ‘Now this legislation moves to the Senate, and I look forward to receiving a final product that will serve as a strong signal to the executives who run these firms that such compensation will not be tolerated,’ Obama said in a statement released while he was visiting Los Angeles.”
If President Nixon, his administration and a compliant Congress had done what this President and this Congress had done — using the United States tax code to punish employees of a company seen as having engaged in legal conduct that they disagreed with, the press and respected government observers would have denounced Nixon and called for the removal in the next election of every involved member of Congress.
Whether or not the proposed legislation reaches the point of being a bill of attainder, which is defined by Wikipedia as “an act of the legislature declaring a person or group of persons guilty of some crime and punishing them without benefit of a trial…forbidden by Article I, section 9, clause 3 of the United States Constitution,” is the subject of debate. But I believe that most rational people have concluded that the bill, in any event, stinks to high heaven, and are hopeful the Senate will reject the House action. President Obama has now changed his position, according to an Associated Press report of March 23rd. “President Barack Obama wagered significant political capital yesterday as he bucked a highly popular House measure to slap a punitive 90 percent tax on bonuses to big earners at financial institutions already deeply in hock to taxpayers. Obama defended his stance by saying the tax would be unconstitutional and that he would not ‘govern out of anger.’”
The witless Congress is seeking to direct attention from itself while the public, deprived of the facts bearing upon who is responsible for our economic plight, is understandably screaming for blood.
I believe that A.I.G. should never have willingly paid the bonuses and that Congress and the Secretary of the Treasury should have made it a condition of TARP funding that such funding not be used to pay bonuses to anyone responsible for depleting corporate assets.
The government has failed us big time. In providing TARP monies, the Congress did not require that banks once again lend monies to creditworthy applicants, so as to bring liquidity back to the markets which was the stated purpose of creating TARP. Now Congress has failed the American public again by writing into law permission to pay the bonuses.
Given the current public mood, due to the enormous pain and damage of economic collapse, there is an understandable desire for punishment. But let’s be real. In my view, the President should veto any legislation similar to the pending House confiscatory bill unless it is corrected by the Senate. He should also propose legislation immediately for the creation of an extra-governmental blue ribbon panel with subpoena power to investigate who is responsible for the entire debacle. Those who were wrong should be held up to scorn. Those who committed illegal acts should be pursued criminally and, if convicted, should go to prison.
One thing is abundantly clear: There is a need to respond to the public’s reasonable demand that there be accountability.