Let the Exodus Begin…

Jake DeSantis may have been the most public buts he’s not the only one at AIG Finacial Products who’s cleaning out his desk:

NEW YORK (Reuters) – Several more employees are leaving the controversial financial products unit that brought American International Group Inc to its knees last year, according to a person with knowledge of developments there.

The resignations are in addition to the “handful” of senior AIG Financial Products executives who have already given notice, said the person, who could not quantify the total number of departures.

To date, AIG said the situation at the financial products unit remains “manageable,” despite the departures. But if too many employees quit, Chief Executive Edward Liddy has warned it could be disastrous for AIG and, ultimately, for U.S. taxpayers who are the insurer’s majority owners.

The financial products division incurred heavy mark-to- market losses on credit default swaps, a type of derivative that guarantees underlying debt against default, after the downturn in the U.S. housing market, leaving AIG so severely short of cash the U.S. government had to step in with a rescue that has since grown as large as $180 billion.

The credit default business was only a part of the financial products division, which is being shut down.

Employees there were promised retention payments more than a year ago, on condition they stayed long enough to wind down their areas of business, effectively working themselves out of a job.

But now some have changed their minds, fed up after 10 days of ridicule and scorn from lawmakers who broadly derided the bonuses, demonstrators picketing outside AIG offices and a threat by New York Attorney General Andrew Cuomo to publicly name anyone who did not return the bonuses.

Who can them they were promised retention bonuses  before  the government bailed out AIG and now they’re being crucified by the media and by politicians who are more interested in leading a lynch mob than governing intelligently.

Related

• AIG Fights a Fire at Its Paris Unit – Wall Street Journal
• Zeal for battle over bonuses waning in Washington – Associated Press

Unintended Consequences: AIG Bonus Tax Could Have Painful Side Effects

Haste makes waste my grandmother used to say… When it comes to legislation haste often leads to unintended consequences. Take for example congresses rush to pass a 90 percent tax on the retention bonuses paid to executives at AIG (emphasis mine):

Lawmakers bellowed with outrage last week following revelations that AIG was paying millions in bonuses to employees at a rogue division based in suburban Connecticut.

But the bonus restrictions House members prescribed in response — a 90 percent tax on those bonuses — could have painful side effects for the subsidiaries of other bailed-out financial companies, including one located just a few miles away from the troubled AIG unit.

Phibro, a commodities trading company located in Westport, Conn., potentially could be hit with the 90 percent tax on bonuses since its parent company, Citigroup, has received $45 billion in bailout money.

Phibro, though, has not actually taken federal rescue funds and is considered a relatively stable and profitable subsidiary of Citigroup.

The subsidiary side effect is just one example of the complications the House-passed bill could create if such a measure clears the Senate and heads to President Obama’s desk.

U.S. Rep. Jim Himes, D-Conn., who represents the district where Phibro is based, said the bill is “undoubtedly replete with unintended consequences” — the product of what he called “hasty work.”

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But the Connecticut Democrat said he expects the Senate to work up an entirely different bill to address excessive bonuses. He said the House version was a “signal” to taxpayers that Congress is paying attention to the issue, but not a final product.

Excuse me??? With all due respect Congressman, we expect our elected leaders to act like adults. Not to run off half cocked and rush to pass a hastily crafted, unconstitutional Bill of Attainder to send a signal.

The last Grownup: John Kyl Puts the Breaks on Rush to Tax AIG Bonuses

We got into this mess because Congress and the administration rushed through the Stimulus bill without sufficient time for legislators to review and debate the bill. Now Congress is trying to compound one set of mistakes with another by rushing through a bill to tax the retention bonuses paid to AIG employees. Fortunately there’s at least one grownup left on capitol hill:

Sen. Jon Kyl, the Republicans’ vote counter, blocked Democratic efforts Thursday evening to bring up the Senate version of the tax bill to recoup most of the $165 million paid out by AIG last weekend and other bonuses in 2009. The House had swiftly approved its version of the bill earlier in the day.

By rushing, Kyl said, Democrats were letting populist outrage trump informed decision making in the Senate, which is supposed to be insulated from the pressures of public passion.

“I don’t believe that Congress should rush to pass yet another piece of hastily crafted legislation in this very toxic atmosphere, at least without understanding the facts and the potential unintended consequences,” Kyl said on the Senate floor. “Frankly, I think that’s how we got into the current mess.”

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How to impose those taxes without running afoul of the Constitution or the law is a dispute that has Republicans urging a go-slow approach. Doing so, of course, would drag out the Democratic discomfort over administration missteps and provide plenty of time for the GOP and others to question Geithner’s performance.

Bravo Zulus for Senator Kyl, Congress needs to slow down, cool off and think this through before they pass a bill that has unintended consequences.

Related

• Countrywide sues AIG unit over its failure to cover loan losses – Los Angeles Times
• ‘Don’t wear anything that says AIG on it’: Under-fire insurer gives employees security tips as fury over bonuses grows – Daily Mail
• AIG bonus outrage has employees living in fear – Associated Press
• Banker fury over tax ‘witch-hunt’ – Financial Times
• Sanity: Kyl blocks bill on AIG bonuses to give Senate time to think things over – Hot Air
• An Adult Steps up and Takes Control – Wizbang
• Are We A Banana Republic? – Powerline

Damn the Constitution, Full Speed Ahead!

This is beyond priceless:

WASHINGTON — The House gave strong approval to legislation intended to recoup bonuses paid by American International Group Inc. and other recipients of federal aid, after a sharp-edged debate that dramatized populist outrage over the government’s sweeping efforts to prop up the nation’s financial system.

The legislation was rushed to the floor by Democratic leaders amid a storm of protest among rank-and-file lawmakers over AIG’s decision to pay bonuses to hundreds of current and former employees, while receiving more than $100 billion in taxpayer assistance. Approved on a 328-93 vote, the measure would impose a 90% surtax on the disputed payments, effective for bonuses made after Dec. 31, 2008.

The legislation would apply widely to payments by all institutions that have received at least $5 billion in taxpayer aid. The special levy would be in addition to existing income taxes, and would apply to bonuses received by individuals with at least $250,000 in adjusted gross income.

To recap… Congress committed an act of supreme legislative malpractice by passing a Bill that no one had to time read, much less digest or debate… and now they’re compounding that mistake by passing what amounts to an unconstitutional Bill of Attainder to cover their tracks.

Lovely,  just lovely… Damn the Constitution, full speed ahead!

Congressman McCotter Slams Stimulus “Yes” Voters for Protecting AIG Executive Bonuses

I’m about ready to make Rep. Thaddeus McCotter of Michigan my adopted Congressman:

“Facts are hard things to disprove.  Every single Democrat in this House that voted for that bill voted to approve and protect those AIG bonuses.  Every single Democrat in the Senate that voted for that stimulus bill, along with three Republican senators, voted to approve and protect those AIG bonuses.  The President of the United States signed into law the protection and the approval of those AIG bonuses that they find so repugnant, now that the American people know what was done.”

“If you are shocked, be shocked at the own members of your party or Administration that put (the amendment protecting bonuses) in, and be shocked that we will now pass a Bill of Attainder that is unconstitutional to try to cover our, shall we say, “tracks,” on this matter.”

Chris Dodd Was Against AIG’s Bonuses Before He Was For Them???

It’s getting so you can’t follow the twist and turns in the AIG retantion bonus kerfufle without a map… It now looks like Chris Dodd was against the bonuses before he was for them but now he’s against them:

For a while, the disappearance of an executive bonus restriction from last month’s economic stimulus looked like sleight of hand worthy of a Las Vegas stage. No one could explain how the provision faded into thin air.

On Wednesday, Sen. Chris Dodd, D-Conn., acknowledged that his staff agreed to dilute the executive pay provision that would have applied retroactively to recipients of federal aid. However, Dodd said he was not aware of any American International Group Inc. bonuses at the time the change was made.

The provision was the subject of new attention this week because, had it survived, it would have prevented AIG from granting $165 million in bonuses to employees of its financial products division.

“I’m the one who has led the fight against excessive executive compensation, often over the objections of many,” said Dodd, the chairman of the Senate Banking Committee. “I did not want to make any changes to my original Senate-passed amendment, but I did so at the request of administration officials, who gave us no indication that this was in any way related to AIG.”

Putting aside for a moment that the Government has no business bailout failing private enterprises or regulating executive compensation… It appears that Sen. Dodd inserted an amendment that exempted contractually obligated bonuses agreed on before Feb. 11, 2009 into the stimulus bill at the request of the Treasury.

Bottom line Senator; you’re the one who changed the amendment allowing these bonuses to be paid. No matter how you try to spin it, it’s your responsibility.

The Hits Keep Coming: Chris Dodd Was For AIG Bonuses Before He Was Against Them

From Fox Business (emphasis mine):

Senator Chris Dodd (D-Conn.) on Monday night floated the idea of taxing American International Group (AIG: 0.9194, 0.1393, 17.86%) bonus recipients so the government could recoup some or all of the $450 million the company is paying to employees in its financial products unit. Within hours, the idea spread to both houses of Congress, with lawmakers proposing an AIG bonus tax.

The move represents somewhat of an about-face for the Senator.

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.

The amendment made it into the final version of the bill, and is law.

Separately, Sen. Dodd was AIG’s largest single recipient of campaign donations during the 2008 election cycle with $103,100, according to opensecrets.org.

I’d laugh but this isn’t funny… This whole faux outrage over retention bonuses at AIG is nothing more than an attempt to distract us from Obama’s falling poll numbers and asinine proposals like this.

As a resident of Connecticut all I can say about Chris Dodd is… May the curse of Mary Malone and her nine blind illegitimate children chase him so far over the hills of Damnation that the Lord himself can’t find him with a telescope. The man is an embarrassment to the good people of this state.

H/T: Michelle Malkin.