Bailout and financial crisis

[Mother_Theresa]

@lbksig

[quote]I don’t want the government to honor agreements that involve sending my tax dollars to hucksters. But it did. Whatever miniscule, irrelevant little scuff the rule of law temporarily suffers as a result of the government getting that money back is well worth it.

I don’t want my government to throw out hundreds of years of contract law because of a public outcry. I want to know that if I enter into a contract that it is enforceable for everyone, including the government. It isn’t a minuscule, irrelevant little scuff when you ignore all legal precedent and try to break contracts. That is a scary proposition in which the laws we have are subject to the whims of whoever is in power. Laws shouldn’t be for the sole purpose of punishing or benefiting one company.[/quote]

I’m with Obama (and Gao bo han and most everyone else) on this one. I read that article yesterday and didn’t buy it at all. Here’s what the article said about the sanctity of honoring contracts.

@the article arguing the bonuses should be paid

In the longer term, having the government void existing contracts, directly or indirectly, as with the suggestions of a punitive tax on such bonuses, will make enterprises less likely to enter into arrangements with the government – even when that is in the national interest. This is similarly counterproductive.

That’s complete hogwash. Yes, the government completely screwed up, repeatedly, in not recognizing those apparent contractual obligations before making two huge mult-billion dollar investments. They should have seen them in advance (assuming AIG didn’t fraudulently deceive, mislead or fail to disclose them in response to the government’s requests) and demanded that they be substantially modified if AIG was to receive any money.

But, just because the government screwed up and handed over the money without doing their job properly, doesn’t mean (a) the contracts are legally enforceable (maybe they are, maybe they aren’t; it depends on the exact terms of the agreements and other facts the lawyers are presently looking into) or (b) it would be some bizarre dirty trick for the government to try to alter or void the provisions now, and certainly (c) it wouldn’t be “throwing out hundreds of years of contract law.”

LAWYERS DO THAT KIND OF STUFF ALL THE TIME – find their client in a crappy position and scrutinize the contracts and applicable laws to look for any possible argument to try to gain benefit for their client. There’s nothing scummy or dishonest about that; it’s called zealous representation.

Everyone knows the whole world is pissed off at incompetent executives receiving millions for lousy corporate performance. Do you really believe bankrupt companies won’t come to the government begging for handouts in the future, because now they’ll be wary that the govt may wish to strike down absurd bonuses for crappy performance? No, everyone already knows damned well that for the most part such undeserved bonuses will be unavailable to those begging for handouts. And, beggers can’t be choosers. Future bankrupt companies will keep coming begging for handouts, regardless of what happens in this case, because everyone wants free money. The article is wrong.