Even more fallout from AIG


Last night, I felt an initial sense of anger and outrage WRT the hypocrisy evinced by Senator Chris Dodd’s revelation that he was responsible for the language of the federal bailout bill that allowed financial executives et al. to retain their bonus payments if said payments were contractual obligations between company and employee. [1] After sleeping on the matter, I find that I’m really not outraged here; at least, I’m not surprised. It merely confirms what I had already believed about Obama et al., specifically that they are no different than any other run-of-the-mill politicians, and that, like any other politicians, they are opportunists when an appropriate situation arises. That there is hypocrisy in their position is still distasteful, but it is not surprising. So much for a new way of doing things in Washington.

WRT the legislation being considered to reclaim the bonus payments from the AIG employees who received them, some additional points have been brought to my attention. Laurence Tribe, a Harvard professor (and former instructor for Obama himself), has indicated that his expert opinion is that such legislation would not constitute either an ex post facto law or a bill of attainder. [2] Given his connection to the President, I’m not entirely sure that his opinion is of the impartial variety, but that, to me, is neither here nor there; the real issue with his statement is that I don’t think he’s really addressed the core of the problem. His suggestions sound fine for fashioning future protections against abuses of federal bailout money, but it does not sound like he’s truly addressing the issue specifically regarding AIG’s employees. I find it difficult to believe that Congress could craft legislation that specifically targets the AIG employees, and still somehow make the language of the legislation sufficiently general to avoid a constitutional challenge. Even if the law uses generalized language, the intent of the bill is still clearly aimed at targetting a “closed class of identified and named individuals” (his words), namely, the AIG employees.

I am also not convined that the ultimate effect of the legislation would be “regulatory and fiscal” as he suggests. Implicit in the legislative route is that the contracts that guaranteed the bonus payments were valid agreements; if it were otherwise, would it not make more sense to pursue resolution through the existing legal mechanisms available to do so (contracts courts)? If the contracts are valid, how can depriving these employees of contractually guaranteed compensation be characterized as non-punitive? According to the Supreme Court, punishment may be defined thus: “What is punishment? The infliction of pain or privation. To inflict the penalty of death, is to inflict pain and deprive of life. To inflict the penalty of imprisonment, is to deprive of liberty. To impose a fine, is to deprive of property.” [3] Even if the language of the legislation is structured such that the law is characterized as regulatory or fiscal, the character of the demands for such legislation are anything but. Plenty of voices, citizen and politician alike, are clamoring for blood. These do not, to me, sound like the voices of reason; they sound more akin to a vindictive preacher, calling down fire and brimstone.

Additionally, Mr. Tribe’s opinion does not appear to address the concern that the legislation in question amounts to inflicting punishment without the benefit of a trial. Again, assuming that the contracts involved are valid ones, then no crime, either civil or criminal, has been committed. The Supreme Court has also upheld this view in its rulings: “…the Bill of Attainder Clause not only was intended as one implementation of the general principle of fractionalized power, but also reflected the Framers’ belief that the Legislative Branch is not so well suited as politically independent judges and juries to the task of ruling upon the blameworthiness, of, and levying appropriate punishment upon, specific persons…by banning bills of attainder, the Framers of the Constitution sought to guard against such dangers by limiting legislatures to the task of rule-making.” [4] Given this opinion, and that expressed by Madison himself (as mentioned in yesterday’s post) [5], the legislation being considered in Congress worries me. Additionally, if the legislation under consideration is intended to make future conduct of this nature unlawful, while also retroactively applying its restrictions to prior actions, by specific individuals, that were legal at the time committed, how can Congress argue that such legislation does not impose an undue burden on the individuals retroactively targetted? It appears to fail both tests WRT the Constitution prohibitions against ex post facto laws and bills of attainder. That Mr. Tribe believes that Congress can (somehow) circumvent these prohibitions successfully seems to imply that some form of obfuscation would be required; how else could the law both accomplish its goal of retroactively applying punitive measures, and also claim to not do so? How can such a law be considered healthy for our Republic? [6][7]

Mind you, I have no problem with this type of legislation, if it is applied to future situations; indeed, it appears that such legislation may be necessary in the very near future. [8] My concern now is with applying such restrictions to acts already committed and legal at the time committed. Again, I think it would be much easier to let the matter drop WRT the AIG employees, and focus on ensuring that such things do not happen in the future. It would be distasteful, undeniably, but I would rather be slightly annoyed by the situation than fearful WRT the future of liberty in our Republic.


[1]: CNN article, 18 March 2009: http://www.cnn.com/2009/POLITICS/03/18/obama.economy/index.html?iref=mpstoryview

[2]: http://business.theatlantic.com/2009/03/laurence_tribe_is_taxing_aig_legal.php

[3]: 71 US 277, Cummings v. State of Missouri, 1866: http://openjurist.org/71/us/277/

[4]: 381 US 437, United States v. Archie Brown, 1965: http://openjurist.org/381/us/437/united-states-v-brown

[5]: James Madison, The Federalist, Number 44.

[6]: Thomas More, Utopia, Book II: “…(it is) quite unjust to bind people by laws which are so numerous (that) no one can read through all of them or so obscure that no one can understand them.”

[7]: James Madison, The Federalist, Number 62: “It will be of little avail to the people that the laws are made by men of their own choice, if the laws be so voluminous that they cannot be read, or so incoherent that they cannot be understood.”

[8]: CNN article, 19 March 2009: http://www.cnn.com/2009/POLITICS/03/19/fannie.bonuses/index.html


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