AIG Bonus Fiasco Could Hurt TALF
The public outcry about the AIG bonuses could hurt programs such as TALF (Term Asset Backed Loan Facility) that is supposed to help free up consumer credit. I agree that the bonuses are uncalled for during a time when the company has lost billions of dollars and has had to be rescued by the government. I do not think that the government has the right to get involved with every decision, including the bonuses. Yes, the government has the right to put a stop to future bonuses of companies who have taken TARP funds. However, I do not think the government has the right to change contracts that were already in place prior to the bailout. What type of message does that send to investors who are supposed to invest in programs like TALF? Investors are afraid of accessing TALF funds because they afraid the government is going to turn around and change the rules on them. Investors do not like uncertainty. How can investors calculate the amount of profits that they will make, if they are afraid that the government is going to restructure these programs every time there is public outcry?
I do not make the kind of money that guys make either (yet), however, I do not think that the government is doing the right thing by taking away these bonuses from these people. A deal is a deal and should be honored. In addition, Congress wants to tax these bonuses 90% as a measure to re coup these funds Congress, is acting out of anger and not rational thinking. This tax would be unconstitutional in the sense that it targets specific individuals. Was it not the unjust taxation of the British that was being imposed upon the colonies one of the reason this country was founded? Congress does not have the right to make up a tax law that to punish a group of individuals. The next law they will want to pass is a 50% tax on everyone that has brown eyes and blonde hair. The passing of such a tax is unconstitutional and goes against the fundamental principles on which this country was founded.
There is a lot of blame to go around for who or what started this financial crisis. I am not against the bailout of AIG as 86% of our country is. Unfortunately the repercussions from the failure of AIG far outweighs the bailout. Should AIG be allowed to fail, there will be millions of claims that would go unpaid. Imagine a scenario in which a domino effect would further ruin our economy, pushing it into a possible depression. Insurance claims for auto repairs or home repairs would go unpaid causing a series of other problems. I do not completely understand the entire scope of AIG’s business model. I do know that most of their problems stem from their heavy involvement in the financial derivatives. However, it is too late too cry over spilt milk. Forget, worrying about paying the bonuses. We need to worry about figuring out a way for a similar financial mess to never happen again.
The public outcry about the AIG bonuses could hurt programs such as TALF (Term Asset Backed Loan Facility) that is supposed to help free up consumer credit. I agree that the bonuses are uncalled for during a time when the company has lost billions of dollars and has had to be rescued by the government. I do not think that the government has the right to get involved with every decision, including the bonuses. Yes, the government has the right to put a stop to future bonuses of companies who have taken TARP funds. However, I do not think the government has the right to change contracts that were already in place prior to the bailout. What type of message does that send to investors who are supposed to invest in programs like TALF? Investors are afraid of accessing TALF funds because they afraid the government is going to turn around and change the rules on them. Investors do not like uncertainty. How can investors calculate the amount of profits that they will make, if they are afraid that the government is going to restructure these programs every time there is public outcry?
I do not make the kind of money that guys make either (yet), however, I do not think that the government is doing the right thing by taking away these bonuses from these people. A deal is a deal and should be honored. In addition, Congress wants to tax these bonuses 90% as a measure to re coup these funds Congress, is acting out of anger and not rational thinking. This tax would be unconstitutional in the sense that it targets specific individuals. Was it not the unjust taxation of the British that was being imposed upon the colonies one of the reason this country was founded? Congress does not have the right to make up a tax law that to punish a group of individuals. The next law they will want to pass is a 50% tax on everyone that has brown eyes and blonde hair. The passing of such a tax is unconstitutional and goes against the fundamental principles on which this country was founded.
There is a lot of blame to go around for who or what started this financial crisis. I am not against the bailout of AIG as 86% of our country is. Unfortunately the repercussions from the failure of AIG far outweighs the bailout. Should AIG be allowed to fail, there will be millions of claims that would go unpaid. Imagine a scenario in which a domino effect would further ruin our economy, pushing it into a possible depression. Insurance claims for auto repairs or home repairs would go unpaid causing a series of other problems. I do not completely understand the entire scope of AIG’s business model. I do know that most of their problems stem from their heavy involvement in the financial derivatives. However, it is too late too cry over spilt milk. Forget, worrying about paying the bonuses. We need to worry about figuring out a way for a similar financial mess to never happen again.
Labels: AIG, AIG Bonus, institutional investors, TALF, TARP
Credit Card / Financial news blog post by Todd Holliday at 8:18 PM 