The Unsinkable brian cork™

Brian Patrick Cork is living the Authentic Life

Government + AIG = Darwin

March20

I began composing the particular post Monday, and updated it as the week played itself out.

To be candid,  I have not enjoyed this particular exercise.  I feel judgment rising in my throat. And, disappointment is weighing heavily upon me.

Nonetheless, off we go – posterity beckons, after all.

Monday joining and fanning a wave of public anger, President Barack Obama collectively blistered insurance giant American International Group Inc. (AIG) executives for:

“recklessness and greed.”

… and pledged to try to block the company from handing its executives $165 million in bonuses after AIG accepted (not took) billions in federal bailout money.

… Indian giver.

Recklessness?  What a fascinating, albeit ironic, choice of words.

What about recklessness in the form of broad statements from a global leader? What about slander Mr. President? What about honoring contracts? What precedent does this set in terms of jurisprudence? What about leading a lynch mob comprised of members of the House and Senate, and acting like a bunch of champanzees with shotguns?

See, this is what happens when you rush the hill (Capital Hill – get it?), carrying, a banner for “change” without thinking ahead. In the first days of his administration President Barack Obama couldn’t work fast enough to hurl (with big fanfare no less) money at AIG (and other companies, like banks, that have done the same thing AIG did) and demonstrate his proactive plan for the people. Obama approved the AIG bailout (that was set into motion back in November) in the first days of his Presidency. Problem is, no one asked enough audit-oriented questions, and apparently forgot what “business as usual” means when they promised the funds to begin with. Then, when it’s realized our new leaders failed to implement appropriate oversight and wrote blank checks, they can’t help but go all bug-eyed and point the fingers fast enough.

Walk with me.

Obama asked:

“How do they (that would be AIG and not Congress that approved the funds) justify this outrage to the taxpayers who are keeping the company afloat?”

And, then apparently added:

“This isn’t just a matter of dollars and cents. It’s about our fundamental values.”

So is taking responsibility when you make a huge blunder.

So…

What about the fact that those bonuses were openly reported in the reports submitted to the House and Senate for approval?

By the way… Ninety percent (90%) of AIG performed well in 2008. Only ten (10%) can account for the financial melt down that ended the year (under Government regulation and oversight). Our finger-wagging fearless leader deflects blame by arbitrarily stating that (all) AIG executives are collectively “greedy” – even though they are operating under employment contracts established last March when they agreed to work for $1 annually beginning in 2009. Apparently, the bonuses were paid legally; part of a program that had been disclosed in advance in filings that AIG made with the government. So, it might be argued that many of the executives meant to receive bonuses might have earned them. And, working for $1 sends a rather powerful message in terms of commitment and a desire to effect go-forward change.

I have not heard of, or read about, any one single Congressman or Senator offering to work for $1 until the American economic situation is under full steam and recovery.

NOTE: I understand that the bailout constitutes a “substantial change in circumstances” under contract law which has been used to render contracts null and void by way of precedent. However, that is not an excuse to use such legal language as leverage to bully citizens with legislation.

For example… New York Attorney General Andrew Cuomo told AIG he wanted a list of employees set to receive bonuses. He said his office will investigate whether the employees were involved in the company’s near collapse, and whether the $165 million in bonus payments were fraudulent under state law.

That is flat-out creepy. What next Mr. Cuomo – visiting their homes at dusk? Abducting their children?

Why isn’t issuing the funds and then bullying and intimidating American citizens using retroactive legislation as a blunt-edged weapon fraudulent under state and federal law?

Just to add more drama, no doubt, House Speaker (the voice of reason?) Nancy Pelosi, D-Calif., said:

“I call upon the executives at AIG to right the wrong they have done to American taxpayers, who are footing the bill for the most expensive government rescue in history.”

[…]

Jumping on the bandwagon, Iowa Sen. Charles Grassley then suggested that AIG executives should take a Japanese approach toward accepting responsibility for the collapse of the insurance giant by resigning or killing themselves.

The Republican lawmaker’s harsh comments came during an interview with Cedar Rapids, Iowa, radio station WMT. They echo remarks he has made in the past about corporate executives and public apologies, but went further in suggesting suicide.

Grassley:

“I suggest, you know, obviously, maybe they ought to be removed,”

“But I would suggest the first thing that would make me feel a little bit better toward them if they’d follow the Japanese example and come before the American people and take that deep bow and say, I’m sorry, and then either do one of two things: resign or go commit suicide. And in the case of the Japanese, they usually commit suicide before they make any apology.”

[…]

Never mind that Senator Grassley’s annual salary is almost four times that of his states average constituent – and, he receives health benefits equal to that of the President, while twenty one percent (21%) of Iowans don’t have ANY benefits.

Update:  Tuesday, Congressional Democrats vowed Tuesday to all but strip AIG executives of their $165 million in bonuses as expressions of outrage swelled in Congress over what they choose to refer to as eye-catching extra income for employees of a firm that has received billions in taxpayer bailout funds. Just to be clear, AIG would not be the only firm named by either Democratic bill, but there was no question whose executives inspired the legislation.

Senate Majority Rascal Leader Harry Reid, from the Senate floor declared:

“Recipients of these bonuses will not be able to keep all of their money.”

Chuck Schumer of New York gamefully added:

“If [you] don’t return it on your own we will do it for you.”

One more:

“They’re not going to get the financial benefit of those bonuses,”

…bleated Senate Finance Committee Chairman Max Baucus, D-Mont.

In the House, Reps. Steve Israel, D-N.Y., and Tim Ryan, D-Ohio, introduced a bill that would retroactively tax one hundred percent (100%)  of the bonuses above $100,000 paid by companies that have received federal bailout money.

Such stirring (and uninspiring if ill-informed) bravado from what appear to be federally supported brigands and bullys.

Interestingly, and not to be left out of the ugliness, it should be noted that Republicans are of the opinion that President Barack Obama’s administration should have done more to stop the bonuses.

Such inspiring wisdom, and insightful leadership.

I suppose it never occurred to those same geniuses paragons of virtu Representatives to consider doing their home work and having a clear understanding of the actual utilization of funds in advance of deployment. Actually… They probably did. It’s just that the 21st century media, and that spotlight, is such a bitch.

I wonder if the House and Senate plan on, and somehow rationalize, penalizing these executives for loss tax revenue based on reduced income.

Prediction:

President Obama and his Cabinet take a black eye when the word gets out that it was Democratic Senator Chris Dodd that wrote-in the loophole that allowed for the bonuses to poke through the bailout package to begin with (everyone knew the bonuses were part of the deal). Obama’s lack of experience, and therefore susceptibility to bad advice under pressure quickly became evident over the past three weeks. The question on my mind is whether he did this under direction of Treasury Secretary Geithner.

Conclusion:

I am defending AIG executives less than I am asking for a stand for best business practices. A call for forethought. A consideration of our Constitution in terms of jurisprudence.

Big businesses keep making the same mistakes. But, so does our government.

Brian Visaggio posted his brilliantly titled: There’s No Crimea-River Tuesday, and I added the following comment (in response to his own earthly father’s historical perspective comment):

So… Ignorant bureaucrats, across multiple administrations, monkey with business.

In my own line of work I help many executives (from start-ups to fortune 50) make better decisions. Sometimes we learn that the best, albeit toughest, decision is to close the business.

From Mr. Visaggio’s dissertation we might surmise that government does not allow for the natural progression of business. Perhaps some times it’s best to let companies fail and others, more strong, and able, to take their place. Certainly might be useful from an S&P standpoint.

There was a pretty good article in the Wall Street Journal a few weeks ago where the writer posited that perhaps we should stop pouring billions of dollars into companies that keep making poor decisions and invest in the many entrepreneurs that come on-line each year with innovative ideas that need less capital to vette themselves. It was something to that effect.

Elements of natural selection?

[…]

This made me suddenly realize (or, perhaps I have actually known all along because it should be in our DNA) that the best answer to the AIG situation, like many similar situations, is that government should have kept it’s hands off, as painful as that might seem, and allow companies to perish along the natural order of things.

Tip of the iceberg, this.

Peace be to my Brothers and Sisters.

Brian Patrick Cork

5 Comments to

“Government + AIG = Darwin”

  1. Avatar March 20th, 2009 at 10:12 am inspirio Says:

    Great.Continue with this 🙂


  2. Avatar March 21st, 2009 at 12:38 am truevcu Says:

    Hate to be that guy, but the post you cite as being Brian Visaggio’s was actually him being kind enough to quote my own blog post, which can be found here: http://trueblarg.wordpress.com/2009/03/16/cry-me-a-river/


  3. Avatar March 21st, 2009 at 12:51 pm Brian Patrick Cork Says:

    Good morning truevcu.

    It looks like, Mr. Visaggio did, indeed, write the post Crimea River . He did cite your Blog (which is terrific). But, my only intention was to cite his post (that cited your post).

    So, to avoid any confusion, or ill will, consider yourselves both cited – and, deeply appreciated.

    Cork


  4. Avatar March 23rd, 2009 at 6:37 pm homeschoolnewbie Says:

    “This made me suddenly realize (or, perhaps I have actually known all along because it should be in our DNA) that the best answer to the AIG situation, like many similar situations, is that government should have kept it’s hands off, as painful as that might seem, and allow companies to perish along the natural order of things.”
    I disagreed with Bush’s bailout… and I disagree with Obama’s. If we had followed, the natural order of things from the VERY beginning and not started down this road; we would NOT be here talking about bonus checks! OMG! No for-profit company should be “bailed out”…ever. This is ridiculous!
    Thanks Brian, great analysis!


  5. Avatar March 24th, 2009 at 6:06 pm Brian Patrick Cork Says:

    Thanks homeschoolnewbie.

    In recent polls people have now, apparently, turned their baleful eyes upon members of the House and Senate that received financial donations from AIG.

    This might be another indication that the oversight was deeply flawed and conflicted.

    I say structure rules that make good sense and abide by best-business-practices. Use those rules as a “lens” for light and truth . If any company fails under that fair scrutiny, allow them to fall to the wayside and make room for healthier competition.

    Natural selection.

    Cork


Email will not be published

Website example

Your Comment:

What’s All This About?

"What am I looking at?", you might wonder.

Lots of stuff.

Meanwhile, here, I discuss events, people and things in our world - and, my (hardly simplistic, albeit inarticulate) views around them.

You'll also learn things about, well, things, like people you need to know about, and information about companies you can't find anywhere else.

So, while I harangue the public in my not so gentle way, you will discover that I am fascinated by all things arcane, curious about those whom appear religious, love music, dabble in politics, loathe the media, value education, still think I am an athlete, and might offer a recipe.

All the while, striving mightily, and daily, to remain a prudent and optimistic gentleman - and, authentic.

brian cork by John Campbell





photos by John Campbell

 

Share this Blog with friends or enemies (via Twitter). Do it!:

Twitter Updates

Error: Twitter did not respond. Please wait a few minutes and refresh this page.

Archives

Email Subscription

Linkedin

View Brian Cork's profile on LinkedIn

Categories



%d bloggers like this: