Who cares about contract law?
President Obama has declared war on the insurer AIG, which the US taxpayers bailed out in the fall of 2008. His ire is directed at the retention bonuses that AIG is paying some of its employees, and he said that his Administration would "pursue every legal avenue to block these bonuses." Of course, he seems to be overlooking the fact that AIG is contractually required to pay these retention bonuses. Because the US Government decided to bail out AIG rather than force it into bankruptcy court, there is no legal basis for canceling existing contracts.
The issue of the retention bonus payments is an excellent example of why AIG should have been forced into bankruptcy, rather than having US taxpayers throw $170 billion dollars at it. And rather than merely state that the United States operates under the rule of law, President Obama is posturing that he intends to undermine it, if not actually undermining it.
The issue of the retention bonus payments is an excellent example of why AIG should have been forced into bankruptcy, rather than having US taxpayers throw $170 billion dollars at it. And rather than merely state that the United States operates under the rule of law, President Obama is posturing that he intends to undermine it, if not actually undermining it.
posted by David at 3/16/2009 11:32:00 PM
2 Comments:
I believe he actually said pursue *legal* means. So, he's asking that the contracts be reviewed, not that the be thrown out. And in the end the will likely be honored, but he can't/shouldn't be happy about it.
And remember it was not his decision to keep AIG from bankruptcy, that was something he inherited from his predecessor, and now that the taxpayers are all in, bankruptcy would be much harder to sell to the american people.
I'd see this as the natural continuation of the proposals to let courts arbitrarily and unilaterally redefine the contract terms of valid, legal mortgages.
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