Abuse of power in Washington D.C.

(What follows are excerpts from a House committee hearing focused on the investigation of AIG and the recent bonuses paid by AIG. For the full source of this transcript, click here and here.)

Barney Frank (D-Mass) is currently questioning Edward Liddy, CEO of AIG, a man who took the thankless job of cleaning up the insurance giant for $1/year salary.

FRANK: But let me ask you this now, and you said some people are giving the -- the bonuses back. I'm now asking you to send us the names of those who received bonuses who have not given them back. Can you do that?

LIDDY: Sir, I -- I will, if I can be absolutely assured that they will remain confidential.

FRANK: Well, I -- I won't give you that assurance, sir. And so if that's the condition, it would be my intention to ask this committee to subpoena them.

And I would -- this is a situation where there's a lot of public activity. I ask you to submit the names of the people who've received the bonuses, noting that they paid them back or not, and I won't accept them under confidentiality, personally. In fact, you submitted some confidential information and I, frankly, threw it away after reading it, because I was afraid I would inadvertently breach the confidentiality.

But I -- I do ask that you submit those names without restriction. And if you feel unable to do that, then I will ask the committee to subpoena them.

LIDDY: Congressman, if -- if you'll -- if you'll let me explain, I very much want to comply with your request. I would hope it doesn't take a subpoena. If -- if it does, then we will obviously comply with the law.

I'm just really concerned about the safety of our people, so let -- let me just read two things to you. "All the executives and their families should be executed with piano wire around their necks." "My greatest hope: If the government can't do this properly, we, the people, will take it in our own hands and see that justice is done. I'm looking for all the CEOs names, kids, where they live, et cetera."

FRANK: I -- I understand that. Many of us get these kinds of threats. Clearly, those threats are despicable, people who engage in this kind of threat. And I would say to my colleagues, the rhetoric can get overheated, so we ought to be very careful.

I will be willing to be guided to some extent by what the security officials may say, but this is an important public subject. And my guess is that there are probably threats aimed, without too much specificity, about people who work there.

So I am going to keep that request on the table. I will consult with the law enforcement people, including the federal law enforcement people. And if they tell us they think there is a serious threat, we will have to take that into consideration.

But I -- I do want to keep that request on the table, and it is subject to our being persuaded. If I ask for a subpoena, it would be a committee markup. It's not a unilateral decision. And, yes, it's legitimate to take into account.

The Artful Dodgers in Washington

Well, folks, they're livid. And we're livid. They're livid because we're livid. And they're busy squawking about just who our ire should be directed at.

I'm talking, of course, about our Congressmen and Women in Washington. You know, the ones that spout endlessly about standing up for you and me, the little folks. The big, bad villian of the day that they are nobly taking on for us are the greedy, no-good folks at AIG who (gasp!) were awarded bonuses (BONUSES!) after taking $185 billion of government bailout money.

When the news of that broke a couple days ago, the Republic was (how to put it politely?) royally pissed. And we have every right to be. It is an utter disgrace that our capitalistic system has continued to allow those who have failed to make good use of the capital to reap rewards commensurate with success.

Our trusted officials in Washington were mighty quick to join us in our gnashing of teeth. Senator Chris Dodd (D-Conn) is planning on holding hearings into how the bonuses came into being. Rep. Barney Frank (D-Mass) was disgusted, offering that "Maybe it's time to fire some people. We can't keep them from getting bonuses but we can keep them from having their jobs." Sen. Richard Shelby (R-Ala) summed up the sentiments: "This is horrible. It's outrageous."

Even President Barack Obama weighed in on the matter, saying that he was "choked up with anger."

That sure is a lot of righteous anger going around up there in Washington. There's only one problem. There was an amendment to the $787 billion stimulus bill passed by both houses a month ago that states the following:

"The prohibition [on bonus payments] required under clause (i) shall not be construed to prohibit any bonus payment required to be paid pursuant to a written employment contract executed on or before February 11, 2009, as such valid employment contracts are determined by the Secretary or the designee of the Secretary."

This amendment fully justifies the bonus payments that were part of the contractual obligations between the recipients and AIG, as negotiated prior to February 11, 2009.

Some have referred to this as the Chris Dodd amendment and suggested that, by inserting this amendment into the bill, Senator Dodd is doing a complete about face on his original position on bonuses.

Look deeper, however, and it may have become evident that certain folks in the Obama administration threw Dodd under the bus in order to save their own butts and deflect critism from themselves.

Regardless of how the amendment got in there, 60 Senators, 246 Representatives and one President cannot escape the fact that by voting for and signing the stimulus bill, they all but guaranteed those bonuses would be paid at AIG.

Now one begins to understand the haste with which our officials joined us in casting stones at the terrible, amoral corporate fat cats. If they didn't pick up the stones quickly and start throwing, we might just realize who was really to blame.

Should we rely on politicians to educate?

Recent (published) letter to the editor of the Raleigh News & Observer. I was responding to another letter writer who was encouraging Congressmen and women to educate their constituents on the stimulus package and what it meant for the economy.

First, his letter:

Our elected officials are there to help streamline the decision-making and represent the consensus of the people they represent. They also have to be teachers. Every good leader is a teacher first. I am too young to remember politics before George W. Bush, but having experienced his term, he might have had an easier time if he had taught. His politics were hidden behind shadows; very few people understood him and hated his decisions for it.

President Barack Obama's example now should be followed by the rest of the government: Go back to those whom you represent, get airtime on local stations, get in touch with as many of those you represent as you can, and explain to them what is happening, what it is hoped to accomplish, and how. We've heard where money's supposed to go. Now the big question is how is this going to help and how is it going to be implemented.

The workings of the government need to be made bare to the people it represents. Give us the benefit of the doubt; if we are to be educated then it should begin with knowledge of how our society works.

Now, my response:

The writer of the Feb. 25 letter "Obama the teacher" suggested that it is the responsibility of our elected officials to teach electors about the functions of government and the economy, particularly when it comes to explaining what is broken in our current environment and how recent legislation will fix it. Methinks thou dost trust too much.

I would contend that we the people should not count on our government to teach us but should educate ourselves in order to know when politicians and such are pulling the wool over our eyes.

Republicans and Democrats have far different ideas of what action (if any) is needed to rescue our economy. Which ideas are right? Well, that would depend on who is teaching, wouldn't it? If we need to be educated, we need to take that responsibility upon ourselves. The worst thing we could do is rely solely on the proponents of a particular plan for such enlightenment.

Letters to the Editor

As much as I rely on electronic media (blogs, online news, newsletters, etc) for my information these days, I still value the print edition of the local newspaper. Perhaps it's because I come from a lineage of journalists (my grandfather was Editor of the Charleston Daily Mail and Pulitzer Prize winner; my aunt is Editorial Page Editor of the same paper). Or perhaps it's because reading the newspaper was such a staple in my household growing up.

I know for certain that one of the reasons is that there is a lot to be said about professional journalists who put the time and energy into digging into the many angles of a story and writing them down for you and I to consume. There is a depth of information and analysis in print journalism that certain areas of the electronic medium still cannot compare to.

Being a loyal subscriber to our local Raleigh News & Observer, for those reasons above, I feel a sense of duty to speak my mind when something appears on their pages that I disagree with. Sometimes I feel a need, as a member of the local community, to offer a competing point of view with one of my fellow citizens. I use the Letters to the Editor avenue to offer such opinions.

I have written several dozen letters to the editor over the years, starting with a horrible and ignorant rant to my university paper about the illusions of importance in student government. That was when I was foolishly contemptuous of most things and people of which I was too cowardly to be a part.

I can't remember if I have posted any yet, but I will begin posting my letters to the editor on this blog. If my letter is a response to a particular story or another writer's letter, I'll print the source material as well so that you, the reader, may judge my own opinions. After all, it is my feeling that those who read this blog (I know there are a few) are part of my community as well. It is my only wish to exchange my ideas with others in my community, of course that I might persuade some to my points of view, but also that I might be persuaded on issues in which my depth of knowledge is wanting.

Good money after bad

The Houston City Council, thankfully, rejected today a proposal to use leftover money from emergency appropriations to help pay down certain debts of first time homebuyers in the city. The thinking (if you can call it that) was that people whose credit scores were only 10 or 20 points shy of allowing them to qualify for a mortgage could be helped over the threshold if only their balance sheets were given a focused little nudge by city government. The city would give up to $3000 for these individuals to use on car loans, credit card balances and other debts.

This is wrong on so many levels, it's crazy easy to just tick them off, so I will:

• It is not the city's money to give, it is the taxpayer's.
• How would you feel if you were told to pay your neighbor's credit card bill so that s/he could buy a home?
• Isn't the whole reason we're in this housing mess because banks made loans to borrowers that were not creditworthy? Will paying off someone's debts make them creditworthy? Maybe on paper, but not in practice. That's like putting makeup on a pig and calling it a supermodel. Giving loans to people who make the grade artificially will only set the system up for more problems in the future.
  
• Speaking of calling pigs supermodels, there's a reason a high percentage of lottery winners find themselves broke within ten years. Wealth is not something you have, it is a state of mind. So is broke. If a broke person wins the lottery, s/he is still broke, even though s/he happens to have money.

If you happen to be reading this and are one of the people who are missing a credit cutoff yourself, or are finding yourself behind in your finances, all things being equal (i.e. you haven't been laid off or had some other negative life event), take this opportunity to right your mind. Get out of the broke thinking and broke mindset. Because no matter who bails you out or how much, you'll still end up in the same difficulties unless you change the playing field, which is your thought process and practices regarding your personal finances.

GM and Chrysler should be allowed to die

Businesses come and go. Which ones survive in a free-market model (such is the direction the U.S. is currently skewed) is determined by whether they are able to deliver profits to their shareholders. For some time now, GM and Chrysler have not been able to do this. Ford, the third of the so-called Big Three automakers, has been able to pull itself up by the bootstraps and limp along while it's adjusted business model and product offerings heal its balance sheet.

The fact that GM and Chrysler are continuing to have a tough go at it is reflected in their announcement that they need still more money from the government to maintain operations (they are asking for tens of billions more, in addition to the 15-odd billion they got a couple months ago). Ford says it is fine for the rest of 2009. Economic Darwinism, or survival of the fittest in a business sense, mandates that GM and Chrysler either be dissolved, sold, or allowed to die.

Yes, there will be some pain if Chrysler and GM go away; ebbs and flows, pain and ecstasy, are inherent parts of an economy that is left free to grow naturally, without government intervention. The survival and health of Ford and foreign automakers should soften the blow, though.

The only other alternative is likely government control of the auto industry. Though they are asking for a loan, look at what is happening to banking. Surely, there are people in legislative power licking their chops at an opportunity for the government beauracracy to get its hooks in this new industry.

Government is notoriously bad at running businesses; there is ample evidence of this throughout history. Business and industry grows when allowed to select experts to direct their growth. Government has no such experts. Nationalization of the auto industry would mean greater pain in the long term than allowing two-thirds of the Big Three to come to their natural end.

Latest readings

For the past several months I've been working my way through "Rise to Globalism" by Stephen Ambrose. It is my first Ambrose book and my first history book since college (nay, high school) and I have to say I am enjoying it thoroughly.

It is an easy read that begins before WWII and tracks the evolution of American foreign policy up until the first Gulf War.

I am spending more time reading it lately so I can get it on up to my
sister, who is also reading up on history I think (aside from tort history that is). In addition, I have a pile of new books to start getting through thanks to a B&N gift card from my sister and brother in law.

"Rise to Globalism" is a good start for a just-enough-depth overview of the history behind out foreign policy.