by K Scappace

Created on: March 26, 2009

Congress must take care before trying to set limits on current corporate executive bonuses. In the recent case of AIG awarding bonuses after the bailout, a pre-existing contract provided for those benefits. They were legal and appropriately awarded.

Before they illegally paid out billions of taxpayer dollars, Congress should have demanded the right to interpret the existing contracts. They failed the public by not doing so.

In fact, are we asking the right questions? Was the bailout legal at all? Why has no one questioned the constitutional provisions of Congress bailing out AIG and other big insurers? These are private concerns not federally subsidized programs. Neither our Congress, nor any branch of the United States government should be in a receiver position of a bankrupt private company.

Unlike railroads, AIG is not vital to national defense in times of war. In the past, in order for a company to request a massive infusion of funds from the government the company had to have a national defense value. Transportation, communications, and utility companies sheltered under this umbrella.

The failure of an insurance company or a bank has, until recently, fallen under the purview of the Securities and Exchange Commision. Why were they so quiet during all of this? Did they know what was happening? Why are we putting the burden of this situation on Congress and not on the SEC?

The mass bailout of Wall Street never passed the best litmus test of all issues of constitutional correctness, the American people. We never got a chance to vote on it and just because other nations felt it was a good idea, does not mean it was the right course for our country to take. We the people, were denied the right to use our voices to stop the mismanagement of our tax dollars.

However, since we are stuck with the situation, we need to take care that as little freedom as possible is lost. We cannot treat these people as undeserving criminals because of our outrage.

In the current situation, Congress does not have a legal right to invalidate an existing contract. They ignored the contract issue in a rush to keep the giants from falling. Now they are stuck with paying millions of dollars in bonuses to the same people that created this situation in the first place. So are we.

One hopes that in future contracts, Congress will set limits on the disbursement of funds within these companies.

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