AIG and the Posturing Democrats

My friend, Congressman Mo Udall, used to tell the story of the congressman in the 1930s who introduced Franklin Delano Roosevelt’s court packing plan.  FDR wanted to do away with opposition to his recovery plans by the Court.

The legislation caught so much heat that the congressman eventually came out against the plan, and even led the floor fight to defeat his own legislation.  One of his constituents — a woman — wrote to him with congratulations for his stand on packing the court.

He wrote back, asking “Which one?”

The story came to mind this week when various members of Congress were seen railing on television about the AIG bonuses.  After receiving $150 billion from taxpayers, AIG executives decided to pay tens of millions in bonuses to their executives.  The result was not surprisingly, a firestorm of criticism, with Congressman Barney Frank and Senator Harry Reid leading the pack.  What is surprising is that both Frank and Reid, and others, had fashioned the legislation that gave the series of bailouts to AIG.

Somehow, the issue of non-control of the corporations that are effectively now owned by the government because of bailout money, escapes me.  First of all, what was to prevent the Congress from inserting conditions on their bailout of no bonuses?  That is, of course, a rhetorical question, because the Congress could have placed any condition it wanted in the bailout bill.

AIG explains that it is bound by contract, contracts made last year, to pay the bonuses.  Not that I don’t believe what AIG tells us, but what is to prevent the Congress or the Secretary of the Treasury from examining those contracts?

Secondly, what company would sign a contract paying a bonus to a failed executive?  Aren’t bonuses usually paid for successful operation of companies?

Getting back to the vociferous complaints by the same members of Congress who fashioned the bailout legislation, the situation is very much similar to the Mel Brooks movie, “Blazing Saddles.”  The pertinent segment of the movie involved a black sheriff having been appointed to enforce the law in a small, racist, western town.

When it appeared that the good townsfolk were about to do injury to the new black sheriff, he pulled his six gun and held it to his own head, saying, “Back away, or the black guy gets it.”

Sympathy for the supposed prisoner then took over, and the villagers backed away, saving the sheriff from lynching.

That segment is what comes forward in the mind when we see the loudly complaining politicians denouncing AIG for its latest act of greed.

What this really tells us is that there is more of a close connection between members of Congress and Wall Street conmen than we realized.  Certainly, they should have learned a valuable lesson after the gigantic scam run by George Bush and Henry Paulson last year with the $700 billion TARP funds being handed over without condition.

Similarly, how complicated would it be to have placed conditions on any further taxpayers’ money being handed over to the corporations “too big to fail?”

America’s downfall began in the 1980s when Democrats in Congress started taking money from corporations for their election races.  Before that, they took only labor money and money from ordinary citizens who had no ax to grind.  Since the 1980s there has been almost no criticism from Democrats of the excesses of the corporate world.  That lack of questioning and of criticism has led to more and more deregulation of the financial industry, which has led us to the condition we face today.

Washington needs to divorce itself from Wall Street.  Members of Congress need to stop accepting corporate money so they can become, once again, somewhat independent operators.  Until then, we are in for more bailouts, more greedy transgressions by Wall Street, and more of the kind of show business nonsense that we’ve been witnessing in recent days.

JAMES G. ABOUREZK is a lawyer practicing in South Dakota. He is a former United States senator and the author of two books, Advise and Dissent, and a co-author of Through Different Eyes. This article also  runs in the current issue of Washington Report For Middle East Affairs.  Abourezk  can be reached at georgepatton45@gmail.com

 

James Abourezk is a former US senator from South Dakota. He is the author of: Advise and Dissent: Memoirs of an ex-Senator.

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