Obama, Barney Frank (shiver), various Dem staff people and the media are in an uproar over $165 M in bonuses being given to AIG executives because it's a company that's been bailed out. Nevermind that the contracts are legal and in full force and effect - and cannot be broken. The Constitution prohibits either the Federal government or state governments from interfering with valid contracts. If we violate those contracts, then no contract in America is worth anything. Goodbye to the basic building block of our commercial society. Hello Socialism.
Here's how some of the bailout money has been spent, which is why Obama and henchmen want us to look in another direction:
Goldman Sachs, $13B
Merrill Lynch, $7B
Bank of America, $5B
Large Banks in foreign countries, $62B. For example:
- UK, $13B
- Germany, $17B
- France, 19B
- Switzerland, 5B
America got $44B - of our own taxpayer money. This is stunning and our current Administration knows it. That's why Obama is on Jay Leno telling us to "Look over there!" Not at him or the mess he's creating.
Why do companies give bonuses rather than pay someone a straight salary? Because President Clinton signed into law the Revenue Reconciliation Act of 1993 that said if a company wanted to compensate an employee for over $1M and didn't use a bonus, it wouldn't be able to deduct it from its taxes.
But that's just about bonuses. How did Fannie and Freddie start the ball rolling in the bailout by getting into such a mess?
Quotas.
Beginning in 1995, new regulations were put in place. Banks were graded on how well they responded to minority groups.
Also in 1995, the head of HUD moved Fannie and Freddie toward a requirement that 42% of their mortgages would go toward low and moderate income families.
2000, Andrew Cuomo raised the low and moderate income loaning to 50% and dramatically hyped Freddie and Fannie's mandates to buy mortgages in underserved neighborhoods for those with very, very low incomes and strongly urged them to enter the subprime loan market.
2000 to 2002, they went from $2B in subprime mortgages to $15B.
2003, they bought $81B in subprime securities.
2004, Bush took the percentage of loans to people who shouldn't have gotten them at all from 50% to 56%.
Barney Frank, all along the way, claimed there was no problem. Mr. Oversight.
And now Barney Frank on the bonuses: "It does appear to me that we're rewarding incompetence; forget about the legal matter here for a second. These bonuses are going to people who screw things up enormously."
Is he serious? I am constantly astonished at the lack of insight of politicians who go on air and berate people who follow the rules they set up and see no fault in themselves. The idea of Barney Frank calling anyone else incompetent and ranting about people screwing things up - well, I'm nearly apoplectic.
And people will watch The Tonight Show and be charmed by Obama, and listen intently while he talks about bonuses and deflects attention from the real problem.
Look over there!
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