Chapter 11? And other AIG musings...

In all of this AIG mess, I continue to wonder what would have happened if the government would have let business run its course. There is a reason that Chapter 11 Bankruptcy exists! It is for companies that have gotten into contracts that they can no longer honor, so that the may reorganize. Hmm...this situation sounds eerily familiar... Now, as it stands, the AIG bonus scandal is dominating headlines, and taking the focus away from the real crooks in this situation: Congress.

Simply put, AIG was required to pay these bonuses; Chris Dodd wrote the contract that said so. A lot of those executives don't take a large salary because of a salary tax. So, in an effort to keep more of their money, they started giving bonuses. Now, the government is attempting to take back the bonuses, tax the snot out of them, or require that they are "voluntarily returned" if AIG is to receive anymore tax dollars. Say that you, Mr. Average American, make $40,000 per year. However, your company elects to pay you $1 in salary and a $39,999 bonus at the end of the year. What happens to your take home pay as soon as your "distasteful bonus" is dismantled? And, since when can Congress be so judgemental? Last I checked, this country was in some serious debt, and earmarks are still being put into bills.

Consider this analogy: Mr. and Mrs. Average American just lost their jobs but have yet to pay off their house. Mr. American decides to continue to uphold his family's contractual obligation to pay their monthly morgage, and his family becomes outraged. They might say, "How can you possibly justify paying this amount of money every month?! We don't have any income!" The next day, Mr. American pulls up in the driveway in a brand new Rolls, and nobody puts up a fuss.

How backwards is that? But, that's exactly what is happening in our country right now.