Maybe the idea of paying bonuses when AIG has been bailed out four times in less than a year is nothing short of ridiculous. But what’s more ridiculous is to allow Congress to pass a bill that imposes a tax rate of 90%. Number one, the contract was drafted months before this bailout of AIG happened last year. What they are doing is simply honoring the contract. Maybe there is the danger that when these bonuses are paid, people can easily walk away much richer with taxpayers’ money. Maybe it SEEMS like the people who caused the trouble in AIG are being rewarded. It was the contract. That’s not even the point. Some of those who received the money have already returned it. It has been less than a week since this issue emerged and the bonuses were paid but the Congress is acting as if it was a matter of life and death.
What’s more, their instant solution to the problem is taxation (not only of AIG executives) without consideration for those (from others) who may be worthy of receiving bonuses. Reading up on the bill, there were no other clauses that show flexibility of the bill. Flexibility such as exceptions as to who get to keep all or part of the money. Being a 5-page bill, it screams “TAX THEM. PERIOD.” Not only does this show the lack of creativity and consideration, it especially shows the lack of competence of those in Washington. What they’re doing is capitalizing on public anger in order to bring forward their own agendas. I don’t deny the bonuses are completely outrageous and in SOME CASES, unnecessary. But to pretend as if NO ONE is worthy of receiving some form of reward is just plain stupidity. Furthermore, this highly politicized situation only shows how much demonization of Wall Street has been taking place. Demonization without the slightest consideration for the kind of impact and unintended consequence of the kind of bills that are being produced in Washington.
This approach clearly manifests the kind of government that is currently in place. So much blame has already been given to the banks and everyone else who has received a bailout. But don’t act as if those in Congress are heroes. They are far from it because if not as despicable as the irresponsibility that was abundant on Wall Street, which led to the crisis, the fact that these people can pass bills on a whim (don’t forget that the Democrats have enough people in the House to pass bills they want without any help from Republicans) and take advantage of the kind of anger that steams out of Main Street.
The question is, when will these Congress people be ever made accountable for their actions? Maybe it is impossible to see the long-term effects of what is going on now, and what else is about to come from Washington but when we face another recession where banks are involved, they become the scapegoats they have been time and time again while Congress act as if they were clean from the mess all throughout. Talk about hypocrisy. The scary thought is not how many more times banks will be asking for money, or the inflation that will result from the huge money printing by the Treasury, or the bonuses that are and will be paid out. It’s probably not even the future recessions or the second Depression. Rather it is the idea that if and when all these happen, the Congress can once again get away with it as if they are fighting for people’s rights when they are in fact the ones depriving them.
I recognize that whatever is happening or happened in the past is significantly affected by flaws in the laws and legal system that exist in the US. Don’t forget that these are all products of lawmakers and as imperfect as they might be, one just has to realize that the kind of discourse that happens in Congress is not enough. Maybe many of them work and I am not implying that tighter regulations that impose restrictions be imposed. Instead these people need to proceed with caution particularly for those that have serious implications for the market. Regulations that aim to monitor or provide oversight into the functioning of the markets or the economy merit further attention that those that dictate the do’s and don’t’s for businesses and companies.
If there was more caution in repealing the Glass-Steagall Act, maybe the crisis we are going through right now would be in a much smaller magnitude. If the Community Reinvestment Act passed in the 70s was crafted with more foresight into the kind of lax lending that might persist, as what gave birth to the subprime mortgage crisis, there might be no crisis in the first place. The crisis was not a childbirth of deregulation. It was rather the childbirth of the loopholes in legislations that allowed people to take advantage of the deregulated market. If there were provisions in the Community Reinvestment Act specifying the group of people who are qualified for subprime mortgages, it couldn’t qualify as an anti-capitalist, anti-market regulation. What it does provide is a measure that assures people’s ability to pay what they owe later on. It does not tell that the market need to be completely shunned from being able to issue mortgages.
There are many other examples but this only points to the fact that whatever takes place in Congress is insufficient and the kind of approach the Congress employed yesterday when they passed the bill that taxes bailout money recipients 90% magnifies this. Without proper action from the White House, the Congressmen who supported this and would probably make the situation worse could get away, yet again. The last laugh’s on them, in their minds they’re saying, catch me if you can.