What was the problem the Obama administration had with the General Motors plan to restructure the company? What was the plan GM CEO brought to the government that resulted in his ouster from the company? Read more
Not only does Rep. Barney Frank (D-Mass.) want to slander corporate executives by dragging them in front of some stupid committee hearing and confiscate their pay retroactively, Frank wants to have control over all compensation of any employee who works for a company that may have received bailout funding.
My question is, will the Treasury secretary be able to retroactively change the union contracts negotiated with car manufactures who have received bailout funds?
My guess is that will be off the table. (More on this soon)
Beyond AIG: A Bill to let Big Government Set Your Salary
… in a little-noticed move, the House Financial Services Committee, led by chairman Barney Frank, has approved a measure that would, in some key ways, go beyond the most draconian features of the original AIG bill. The new legislation, the “Pay for Performance Act of 2009,” would impose government controls on the pay of all employees — not just top executives — of companies that have received a capital investment from the U.S. government. It would, like the tax measure, be retroactive, changing the terms of compensation agreements already in place. And it would give Treasury Secretary Timothy Geithner extraordinary power to determine the pay of thousands of employees of American companies. …
It applies to all employees of all companies involved, for as long as the government is invested. …
… the bill gives Geithner the authority to decide what pay is “unreasonable” or “excessive.” And it directs the Treasury Department to come up with a method to evaluate “the performance of the individual executive or employee to whom the payment relates.”
Where are we going with all of this Congressman Frank? Just admit it congressman, you just want the government to control everything. When this does not work out – and it will not work out – I guarantee the problem will be the way the private sector does business.
If Government Motors fails, it will not be the fault of GM or the government, it will be the fault of Toyota, Nissan, Honda and Ford – the companies who have not accepted TARP funds yet.
Last fall it started. Congressional legislators like Senator Dick Durbin (D-Ill.) proposed – and president-elect Obama supported – “cram down” legislation allowing bankruptcy judges the ability to modify mortgages of primary residences. If lawmakers thought this was a good idea, it was certain that future legislation would allow modification of other loans including automobiles, credit card debt and student loans.
Business Week writer Alison Damast introduces us to Robert Applebaum and the Web site StudentLoanJustice.org. Loan justice… what a hoot.
In just two short months, Robert Applebaum has become something of a spokesman for a generation of people burdened with student loan debt. Applebaum, a 35-year-old attorney in New York, started a Facebook group in January called “Cancel Student Loan Debt to Stimulate the Economy,” fed up with news reports about bank executives spending millions to redecorate their offices and receiving hefty bonuses. “I wanted to rant, so instead of sending an e-mail to a couple of my friends, I decided to start a Facebook group,” says Applebaum, who finished law school owing $80,000 in student loans. “I figured maybe just a few of my friends would join.”
He was wrong. By the end of the second week 2,500 people had joined, and the group now has more than 138,500 members, many of whom are pressing their representatives in Congress for legislation that would forgive student loan debt. “It’s just snowballed,” says Applebaum.
More class warfare. It’s not fair that you have a job that pays more than I get. Wahhhh, wahhhhh, WAHHHH! I deserve it! I want it!
Applebaum, who graduated from Fordham Law School in 1998, took a job as an attorney at the Brooklyn District Attorney’s Office after graduation, at a starting salary of $36,000 a year. His salary was so low that he put his loans in forbearance for five years, until they ballooned to $100,000. “Despite having a law degree, I’m middle class and I don’t have any money at all,” he says. “I don’t own a house or a car. My only assets are my couch and television.”
Applebaum seems to have made a bad investment choice. He elected to go to law school, get into serious debt and made assumptions about what his salary would be after law school.
Chances are, he never researched what his salary would be after law school.
Alan Collinge is another victim, with my emphasis added.
Alan Collinge, author of The Student Loan Scam and founder of StudentLoanJustice.org, has been a student loan activist for nearly four years. He is working to reverse the bankruptcy laws and establish limits on how lenders pursue borrowers. Collinge graduated with three degrees in aerospace engineering from the University of California several years ago and $38,000 in student debt, which he’s still working to pay off. He’s traveled around the country talking to elected officials and working to restore what he considers “basic consumer” rights. As of yet, he’s had no luck, but he hasn’t given up hope. “Until someone shows me why student loans should specifically be exempt from bankruptcy protections, it’s definitely a fight worth fighting,” he says.
Looks to me that Collinge is not even looking for a job in aerospace. Maybe he likes what he sees in the community organizer field.
Damast missed an important part of this story. Sure, she’s pulling heart strings by telling stories of victims who had to take drastic measures – like have mom and dad mortgage the house to help – but what is the root cause?
College costs have gone through the roof. Tuition inflation rates have average twice that of general inflation since the mid-1970s. With tuition hikes averaging about 8 percent per year, that means that tuition can double in nine to ten years.
Recently, college tuition cost increases have slowed down due to demand, but they still are going up. What are colleges and universities doing to keep costs reasonable? State schools certainly do not seem to be cutting off illegal aliens getting in-state tuition rates, they love these programs since more government funding is guaranteed to come their way.
At the federal level, reduced student loan interest rates, tax deductions for loan interest, tax deductions for tuition, and more Pell Grants simply provide an environment where schools can increase tuition at will. In Florida this week, the state claims a 15 percent increase in tuition at state universities is justified because rates are below average in the United States. They note some of the tuition increase will be offset by increased Pell Grant funding provided in the stimulus package.
Update: Yup, Allah Hot Air is on this topic earlier this afternoon, and I heard Howie Carr was discussing as well. Allah seems to have his own student loans to pay off…
Unfair to those who repaid their loans or didn’t have loans in the first place? Sure — but no more so than dumping oceans of TARP cash on the banks that created the crisis. And if, if the stimulus effect of loan forgiveness is as profound as these guys think, taxpayers would be repaid in the form of a quicker economic rebound. One question, though: Why do they assume forgiven debtors would spend the savings instead of pocketing them or using them to pay off other debt a la tax rebate checks? The answer, maybe, is the sheer amount of money we’re talking about. In my case, forgiving federal loans would save me north of $8,000 a year; toss private loans in there and it’s a cool ten grand. I’d sock some of that away, but with tens of thousands dollars suddenly freed up, I’d also start looking at home prices in the area. Stimulating! Exit question: Who’s onboard?
Dude, I like your stuff, but I’m not paying anyone else’s mortgage and I don’t want to pay your student loans. I paid mine off years ago, and we’re still paying off my wife’s loans – at an interest rate of about 1 percent (that’s free money folks). What more do you want?
Democrats in Congress usually have a “thing” for privacy rights. Listening in on international phone-calls were one end of the conversation is a known or suspected terrorist? That’s bad. However, not all such intrusions are equal.
McCarthy-esque intrusion into the lives of folks working on Wall Street? Wielding the tax code as a weapon against employees who allowed the offer of retention bonuses to convince them to remain in AIG’s employ that they might carry the government’s water? How about a fishing expedition into the remuneration of Merrill Lynch employees by Andrew Cuomo? That, it would appear, is hunky-dory to the high mavens of privacy rights and civil liberties, death threats and hate-speech concerns notwithstanding.
Update (Jim): I would say its unusual when Dave and Chris Matthews actually agree on something.
One day after saying he had no idea how the “Bonus Loophole” ended up in the Stimulus bill, CNN uncovers that in fact Chris Dodd’s staff wrote the loophole in an amendment to the Stimulus Bill that allowed the AIG bonuses to be paid. It’s more than just an embarrassing moment for Dodd, it’s another broadside to his re-election bid.
The interview which just aired was an embarrassment. Dodd was forced on live TV to backpedal on his previous comments that he had nothing to do with the bonus loophole. And in the process he fingers the Treasury department as the force behind the loophole. That’s Geithner and that’s Obama. Feigned outrage!
His reasons for making the changes, at the behest of Treasury, are certainly plausible. So why did he not say that yesterday, and why should we believe him until we hear from Treasury? And why does this not damage his credibility on everything? And if it is true, then Geithner and Obama both knew about these bonuses and now are just playing the populist part.
This whole thing stinks and it started with feigned outrage and a lie!
Update: The real outrage is spreading. Make sure you check out Ed Morrissey’s take at Hot Air and make sure you read comments from folks around the country.
In other words, Dodd lied. He spent a full day lying to the American people, and now he’s trying to shift blame to others. He and his pal Barney Frank want to publicly name the people who received the bonuses authorized by Congress and this administration in an attempt to deflect blame for their own actions.
If Dodd had a shred of honor, he’d resign. If he had a shred of honor, though, we wouldn’t be in this mess.
Once again … it’s the lie that will cost the Senator more than his “Bonus Loophole”.
Talk about Mr Smith goes to Washington. Shep Smith jumped ugly on Congress … and Chris Dodd. It is an amazing performance and worth watching for sure. Enjoy.
Video now up … sorry about the delay. New software today, still working out the kinks.
He went on to call today’s hearing into the AIG bonuses before the House Financial Services subcommittee a distraction and suggested that Fox bill Congress for all of the needlessly lost commercial time covering the hearings live.
It’s a distraction only if you lose sight of the big picture but well worth reporting, at least the way Shep did today. As we have been saying for two days … Congress is at the heart of this whole bonus boondoggle and the meltdown of Wall Street as well.
Update: Here’s the video of Shep condensing the AIG hearings down to a complete distraction from the banking crisis … and Fox News … “Fox should bill congress.” Enjoy.
First make a law … then implement it … then express outrage when it is … mix it up and you get …
The $165 million AIG bonus flap that has caused outrage around the nation has its roots in a provision of Connecticut labor law that political leaders say needs to be changed.
The embattled insurance giant, which has received about $170 billion in federal bailout money, has said it is legally bound to pay the bonuses because of a provision in the Connecticut Wage Act. Many of those receiving the bonuses work for AIG’s financial products unit in Wilton.
If AIG failed to pay the bonuses, under state law the company could be forced to pay a double penalty, legislators said.
“The state of Connecticut should not be used as the scapegoat or the excuse for AIG to pay these outrageous” bonuses, said House Republican leader Lawrence Cafero of Norwalk.
Read the whole story to hear the outrage from all of the lawmakers … ummm … who wrote and passed the law.
Art Laffer pretty much summed up the Government’s bailout of everyone from AIG to GM and Chrysler … they shouldn’t be in the business in the first place. It’s very funny. Read more
Hot Air blogged on this yesterday but I feel like we did not give it the attention it was due … so here’s the link to the Hot Air post and we will be featuring it in the first half hour of the show.
For those of you not familiar with Joh Stossel he is a critical thinking journalist who does not hide his libertarian leaning philosophy. His reports always reflect his affinity for personal freedom and individual liberty and his reasoning is difficult to debate because it is based on sound logic. I like John Stossel very much and after viewing this report you will understand why.
BTW his contrarian view was on full display when he did his special on global warming, the report that gave us .. “I worry … my mom worries.”
Today, the external auditors for General Motors expressed their concerns over the viability of one of the three US car-makers:
“Auditors for General Motors today said there is “substantial doubt” that the struggling automaker will remain financially viable and able to continue operating, raising doubts about whether the company will have to declare bankruptcy or can continue to qualify for Treasury Department loans.”
In layman’s terms, this means that, all other things being equal, GM being in business in the near future (i.e. the next twelve months) is a questionable proposition, despite the billions the government has poured into the company.
A rational investor knows when to cut his losses… any bets on the government’s next move?