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Obama Moves to Block AIG Bonuses
Politics |
2009/03/19 11:19
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A tough-talking President Barack Obama moved yesterday to block the $165 million in bonuses for American International Group executives that prompted a new wave of outrage at corporate America and taxpayer bailouts.
Despite the aggressive approach, it's unclear whether he can get the payments back. But the White House said it would modify the terms of AIG's pending $30-billion bailout installment to at least recoup the $165 million the bonuses represent. That wouldn't rescind the bonuses, just require AIG to account for them differently.
Separately, state Attorney General Andrew Cuomo said he will subpoena the names of AIG officials involved and copies of their employment contracts to determine whether the bonuses are legal, given the firm's weak finances.
Manhattan-based AIG was saved from insolvency by $170 billion in taxpayer-backed loans - and reported a $61.7-billion loss in the fourth quarter last year. It revealed on the weekend that it used more than $90 billion in its federal aid to pay out banks, some of which had received their own U.S. government bailouts.
Yesterday, Obama gave voice to rising disgust since Saturday, when the bonuses became public. Cuomo said the bonuses were paid to members of the specific AIG unit at the root of the firm's near-collapse from bad, mortgage-backed debt.
How do they justify this outrage to the taxpayers who are keeping the company afloat? Obama asked. He asked Treasury Secretary Timothy Geithner to use that leverage and pursue every legal avenue to block these bonuses and make the American taxpayers whole.
AIG has said it had no choice but to pay the bonuses under agreements signed last year before it got into difficulties and sought a bailout. Spokeswoman Christina Pretto said: We are in contact with the attorney general and will, of course, respond to his request.
Obama didn't specify a possible legal strategy for blocking the payments. However, Cuomo said he was investigating whether the employment contracts cited by AIG were legally flawed - technically fraudulent - under state debtors and creditors law. They would be, he said, if AIG management knew when it signed them that weak finances would render them unable to pay the bonuses without outside help. Contracts can be renegotiated, he said, adding, You could argue that if the taxpayers didn't bail out AIG those contracts would be worth the paper they're printed on.
Experts in corporate law said the Obama administration has an important advantage in the controversy. In return for the bailout, the government now owns 80 percent of the company. They're the big dog in the room now and can put some leverage on AIG to straighten this out, said attorney Jim Ervin, a partner at Benesch, Friedlander, Coplan amp; Aronoff Llp in Ohio.
Attorney Ross Albert, a partner at Morris Manning amp; Martin Llp of Atlanta, said it's difficult to be specific about the government's options without seeing the contracts in question, but added, If the bonus is based on achieving some bench mark and it turns out the bench marks achieved were through accounting hocus-pocus, not reality, they wouldn't even have a legal right to this bonus, Albert said.
But Stephen Breitstone, a tax specialist in the Mineola law firm Meltzer, Lippe, Goldstein amp; Breitstone Llp, said the law Cuomo cited is intended for cases where companies facing bankruptcy are seeking to keep money away from creditors by giving it to employees or others. If he can prove that's what this is, that's a pretty bold accusation, Breitstone said.
Labor and employment attorney Carmelo Grimaldi, who works with Breitstone, said, I think the government is going to have a difficult situation given the fact that these contracts were made. If they provide for bonuses, AIG faces a breach of contract if they don't pay these bonuses.
This story was supplemented with Bloomberg News and Associated Press reports.
Challenges to AIG's actions
President Barack Obama wants to block bonuses paid by AIG. Here are two weapons in his arsenal:
NEW TERMS. Modifying terms of AIG's pending bailout installment to at least recoup the equivalent in bonuses.
MAJORITY OWNERSHIP. The government owns 80 percent of AIG - an important advantage because it can force the company to change practices.
State Attorney General Andrew Cuomo has begun issuing subpoenas for AIG information.
KEY PROBE. He is investigating whether AIG employment contracts were fraudulent by promising bonuses executives knew the company could not afford. |
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Cheney Has Discretion Over Records
Politics |
2009/01/20 09:16
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A federal judge in Washington, D.C., ruled that, despite the government's constantly shifting positions, a coalition of historians and archivists were unable to prove that outgoing Vice President Dick Cheney and his office staff intended to illegally destroy records at the end of his eight-year term.
nbsp; nbsp; U.S. District Judge Colleen Kollar-Kotelly said she was bound to apply the Presidential Records Act (PRA) as Congress enacted it, which provides only narrow areas of oversight relating to the Vice President's document preservation decisions.
nbsp; nbsp; Plaintiffs, led by the Citizens for Responsibility and Ethics in Washington, accused Cheney of changing the definition of vice-presidential records, which would allow his office to destroy records that were supposed to be preserved.
nbsp; nbsp; Judge Kollar-Kotelly first determined that the PRA does not preclude judicial review of the plaintiffs' claims.
nbsp; nbsp; The court finds that it 'borders on the absurd' to believe that Congress statutorily defined Vice-Presidential records and required the Vice President to implement steps to preserve them, but denied any judicial review to prevent the Vice President from using a different definition for Vice-Presidential records, Kollar-Kotelly wrote.
nbsp; nbsp; She then ruled that although the plaintiffs brought legally cognizable claims under the Mandamus Act and the Declaratory Judgment Act, she was required to rule for the defendants.
nbsp; nbsp; The plaintiffs deposed a senior White House aide, who testified that Cheney and his office were fully complying with their obligations under the PRA.
nbsp; nbsp; Plaintiffs were unable to rebut this representation through their discovery, Kollar-Kotelly wrote. The Court therefore has no basis on which to award Plaintiffs relief against the Vice President and the Office of the Vice President.
nbsp; nbsp; She dismissed claims against the Executive Office of the President, because it was not in charge of document classification or preservation.
nbsp; nbsp; It is clear, as Defendants emphasize, that the Vice President has discretion concerning the decision to create or dispose of Vice-Presidential records, and even how he chooses to preserve them.
nbsp; nbsp; Kollar-Kotelly also dismissed the plaintiffs' claims against the U.S. Archivist and the National Archives amp; Records Administration, because they have limited roles during the vice president's term in office.
nbsp; nbsp; The decision vacates a September 2008 order requiring the defendants to preserve the records while the case was pending. |
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Protesters rally near Texas court in dragging case
Politics |
2008/11/18 18:51
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| Protesters galvanized by a dragging death that has stirred memories of the notorious James Byrd case rallied twice outside an eastern Texas courthouse to speak out against a judicial system they consider racist.pAbout 60 people, led by a contingent from the New Black Panther Party and the Nation of Islam, met at the Lamar County Courthouse on Monday to bring attention to the death of Brandon McClelland. The groups later returned with about 200 protesters. Afterward, dozens of people chanting No justice, no peace! marched to a nearby church for a meeting./ppAuthorities say two white suspects purposely ran over McClelland, who is black, following an argument on the way home from a late-night beer run in September. McClelland's body was torn apart as it was dragged some 70 feet beneath a pickup truck near Paris, a city about 95 miles northeast of Dallas with a history of tense relations between blacks and whites./ppThe death came 10 years after James Byrd was killed in Jasper, another eastern Texas town. Byrd was chained to the back of a pickup by three white men and dragged for three miles./ppHow do we get justice for Brandon McClelland? cried Anthony Bond, founder of the Irving chapter of the National Association for the Advancement of Colored People./p |
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McCain, GOP gain ground on Obama ads in key states
Politics |
2008/10/27 19:45
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| After weeks of being out-advertised by Barack Obama, Republican presidential candidate John McCain and the Republican Party are nearly matching the Democratic nominee ad for ad in key battleground markets.pAd spending and ad placement data obtained from Democratic and Republican operatives show that in the closing days of the campaign the Republican voice has grown louder in states such as Florida, Ohio, North Carolina, Virginia and Pennsylvania./ppFor instance, Obama had been scheduled to buy about $2.5 million in Florida ads for the last week of the campaign. McCain is now set to spend about $1.6 million and the Republican National Committee added $1.5 million to their buy in the state this week. Obama appears to have added more weight to his ads since./ppThe ad war is especially noticeable in Florida's central corridor, which includes Tampa, Orlando and West Palm Beach./ppThose near-parity levels in crucial states come with a price. McCain has had to trim back his ads in Minnesota, Maine, New Hampshire and Wisconsin, giving Obama even greater edges there./ppA map of the states where McCain and the RNC are spending their money also illustrates the defensive nature of their 11th hour strategy. Except for Pennsylvania, the McCain-GOP focus was on trying to hold states that President Bush won in 2004./p |
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Authors, publishers settle suit against Google
Politics |
2008/10/27 19:44
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| Eager to cool the debate over copyrighted text online and anxious to make some money, Google and the publishing industry announced Tuesday that they have settled their three-year legal battle over the Internet giant's book search program.pUnder an agreement reached by Google, the Authors Guild and the Association of American Publishers, librarians and the public will have an easier time tracking down millions of out-of-print books. At the same time, Google and the book business will have greater opportunities for online sales./ppWe're trying to create a new structure where there will be more access to out-of-print books, with benefits both to readers and researchers and to the rights holders of those books — authors and publishers, Richard Sarnoff, chairman of the publishers association, said Tuesday in an interview./ppThis is an extraordinary accomplishment, Paul N. Courant, university librarian for the University of Michigan, said in a statement. It will now be possible, even easy, for anyone to access these great collections from anywhere in the United States./p |
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Iraqi Cabinet authorizes reopening of US talks
Politics |
2008/10/20 19:45
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| The Iraqi Cabinet on Tuesday authorized Prime Minister Nouri al-Maliki to reopen talks with the United States on a security pact that would allow U.S. troops to stay in Iraq for three more years after their U.N. mandate expires on Dec. 31.pWith a week to go before the American presidential elections, the Iraqi decision could delay the key agreement that provides the legal basis for the U.S. to operate in Iraq past the end of the year./ppIraqi government spokesman Ali al-Dabbagh said members of the Cabinet proposed unspecified essential amendments and gave them to al-Maliki to offer to American negotiators./ppParliament must approve the agreement and al-Maliki is reluctant to submit the draft unless he is confident it will pass by an overwhelming majority./ppWhite House press secretary Dana Perino said the Bush administration hasn't seen the Iraqis amendments yet, so it's not possible to say at this point whether U.S. officials would be willing to re-open talks. But officials have said previously that the agreement represented Washington's last offer, and that its success now rests with the complex Iraqi political system — a signal that the White House would likely be unwilling to engage in additional negotiations./p |
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