As President Obama continues to reach across the aisle, and across the country, garnering support for the Economic Recovery Plan, finger pointing persists over who is responsible for the AIG debacle. I assure you, there is enough blame to go around. Should the current administration have attempted to re-negotiate contract language, written in 2008 by the former administration, for payouts of AIG bonuses, meanwhile delaying the stimulus package as the country continues to hemorrhage from economic blunt trauma? No one argues the point that paying out those bonuses given the country's current predicament -- which was intensified in great part by AIG's reckless behavior -- was inappropriate and distasteful, contract or no contract. But the legislative proposals on the table to rectify the situation may end up doing more damage than good in the broader scheme of things. No legal means existed to resolve AIG like FDIC resolves banks. "The government was faced with no good options", Treasury secretary Giethner added.
In order to prevent a recurrence of the AIG catastrophe, officials requested Congress to grant regulators resolution authority. This would give the government power to reorganize or restructure a non-bank company. Such powers would include selling off assets and subsidiaries, imposing limits on executive compensation and taking action on risky holdings.
Republicans argue, too much regulation would impose more “big government”, fearing government control of private business. Democrats argue, there needs to be some regulation over financial institutions deemed too big to fail. Democrats suggest corporation be responsible to carry large enough Capital reserves, to help stave of a financial crisis.
Perhaps Republicans and Democrats can come to an agreement of how must regulation is enough, but there needs to be some regulation. Allowing major institutions to fail, effecting loss of pensions, demised 401K, and job loss, is not the best option.
Left of Center
No comments:
Post a Comment