The Problem with Knee Jerk Legislation

Instapundit calls it the problem with naming laws after dead people. True, but it is also the problem with rushing to pass new laws to make the public feel good. Not only do you look foolish, sometimes you actually create mini-disasters. See, e.g. Sarbanes-Oxley and Dodd-Frank.

"Murder victim’s mother blames ‘bath salts’ drugs for her daughter’s death. New Jersey rushes to pass a ban on bath salts, names law after victim. Now: Tests show accused killer had no bath salts in his system.”

Laws Named After Dead People | The Agitator

Congressman Wants Special Treatment By The TSA

Some Congressman, including James Clyburn, are using the Tuson shooting tragedy to argue for special privileges at airports, looking to by-pass the intrusive screening processes that they set up, through the TSA, for the rest of the country. It is an amazing peek into the minds of these elected officials, who seem to believe that they are better than the rest of us, and entitled to special treatment.

http://thehill.com/blogs/blog-briefing-room/news/136849-house-dem-calls-for-beefed-up-security-special-treatment-by-tsa?

65% Favor Getting Rid of Entire Congress and Starting Over

Interesting survey from Rasmussen. I would have thought it would be higher.

65% Favor Getting Rid of Entire Congress and Starting Over - Rasmussen Reports™

A new Rasmussen Reports national telephone survey finds that 65% of Likely U.S. Voters say if they had the option next week, they would vote to get rid of the entire Congress and start all over again.

MA Securities Regulators Leaks SSNs of Advisers

According to Investmentnews.com advisers in Massachusetts were stunned after receiving a letter from the Massachusetts Securities Division, announcing that the regulator had accidentally leaked personal information on some 139,000 advisers registered in the Bay State.

The regulator, which headed by Secretary of State William F. Gavin accidentally released the social security numbers of 139,000 state registered investment advisers. According to the article a spokesman for the securities division downplayed the privacy breach stating "the important thing is there was no breach and that the material was returned in tact."

More political doublespeak? The release of the social security numbers of over 100,000 individuals is not a security breach? If an adviser made that type of statement to the Massachusetts securities division, they would be filing charges for misrepresentation - not to mention the violation of state privacy acts for the underlying breach - accident or not.

Why do the regulators get a pass for this violation? Is someone being fired and having their permanent record permanently marked?

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Who You Calling a Tea Bagger?

Apparently President Obama is quoted in a book referring to the supporters of the Tea Party Movement as "tea baggers" and the right is having an absolute fit, claiming the term is disgusting and inappropriate. The feigned outrage is simply amazing.

Please. Let's be honest here. The reason the term has become so popular is that it is demonstrative of the complete lack of understanding. The joke has always been on Fox News - where anchor after anchor used the term "tea bagger" in supportive pieces, and never had a clue what the term meant. The mocking was directed at Fox News, and reporters and anchors who were so eager to support anything that was anti-Obama and so out of touch, that they had no idea that the term referred to a sexual act.

It wasn't only Fox News who used the term, the tea baggers themselves used it to identify themselves well before any "liberal" used the term. If you doubt this, search the news archives at Google for the term "tea bagger" and just scan the headlines. The term has been used by the movement itself, and by the "right" wing news media. Witness the "Proud to Be a Tea Bagger pins."

That is what made the term so appropriate. Clueless news anchors using the term to report about clueless protesters sitting in worn out lawn chairs waiving little American flags proudly referring to themselves as tea baggers, without a clue what they were protesting about, or that they were saying. Check out Teabaggers, You Named Yourselves,  Rise of an Epithet at the National Review, The Slur That Must Not Be Named, for more,

Sort of like the protests over the Czars that the President was appointing, and the woman who wanted to know who they were going to rule over, and how much land the government was giving them.

But the real issue here is the feigned uproar. The press needs some honesty, politicians on both sides need to stop the feigned outrage, and the Tea Party Movement needs to focus on its core mission and getting the nut jobs off the stage.

A New American Tea Party: The Counterrevolution Against Bailouts, Handouts, Reckless Spending, and More Taxes

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Congressional Stock Trading Oddities -Time for Blind Trusts?

The controversy over Senator Durbin's stock transactions has put the spotlight back on stock market transactions by our elected officials. While Senator Durbin appears to have bought and sold stocks after the public announcement of the information he allegedly received, other odd trades are beginning to surface.

There are a number of reports of senators and representatives buying and selling stock at the time of important and significant announcements surrounding the government bailout programs last year. There are certainly problems with the claims of insider trading as I pointed out in my recent post on Senator Durbin's trades, which appear to be perfectly legitimate. The stories ignore the fact that many of these representatives have brokers or money managers who actually pick the positions that are bought or sold, and there are some who are actually in blind trusts.

But in a time when the American public is thoroughly disgusted with the conduct of our elected officials, and with the financial sector, isn't it time to address those perceptions and do something about the ability of elected officials to purchase or sell securities. Or to at least prevent them from doing so in industries that they have the ability to dramatically impact through legislation or other actions?

Blind trusts would appease some of the concerns without an outright prohibition, and is something that should be considered. Then again, it is these senators and representatives who would have to enact such a rule upon themselves. We will undoubtedly see term limits before we see a rule requiring blind trusts.

Congressional Pandering and the 100% Income Tax on Compensation

Congress does a number of things very well. Pandering to the populace is one of them, and nothing demonstrates this as well as the House's attempt to punish AIG. The other thing they do well is pass a bill that has popular appeal, and then hope that someone else stops them, or there is a presidential veto, or the courts strike it down. Then they get to say "we tried to fix it but the [opposing party][the President][the Courts] wouldn't let us!"

We all know that Congress screwed up on the AIG bonuses. They prevented the use of bailout funds for bonuses, but exempted any bonus payable pursuant to a contract that existed prior to February 2009. That might not have been a screwup, on some levels, it makes sense. However, as we all know, there was a huge backlash from the public, since the bailout money was going to pay "executive bonuses." Congress, in its usual pandering, fueled that fire. Ignoring the fact that they expressly permitted those bonuse payments, they began railing against "bonuses" to "executives" at AIG too.

Mixing terminology is another thing Congress does well, since those "bonuses" are not really "bonuses" and the majority of people getting those bonuses are not "executives" but rather technical staff, analysts, assistants, in-house counsel, etc.

Then the House passed legislation on Thursday to impose a 90% surtax on bonuses granted to employees with household income of more than $250,000 at companies that received at least $5 billion from the government's financial rescue program.The Senate is considering a similar plan that could be up for a vote as soon as next week.

Let's follow the bouncing ball. First, the tax is on HOUSEHOLD incomes over $250,000. That covers a whole host of families. Two professionals, a nurse and a lawyer; a stock broker and a teacher.

Second, almost everyone on Wall Street has a compensation package that is salary plus "bonus." Wall Street structures its compensation packages this way intentionally. You see, they don't pay the "bonus" until March of the following year. Not only do they keep the float on the employee's money for the extra months, if you are not at the firm when the "bonus" is paid, you don't get it. So, folks stay until bonuses are paid in March. By then, the employee has worked three months, receiving a vastly reduced "salary" and is 1/4 of the way towards earning next year's bonus. Makes it hard to quit, since you will lose 1/4 of your compensation if you do. And round and round it goes.

Back to the tax. The tax applies to any bonus paid to any employee of any company who received more than $5 billion from the TARP funds, which includes Citi, JPMorgan, BofA, Goldman Sachs Group Inc., Morgan Stanley, PNC Financial Services Group Inc. and U.S. Bancorp.

Morgan Stanley staff gets paid salary plus bonus. Secretaries, IT folks, internal accountants, attorneys, all get bonuses as part of their overall compensation. It is almost guaranteed that most of those folks who are married with a working spouse make over $250,000 a year, combined. It's relatively easy, given the cost of living in a major city these days. An in-house attorney makes something on the order of $200,000. Her husband probably makes over $100,000 and BAM, they get hit with a 90% tax on her bonus, and she has absolutely nothing to do with the bank's current problems. Some of the IT professionals make over $200,000. Same situation. There are assistants who make significant amounts of money working at these firms, who get paid with a bonus, and the government is going to tax them too at 90%.

Congress cannot possibly justify this. They have created this mess and they are now pandering to the public. AND, they are too lazy to write a bill that actually addresses what they are trying to address. While I wouldn't agree with it, if you want to get the bonuses that were paid to executives, use the power of additional TARP funds to do it, not the tax code.

If you want to use the tax code, then apply the tax to bonuses over one million dollars. I would still have a huge problem with that, but you would not be taking money from the innocent secretary, bookkeeper and IT guy.

Don't believe it? Read it yourself, it's only one page long - The House Bonus Bill

Liddy Says Geithner Knew About Bonuses

AIG Chief Edward Liddy says that Geithner knew about the pending bonuses to its employees as far back as November 2008 when he was the Federal Reserve Chairman. This directly contradicts the timeline put forward by Geithner and the Administration,who claims that they only found out this month.

OK, which one is it. Did Geithner know about the bonuses in November, and is simply conducting an outrageous diversion for the public's amusement, or is he a dolt who didn't know until last month. Either one is not good, but if we are going to get into a situation where another Administration starts lying to us, there is going to be a severe collapse of confidence by the American public, the likes of which we have never seen.

The reality is that Geithner screwed up. I understand, or as our President says "I get it." There are thousands of employees at AIG, thousands of employees with different compensation packages. What undoubtedly happened is during the original TARP discussions and Geithner's involvement under the Bush Administration, the focus was on the "big" compensation packages, not the hundreds of others. (Keep in mind that the $165 million we are talking about, while a huge amount of money, is less than 1% of the 170 billion that AIG has received),

I get it. You were not looking at compensation packages that constituted less than 1% of the total bailout. I understand. In the grand scheme you were saving the country and the economy, and in context, $165 million was not a big deal. Completely understandable.

So why are you now screaming about AIG taking the bonuses, when you have already acknowledged that the amount of the bonuses is insignificant in the grand scheme of things?

You are not a liar, you are a politician doing what politicians do far too often. Pandering.

USNews.com has the details - AIG Chief, White House Statements At Odds?

More Details on the AIG Bonuses

NYS Attorney General Andrew Cuomo has some details on the AIG bonuses, and the situation is not getting any better for the Administration or AIG.

First, please understand my ire. The details of these bonus payments are not yet public. Some reports say they are for executives, others say that 400 employees are included in the bonus payments. Some reports say they are retention bonuses, others say they are performance bonuses. All reports say that AIG entered into these contractual obligations in early 2008. The details make a difference, and I am not in favor of simply abrogating those contracts, nor of creating a retroactive tax on them. Ex post facto and all that other legal mumbo jumbo. In our system of jurisprudence, you simply cannot do that, and any court would strike down such attempts. Arguing for 90% taxes and intentional breaches of contract makes for some very nice pandering to the public, but it is not going to work.

My anger is directed at this Administration and the Bush Administration. I cannot fathom how they gave AIG 170 billion dollars without knowing where the money was going to go, and how it was going to be used. And forget about conditioning the use of the money. They could have conditioned that money on renegotiated bonuses. Not a problem at all, and we can assume it would have worked, since no bailout money, no AIG, no bonuses at all.

Mr. Cuomo has released some facts about the payments. It seems that his office, an outsider in the transactions, was able to do what the Fed and Treasury was unable or unwilling to do - get the details.

According to Mr. Cuomo's letter to the House Committee on Financial Services:

1. The top recipient received more than $6.4 million;
2. The top seven bonus recipients received more than $4 million each;
3. The top ten bonus recipients received a combined $42 million;
4. 22 individuals received bonuses of $2 million or more, and combined they received more than $72 million;
5. 73 individuals received bonuses of $1 million or more; and
6. Eleven of the individuals who received "retention" bonuses of $1 million or more are no longer working at AIG, including one who received $4.6 million.

First the retention bonuses. My understanding is that the agreement is "stay with us another year, and at the end of the year we will pay you $X since you agreed to stay." If that is the case, AIG needs to pay those bonuses. The parties entered into an agreement, the employee did what hew as supposed to do, and is entitle to the payment. This really can't be an issue, and yes, it is a lousy agreement, AIG management is a bunch of irresponsible fools, etc. But hindsight is wonderful, those are agreements that were entered into over a year ago, and should be honored.

Mr. Cuomo has identified payments of approximately 1/2 the $165 million, but without the details, it is difficult to comment on the payments, except to remind everyone, again, that these are contracts that were entered into over a year ago.

Do you really want the government forcing companies to breach employment contracts? Think about your own employment or business situation. You enter into a major agreement, do everything the agreement calls for, and when it comes time to get paid, the company refuses to pay. Or the government enacts a new law that puts a 90% tax on that type of contract.

Not in our system of jurisprudence. We need competent government leaders, not proponents of illegal and unconstitutional "fixes."

The Case for Bonuses at A.I.G.

Dealbook at the NYT points out the legal arguments, and policy reasons behind honoring contracts. If we let the government retroactively abrogate valid employment agreements, what is the impact on business in the US?

Still, was the fact that bonuses were part of AIG employee's compensation really a surprise to the administration? If so, we have really big problems ahead.

The Case for Bonuses at A.I.G.

Why all the Moaning over AIG Bonuses?

In case you missed it, there is quite a bit of consternation over AIG's bonus payments to its executives and employees. With AIG accepting bailout funds, the fact that they are paying $165 million to executives and employees after accepting the money has become a rallying point for the Obama administration and for a segment of the general public.

While creating diversions is a favorite sport of politicians, it appears that they are simply missing jumping on a publicity bandwagon that they themselves created.

Those bonus payments are contractual. The company entered into employment agreements and severance agreements with its executives and employees long before this economic crisis, and the government had no right, and no ability, to interfere in those contractual arrangements. The general public can object to executive compensation all it wants, but (and excuse my bluntness) it is none of the public, or the government's business. These are matters for shareholders and boards of directors, not senators and politicans.

However, that all changes with the bailout money. When the government gives you money to help your business, in my view, it has the right to condition that money in reasonable and necessary ways. One condition could have been to limit bonuses and executive compensation, much as the administration attempted to do with the bailout money for the investment banks.

However, that did not happen here. While moaning and whining about the bonuses, even the Obama administration acknowledges that these are pre-existing contracts. Lawrence Summers, President Obama's chief economic advisor is quoted in the NYT as saying - "[w]e are a country of law... There are contracts. The government cannot just abrogate contracts. Every legal step possible to limit those bonuses is being taken by Secretary Geithner and by the Federal Reserve system.”

The first half of the statement is correct. A private contract between a private employer and his employee is not something the government should be meddling with. But what about the last sentence? Is the government really doing everything it can?

What is it with government officials? The Bush administration gave out TARP money without sufficient regulation and monitoring, and much of it was wasted. Now we have the Obama Administration doing the same thing. Are our politicians this stupid? Undoubtedly not. In my view, they did not "overlook" the bonus and compensation issue. The President talks about it often, and does so often enough to be accused of starting class warfare.

So why wasn't the renegotiation of these contracts discussed during the bailout process? Did anyone try to condition bailout funds on the scaling back of those bonuses by agreement with the employees? If not, why not?

If the decision was made not to do so, why do we have all of this posturing by government officials when they did in fact have the ability to negotiate these items before turning over the TARP and bail out funds?

Whoever Wins, Chill A Bit

Great commentary from conservative blogger and University of Tennessee Professor Glenn Reynolds at Forbes.com

You don't have to love the "other guy." You don't have to hold back on fighting against policies you don't like. You don't have to pull punches. But once someone is duly and legally elected president, you do owe some respect to the office and the Constitution. And to your fellow Americans.

I'm not an Obama fan, particularly, but a lot of people I like and respect are. To treat Obama as something evil or subhuman would not only be disrespectful toward Obama, but toward them. Instead, I hope that if Obama is elected, their assessment of his strengths will turn out to be right, and mine will turn out to be wrong. Likewise, those who don't like John McCain or Sarah Palin might reflect that by treating Palin and McCain as obviously evil and stupid, they're disrespecting tens of millions of their fellow Americans who feel otherwise. And treating a presidency held by a guy you don't like as presumptively illegitimate suggests that presidents rule not by election, but by divine right, so that whenever the "other guy" wins, he's automatically a usurper.

We don't have to agree on issues, or on leaders. But if we can't agree that a free and fair election can produce a legitimate president even when it's not the candidate we like, then we've got a very serious problem.

The entire commentary is here:

Whoever Wins, Chill A Bit - Forbes.com

McCain says he would fire SEC head Christopher Cox

This is what we are going to get for President? McCain loses it, goes off message and threatens to fire one of the best heads of the SEC (at least from a Republican standpoint.

McCain says he would fire SEC head Christopher Cox -- Newsday.com: "McCain says he would fire SEC head Christopher Cox"
Check out google on this. He is way off base, and way off message for his campaign..again.

Treasury Rolls Out Overhaul of Financial Regulators

The Paulson Plan has finally been revealed, but it may just be much ado about nothing. No one expects anything to happen in a presidential election year, and Secretary Paulson acknowledges that fact. He also pointed out that this overhaul plan is not a reaction to current market conditions or financial problems, but is something that has been in the works for months.

There is a lot to digest in the Plan, which consumes 218 pages, but the key points for the securities industry are the merger of the SEC and the CFTC, the vesting of regulatory oversight in the fed, and the inclusion of hedge funds and private equity funds in the regulatory umbrella; although in a very limited fashion.

The Treasury Department has created a fact sheet regarding the plan at its web site.

Spitzer Is Linked to Prostitution Ring - New York Times

The New York Times is reporting that New York Governor Elliot Spitzer has been caught on a wire tap confirming plans to have a prostitute meet him in Washington where he had reserved a hotel room. This reportedly occurred on February 13 of this year.

I was never impressed with Mr. Spitzer when he was the Attorney General of New York, as he always appeared to be more impressed with his press than his results. He was a self-righteous, arrogant and overly impressed with himself prosecutor, and I thought the people of the great state of New York made a huge mistake when they elected him governor.

He barged into areas that he should not have been, he tossed a potential monkey wrench into the securities regulatory scheme and in reality, did nothing to help the industry or potential investors. Even his record research settlement with Wall Street did nothing to help investors - a pittance went to investors, if it ever got distributed at all. A big piece when to the various attorneys general around the country.

I am certainly less impressed now. If this story is true, Mr. Do-gooder, Mr. White Knight, Mr. Over-the-Top, is nothing but a common John - well, not so common, since he allegedly got a prostitute to travel to Washington to meet him.

What a piece of work. And when caught, he holds a press conference and calls his conduct "an obligation to his family." I always thought that paying a prostitute was a crime, putting aside of course, your obligation to your wife to be faithful, and your obligation to your constitutants to obey the law.

Nothing but another piece of garbage politician. Nothing more.

UPDATE - His political foes are having a field day, calling for his resignation

Miscarriage of Justice? - Bush Commutes Libby Sentence

President Bush commuted I. Lewis Libby Jr.'s prison sentence yesterday.

With some calling it a correction of a miscarriage of justice, the only miscarriage of justice I see here is the arrogant belief of the administration that it is above the law.

Mr. Bush is quoted in the Times as saying “I respect the jury’s verdict...But I have concluded that the prison sentence given to Mr. Libby is excessive.” Forget that an experienced federal judge considered all of the evidence and imposed a sentence that was consistent with the law, Mr. Bush knows better, and simply ignores our judicial process to benefit his friends.

But this does provide a great defense strategy for the next big case that comes along. Sidetrack the investigation by having a crony lie under oath, the prosecutor is unable to prove his case, the crony gets convicted of perjury and the president commutes the sentence. Perfect.

Next we can ignore statutes and rules, and when the agency charged with enforcing those rules seeks enforcement, we can attempt to have the agency disbanded.

Oh wait, they tried that already.

Gonzales Met With Advisers on Dismissals - New York Times

When will politicians start telling the truth? Has everything come down to spin, distortion and outright lying? Do our government officials have any self respect?

Gonzales tells the world two weeks ago that he was not involved in the dismissals of seven US attorneys, and now it is found that he actually attended an hour long meeting about it with his staff. Oh wait, it is not a lie, he simply "forgot" about the meeting, according to his aides.

As we tell our clients, saying you don't recall when you do is a lie.

Senate limits Gonzales' hiring authority

Gonzales is toast. Demonstrative of the mood in Congress over the handling of the US Attorney fiasco, the Senate voted 94-2 in favor of a bill that would cancel the attorney general's power to appoint U.S. attorneys without Senate confirmation. NINETY FOUR to TWO. I'm sorry, that is not political, that is flat out anger. That is what...virtually every Republican senator voting in favor of the bill?

First Thing We Do, Let's Kill All The Lawyers

This famous line from Henry VI was not a criticism of lawyers; it was actually in praise of attorneys. The quote is expresses the speakers desire to eliminate impediments to a revolution – they need to get rid of the lawyers in order to overthrow the government.

Last week, a Bush Administration Official expressed his own concerns about lawyers getting in the way of attempts to overthrow our constitution. Shakespeare understood the importance of attorneys in a free and open society. One has to wonder why the current Administration does not.

In a radio interview last week, Charles Stimson, deputy assistant secretary of defense for detainee affairs, in his best insurgent voice, once again presented an Administration attack on the constitution, this time the right to counsel. However, he also attacked attorneys themselves, saying that those who are representing Guantánamo Bay detainees should not be doing so, urging those attorney’s paying clients to stop using their services. He cited many of the law firms by name and suggested that corporate CEOs "make those law firms choose between representing terrorists or representing reputable firms." Not content with that beaut, he then suggested that the attorneys were receiving money from terrorists, suggesting that some of the firms "are receiving monies from who knows where, and I'd be curious to have them explain that."

Enough is enough. Regardless of your views on the detention of suspected terrorists, and despite your frustration at the war on terror, a basic tenant of our constitution, our system of justice, and our entire way of life is the right to counsel, the right to confront your accuser, the right to a speedy and fair trial. If we lose those rights, we become exactly what we are supposedly fighting.

On Wednesday, Mr. Stimson apologized. Sort of. He was sorry if his comments “left the impression” that he was attacking the attorneys. What? That is exactly what he did. He attacked attorneys who are defending the constitution. And this from the man who is in charge of policy regarding the detainees?

This Administration has avoided the constitution on so many levels, and has for the most part gotten away with it, that they are now flat out brazen in their contempt for the constitution and our entire democratic government.

I understand that those pesky lawyers keep getting in the way, but those pesky lawyers are protecting the constitution, and our entire way of life.

The terrorists are trying to destroy our way of life. Do we really need our government doing the same thing?

Tom DeLay's New Blog

While he is certainly not one of my favorite politicans, Tom DeLay has started a blog. In his opening post he said

I have created this blog in order to provide Americans with a new meeting place where such opinions and viewpoints might be better shared, discussed, and debated; a place where conservative Americans might really speak truth to power and to one another.

The blog world did not welcome him to their world, as the comments were fast and furious on his blog. He then he proceeded to delete 111 comments that he apparently did not like. So much for discussion, opinions and viewpoints. Someone save the comments though, and has re-posted them here.

Great idea though. If he is really writing it, and really reading it, it should make for a very interesting blog. It will be interesting to see if a disgraced politican can revive his career through a blog.