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Politics : Sioux Nation -- Ignore unavailable to you. Want to Upgrade?

To: Cactus Jack who wrote (163436)	3/17/2009 1:55:38 AM
From: stockman_scott	Respond to of 361517

Are Baseball Teams Headed For Financial Ruin? bleedcubbieblue.com

To: Cactus Jack who wrote (163436)	3/18/2009 2:39:44 AM
From: stockman_scott	Read Replies (2) \| Respond to of 361517

A.I.G.’s Bonus Blackmail ______________________________________________________________ By LAWRENCE A. CUNNINGHAM Op-Ed Contributor The New York Times March 18, 2009 President Obama on Monday instructed the Treasury Department to “pursue every single legal avenue” to recover $165 million in bonus payments the insurance giant A.I.G. recently made to nearly 400 employees in its financial products unit. A.I.G. has, of course, received $170 billion in bailout funds and yet continues to incur extraordinary losses — some $62 billion last quarter alone. A.I.G. insisted it was legally obligated to make the bonus payments and that failure to pay would breach its contracts with employees and expose it to penalties under state employee protection laws. The company also warned that breaching the agreements would amount to defaulting on numerous other business contracts, at staggering cost. Amid this standoff, there has been an explosion of outrage against perceived excessive compensation to those who precipitated the financial crisis. Some lawmakers have threatened to impose a 100 percent tax on the A.I.G. bonuses and Senator Chuck Grassley, Republican of Iowa, even wildly suggested that the company’s executives consider suicide for their culpability. But moral outrage and public rebuke do not provide legal grounds for backing out of a contract. If the government is serious about finding a legitimate basis for abrogating these payments, officials must look to basic legal principles. And if A.I.G. is serious that it is legally bound to pay these bonuses, it must do more than say nonpayment would expose it to damages or penalties. Nor is it enough to invoke the sanctity of contracts, because our legal and business system recognizes plenty of valid excuses from contractual duty and even justification for breaching. There are numerous issues both sides must contend with to evaluate whether A.I.G. was bound to or excused from its payment duties. First, the specific promises that employees made or conditions stated in their agreements must be examined. Determining what promises exist requires only reading the contracts; identifying conditions (which will likely offer more wiggle room in A.I.G.’s duty to pay) requires both reading the contracts and understanding any negotiations that preceded them. Subpoenas issued by Andrew Cuomo, the New York attorney general, have put much of this vital information into the hands of government officials. Those officials would do well to compare the provisions in these contracts to the job performance of the employees who received bonuses. If employees did not meet stated performance goals, they would be in breach of contract and A.I.G. would not have to pay. Likewise, A.I.G. has stated that these agreements expressly state that if employees are terminated for cause, they are not entitled to any bonus payments. It follows then that the contracts may preserve the company’s power to deny bonuses to employees who could be terminated for cause but have not yet been. Apart from specific contractual terms, there are other reasons A.I.G. might rescind these bonuses. They include the nondisclosure of important material information — for instance, if an employee failed to be absolutely candid about the size and risk of trading positions taken on the company’s behalf. Findings of fraud on the part of an employee would certainly also excuse A.I.G.’s duty to pay. This isn’t to say that any A.I.G. employee engaged in such activity. But given the scale of problems that A.I.G. has confronted, and credible allegations of serious misconduct within the organization, it’s worth investigating. There is also at least some chance, given A.I.G.’s functional insolvency and the government takeover, that these agreements may be rescinded either on the basis of impracticability or by virtue of unforeseeable and uncontrollable circumstances. A credible fact supporting both excuses is precisely the company’s huge loss last quarter. Courts excuse contract duties when governmental action essentially destroys the original purpose of a contract — and the taxpayers’ 80 percent stake in A.I.G. is a more extreme sort of governmental action than usually appears in such cases. A final potential legal basis for rescinding these payments is fraudulent conveyance law. This generally limits the right of a financially troubled company to transfer property to favored claimants on sweetheart terms when doing so would hurt the interests of other claimants, like lenders and shareholders — in this case, perhaps even taxpayers. Again, this is not to say that these payments violate this doctrine, but it is a relevant question for the government to probe. Without reading the contracts, understanding their background and learning about employee performance, one cannot say whether A.I.G. is legally bound to pay or legally excused from paying these bonuses. But we won’t resolve this question by simply trading nebulous assertions and hysterical threats. -Lawrence A. Cunningham is a professor at George Washington University Law School. Copyright 2009 The New York Times Company

To: Cactus Jack who wrote (163436)	3/18/2009 2:41:51 AM
From: stockman_scott	Read Replies (1) \| Respond to of 361517

Obama Names Indiana’s Hamilton as First Judicial Pick / By Greg Stohr March 17 (Bloomberg) -- President Barack Obama nominated David Hamilton, an Indiana federal district judge with bipartisan support, for a U.S. appeals court seat in the new administration’s first judicial appointment. Hamilton, 51, a former aide to then-Governor Evan Bayh of Indiana, is a 15-year veteran of the federal trial court in Indianapolis. He has backing from Bayh, now a Democratic U.S. senator, and Richard Lugar, Indiana’s Republican senator, the White House said. If confirmed by the Senate, Hamilton would serve on the Chicago-based 7th U.S. Circuit Court of Appeals. “Judge Hamilton has a long and impressive record of service and a history of handing down fair and judicious decisions,” Obama said in a statement. “He will be a thoughtful and distinguished addition to the 7th Circuit.” The selection is the first concrete sign of how Obama might reshape a federal court system that now has three Republican appointees for every two Democratic nominees. The vacancy that Hamilton would fill is one of 15 at the federal appeals court level. The president also may have multiple Supreme Court openings to fill in the next four years. A senior administration official, speaking on the condition of anonymity, pointed to Hamilton’s appointment as a signal that the Obama administration was looking to reduce the level of controversy over judicial nominations. Still, interest-group reaction to Hamilton’s nomination suggested that the feuding was far from over. ‘Radical Side’ Hamilton’s selection “indicates that we will see the more radical side of Obama when it comes to judicial nominations,” said Curt Levey, executive director of the Committee for Justice, which advocates for conservative judges. Hamilton last year struck down a state law that required convicted sex offenders to submit to searches of their personal computers. In 2005 he ordered that the prayers used to open state legislative sessions be nondenominational. Kathryn Kolbert, president of the liberal People for the American Way, called Hamilton “an extraordinarily good judge” and “an excellent first choice.” Obama will nominate judicial candidates after an evaluation of their credentials by the American Bar Association, the White House official said. That marks a resumption of the role the ABA played from the 1950s to 2001. President George W. Bush’s administration ended the group’s role, pointing to the ABA’s call for a death penalty moratorium and its support for abortion rights. Hamilton, a graduate of Haverford College and Yale Law School, was appointed to the federal trial court in 1994 by President Bill Clinton. A Fulbright scholar, he is the son and grandson of Methodist ministers and is the nephew of former Democratic Representative Lee Hamilton of Indiana. Lugar said Judge Hamilton had served “with distinction” as a federal trial judge in Indianapolis. Bayh called Hamilton “an exceptional jurist who has demonstrated the highest ethical standards and a firm commitment to applying our country’s laws fairly.” To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net. Last Updated: March 17, 2009 13:47 EDT