The Mystery Loophole & AIG Bonuses
While the AIG bonuses have become a national fixation (perhaps even a distraction), it seems that they are actually legal. While Congress did place restrictions on companies who receive bailout money, someone wrote in a loophole:
iii) The prohibition required under clause (i) shall not be construed to prohibit any bonus payment required to be paid pursuant to a written employment contract executed on or before February 11, 2009, as such valid employment contracts are determined by the Secretary or the designee of the Secretary.
Given this, the AIG bonuses are legal. Of course, they are still outrageous and morally unacceptable. Not surprisingly, people are trying to find the person responsible for this addition. Also not surprisingly, no one is (as of this writing) claiming credit for it.
Naturally, some people suspect that someone in the pay of AIG (or some other company being bailed out) put in the loophole. That seems to have some plausibility. But, as of yet, there is no concrete evidence for this claim. However, such political dealings would seem to be business as usual in Washington.
While the number one question is about who put in the loophole, it is also important to ask how the loophole went unnoticed for so long. One hypothesis is that it was intentionally ignored by those who should have been reviewing the document. If so, they would share the blame in this fiasco. Another hypothesis is that the folks who are supposed to review the document simply failed to read it fully and carefully. In this case, their failure would not be one of malicious intent but rather one of laziness. I would like to think that such things are carefully checked before they are signed. However, I am reasonably confident that such documents are often only given a cursory review. In this case, those involved would still deserve some of the blame-their negligence allowed this to happen.
I was discussing this matter with a colleague during my office hours and jokingly suggested that if no one admits to writing the loophole, then it should be treated as a typo or mistaken inclusion. As such, it should simply be deleted. After all, if no one with the official right or power included that loop hole, then it is not a legitimate part of the law. After all, if I were to sneak some text into the document and it was signed, surely it would not thus become law. Likewise for this mystery loophole-unless it can be shown that it was legitimately added, we should treat it as an illegal inclusion and it should be removed immediately.
If I am wrong about this and any text in such a document becomes law when signed, I plan to make a quick trip to DC to start changing laws-beginning with making myself tax exempt and the recipient of federal funding.