Another Open Letter to President Obama

I watched with some interest your most recent statements concerning the morally-questionable decision by the Board of Directors at mega-bucks bailout recipient AIG to award $165 million dollars in bonuses to some of its executives. While I am in complete agreement that this course of action on the part of AIG's Board was not the smartest thing under the circumstances, I feel that I must point out one detail that you seem to have overlooked:

It wasn't illegal!

In support of my opinion, I must remind you that there is nothing within the Emergency Economic Stabilization Act ("ESSA") of 2008 (Pub. L. 110-343, 122 Stat. 3765), or in its most notorious provision, the Troubled Assets Relief Program ("TARP"), nor within the Special Credit Facility created by the Federal Reserve Bank of New York acting under the authority of the Federal Reserve Board of Governors and the Federal Reserve Act of 1913, as amended, (12 USC, ch.3, §13.3) that limits or prohibits the company's decision to award compensation as it sees fit. In fact, ESSA sect. 111, "Executive Compensation and Corporate Governance" only provides that "Any financial institution that sells troubled assets to the Secretary [of the Treasury] under this Act shall be subject to the executive compensation requirements ..." [emphasis added] would be subject to the limitations imposed by the law itself. Thus, until the Treasury Department or one of its agencies actually purchases a "toxic asset" from AIG, there is no legal basis on which the government may act.

While statements made by members of Congress such as Chairman of the House Financial Services Committee Barney Frank expressing "outrage" at AIG's decision and your own vow to "pursue every legal avenue" to prevent the actual payment of these bonuses may "play well" in the press, they must be recognized as nothing more than rhetoric and unenforceable by any legally-applicable recourse. The fault for this lack of recourse, since it is absent in the law that was passed by the Congress, rests squarely upon the members of that body, including yourself, since you (as a then-member of the Senate) voted in favor of this legislation.

As President you, of course, have the authority to issue an Executive Order to prevent the proposed action by the AIG Board of Directors or even to criminalize such an action. I merely remind you that the criminalizing of an action that was not illegal at the time it as performed would be seen as a blatant attempt, on your part, to unilaterally vacate the "due process of law" provisions set forth in Articles V and XIV of the Constitution. While judicial review would certainly check such an abuse of power, it would result in a Bill of Impeachment being submitted to the House of Representatives (see N.b., below) and then by your almost-certain conviction in the Senate.

In conclusion, Mr. President, the propriety of AIG handing out $165 million in bonuses is, at best, certainly questionable. It is not, however, illegal for the company to do so. Since it is a certainty that AIG's attorneys have, after thoroughly investigating the law, assured the Board of Directors that awarding such bonuses would not involve exposure to either administrative or criminal liability, I merely suggest that your credibility as President may be seriously jeopardized by your statements regarding this matter.

Sincerely,

Wayne McDonald

N.b.U.S. Congress. House.Committee on the Judiciary."Articles of Impeachment Adopted by the Committee on the Judiciary." Pursuant to Debate on HR 803, 93rd Cong., 2nd sess., (1974).

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"Article 2

"Using the powers of the office of President of the United States, Richard M. Nixon, in violation of his constitutional oath faithfully to execute the office of President of the United States and, to the best of his ability, preserve, protect, and defend the Constitution of the United States, and in disregard of his constitutional duty to take care that the laws be faithfully executed ... "