Wednesday, March 25, 2009

Introducing the Star Chamber

The recent recipients of bonuses from AIG have been tried, convicted and urged to commit suicide by a number of prominent members of Congress, all for the crime of fulfilling their contracts.

Their actions are a disgrace to their offices and a betrayal of their oaths to protect the rest of us from such flagrant denials of due process.

But perhaps, somewhere in the thousands of pages of recent spending legislation the Bill of Rights has been replaced by the Star Chamber, of which Wikipedia says:

The Star Chamber (Latin Camera stellata) was an English court of law that sat at the royal Palace of Westminster until 1641. It was made up of Privy Counsellors, as well as common-law judges, and supplemented the activities of the common-law and equity courts in both civil and criminal matters. The court was set up to ensure the fair enforcement of laws against prominent people, those so powerful that ordinary courts could never convict them of their crimes. Court sessions were held in secret, with no indictments, no right of appeal, no juries, and no witnesses. Evidence was presented in writing. Over time it evolved into a political weapon and has become a symbol of the misuse and abuse of power by the English monarchy and courts.

It was mistakenly thought that in 1487 an act was passed which established a special "Court of Star Chamber" to deal with the nobles; however; the only legislation passed in that year in this context was to set up a tribunal to prevent the intimidation of juries and to stop retaining. It seems to have gone out of use by 1509 and it had no connection with the later Court of Star Chamber whose primary purpose was to hear political libel and treason cases.

In modern usage, legal or administrative bodies with strict, arbitrary rulings and secretive proceedings are sometimes called, metaphorically or poetically, star chambers. This is a pejorative term and intended to cast doubt on the legitimacy of the proceedings. The inherent lack of objectivity of any politically motivated charges has led to substantial reforms in English law in most jurisdictions since that time.

As the U.S. Supreme Court described it, "the Star Chamber has, for centuries, symbolized disregard of basic individual rights. The Star Chamber not merely allowed, but required, defendants to have counsel. The defendant's answer to an indictment was not accepted unless it was signed by counsel. When counsel refused to sign the answer, for whatever reason, the defendant was considered to have confessed." Faretta v. California, 422 U.S. 806, 821-22 (1975).

But at least we now precisely what "change" Mr. Obama has brought to us. We are no longer citizens of a free republic. We are subjects.

I've never been so embarrassed to be an American

“Have you no sense of decency, sir, at long last? Have you left no sense of decency?”

----- Joseph Nye Welch to Senator Joseph McCarthy, June 9, 1954.

Dear Mr. President,

The following illustrates what you and your commissars are doing to ordinary Americans who happen to make the mistake of first making a lot of money and then of trusting your Administration.

I would put to you the same question Attorney Welch put to Senator McCarthy, with whom you share many characteristics: “Have you no decency, sir, at long last? Have you left no sense of decency?”

Publius Scipio

NEW YORK TIMES March 25, 2009
Op-Ed Contributor
Dear A.I.G., I Quit!

The following is a letter sent on Tuesday by Jake DeSantis, an executive vice president of the American International Group’s financial products unit, to Edward M. Liddy, the chief executive of A.I.G.

DEAR Mr. Liddy,

It is with deep regret that I submit my notice of resignation from A.I.G. Financial Products. I hope you take the time to read this entire letter. Before describing the details of my decision, I want to offer some context:
I am proud of everything I have done for the commodity and equity divisions of A.I.G.-F.P. I was in no way involved in — or responsible for — the credit default swap transactions that have hamstrung A.I.G. Nor were more than a handful of the 400 current employees of A.I.G.-F.P. Most of those responsible have left the company and have conspicuously escaped the public outrage.
After 12 months of hard work dismantling the company — during which A.I.G. reassured us many times we would be rewarded in March 2009 — we in the financial products unit have been betrayed by A.I.G. and are being unfairly persecuted by elected officials. In response to this, I will now leave the company and donate my entire post-tax retention payment to those suffering from the global economic downturn. My intent is to keep none of the money myself.
I take this action after 11 years of dedicated, honorable service to A.I.G. I can no longer effectively perform my duties in this dysfunctional environment, nor am I being paid to do so. Like you, I was asked to work for an annual salary of $1, and I agreed out of a sense of duty to the company and to the public officials who have come to its aid. Having now been let down by both, I can no longer justify spending 10, 12, 14 hours a day away from my family for the benefit of those who have let me down.
You and I have never met or spoken to each other, so I’d like to tell you about myself. I was raised by schoolteachers working multiple jobs in a world of closing steel mills. My hard work earned me acceptance to M.I.T., and the institute’s generous financial aid enabled me to attend. I had fulfilled my American dream.
I started at this company in 1998 as an equity trader, became the head of equity and commodity trading and, a couple of years before A.I.G.’s meltdown last September, was named the head of business development for commodities. Over this period the equity and commodity units were consistently profitable — in most years generating net profits of well over $100 million. Most recently, during the dismantling of A.I.G.-F.P., I was an integral player in the pending sale of its well-regarded commodity index business to UBS. As you know, business unit sales like this are crucial to A.I.G.’s effort to repay the American taxpayer.
The profitability of the businesses with which I was associated clearly supported my compensation. I never received any pay resulting from the credit default swaps that are now losing so much money. I did, however, like many others here, lose a significant portion of my life savings in the form of deferred compensation invested in the capital of A.I.G.-F.P. because of those losses. In this way I have personally suffered from this controversial activity — directly as well as indirectly with the rest of the taxpayers.
I have the utmost respect for the civic duty that you are now performing at A.I.G. You are as blameless for these credit default swap losses as I am. You answered your country’s call and you are taking a tremendous beating for it.
But you also are aware that most of the employees of your financial products unit had nothing to do with the large losses. And I am disappointed and frustrated over your lack of support for us. I and many others in the unit feel betrayed that you failed to stand up for us in the face of untrue and unfair accusations from certain members of Congress last Wednesday and from the press over our retention payments, and that you didn’t defend us against the baseless and reckless comments made by the attorneys general of New York and Connecticut.
My guess is that in October, when you learned of these retention contracts, you realized that the employees of the financial products unit needed some incentive to stay and that the contracts, being both ethical and useful, should be left to stand. That’s probably why A.I.G. management assured us on three occasions during that month that the company would “live up to its commitment” to honor the contract guarantees.
That may be why you decided to accelerate by three months more than a quarter of the amounts due under the contracts. That action signified to us your support, and was hardly something that one would do if he truly found the contracts “distasteful.”
That may also be why you authorized the balance of the payments on March 13.
At no time during the past six months that you have been leading A.I.G. did you ask us to revise, renegotiate or break these contracts — until several hours before your appearance last week before Congress.
I think your initial decision to honor the contracts was both ethical and financially astute, but it seems to have been politically unwise. It’s now apparent that you either misunderstood the agreements that you had made — tacit or otherwise — with the Federal Reserve, the Treasury, various members of Congress and Attorney General Andrew Cuomo of New York, or were not strong enough to withstand the shifting political winds.
You’ve now asked the current employees of A.I.G.-F.P. to repay these earnings. As you can imagine, there has been a tremendous amount of serious thought and heated discussion about how we should respond to this breach of trust.
As most of us have done nothing wrong, guilt is not a motivation to surrender our earnings. We have worked 12 long months under these contracts and now deserve to be paid as promised. None of us should be cheated of our payments any more than a plumber should be cheated after he has fixed the pipes but a careless electrician causes a fire that burns down the house.
Many of the employees have, in the past six months, turned down job offers from more stable employers, based on A.I.G.’s assurances that the contracts would be honored. They are now angry about having been misled by A.I.G.’s promises and are not inclined to return the money as a favor to you.
The only real motivation that anyone at A.I.G.-F.P. now has is fear. Mr. Cuomo has threatened to “name and shame,” and his counterpart in Connecticut, Richard Blumenthal, has made similar threats — even though attorneys general are supposed to stand for due process, to conduct trials in courts and not the press.
So what am I to do? There’s no easy answer. I know that because of hard work I have benefited more than most during the economic boom and have saved enough that my family is unlikely to suffer devastating losses during the current bust. Some might argue that members of my profession have been overpaid, and I wouldn’t disagree.
That is why I have decided to donate 100 percent of the effective after-tax proceeds of my retention payment directly to organizations that are helping people who are suffering from the global downturn. This is not a tax-deduction gimmick; I simply believe that I at least deserve to dictate how my earnings are spent, and do not want to see them disappear back into the obscurity of A.I.G.’s or the federal government’s budget. Our earnings have caused such a distraction for so many from the more pressing issues our country faces, and I would like to see my share of it benefit those truly in need.
On March 16 I received a payment from A.I.G. amounting to $742,006.40, after taxes. In light of the uncertainty over the ultimate taxation and legal status of this payment, the actual amount I donate may be less — in fact, it may end up being far less if the recent House bill raising the tax on the retention payments to 90 percent stands. Once all the money is donated, you will immediately receive a list of all recipients.
This choice is right for me. I wish others at A.I.G.-F.P. luck finding peace with their difficult decision, and only hope their judgment is not clouded by fear.
Mr. Liddy, I wish you success in your commitment to return the money extended by the American government, and luck with the continued unwinding of the company’s diverse businesses — especially those remaining credit default swaps. I’ll continue over the short term to help make sure no balls are dropped, but after what’s happened this past week I can’t remain much longer — there is too much bad blood. I’m not sure how you will greet my resignation, but at least Attorney General Blumenthal should be relieved that I’ll leave under my own power and will not need to be “shoved out the door.”
Jake DeSantis

Sunday, March 22, 2009

I'm Confused

Dear Mr. President,

Are you familiar with the “shareholders derivative suit”? It is a standard tool of corporate governance. It allows shareholders to sue the directors of a company for bad results. To be precise, the directors may be held personally liable for losses suffered by the company if they acted in bad faith, engaged in self dealing or failed to exercise due diligence. Making a bad business decision is not grounds for liability; making a bad decision without doing your homework is. Which calls to mind the AIG bailout and claims by various members of the government that they had no knowledge of the retention bonuses. Given your public commitment to transparency and accountability, would you kindly introduce legislation allowing voters to sue, personally, all members of Congress and the Executive who failed to do their homework?

I realize that most of these individuals have not yet ascended to the ranks of the Truly Evil Rich, so it would not be feasible to recover from them the billions they have frittered away. I would propose more modest consequences. Those found liable would be removed from office, disqualified from future office (even dogcatcher), lose all benefits (including campaign funds socked away for a rainy day) and be subjected to audits going back to three years before they first took office.

Applying this new liability to the AIG case does prevent some difficulties. Retroactive penalties are generally disapproved of as ex post facto laws, which are prohibited by the Constitution. Similarly, affected individuals may also claim that, by being singled out for punishment, they are the subjects of a Bill of Attainder, also prohibited by the Constitution. You may recall that the Bill of Attainder was a favorite tool of Henry VIII of England. He used it to legally murder a number of those who opposed, or simply displeased him. Yet, coming from the current Congress and Administration, the claim would would ring false. Recent legislation designed to recover the retention bonuses through punitive taxes certainly seems to be little more than legislation intended to punish a disfavored few.

Curiously, that disfavored few have attained that status by living up to their contracts. They EARNED the bonuses that have caused so much fuss. They kept their end of their deal with their employer – AIG – and the US government. If they snookered us, you and your should be attempting to discover who dropped the ball, not on how to welch on what turned out to be a bad deal for the US.

In sum, I am confused. It would seem that our Republic is in the hands of dishonest, vindictive incompetents willing to sacrifice even our most fundamental protections to preserve their positions of power. Your silence on these questions suggests that either you do not understand them or find no reason to object to them. You promised us “hope” and “change.” I hope you did not intend such an appalling change for the worse.


PS I apologize for the slight deception in my last letter. I know there are not 37 Articles to the US Constitution. I was citing the Constitution of the former Soviet Union.

Wednesday, March 4, 2009

International Amnesty

Dear Mr. President,

I understand you have taught Constitutional law. I would ask, therefore, how you reconcile pending amnesty proposals for illegal aliens to Article 37:

Citizens of other countries and stateless persons living here are guaranteed the rights and freedoms provided by the law, including the right to apply to a court and other state bodies for the protection of the personal, property, family and other rights.

Citizens of other countries and stateless persons, when living here, are obliged to respect our Constitution and our laws.

Does the requirement to respect our laws apply only AFTER arriving here, and not to the manner of arrival?

Does being foreign born, and having a contempt for our laws, entitle one to preferential treatment, treatment not available to the law abiding?

Tuesday, March 3, 2009

New Revenue Sources

Dear Mr. President,

In these times of economic crisis, when the government needs every kopeck it can raise, it has occurred to me that the following suggestions might be helpful.

  1. End the “War on Drugs.” Our experience with Prohibition teaches us that this simple step ill save money currently spent, mostly futilely, on interdiction. In addition, legalization would drive down prices, undercutting the drug cartels that cause such troubles in Mexico and other Latin American nations. Finally, legal sales can be taxed – as with alcohol.

  2. Windfall profit taxes for additional sales of goods and services resulting from awards, such as Academy Awards, New York Times Bestseller status, the Pulitzer Prize, or an author's election to office or other public disgrace.

  3. Strict registration and licensing of celebrities who wish to become “activists.” Licensing fees for these lobbyists would be a flat percentage of their annual gross incomes.

  4. Lift the current ban on offshore oil drilling. This step would reduce the cost of energy and encourage production, creating jobs. In addition, with consumers now conditioned to higher fuel prices, a surcharge to fund socially responsible research into alternative energy, would pass unnoticed.

  5. An illegitimacy tax. While procreation may be a natural right, creating a burden on society is not. In addition, modern DNA tests remove uncertainty regarding paternity. Parents should therefore be directly responsible for the cost of public benefits to protect and rear their offspring. Parents who cannot afford to pay these assessments should be required to work off their obligations.

  6. An appointment to office tax, being a percentage of the total sum an appointee contributed directly or through surrogates, to secure the election of the appointer. As a corollary, appointees who are not current in their taxes would be assessed a surcharge equal to 200% of their tax deficiency. Payment in full being due before appointee is permitted to take office.

  7. A celebrity tax, payable by entertainers, sports figures, political pundits and others who derive their income not from production of goods or services having practical utility but from their own notoriety. An additional surcharge could be levied upon those “famous for merely being famous.”

  8. Registration and licensing of print and broadcast journalists. While print and broadcast journalists exercise a public trust, events over the last decade – witnesses various deceptions perpetrated by or on the New York Times and CBS Evening News – reveal that these organizations cannot be allowed to police themselves. Oversight is clearly necessary to ensure the accuracy and integrity of all reporting. Neither is there any reason that these organization should not contribute handsomely to the public fisc in return for the opportunities they enjoy.

  9. An entertainment tax. While rest and recreation are, of course, necessary to the well being of individuals, in these times of national crisis such as these they must be pursued in moderation. To that end, taxes may be imposed on such items as motion pictures, televisions, condoms, DVDs, home theaters, video games and works of fiction (including the writings of any holder of or candidate for political office).

  10. A leisure tax. Given the current crisis, unproductive members of society are a luxury we cannot afford. Thus all able-bodied men and women not otherwise gainfully employed should be put to work at socially productive tasks. Given the millions we spend each year on public education and training, no one should complain that they have not been given opportunity to acquire the skills needed for their preferred employment. As Captain John Smith taught during a similar time of national peril “He who does not work, neither shall he eat.”


Publius Cornelius Scipio Africanus Major