When the tragic A.I.G. picture completely unfolded with the scandalous picture amid executive leadership stating that bonuses needed to be paid to operatives under existing contracts or lawsuits were inevitable, the first thought that should surface within anyone analyzing this picture is just where were the high-powered lawyers?
The executive leadership of the nation and its two legislative branches have long contained within their ranks those considered to be among the "best and the brightest" legal minds.
If one accepts the aforementioned then one supreme element stands out. Simple protective safeguards could have been invoked that would be routinely applied to important business contracts. Indeed, had some of these critical points been neglected, lawyers involved in the contract writing would be looking for work.
The use of a condition precedent and condition subsequent, two staples of contract law, could have been invoked to protect taxpayers. The condition precedent would have been simple. In order for government money to be received for A.I.G.'s assistance all previous contracts calling for bonuses of any kind would be declared null and void.
The proposed arrangement was termed a "bailout" which presumes emergency circumstances. In emergency circumstances bonuses should not ever be under consideration so the legislation should have included such a protective condition precedent.
A condition subsequent could also have placed within the scope of the defining bailout package. This would have mandated A.I.G. to meet certain conditions consistent with the receipt of taxpayer money during an emergency period.
If those conditions failed to be met then the agreement would thereupon become null and void with the government on behalf of the taxpayers demanding immediate receipt of all funds extended.
In ordinary business circumstances receiverships are promptly sought in a court of equity when individuals are suffering continuing irreparable harm. This can be said about American taxpayers in lieu of what is occurring at A.I.G.
It has been acknowledged that the government, meaning the U.S. taxpayers, own 80 percent of A.I.G. Under any circumstances that should be a controlling interest.
Therefore, with the taxpayers holding a controlling interest in A.I.G., then what about the possibility of a suit in a court of equity to prevent an irresponsible management group from generating more irreparable harm on U.S. taxpayers?
How about suing for a government takeover of A.I.G. at least until such time that order can be restored and its financial house put in order? Receiverships have long been available as a redress under U.S. common law. Should such an action be considered under the present emergency?
With so many lawyers on the government payroll, should we not be hearing more about such tactical procedures? Why was there not protective language in any and all agreements pertaining to recipient of such vast government funds?
These are questions that demand immediate answers.
