Washington's AIG Outrage Really a Political Diversion Tactic

Here's a quick one to the politicians - it's obvious what you're up to. Once again, just like focusing on whether the GM executives drove cross-country or flew to a hearing, rather than whether or not their survival plans were adequate to prevent further handouts from the taxpayers (evidently not, I told you so), there's now this feigned outrage over AIG bonuses. There were plenty of opportunities along the way to interject in the bonus ritual, including the most recent dole out of cash to AIG under, yes, the current administration.

They drag the CEO before Congress to grill him and chastise him over bonuses. This is a guy who came out of retirement to work for $1 a year to try and turn this thing around. Talk about Obama inheriting this and Obama inheriting that; look what this guy inherited! And now that the mystery's over on how the bonuses were allowed (Wow, Dodd, what a surprise - he finally fessed up after all the outrage), this guy has already been demonized for actions that were already put in motion before his arrival. AIG is not solely to blame for the current economic malaise. It's the same story relived every time - when leaders screw up royally and continue to screw it up worse and worse, they need to generate sound bite after sound bite and point the public's ire in a different direction. Some of the statements and behavior from out elected officials is truly outrageous.

AIG representatives should either “resign, or go
commit suicide.”

This comes from none other than Charles Grassley, such a respectable figure. When questioned on his outrageous statement, he blew it off saying,

“I hope you recognize rhetoric,” Grassley said, “and
I shouldn't even have to answer that question….”

I'm sorry, but this is just outrageous - and you should apologize for it. Political leaders have been forced to apologize for less. As someone who's been personally impacted by suicide, this is a completely offensive, unacceptable statement for anyone in a leadership position to make, and then to blow it off later and not even take accountability for the ludicrous nature of the statement. Well, that's just par for the course. Seriously though, commit suicide. These people have families. They have people who love them and rely on them. Nobody should be forced to commit suicide over a job, no matter how much they screwed up. Because some guy works for a company in a totally different division or had nothing to do with a small unit of 450 people who screwed up a company of over 100,000 employees, because they're in a leadership position with this tainted company, they should commit suicide. Ridiculous.

Have any of our politicians who enabled the current situation, who blocked efforts to slow the pace of irresponsible lending, who have burdened future generations with debt they will never be able to pay...have these politicians been asked to commit suicide? No, they gave themselves another raise this year while seeking to ration out bonuses on Wall Street. I get it, AIG took taxpayer dollars, so they shouldn't give exorbitant bonuses. How can anyone in Congress judge what a bonus should be for someone who may have actually headed up a pretty good unit at AIG that had nothing to do with credit default swaps? Let's see, the company's struggling so bad that we have to keep throwing money at it, so we'll ensure even the good employees seek employment elsewhere where they can at least earn the going market rate for their performance and skill set.

We should just accept it for what it is:

Political Diversion Tactics!

Comments

[Mbuna:]

I confess I find this column somewhat amusing. I can agree with you on everything you said about the politicians, true enough. At the same time however, you take a page out of their playbook, in fact it is the very play you put in bold type- Political Diversion Tactics. So you can see why I am amused. "Those people have families"- yes I'm sure they do along with the 3 houses with BMW's in the driveways, and maybe some large alimony payments to boot. 73 of the bonuses were over a million dollars and a large percentage of the bonuses were from-guess what- that small unit of 450 people. Are you a free market capitalist? If you are then all of the people at AIG should have been out of work months ago because that is how it is supposed to work. Ideology will almost always take a back seat to greed. Yes everyone wants their bonus but at this time that is no longer possible. Your lifestyle is going to have to change.

Mar 20 04:22 AM

[Mbuna:]

I confess I find this column somewhat amusing. I can agree with you on everything you said about the politicians, true enough. At the same time however, you take a page out of their playbook, in fact it is the very play you put in bold type- Political Diversion Tactics. So you can see why I am amused. "Those people have families"- yes I'm sure they do along with the 3 houses with BMW's in the driveways, and maybe some large alimony payments to boot. 73 of the bonuses were over a million dollars and a large percentage of the bonuses were from-guess what- that small unit of 450 people. Are you a free market capitalist? If you are then all of the people at AIG should have been out of work months ago because that is how it is supposed to work. Ideology will almost always take a back seat to greed. Yes everyone wants their bonus but at this time that is no longer possible. Your lifestyle is going to have to change.

Mar 20 04:23 AM

[Steven Hansen:]

nothing is fair about politics. congress is having hearings when they are the problem - and blaming everyone else. the citizens should convene a panel in washington to review how congress got us into this recession.

when taxpayer money is being used to fund companies, we expect certain levels of contraction of expenditures. as these companies are not in bankruptcy, they must honor their contracts.

you cannot expect a company to not honor contracts unless in bankruptcy.

Mar 20 04:35 AM

[Mbuna:]

On Mar 20 04:35 AM the hand wrote:

> nothing is fair about politics. congress is having hearings when
> they are the problem - and blaming everyone else. the citizens should convene a panel in washington to review how congress got us into this recession.
Mbuna here-
CONGRESS GOT US INTO THIS RECESSION?? How quaint.
The hand continues-
> when taxpayer money is being used to fund companies, we expect certain levels of contraction of expenditures. as these companies are not in bankruptcy, they must honor their contracts.
Mbuna-
I like the way you say "we expect...." Please explain who "we" is. Full disclosure PLEASE.
The hand-
> you cannot expect a company to not honor contracts unless in bankruptcy.
Mbuna-
The only real corollary I can glean from the Hand here is that the Fed and Treasury exist for the purpose of providing funds when needed so that companies may honor their contracts. A nice idea I suppose but really, what have you been smoking? May I suggest a lobotomy?

Mar 20 05:03 AM

[I weep for ...:]

Read the actual bill it is available on the House's website. Despite how it has been reported it: taxes any individual whose salary and bonus combined is more than 125k. Households combined whose salary and bonus amount to more than 250K are also subject to the taking. So if you work at one of these banks, earn 100K a year and got a 26 K bonus and are the sole breadwinner of your house, the gov't will take your entire bonus. Does that seem fair to the over 116K employs of AIG who had nothing to do with the London based FP unit who work hard to provide for the familes and were counting on the bonus to pay loans and mortgages? Who are working hard to ensure that the company remains profitable to pay back the taxpayer! Wasn't that the whole point of the bailout? Or was it to pay the counterparties? Hmmmm... Oh, by the way, this tax doesn't actually tax the London based employees that everyone wants to flog. And it doesn't tax Merril Lynch because unlike AIG they are still allowed to lobby Congress. Can't wait for our best and brightest to go to Zurich, Banco Sociale and other foreign entities and the US Economy collapes. Way to go Congress!

Mar 20 09:27 AM

[JK Corcoran:]

So, since the precedent is being set that companies in trouble should restrict pay or the government will; and government ownership implies the ability to string people up (Grassley auth.) and/or tax them to death; the same precedent should be applied to the government. The question is who in government should be the first to be punitively taxed, then fired (or strung up, Mr. Grassley?)? I can think of a few...Frank, Dodd, Grassley, Pelosi, Reid...how about all those voting for the bonus tax bill...all 328 of them!!

Mar 20 10:52 AM

[Buckoux:]

Taxing to punish what we don't like, but that was legal at the time, is un-American. This country fought a revolutionary war against such capricious and arbitrary actions by the government officials of Great Britain. All these politicians and reporters who are running around with their hair on fire about the AIG bonuses are doing nothing but political theater. The fix regarding these bonuses was in before inauguration day and both parties knew it. The 90% tax purposed by a hypocritical Congress will fail to pass as the publics attention span tires of the repetition. That's the way it's supposed to work.

Mar 20 11:00 AM

[Socialism c...:]

We should DEMAND the Obama & Dodd (and other politicians on the take) return EVERY DOLLAR they received in election contributions from AIG!!! Does this not appear slightly crooked, given what has transpired???:

www.opensecrets.org/or...

Mar 20 12:34 PM

[NanO49:]

That's just what I said yesterday! Thanks for giving my remarks some credence -- it's all smoke and mirrors!

Mar 20 12:50 PM

[WayneS:]

People don't realize that Congressional hearings are not trials or even an effort to get at the truth. They are strictly commercials by politicians to keep their names on people's minds so that they are re-elected. The only other option is that Congress is populated with idiots and fools. It was obvious that each questioner did not listen to any previous testamony and only read yesterday-prepared speeches. They did not know who the recipients of the bonuses were. Most didn't know that Liddy was appointed recently at $1/year. They didn't know they voted for the bonuses to be given out. They actually didn't know what they voted for as they didn't read the legislation.

Mar 20 01:39 PM

[Teutonic Kn...:]

Everyday Finance:

Historians generally believe that it is customary for the human specie to find scapegoats in time of greal distress, and the present situation with AIG that you described is no exception.

teutonic

Mar 20 09:31 PM

[scorp99cam:]

I understand your anger at congress, and agree this 165 million is a pittance compared to total amount of money thrown at problem. I also agree the grandstanding and saying those people at AIG should kill themselves rediculous. BUT let's be honest. Without taxpayer money all these people would be laid off. Who cares if they don't their bonus? In order to save costs we lay people off in every company with the majority of the burden placed on the average worker and not executives. If they leave, great! Go be more productive somewhere else. AIG and all companies too big to fail should be broken up until they are not too big to fail. If they can damage our country by creating too much systemic risk then break them up until they can't. These are failed institutions. Besides, the contracts signed up for in the bonuses appears unethical to me(basing the contract on previous years performance after they knew this year performance would be terrible), so if they miss out on an unethical contract, who cares? Congress actually passed this law in one day, among the fastest turnarounds for them ever.

Mar 21 01:08 AM