Column
The AIG Bonuses: FreePassers Gone Wild!
I have noted before that the FreePasser epidemic has permeated every aspect of our society. However, the recent disclosures of the use of government bailout money for bonuses at American International Group (AIG) astound even me. It turns out that the taxpayer bailout money was used to pay bonuses of about $450 million to a small group of employees at the business unit at the company that lost $40.5 billion last year and helped cause the current crisis in the first place. Apparently, if you believe the excuses, this appears to be a contractual obligation that AIG cannot abrogate.
The Sucker at the Poker Table
Have you ever heard the old story about not being able to figure out who the sucker is at the poker table because it turns out to be you? In the case of AIG, I think that we now know who the sucker is at this poker table - the U.S. taxpayer. This is somewhat like putting up a reward for information leading to the recovery of money in a bank robbery, then paying the bounty to the bank robbers who then claim immunity from prosecution. The AIG bailout is no less absurd.
No Pitchforks and Torches-Yet!
Treasury Secretary Geithner and President Obama are looking for a way to rescind the bonuses. If they do not, the public anger building on both sides of the political divide will intensify. No one likes to be viewed as a sucker, especially the average American who is suffering the consequences of the gross mismanagement of these major financial institutions.
This righteous anger is building like a smoldering volcano ready to erupt. In the past, there was at least a question as to how responsible those receiving bonuses were for the disaster. In this case, the very people who bankrupted the company are receiving the rewards. These people are poster boys for my campaign against FreePassers.
Stealing It Fair and Square is Not an Option
If the public believes FreePassers can get away stealing taxpayer dollars, their distrust will spread to the government as well. Eventually, people will reach a boiling point and will tolerate no more. Allowing derivative traders to receive huge payouts while asking workers to reduce retirement benefits will be viewed as ridiculous.
Earthquake in Slow Motion
Eventually, this anger at FreePassers will find a way to express itself, and it won’t be pretty. Support for any future bailout plans may be very limited and could prevent necessary measures and reforms to deal with the financial crisis in the coming years.
These bonuses need to be rescinded. Even if there are legal problems as a result, the alternative in terms of public unrest would be far worse.
February 23rd, 2010 at 5:42 pm
For me it isn’t that people are “paid what they are worth” so much as the systemic over-valuation of the work performed. How is it possible, with massive layoffs and downsize–the market awash with employees–that compensation continues to increase? These bankers are the same folks who advise corporate management . . . doesn’t such a practice call into question the validity of the advice? Lastly, could it be that the “bonus pool” is a third lower this year than previously because of “supply” being taken out of the market? That is to say, since Merrill Lynch, Bear Stearn, and Lehman, no longer “exist” the bonus pool dropped because of fewer employees?
February 23rd, 2010 at 5:51 pm
This type of wealth disparity in this country is ridiculous and a hazard to a functioning democracy and free market. The $20.3 billion paid out as bonuses on Wall Street could support over a quarter-million good-paying middle class jobs. I truly believe the best way to prevent socialist tendencies in government is to prevent the accumulation of extreme wealth amongst the elite. Supply-side economics doesn’t need to rely on the top-income earners to invest if there is a healthy middle class. It seemed that America functioned just fine (likely better) when the income disparity was much lower.
March 13th, 2010 at 1:44 am
Wall Street reform is going to fail for the same reason that health care reform was eviscerated. An obstructionist Republican Party that is voting as a bloc in order to cause the failure of the Obama presidency. Nothing that Obama supports is going to pass.
March 25th, 2010 at 6:02 pm
When I originally commented I clicked the “Notify me when new comments are added” checkbox and now each time a comment is added I get four emails with the same comment. Is there any way you can remove me from that service? - Thanks