Outside voices: AIG bonuses stir rage
Executives shouldn’t be rewarded for needing bailout
Fort Worth Star-Telegram, March 19: Should U.S. taxpayers be livid over the gargantuan bonuses being paid to workers at AIG, the global insurance giant that has received at least $170 billion in government bailout aid?
Do geese fly? Do dogs bark? Do politicians grandstand?
The American International Group bonuses symbolize the wretched excess, greed and irresponsibility that have plagued much of the business world in recent years.
The obscenely obese bonuses total $220 million to hundreds of employees, with $55 million awarded in December and an additional $165 million in retention bonuses paid last week, according to news reports. Seventy-three employees got bonuses of $1 million or more and the biggest bonus was nearly $6.5 million, the Associated Press reported.
For these undeservedly lucky folks, AIG must stand for “Ain’t It Grand?” But for the average bonus-deprived taxpayer, it stands for “Ain’t It Greed?”
Even more infuriating, the bulk of the bonus bonanza went to employees who worked in an AIG unit responsible for peddling risky financial products known as “credit default swaps,” a form of insurance heavily tied to subprime mortgages and the housing industry collapse.
Yes, AIG gave hefty bonuses to the very folks responsible for bringing the company to its knees. That’s the antithesis of the employee financial incentives philosophy that CEOs customarily preach and college business professors traditionally teach.
But, of course, it’s not AIG that is really paying the bonuses. It’s essentially U.S. taxpayers who are footing the bill, because the bonuses wouldn’t have been possible without the bailout money provided via our benevolent Uncle Sam. …
Since 1980, compensation of CEOs of large companies has risen at far higher rates than for average workers. The real, inflation-adjusted income of the wealthiest Americans has jumped substantially over the past two decades, but many middle-class and lower-income workers have experienced no more than modest gains.
In America, outrage is all the rage.
The AIG mess is just the latest can of gasoline being tossed on a rapidly spreading fire.
Philadelphia Inquirer, March 19: Of all the reasons for taxpayers to be outraged about AIG, executive bonuses are only a part of it.
The federal government deserves blame, too, for shoveling money with few conditions at the “too-big-to-fail” insurance firm since last fall. …
Bonuses never should have been given to the people who helped to create the financial crisis. AIG’s financial-products unit devised the infamous “credit-default swaps” that helped to bring the company to the brink of collapse, necessitating the bailout.
In 2008, this arm of AIG lost $40.5 billion. But employees at the business unit are receiving $450 million in bonuses under a retention program begun a year ago. The latest installment of those bonuses was paid out to 418 employees Friday; an additional $230 million is to be paid later.
Apparently, when Wall Street lost its way, it also lost any sense that “bonuses” should reward superior performance. …
Congress and the Obama administration should apply whatever pressure they can to compel every AIG executive to give back his bonus. If the executives have any shame left, they’ll comply. …
Dallas Morning News, March 19: Wednesday’s Capitol Hill smackdown of American International Group CEO Edward Liddy was to be expected, given the national furor over the company paying multimillion-dollar bonuses to the same scoundrels who destroyed it.
It’s fine to beat up Liddy, but let’s not forget that the Barack Obama administration knew, or should have known, about these bonuses ahead of time and signed off on them.
Now that the public is outraged, the president is trying to distance himself and his economic team from the mess while scrambling to get out in front of a story he’s been playing catch-up on for too long. …
It’s starting to look like this administration’s economic team is politically overmatched by circumstances. …
In relative terms, the $165 million in AIG bonus money is chump change. But what those dollars symbolize to ordinary Americans is a corrupt system in which rich, well-connected schemers profit at the expense of the many.
Note well, Washington: In November, Americans voted for change, not for you to make them feel like chumps.
Seattle Times, March 19: … AIG wins the prize as the nation’s worst corporate citizen. The bonuses should be repaid, rescinded or taxed at extraordinarily high levels, as some senators have suggested.
Politicians from President Barack Obama on down are trying to get in front of the parade of rage by issuing public statements that fuss and fume. They will be measured by their success in using every strategy imaginable to get the money back. The message now to every hardworking family in America: Our government rewards failure. …