Readers were right. I posted about the idea of shaming the AIG execs, but events move faster than thoughts:
A tidal wave of public outrage over bonus payments swamped American International Group yesterday. Hired guards stood watch outside the suburban Connecticut offices of AIG Financial Products, the division whose exotic derivatives brought the insurance giant to the brink of collapse last year. Inside, death threats and angry letters flooded e-mail inboxes. Irate callers lit up the phone lines. Senior managers submitted their resignations. Some employees didn't show up at all.
I wonder if older commenters could leave thoughts about analogous situations that they can recall?
More like this
If there were ever an argument for high income tax rates on large incomes (i.e., greater than five million), AIG is making it.
According to recent press reports, the creationist organization Answers in Genesis will merge with the troubled insurance giant American International Group. The new corporation will be named AIG, for American Indulgences Group.
I've found a good post that does a very good job of laying out some of the long range and immediate factors that lead to our current economic woes.
so apparently insurance conglomerate giant AIG is on the verge of bankruptcy, again, despite something of order $200 billion bailout from the US, which now owns 79.9% of the company
the news solution is to request the US government guarantee the outstanding CDS that AIG issued
It shows how greedy and incompetent they are. If they just handed out a few million dollars of government money to the mob, everyone would go home happy.
From the Washington Post article you linked:
I've been in a similar situation, where "senior" executives undertook plans that failed, and everybody under them had to go along. Backing out this sort of mess is hardly the sort of thing that leaves glowing points on your résumé. Anybody concerned about their career would be better advised to find another job where they can do something positive. If this money isn't forthcoming, most of these people will probably do just that.
It may make people unhappy, but this isn't a matter of "rewarding incompetence", it's part of the overall cost of those stupid decisions made by incompetent people who've already left.
I wonder what will happen at the upcoming G20 summit in London, where police expect the biggest protest since May Day 2000.
Of course now the company will go under and the "bailout" money will be lost. Nice move Obama.
I am older, but I can't say I've seen anything like this before. Part of it is that the Feds have never bailed anyone out to this extent before and that people are, in general, annoyed about that to begin with.
There is also the relatively new 'government by poll' which is revved up by 24 hour cable outrage journalism and the internet. Politicians are adding fuel to the fire by wanting to look good to a public that often can't see past the end of its collective nose.
Upper-middle class communities in this country are guarded by off-duty cops 24/7. I bet those AIG MDs probably have a/ few blackwater guys ready to pwn any prole who gets within 10 ft of them.
They'll get their money. But maybe those loser beta IBers are married to ugly, vapid e. asian women - then we'll know there's justice in the world.
["levi johnston" regularly leaves comments which i never let through moderation. i thought i'd let this one through so that readers could see some of the weird stuff that never gets through moderation]
I'm a bit uncomfortable with this sort of approach. It seems disturbingly similar to mob rule.
Incidentally, there's been a proposal made that may allow the bonuses to be stopped:
http://huffingtonpost.com/aaron-zelinsky/larry-summers-stop-the-aig_b_1…
(disclaimer: The writer is my twin)
The primary point is that the IRS has wide latitude in declaring compensation to be unreasonable and that all sorts of laws kick in at that point.
"mob rule."
we're there, aren't we? it just isn't violent yet. "populist anger" is just a euphemism.
Of course now the company will go under and the "bailout" money will be lost. Nice move Obama.
No, it won't. Geitner and Bernanke won't let it. When Lehman was allowed to go bankrupt, it devastated the credit markets. (And here's where you can make your "Nice move Bush" shout-out.) The fear is that the consequences of AIG-gone-bust will make Lehman's fallout look piddling in comparison. The reason why it has to be bailed out is because the systemic risk is too great. However, I'll admit I'd be hard-pressed to think of a second reason to not let it fail.
I'm certainly NOT normally in favor of nationalization, but in this bizarre case, if the government put that much money into it, they should be considered a part owner and should be making that ownership felt.
If AIG were actually 'allowed to fail', in a legal sense it would be in some form of bankruptcy. I can't imagine any bankruptcy judge allowing such huge bonuses to go through under these circs. What the bailout has done, under the rationale of 'great systemic risk', is allowed the company execs to believe that it is business as usual. No it isn't. Bonuses, even if executives feel entitled to it, are discretionary expenditure. In bad times bonuses are smaller or non-existent, even on Wall Street. These are bad times.
A separate issue is whether these bonuses, when spent by the executives, has some stimulus effect on the local economy. They might, but many wiser ways to spend that money exist with even greater stimulative impact (and it is Government money, not AIG's money).
The bonuses are a diversionary issue. The amount the companies themselves are getting is the real problem; Obama is caving in to finance (an understatement: Geithner and Summers are finance.)
So you make a stink about 0.1% or so of the giveaway, and make an example of a few guys, and 99.9% of the giveaway cruises through.
To make my stance clear: I support more retribution, not less; this bonus hooplah is a red herring. Second, Some sort of enormous bailout - stimulus package is absolutely necessary, but government should drive a very hard bargain with corrupt, failed companies.
But it's not going to happen. 90% of the Republicans and 60% of the Democrats are morons or crooks or both, and the Greens and the Libertarians put together are worth half a bucket of lukewarm piss.
If I worked at AIG at the time of the bailout and was well paid, I would have quit the company, unless of course they were to pay me a big bonus to stay through all the crap.
Do you think maybe that is what happened? I don't think these upper level folks thought this was a swell idea and probably wanted to quit. Only they knew it might be hard to find a job quickly and if they would get a bonus to stay... Well maybe that is what kept them there.
I think AIG should have gone bankrupt, but I am not an expert in bankruptcy. As for the "systemic risk" I think that is code for rich folks, corporations (Goldman Sachs) and governments (European central banks) losing tons of money they invested in securities. Perhaps some blame belongs to the rating agencies that didn't really let investors know how risky AIG securities were.
Securities involve risk. We invest in them because we are greedy and willing risk it.
If you gamble long enough, eventually you lose.
Next time, rather than use taxpayer money, I think Congress should do what David Crockett did almost 200 years ago; take up a collection from the members of Congress and use their money for these, uh, "creative" endeavors which don't seem to be a constitutional use of our money.