Like many folks, I'm outraged about the continuing bonuses given to people in the trading unit at AIG that essentially brought on the downfall of AIG and was responsible in no small measure for the global financial collapse.
There are a lot of facets to this story, so I'm just going to share my thoughts on them.
First, the Obama administration is handling this very badly. I'm not criticizing Kenneth Feinberg, who I think is, overall, doing a good job. However, the president is expressing mock outrage at the top, yet below him, his minions have been quietly working to make sure these bonuses get paid.
Senator Dodd stripped out compensation limits from the initial TARP bill at the request of somebody in the Obama administration. We can only guess who, but my money is on Geithner.
So, at the first, the administration talked one game while playing another: act outraged, but make sure the bonuses get paid.
Geithner is also hacking everybody off by saying that if we implement this tax on the banks, that the taxpayer won't have to worry that their money is being used to pay bonuses.
What this misses is that people are angry because their fundamental sense of justice is seriously offended. People who have worked hard their entire lives are now struggling or unemployed. The economy is weak and small businesses are dropping like flies. Big businesses aren't necessarily doing so hot, either.
The problem, which apparently nobody in the Obama administration understands, is that it is morally wrong to give bonuses to the people at AIG.
I'm not talking "wrong" in some worker's manifesto sense that it's wrong for one man to make more money than another. This is America. We idolize sports and entertainment figures who make more in a year than our entire block makes in a lifetime.
It's wrong because they don't deserve it. Their company is losing money. In the rest of the country, a company that loses money means pink slips. For these clowns, it means gigantic bonuses.
It's wrong because this is the very trading unit that put AIG in peril. Bad enough that their company doesn't make money, but these guys are the very type of clowns who brought on the global economic collapse.
It's just plain wrong.
Now, it is true that this happened under Bush's watch, not Obama's. Congressional Democrats brought up the idea of compensation limits as a condition of TARP.
Hank Paulson demanded that no compensation limits be enacted. His logic? That it would be too difficult.
Too difficult? More difficult than bankruptcy?
The reality is that Paulson, like Geithner, is from the culture of Wall Street and you will notice that the one and only thing in this whole economic mess that has come through unscathed is Wall Street compensation.
So, when the Obama folks say they got dealt a crappy hand, they're right. They did.
And then they played that crappy hand as badly as possible.
At this point, the contracts expire next month. No more guaranteed bonuses at AIG for a while.
The one and only bright side to all this? Feinberg has said that he will take past bonus payments into account when setting future compensation.
I know how I'd do it. I just wonder if he has the balls. Being that he's from the Obama administration, the answer is almost certainly "no" since this administration is pretty much the nutless wonder of American politics.
I would take the top 20bonus recipients. Set their compensation to about $30,000 a year. Scare the living piss out of them. They will more than likely quit.
And they'll be quitting in the midst of a very weak employment picture. Wall Street's unemployment rate is right there with the rest of the country.
Once they're replaced and operations are hitting their stride again, I'd take the next 20. Repeat the entire process until every one of these amoral jerks who accepted a bonus has either quit or is working for $30,000 a year.
Sounds mean spirited? Sounds vindictive?
These people ruined lives. And they profited immensely from it. I defy anybody to shed a tear for somebody who just got an average of about $2 million in compensation over the past 3 years.
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