How far can this AIG mess go? It’s bad enough that the taxpayers handed over in excess of 180 billion to the financial giant, but nothing compares to what just happened. Not the fact that 200 million went out in bonuses. That’s an ethical issue to be debated in bars and living rooms throughout the country. That our congress insists on yet another inane kneejerk reaction to it is what we really should be upset about. Americans are protesting outside the homes of AIG executives, when it should be on the mall in Washington. It is simply another example of horrifically misguided anger on all sides of this mess, and serves as a blind diversion to the real issues at hand.
Why do we suddenly care about 200 million, hardly 1.5 percent of the amount given to AIG? These were contractual bonuses, and the inclusion in the original bailout of the provision that allowed them saved a small fortune in potential legal fees. Who in the world would not sue for their bonuses when it was clearly written into an employment contract? Lawyers would have a field day with this. Now, Chris Dodd must fight for his political life for doing exactly what some rather intelligent lawyer told him to (I am leaving out the little flop-flop of denial, however).
Isn’t the real issue, considering the global nature of AIG, the amount of the bailout that has been siphoned overseas? Not to mix the bailout with any stimulus package, but Americans have the right to believe that cash handed to a corporation in the U. S. should, at the very least, stay here. Since transparency has not yet (ever?) hit AIG, we have no idea. Whether the bailout was necessary is a debate left for those far more intelligent than I, but a high I.Q. is not necessary to realize that a politician handing out taxpayer dough has a responsibility to know exactly where it is going.
And I.Q. is the primary reason we should not have such a huge issue with these legally-mandated bonus payments. Economists all over the globe cannot fully understand, never mind explain, the AIG mess. Many of the executives responsible have since left the company, some not so voluntarily. It would be a very prudent move to keep as many of those involved, those that actually understand this disaster, in the rolodex. Concern needs to be paid on the return of the 180 billion, and if 200 million in bonus payments is the best shot we have at keeping the ones that can make that happen onboard, and also avoids the millions in additional legal fees we would have faced should Mr. Dodd left that one line out, then why would we fight this? If the employees can be coerced into voluntarily returning the cash, as some already have, great. Short of that, we need to just let this one go.
3 comments:
Mr. Meloy- Your points are well taken. I agree with you assertion that the recovery of bonuses and Chris Dodd fiasco are distractions, noise factors if you will, that hinder two key actions that need to be taken.
One high level action category is “containment.” Some tactical things (such as bailouts) have been done, but this administration needs to bring the containment to a higher level. For instance finding a way to broker the merger of good banks with bad financial companies to get lending going again would be a strategic move that would rid tax payers of companies that compromised our financial system and reward “good lenders with additional cash and accounts. In exchange the government would take away some of the toxic assets and give tax payers the satisfaction of knowing action was taken and companies like AIG got the death penalty for their mistakes. This would send a strong signal to investors, wall street, banks and tax payers that this administration means business, that this kind of unethical conduct carries consequences and still keeps financial institutions in the free market. I know it is easier said than done, but work needs to begin on this immediately.
The second action, is simple root cause analysis. Identify the points of origin and implement long term policies that will prevent future occurrence of these system failures. This will take a tremendous amount of effort and will be filled with vipers and pitfalls, but it has to be done. To not do so is to guarantee a repeat performance.
Yes the AIG bonuses are a distraction and yes tax payer money going overseas is a concern, but I guess I see it as a symptom of an even bigger problem that no one appears to be addressing which is the root causes and points of origin that allow this kind of “legal” embezzlement to occur to begin with. Just my two cents.
Wushock,
Thank you for your comment. I would argue that the root cause is simply that the government allowed it to happen, even enmcouraged it. The early 80's Reagan deregulation, and, in fairness, a few select Clinton policies, were enablers. We cannot blame the corporations whose actions, while unethical, were not illegal. For every law passed, there are thousands of lawyesr whose sole purpose is to find loopholes, and are very good at it. If we as americans really want to make AIG pay, then get Geico.
If GEICO has been mismanaged like AIG has they too should suffer the consequences and cease to exist, regardless of their government affiliation. Think of it as improving the corporate gene pool.
Yes, deregulation had its role in this but didn’t we vote them into office? If you want to take your argument to its logical conclusion then we are the root cause. But that is where you and I part ways.
Articles of incorporation do not absolve corporate leaders from having courage and being responsible enough to stop their company from harming others. There are ample case studies to that affect. The leaders of these companies knowingly and willfully allowed this to happen in my opinion.
I agree there are many attorneys who are good at finding loopholes, which is why this may be difficult to prosecute. That is why I propose we move on by brokering the demise of these companies rather than waste time trying to prosecute the ghosts of corporate sins past. We can still do that later. If that were to happen the government would have access to contracts, personnel records, financial records and all kinds of information they currently can not get to. Plus splitting up these organizations may be the only way to split apart important internal fiefdoms.
Post a Comment