Sunday, March 15, 2009

News Flash: Financial Services Industry Still Doesn't Get It

I interrupt this rash of theater reviews (I still have the four plays that I saw last weekend to be discussed... and will do so when I have a few hours to write them—wish I wrote faster!) to give you a short screed on greed. The Times reports today that A.I.G. is contractually obligated to pay $160 million in bonuses to executives. The Obama administration actually doesn't dispute this, although they have tried to get A.I.G. to cut the amounts paid out. This quote stood out to me:
"... the administration will force A.I.G. to eventually repay the cost of the bonuses to the taxpayers as part of the agreement with the firm, which is being restructured."
I can live with the fact that people who in reality don't deserve bonuses will get them if I can be assured—and let's get those same damned lawyers who wrote up the executive bonus contracts to put this in writing for the American people—that A.I.G. will pay back every cent they owe and that once the company is stable again, the United States will not have contributed anything to these bonuses. Because we all know what's going to happen: at some point, the Administration or Congress or a combination of the two is going to come back to us and say, "You know, A.I.G. has done a pretty good job and they've gotten close to paying us back everything they owe: we're going to forgive the rest. It's in the interest of the economy and of the American taxpayer to let them have their company back now." Oh, they won't use those exact words, but the result will be the same: A.I.G. won't repay us in full; we will all have paid for the company and have nothing to show for it but a higher national deficit (see the 1980s savings and loan crisis, especially the net loss in the "Consequences" section).

Now, in fairness, I have a friend who works for A.I.G.—he's not a top executive, but it's safe to say that he really is one of those people who the company describes as "the best and the brightest talent to lead and staff the A.I.G. businesses." I firmly believe that if we're ever repaid what we've given this company, it'll be thanks to people like him and I want him to be fairly compensated for his work. That said, it doesn't take a financial genius—which are, admittedly, in short supply there these days—to realize that those well-paid lawyers really ought to figure out a way to defer these contracts or renegotiate or something.

It's the arrogance of the industry, as a whole, that they just can't see it. So what if the American people own 80% of their company? So what if they'd all be out of work if the government hadn't stepped in with a bailout? So what if the rest of the country struggles more on a daily basis than these people ever will just to survive? I have a contract: pay me.


Ju said...

This is sick. Why in the world are we helping these companies that keep sending millions to people who do not know how to run a company? They cry yet get paid millions on the "average joes" taxes. Furthermore, I fear this is just the tip of the iceberg. Look what Enterprise rent-a-car did to get bailout funds:

Catherine said...

When's the last time you got a bonus? Or I did? I don't expect the A.I.G. execs to pay MY bonus; they shouldn't expect me to pay theirs. I've been very patient w/the various bailouts (you know me, a socialist at heart, so government intervention doesn't scare me), but I'm really getting to the point of "Let 'me fail."