AIG Mess

With every member of Congress now posturing and trying to outdo one another in expressing outrage over retention bonuses paid to AIG executives, it didn’t surprise me to receive an email tonight from Senator Debbie Stabenow. I guess I got on her mailing list last fall, when I wrote asking her to oppose the $800 billion financial bailout (which she did, and for which I give her enormous credit).

Anyway, this is the text of the message she sent tonight:

This morning, Senator Stabenow went to the Senate floor to speak about the outrageous bonuses being lavished on employees at AIG. She spoke about the outrageous double standard between Wall Street and America’s automakers, who have submitted their management plans to the auto task force and are renegotiating contracts with their workers, who have already taken cuts. Our families are struggling, and those who got us into this mess should not be rewarded for their failure.

Here is the link to Senator Stabenow’s speech:

http://www.youtube.com/watch?v=5Td2ya5z1Y8

I do agree with the Senator that those who got us into this mess should not be rewarded for their failure — and, as I said above, I credit Senator Stabenow for opposing the original TARP legislation, out of whose funds AIG was bailed out. That said, this was my reply to Senator Stabenow:

Didn’t you vote for the “stimulus” bill which included an amendment explicitly protecting these bonuses? I’m assuming you were not aware of that amendment, given the short amount of time available to review the conference report. But had you been aware of that amendment, would you have voted differently on the bill?

Naturally, every member of Congress will now purport to oppose that provision. But just how much do they really mean what they say? Given that the amendment was indeed part of the final stimulus bill, do they oppose the bonuses enough to have voted against the stimulus?

My larger question, directed at the Senator’s colleagues (including the current President), who did vote for TARP and are now expressing outrage, is this: If you really wanted fundamental change in the way these financial institutions do business, including the way they compensate their employees who “got us into this mess,” shouldn’t you have let those institutions fail and be liquidated? Or at least written your mandated compensation changes in to the original bailout agreement? By continuing to prop them up with $173 billion of no-strings-attached taxpayer dollars, why are you surprised that they continue to operate their business as they have in the past?

Personally, I’m more outraged by the $173 billion that was “loaned” or otherwise entrusted to this failed monstrosity than I am by the way that company spent $165 million compensating the employees which the government’s bailout package enabled them to retain.

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