March 19, 2009
Last month President Obama signed a $787 billion stimulus package into law, a short-term political victory of sorts for the President. The President at that time was, and still is, riding high with a 60 percent approval rating. This stimulus package came on the heels of last year’s $700 billion bailout. Actually, it was more like a $1 trillion plus bailout when you add the $200 billion for the Freddie Mae and Freddie Mac takeover, the $85 billion bailout to American International Group (AIG), and the $30 billion guarantee to JP Morgan to bailout Bear Stearns.
As the late Senator Dirksen once remarked: “A billion here, a billion there, and pretty soon you’re talking real money.”
Now we are hearing much understandable sturm und drang about the $165 million in bonuses paid to AIG executives after AIG received a $170 billion bailout. And AIG will probably be asking for more. Kind of like the boy who killed his parents and then asked the court’s mercy because he was an orphan.
Why wasn’t there a cap on executive compensation included in the stimulus package?
Actually Senator Christopher Dodd (D. Conn) tried desperately to include such a limitation, which would have applied to all future bonus payments without regard to when those payments were promised, including those paid to AIG executives. Reportedly, it was Tim Geithner, Treasury Secretary, and Larry Summers, head of the National Economic Council, who openly criticized Dodd’s proposal and insisted that those limitations should apply only to future compensation contracts, not ones that already existed. But now that a political scandal has erupted over these payments, the White House is trying to deflect blame from itself and heap it all on Senator Dodd by claiming that it was Dodd who was responsible.
Lately, there is little mention about the $1.6 billion in compensation — including bonuses — paid to top executives in 116 banks who received $188 billion under the Troubled Asset Relief Program. Obviously this $1.6 billion did not trickle down to Americans in desperate need of loans.
Where is the outrage over these payments? AIG must feel singled out.
And remember back in 2004, Pacific Gas & Electric, while in bankruptcy, paid $83 million in “retention” bonuses to the very same people who put the company into bankruptcy. The trend continues of rewarding incompetence. Greed seems to be endemic in today’s corporate culture.
Is it any wonder that American taxpayers, who foot the bill, are becoming fed up?
The Hunger Site
March 19, 2009 at 6:41 pm
A SPECIAL PROSECUTOR MUST BE APPOINTED
A.I.G. has long been a national embarrassment.
http://pacificgatepost.blogspot.com/2009/03/aig-national-embarrassment.html
A Special Prosecutor should be assigned and given wide berth to hunt down the malfeasance.
March 19, 2009 at 3:47 pm
Great article. I wish people would pay more attention, but it is hard when executive and legislative branch grandstanding and getting all the coverage for their hammering of AIG. they are trying to stop the world from asking any further questions about bonus payouts that are even more scandalous and reprehensible.
March 19, 2009 at 3:30 pm
The bonus thing is a cynical red herring for the angry public. It keeps their attention off the real issue: the hundreds of billions of dollars that keep getting tossed out to prop up zombie banks, car companies and insurance companies. It is easier for Obama to feign outrage and to slap the wrists of a few greedy, spotlighted executives (a consequence of his own mismanagement, mind you) than to nationalize the companies these executives run.