So the geniuses in Washington, Republican and Democrat alike, decided in a magnanimous way to spend your money by giving an enormous sum of bailout money to troubled insurance giant AIG. In the modern American pattern of subsidizing failure, instead of letting the bankruptcy laws work for failed companies as intended, the government stepped in to bail them out. As an added bonus, we agreed as “the people” to this bailout with virtually no strings attached as far as I can see.
So what did AIG do? Shrug, say “Thanks for taxpayers money!” and went on doing business as usual. Why wouldn’t they? People like current Treasury Secretary and former tax cheat Timothy Geithner, Senator Christopher Dodd and Congressman Barney Frank helped forge this whole mess, and now we have put them in charge of getting us out of it. Brilliant! As part of this crazy setup, AIG saw fit to pay huge retention bonuses to employees in the complex financial products division, the very same division that is causing many of their huge losses that we are bailing them out for. Some of those bonuses were to the tune of $1,000,000. Million dollar bonuses seem crazy for a company that is in that much trouble. On the other hand, why wouldn’t’ we expect financial mismanagement from a firm that is 80% owned by Americans because of financial mismanagement in the first place?
These people at AIG were given “retention bonuses”, i.e. money to keep them from leaving. One would think that people who failed that badly would be encouraged to leave, not paid to stay. Allegedly this is because of the complexity of the transaction they worked with, which may or may not be true, but this much is true. Incompetent or not, AIG was contractually obligated to pay these bonuses and if they didn’t, the lawsuits would have been flying which ultimately would have cost them more than $165 million because they would have lost every one of them. Not to defend or excuse mismanagement and incompetence, but that is just the reality of the situation. Our political leaders are outraged, OUTRAGED!, that our money that they gave to a poorly managed firm was poorly managed. Outraged I tell ya! Believe you me, they are gonna do SOMETHING about it. Just you wait and see. The whole thing is such a circus of people trying to cover their own backsides and deflect blame. AIG is turning into a political hot potato and no one wants to be the one holding it at the end.
What I really wonder is this: how much is it going to cost in time and money wasted for the U.S. government to pass some crackpot and possibly un-Constitutional bill to get this money back? You have to implement this new retributive tax on one narrow class of workers in a clear case of using the political system to enact some sort of weird pseudo-populist vengeance and then you have the cost of the IRS collecting these taxes plus the inevitable legal challenges to these taxes. I would be willing to bet that it will probably cost, in the long run, as much or even more than the $165 million that was paid out to “recover” it. So we aren’t “recovering” this money, we are taking it away out of spite. It is like spitting on the last cookie so no one else can eat it.
We shouldn’t be mad at AIG and the people getting these bonuses to the tune of $167,000,000. We should save our torches and pitchforks for the knuckleheads that decided to bailout a private company that made bad bets to the tune of $173,000,000,000 in the first place. In other words, instead of Barney Frank holding hearings about AIG, someone should be holding hearings about HIM and his cohorts for giving away billions of dollars of your money with only minimal thought as to how that money should have been spent. Politicians are running for cover like roaches when the lights come on, but we shouldn’t let them off the hook. This bonus issue gives them the opportunity to bemoan the injustice of it all and promise swift and terrible justice will be meted out on those scoundrels at AIG for mismanaging money that was given to them by your Congress because they were already mismanaging money. Don’t buy it. AIG is just a private company that should have been left to sink or swim in the marketplace, just like bad banks, automakers and others should be forced to work within the framework of our economic system. Instead we have subsidized incompetence and yet we are surprised when these companies continue to be incompetent.
“When you reward failure, all you get it more failure.” Newt Gingrich
So what did AIG do? Shrug, say “Thanks for taxpayers money!” and went on doing business as usual. Why wouldn’t they? People like current Treasury Secretary and former tax cheat Timothy Geithner, Senator Christopher Dodd and Congressman Barney Frank helped forge this whole mess, and now we have put them in charge of getting us out of it. Brilliant! As part of this crazy setup, AIG saw fit to pay huge retention bonuses to employees in the complex financial products division, the very same division that is causing many of their huge losses that we are bailing them out for. Some of those bonuses were to the tune of $1,000,000. Million dollar bonuses seem crazy for a company that is in that much trouble. On the other hand, why wouldn’t’ we expect financial mismanagement from a firm that is 80% owned by Americans because of financial mismanagement in the first place?
These people at AIG were given “retention bonuses”, i.e. money to keep them from leaving. One would think that people who failed that badly would be encouraged to leave, not paid to stay. Allegedly this is because of the complexity of the transaction they worked with, which may or may not be true, but this much is true. Incompetent or not, AIG was contractually obligated to pay these bonuses and if they didn’t, the lawsuits would have been flying which ultimately would have cost them more than $165 million because they would have lost every one of them. Not to defend or excuse mismanagement and incompetence, but that is just the reality of the situation. Our political leaders are outraged, OUTRAGED!, that our money that they gave to a poorly managed firm was poorly managed. Outraged I tell ya! Believe you me, they are gonna do SOMETHING about it. Just you wait and see. The whole thing is such a circus of people trying to cover their own backsides and deflect blame. AIG is turning into a political hot potato and no one wants to be the one holding it at the end.
What I really wonder is this: how much is it going to cost in time and money wasted for the U.S. government to pass some crackpot and possibly un-Constitutional bill to get this money back? You have to implement this new retributive tax on one narrow class of workers in a clear case of using the political system to enact some sort of weird pseudo-populist vengeance and then you have the cost of the IRS collecting these taxes plus the inevitable legal challenges to these taxes. I would be willing to bet that it will probably cost, in the long run, as much or even more than the $165 million that was paid out to “recover” it. So we aren’t “recovering” this money, we are taking it away out of spite. It is like spitting on the last cookie so no one else can eat it.
We shouldn’t be mad at AIG and the people getting these bonuses to the tune of $167,000,000. We should save our torches and pitchforks for the knuckleheads that decided to bailout a private company that made bad bets to the tune of $173,000,000,000 in the first place. In other words, instead of Barney Frank holding hearings about AIG, someone should be holding hearings about HIM and his cohorts for giving away billions of dollars of your money with only minimal thought as to how that money should have been spent. Politicians are running for cover like roaches when the lights come on, but we shouldn’t let them off the hook. This bonus issue gives them the opportunity to bemoan the injustice of it all and promise swift and terrible justice will be meted out on those scoundrels at AIG for mismanaging money that was given to them by your Congress because they were already mismanaging money. Don’t buy it. AIG is just a private company that should have been left to sink or swim in the marketplace, just like bad banks, automakers and others should be forced to work within the framework of our economic system. Instead we have subsidized incompetence and yet we are surprised when these companies continue to be incompetent.
“When you reward failure, all you get it more failure.” Newt Gingrich
2 comments:
When you hear, "hello, I'm from the government and I'm here to help"...run away as fast as you can.
These people will be our ruin.
We'll be quite fortunate if they don't get us all killed.
These morons are now in charge of our defense!
Wait Steve, you don't trust the people who give us the DMV to run our economy? That is just cynical dude.
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