Just since Sunday, I have read at least a hundred blog entries concerning AIG, perhaps two or three dozen different newspaper stories, original source material such as Edward Liddy’s letter to the White House, and the CDS list. The blogosphere is ablaze with more rage and hatred toward AIG than I have ever seen – even more than the outrage Enron created. We have reasons to be angry and I don’t need to reiterate them here. Anyone who has read my take on this issue knows I am just as outraged at AIG as the next person, but I find Americans are reacting primarily from their gut on this topic.
If Americans were truly outraged at having a portion of their tax money wasted, they would demonstrate outrage every time Congress submits a budget filled with pork projects. Pork projects are a waste of taxpayer money. Recently we saw a budget signed into law that contained $8 billion in wasteful spending. Only a few people were outraged – mostly Republicans and Conservatives (they aren’t the same anymore.) The pork amounted to 2% of the budget. The AIG bonuses amount to 0.3% of the bailout money. So when you wave your hand in imitation of Barack, dismissing the pork as insignificant, recall how angry you became when AIG wasted 0.3% of your money. Just something for you to think about.
Today a House subcommittee (House Financial Services Subcommittee on Capital Markets,) became the focus of national attention when it began hearings on AIG. Normally subcommittees attract very little attention. During the hearing, the Representatives spewed their hypocritical indignation for more than an hour. Code Pink showed up bearing sign demanding AIG employees be jailed. At least one blogger demanded that AIG employees be brutally beaten and killed in the streets. (I figured he was joking but soon his comments were filled by enthusiastic agreement.) Moreover, Senator Charles Grassley (R-IA) suggested that AIG executives should commit suicide!
Has our society really broken down to this – hatred so intense that we wish violence on those who disagree or offend us? America was not founded on hatred. Yes, AIG ripped us off. Nevertheless, every year your government rips you off for far more and none of you damn cows so much as moos.
AIG AIN’T THE ONLY BAILED OUT COMPANY PASSING OUT BONUSES
Meanwhile a couple of other bailed out messes are getting ready to dole out bonuses and most of you know nothing about it. I am talking about Fannie Mae and Freddie Mac. Once again, I must ask, what has anyone at Fannie or Freddie done to deserve a bonus? Nothing they ran a sinking ship. Why did these losers need a bailout? Subprime loans. These loans were made primarily due to social engineering policies at Freddie and Fannie, encouraged by ACORN and the Democrats in Congress.
While our hard earned tax dollars are being passed out like free party favors at two unhealthy lending institutions the Federal Housing Authority tells reporters, “it’s a reasonable and well-thought out plan … The most important thing in those companies are the human assets … It would have been catastrophic if people had walked out…” Reuter’s reporter Patrick Rucker seems to sympathize with Fannie and Freddie employees noting, “Many company employees lost large sums as the value of Fannie Mae and Freddie Mac shares collapsed when the companies were seized.” Unfortunately, in companies where bailouts were not received, employees also lost large sums as their companies lost value, but there was no money in the company coffers to provide bonuses to compensate them. No these unlucky folks instead have to pay for bonuses at Fannie and Freddie. Furthermore, in this economy, where banks are consolidating and going bust faster than changing weather, who is going to quit because they didn’t get a bonus?
So where is your outrage folks? I think the anger will all depend on how the President and the media react. AIG is a huge insurance company that has swallowed up $180 billion in taxpayer bailout money. When the arrogant CEO defended doling out that money to the people responsible for ruining the company, he made an easy target. He represented evil corporate America. Naturally, the President was quick to respond and denounce AIG. On the other hand, Fannie and Freddie are the darlings of Congress. Yes, they gobbled up billions in taxpayer money (Freddie has received $45 billion and will likely be requesting more,) however, Democrats have a lot invested in them. Unless the news media gets angry about the bonuses at these enterprises, expect only mild objections.
EASY SOLUTION – SLOW TO ARRIVE
On Monday, I heard water cooler talk about how the contracts were unbreakable and how Congress should tax the bonuses. It occurred to me that the solution was simple and AIG CEO, Edward Liddy should have arrived at it prior to the publicity. Liddy should have issued a memo to his bonus receiving staff demanding they sign a letter refusing the bonus. He should have explained, as recipients of the largest public bailout in history, these bonuses would touch off a firestorm of criticism and jeopardize future assistance the company might require. Unfortunately, for everyone, he was either too arrogant or too ignorant to come up with this on his own before Sunday.
Today under tremendous pressure from all sides, Liddy, asked his employees to return at least half of the awarded bonuses. I don’t know about you, but my wife would have had that money spent the day it hit the bank. It’s much easier and politically correct to do the right thing in the first place.