Oooooh yeah, you didn’t think I could let a Your Take go by after the uproar over AIG paying out their bonuses to the very division that caused their financial malaise, did you? 🙂 Well, I couldn’t. I couldn’t because I’m curious what you all think of the situation and whether the public outcry was unfair or justified.
To recap, AIG paid out $165 million in contractually obligated bonuses to executives in the Financial Products division. The public, and subsequently the congressmen and women, were upset because AIG received billions of dollars in bailout funds to prevent a bankruptcy. People protested outside AIG headquarters in New York, Congress grilled CEO Edward Liddy, and Jon Stewart and Steven Colbert made light of it nightly on their shows.
If you are eager to carry a pitchfork, I invite you to read this letter from from former executive vice president, Jake DeSantis .
My opinion is that the executives should be able to keep their pay because a contract is a contract. The government knew about these agreements before they gave AIG bailout funds, they knew the agreements would have to stay if they wanted experts to stay (just look at the exodus at Merill Lynch following their “sale” to Bank of America), and all this “outrage” is just catering to the masses who are rightfully upset, just at the wrong people.
I don’t think the size of the bonuses is a good reason not to be upset. $165 million is still $165 million, regardless of the total bailout sum. Sure, it’s tiny in comparison but that’s not a good reason not to be upset. However, if you want to be upset, be upset at the people holding the purse strings.
I’m most disappointed in the politicians jumping on this opportunity to be so upset. Iowa Republican Senator Charles Grassley even implied (and then backpeddled) that executives should be more contrite, remorseful, and perhaps commit suicide . I know he didn’t really mean that executives should kill themselves, but the fact that he used so powerful language was because he was trying to win votes and get in on the feeding frenzy. That’s probably the most disgusting part about all this.
What’s your opinion on this? Do you think the anger is misplaced or right where it should be? While your opinion has probably already been formed, I recommend you read the NYTimes Op-Ed letter either way because it’s very eye opening.
(Photo: barrybar )