AIG bonuses spark outrage
Not since the uproar over the Dubai Ports deal a few years back has so much non-partisan national anger been expressed as has been over the last week regarding bonuses paid to executives of American International Group Inc., better known as AIG.
Unfortunately for us, the American taxpayers, this money is coming out of the TARP money, given to AIG as well as other financial institutions last fall with “no strings attached.” The rescue of AIG in particular was touted as a matter of life and death for the salvation of the economy of the United States as well as the global economy by the designer of the bailout — the Bush administration. We were told that AIG was an insurance company that was “too big to fail.” And so now we, the American taxpayers are the not-so-proud owners of almost 80 percent of this oversized entity.
The mainstream media has repeatedly highlighted the AIG employee retention bonus package as somehow being the fault of the Obama administration, but fails to point out that it was the Bush administration’s Treasury Department that worked with the Federal Reserve in carrying out last year’s bailouts which bought AIG stocks despite the fact that the “bonus contracts,” which are now at the heart of all the outrage, were part of the package. The Bush administration did not “demand limits on bonus payments as part of future federal bailouts,” as was reported by Media Matters.
Congressional Republicans, despite the Bush administration’s role in setting the terms of the AIG bailout six months ago, are attempting to place sole blame for this fiasco on the Obama administration, but it easy to see that this is yet another problem, on a long list of problems inherited by the current administration from the previous one.
The American people have every right to express their outrage because of the fact that AIG paid out tens of millions of taxpayers’ hard-earned money for “retention bonuses” to company executives whose on-the-job performance led to the disastrous losses and near collapse of the insurance company to begin with.
According to the New York Times, the company paid bonuses which included more than a million each to 73 people and to almost all of the employees in the financial products unit, which was directly responsible for creating the “toxic derivatives” that caused AIG’s problems in the first place. This is part of the reason that across the board most of us feel that these incompetent business executives are not deserving of any type of bonus at all. This is a total misuse of our money, regardless of any contractual agreements they say they must honor.
The Los Angeles Times reported that $165 million in bonuses was necessary to retain some 400 workers at AIG’s financial services unit. This is the same group of managers and salespeople who spent a half a million dollars last year on a resort vacation after it received its first $85 billion chunk of federal bailout money from the Bush administration. These people must be living on a different planet than the rest of us.
As if all of his were not bad enough, it was also revealed that much of the bailout money received by AIG has been funneled to the company’s trading partners, which includes other banks and financial firms. According to the New York Times, 20 European banks received a total of $58.8 billion. Billions more were also handed out to Goldman Sachs, Merrill Lynch, Bank of America and Citigroup. The total was $107.8 billion of the bailout given to AIG. This still leaves $32 billion which is yet to be accounted for.
President Obama said that AIG is in financial problems because of “recklessness and greed” and said that he intends to stop it from paying out millions in executive bonuses. “This isn’t just a matter of dollars and cents. It’s about our fundamental values,” as was reported by the D.C. Examiner. Congressional representatives on both sides of the aisle are likewise outraged.
It is clear that financial reform is indeed needed in order to prevent this type of debacle from happening again. The financial bailout program is unpopular with the majority of the American people, particularly after the taxpayer-funded bonuses were revealed. The average American taxpayers are struggling to keep their jobs, their homes, their retirement funds and food on the table, and so the Bush administration’s mantra of less regulation and less oversight, which was the mindset that allowed this to happen in the first place and which seemed to be so popular in the past, no longer looks so appealing.
ABOUT THE WRITER
Carol Jensen is a long-time Barstow resident, graduating from Kennedy High School and Barstow College, where she was an English instructor for many years. Much of her time now is spent writing political and social commentary. She may be contacted at cajensen49@msn.com.
