Sunday, March 15, 2009

Power and Greed, #4 - AIG

What did I tell you yesterday? The wall street insiders make the rules, and under their rules they can't lose. Only society loses. Larry Summers calls it "outrageous", but where has Larry Summers been for the past 10 years, a period where this kind of stuff has been "par for the course". (A golf-related phrase seems appropriate, don't you think?) I'm talking about the $165 million in bonuses that AIG will be paying, or has paid, under its "contractual obligations".

This stinks! AIG executives should be paying back, not being paid! I don't care whether or not these individuals had anything to do with the divisions that lost all the money by taking crazy risks. I once worked for a large corporation that paid bonuses. If we, as an organization, lost money, nobody got paid. The survival of the organization takes precedence over the enrichment of the individual. This management practice makes everyone sensitive to the risks being taken anywhere in the organization, and it's a good idea. Unfortunately, it's just another good idea that the "financial wizards" at AIG didn't have in mind when they wrote their own contracts.

I told you yesterday that wall street is an insider's game. Got the picture? And, if the U.S. government can't find a way to stop this outrage, something is dead wrong. If nothing else, the congress should pass a special tax law applicable to AIG executives only - a 100% tax on any bonuses paid to them in 2009. That should do the trick. Anybody else like this idea?

4 comments:

Dave said...

I think it depends on who's getting the bonus, and what for:

http://ratherthanworking.blogspot.com/2009/01/whats-bonus.html

ThomasLB said...

Larry Summers is on the record as favoring sending toxic waste to impoverished areas for disposal, because when poor people die it has less economic impact than when rich people die.

I don't think he really knows what "outrageous" means.

leslie said...

You are quite the simpleton, aren't you?

Life Hiker said...

Who are you, Leslie? Nothing on your blog, nothing on your profile. I think you got me beat on "simple".

But I'm still curious about why you would respond like you did. Do you work for AIG?