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AIG made the front page of every paper with their $165 million executive bonus package. It took mere hours for the country to organize a lynching party.
It may be true Americans are just looking for someone to pin their problems on, but the American International Group made it so easy. The company’s initial reaction was defiance, insisting they were contractually obligated to pay the bonuses, which has got to make you wonder – if they’re part of a contract, aren’t they just salary?
Of course, they were lying. Sure, someone might have signed a piece of paper saying there were going to be bonuses, but this was all well before AIG barely escaped being talked about in the past tense. This was while the very same employees who received the bonuses brought the company to the brink of financial collapse, forcing the government to lend $180 billion to AIG. When circumstances change, contracts become surprisingly easy to break.
AIG’s second excuse was even worse. CEO Edward Liddy told Congress he had to follow through with the bonuses in order to keep employees at the company. Oh, the same employees who nearly brought down the entire American financial system, you say? Sounds like a Cracker Jack crew. Let them leave if they’re stupid enough to, because no one will hire them after they’ve been tainted with causing the world’s economic problems.
Yes, people are overreacting. The media tends to get a little overzealous at times, as they did with the AIG story, but this one really hit home for a lot of people, for whom the American dream has gone from becoming an executive one day to merely getting a job and keeping the house. To see such a reckless company act as though it’s profiting from a government bailout is a terrible image to send.
The 90 percent tax levied on the bonuses by the House – still to be approved by the Senate – was an immature move though, a plea by Congress for someone to notice them and recognize that things do get done in Washington. Everyone wants to see the bonuses given back, but taxing people you don’t like is a slippery slope. How long before there’s a 90 percent tax on all registered Libertarians?
President Obama has remained characteristically cool through the entire episode, to the chagrin of many. There are those who want to see him throw something or yell at someone. But there’s a time for all that, and this isn’t it. His administration reacted swiftly, ordering Treasury Secretary Timothy Geithner to find any legal avenue to squelch the bonuses.
That was the right thing to do, but it still doesn’t answer the question: What were the executives at AIG thinking? Did they not think people would notice? Did they think people wouldn’t care? When the furor got so bad they couldn’t stand it, they asked for half the money back, only further cementing the idea they could have done that all along, or just not given out any money in the first place.
It will be a tale for the history books. AIG’s incredible naivete and bungling will go down beside the tales of corruption at Tammany Hall – ridiculously impossible in a few years but impossibly real for all who were there.
William P. Davis is Web editor for The Maine Campus.
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