The initials AIG may stand officially for American Insurance Group, but they would better represent: Ain't I Greedy! This financial conglomerate received some $170 Billion of Federal money through several rounds of the TARP bailout. Now it wants to pay nearly $170 million more of bonuses to its failed executives, those same executives whose greedy misconduct led to repeated TARP payments in an attempt to save the company. That will result in total bonuses approaching one billion of our dollars - bonuses paid for failure, incompetence, and excruciatingly-poor judgment at AIG!
AIG maintains that it has contractual obligations to pay out those new bonuses, a view supported by some members of Congress who claim there is no choice in the matter. Even Obama economic guru Larry Summers has stated publicly that while he detests those bonuses, they cannot be stopped. Those attitudes show that some members of Congress, and Profesor Summers, are not well-versed in corporate law and are willing to swallow an AIG myth hook, line, and sink-us.
Bonuses represent a form of performance pay, they are not regular compensation. This means that if the performance is lacking, the bonuses should also be lacking. While AIG refuses to identify those to whom the bonuses are to be paid, or to provide the amounts of individual bonuses, we know that they are going to the worst of the AIG divisions, the one which engaged in credit swaps and other risky forms of corporate behavior.
Given that the performance of that division of AIG was horrid, nearly bankrupting the company, and that such bankruptcy was only avoided by nearly $170 Billion of TARP bailout funds, what could possibly justify any bonuses in the first place, let alone any additional ones now? Further, the funds to pay such bonuses can only be a thinly-disguised transfer of TARP money to the most-undeserving and especially-greedy at AIG. What our federal government should be doing is making every effort to take back all bonuses already paid, rather than compounding its former errors.
It is claimed that there are private contractual agreements to pay the bonuses to these incompetents -- but the public interest can override a private contract which is so egregious. The Obama administration's Justice Department should take immediate steps to block those new bonuses in the Federal courts, as well as make every effort to recover what has already been wrongfully paid out to AIG executives. Congress should immediately demand a full investigation of just what AIG has done with its gigantic share of the TARP bailout. We already know that tens of billions of dollars were transferred to losing American banks to which AIG owed money, although those same banks had received their own TARP money. We also know that tens of billions of our dollars went to banks in Britain, France, Germany and elsewhere to whom AIG had obligations. All of this is shameful.
Had AIG been allowed to fail, our government might have taken it over and provided the same insurance services which AIG claims to provide while the company was reorganized. Temporarily nationalizing AIG would have been well-justified and much more effective than throwing so much money down the AIG sewer. Now their new TARP demands are likely to result in throwing good money after the previous money which they merely gave away with few if any strings attached. There must be no new bailout for AIG -- and no more bonuses, either. Their stench is bad enough already.
