Colorado State U.: Column: AIG bonuses an injustice to American taxpayer
(U-Wire Via Acquire Media NewsEdge) UWIRE-03/27/2009-Colorado State U.: Column: AIG bonuses an injustice to American taxpayer (C) 2008 Rocky Mountain Collegian via UWIRE By Alex Stephens, Rocky Mountain Collegian (Colorado State U.) FORT COLLINS, Colo. -- The American International Group, AIG, was exposed to have spent $218 million -- up from a previously estimated $165 million -- on its executive's bonuses after receiving $170 million in Federal aid.
That's correct, we, the tax payers, have been robbed in order to provide the executives of AIG (the very same company that posted the largest quarterly loss in history) with year-end bonuses. The anti-Robin Hood -- stealing from the poor, giving to the rich.
A bonus -- what exactly is it? I always believed that, in a business related sense, a bonus was something extra awarded to someone that went "above and beyond" in their job performance -- a prize given to the members who sold the most product. More fundamentally, a bonus is something that's contingent on success.
If the company that holds the dubious award for posting the largest loss in history is able to award bonuses, they must be on the merit of failure. It's safe to say, without exaggeration, that while you and I might be fired for performing poorly at work, AIG executives are rewarded with your cash, courtesy of the spineless Sen. Chris Dodd, chair of the Banking, Housing and Urban Affairs Committee who arranged the Troubled Assets Relief Program bailout.
Dodd feared that the government would be sued by AIG if they did not allow bonuses to be awarded, so he threw money at them with no strings attached and prayed like hell that no one would notice.
In an article in the Wall Street Journal last week, former vice-president of AIG, Ron Shelp, argued that while the $165 ($218) million in bonuses might seem like an injustice, it really isn't one.
First of all, he argued, the framework programs for bonuses were in place before the federal funding was dolled out. Secondly, the bonuses are legally required to be given out, as stipulated by contracts between executives and the company itself.
That's right, AIG has contracts with their executives that award them bonuses regardless of the company's holdings, meaning performance doesn't matter in the least. They will still be given handfuls of (your) cash no matter how many jobs were lost, lives ruined, dreams shattered, futures compromised due to their inability to act responsibly.
What if we hadn't bailed them out, though? Would the executives have sued the company for not fulfilling the contractual agreement? Where would the bonus money come from? Would AIG have fired lesser employees to afford the executive bonus pay? Furthermore, Mr. Shelp, where is it written that I have to give these failures my tax dollars as bonus money? Thousands of Americans are now out of work. They struggle to pay heating bills and feed their children, while some of the folks that caused that very misery are being rewarded for it with tax-payer money.
It's like giving a hefty bonus to an engineer after one of his buildings collapses and kills all inside, but having it paid for by the families of the dead.
But no, that's not all. Most importantly, Shelp said, the executives' bonuses were justified because it's in everyone's interests that they receive them (the company, the government, even your own). Why? So AIG can "get out of the financial units business that wrecked the company" by retaining the very same executives who caused it.
Paying someone even more money so they can correct their mistakes seems wrong, but as I'm not a highly paid executive, I guess I just don't understand.
I hope that this perversion of justice isn't soon forgotten.
Congress freaked out by introducing a bonus tax, a few of the bonus tainted executives have returned the loot, but the principle should be hammered in like a railroad spike: Wall Street continually proves itself untrustworthy without regulation, so let's stop being afraid to do it.
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