AIG bonuses are salt in taxpayers’ wounds
No one should be surprised that members of Congress from both parties are calling for executives of American International Group Inc. to be tarred and feathered over the $165 million in bonuses paid to individuals largely responsible for bringing the insurance giant to its financial knees. Another $230 billion in bonuses is to be paid in 2010, according to The Hill newspaper, which covers Congress.
The federal government (read that taxpayers) has pumped in $182 billion to keep the company from going under. That translates into an 80 percent ownership of AIG. The first $80 billion or so loan came six months ago from the Federal Reserve, without involvement of Congress. The rest is through the Treasury Department from government funds Congress established to bailout financial institutions.
As U.S. Rep. Tim Ryan of Niles, D-17th, put it, in cosponsoring a bill that would tax at 100 percent bonuses over $100,000 paid by companies that received federal bailout money, “There is absolutely no way that AIG executives deserve to receive their bonuses while I’ve got constituents back in my district who are losing their jobs and can’t afford to put food on the table. They can talk all day about how that money is due to them because it’s in their contract; tell that to the Amweld retiree in Warren, Ohio, who just had his health care benefits stripped and didn’t even receive so much as a written notification.”
If this sounds like political demagoguery, there is ample justification for it. Ryan and his colleagues on Capitol Hill are well aware that the mere mention of the word bonus can trigger an uprising on Main Street, where long lines of the unemployed have become common place.
There is absolutely no way AIG can justify the bonuses of $1 million or more paid to 73 individuals, or the $6.4 million that one individual received.
Millionaires
The top seven bonus recipients received more than $4 million each; the top 10 received a combined $42 million; 22 individuals received bonuses of $2 million or more.
The argument put forth by AIG that the bonuses were agreed to contractually almost a year ago and, therefore, would result in lawsuits if they weren’t paid is fallacious, at best.
As New York Attorney General Andrew Cuomo, who is investigating the bonus payments and has subpoenaed documents from AIG, contended, “You could argue that if taxpayers hadn’t bailed out AIG, the contracts wouldn’t be worth the paper they were signed on.”
Congressman Ryan and his colleagues who are demanding a pound of flesh on behalf of the taxpayers are absolutely right in taking such a strong stand. With hundreds of billions of public dollars flowing into financial institutions big and small around the country, the word needs to go out that business-as-usual is not acceptable behavior.
Just because we can’t afford to let companies like AIG fail, does not mean we should be played for suckers.
As for who in the federal government should shoulder the blame for this blatant greed on the part of individuals who by their acts of commission brought AIG to its knees, there are facts that cannot be challenged.
It is a fact that the bonus contracts were entered into last year, when President Bush was in office. It is also a fact that last year, the White House orchestrated the payment of $350 billion to bailout financial institutions (the Democratic Congress went along) with no regulations governing the expenditure of the funds.
And it is a fact that when AIG was holding out its hand for taxpayer dollars, company executives did not reveal the existence of the bonus contracts.
There is a lot of blame to go around. But that’s not important. President Obama and Congress should make it clear to any company that has received or is seeking a bailout: Forget bonuses, golden parachutes and exorbitant salaries.