The shame will not be on those who worked pursuant to a contract for set compensation and save their company a trillion dollars. Rather, the shame will be upon Congress, both Democrat and Republican, which demonized hundreds of working individuals for the politicians' own petty political populism. The shame should, rightfully, be heaped upon Senator Christopher Dodd (D, CT) and President Barack Obama.
Ipsism has no connection to AIG and will neither benefit nor lose, financially, whether those at AIG receive or don't receive their compensation. Nor is there personal financial incentive in the taxation of (or lack of) the AIG bonuses. However, we shall all be degraded by the SHAMEFUL actions of Congress and, most importantly, by President Obama. These same people who cried out about the purported loss of freedom forfeited to a government who listened to international phone calls during a time of war, now gleefully browbeat, threaten, and confiscate the property of a small group of individuals who had the effrontery of working for a business which the government illegally acquired.
First, let's consider the nature of these "retention" bonuses. Insurer AIG had a division that had been wildly successful in selling insurance products known as credit default swaps and other derivatives. Fancy names for AIG agreeing to be co-signers for clients who could not afford to take a loss on investments. AIG agreed to be responsible if the client could not pay for its investments and in some cases guaranteed to take the loss if an investment failed. The investments were largely in home mortgages that AIG figured were pretty safe investments with little loss potential. The clients were giant investors, Goldman Sachs, foreign banks and even foreign governments. The money came rolling in and all was right with AIG until the sub-prime mortgage implosion. AIG suddenly recognized that it had a potential THREE *T*RILLION DOLLAR LOSS.
This was, apparently, a sobering moment for AIG. They decided to close the division that had been selling the derivatives and began informing clients that they were not going to be able to pay off on the loss insurance (credit default swaps) that they had sold. Well, the clients weren't exactly pleased at the thought of losing many billions of dollars. So what did the clients do? They called Secretary of the Treasury, Hank Paulson, and said, 'you've got to do something. We can't afford to lose billions of dollars. We paid an American Insurance Group millions of dollars to protect us and they're not able to cover the loss.' And what did Hank do?
Hank thought, hmmm..., Goldman Sachs is my company; they pay me hundred of millions of dollars a year. I can't let anything bad happen to them. How do I sell protecting my cash cow? I know, I'll say that the world economic system will collapse if we don't save AIG. Thus the AIG bailout.
Now, funny thing about corporations. The government, through law, makes a corporation an entity, a person if you will. But, not even government can breathe life into that corporate person. The corporation requires people to carry out each and every action related to the corporation. Which brings us back to AIG. AIG had this once beautiful white elephant that was about to bankrupt it. And, notwithstanding Secretary Paulson's arrival from on high - deus ex machina in this modern day Wagnerian tragedy - AIG still needed people to carry on its operations. High stakes claim adjusters in a billion dollar world.
Now, let's consider what we would do if we were AIG employees who had recently been told that their division was closing down and it was obvious that the entire company was on the verge of bankruptcy. We'd look for another job. Any reasonable person would. However, with the appearance of Hank from on high, willing to spend hundreds of billions of tax-payer dollars so that AIG could funnel money to Hank's cash cow, AIG thought that it should try to cut its losses by managing these loss obligations. It needed people who understood the instruments to manage closing the division. It couldn't call a temp agency and have someone send over Bob. Out of necessity, AIG asked key people to stay and wind down their client accounts. AIG was worried that the employees would jump ship and leave it in a lurch. AIG negotiated contracts with a few hundred people to stay on at a salary; if they stayed on long enough to complete their assignments, they would get a bonus - a RETENTION bonus. That was the method chosen by AIG to make sure the employee stayed long enough to complete their tasks. After all, there were OTHER companies that were willing to hire these same AIG employees. Companies that weren't over extended and weren't about to go bankrupt. The employees agreed, signed a contract and completed their assignments. In the process, it is estimated that these employees saved AIG a trillion dollars; refusing payment to some of their clients who wanted to double dip from the US treasury, refusing to payoff on losses that had been compensated by other payments from good ole Hank and the Federal Treasury, tax-payer money.
Then came time to pay out the bonuses. Well the new owner of the company, the Federal Government, knew that the bonuses would soon be due. The Federal Government created a law, written by Senator Dodd's crack legislative team, in coordination with one of President Obama's favorite tax evaders, Little Timmy Guentner, specifically approving payment of these very retention bonuses. Senator Dodd says that ALL of the US senators approved the bill. It passed unanimously, that means all of them.
The bonuses were paid. Suddenly, these same individuals, who had approved the deal every step of the way, complained that the AIG employees were actually accepting the bonuses that had been offered to them and earned by them. These politicians began using the bonuses as fodder to gin up populist class warfare and wealth envy. The actions of these politicians is SHAMEFUL! The greatest amount of shame must be heaped on President Obama. His employees created the deal, approved the deal and accepted the benefit of these peoples' work and effort. Now, President Obama is leading the chorus to lambaste the people who did their bidding. Why? Because the AIG employees lived up to their contracts and accepted their pay. SHAME must be placed on every member of Congress who hopped on the populist band wagon to sully and besmirch the people who worked for them. SHAME must be placed on a Congress that would selectively tax their employees for living up to their contract. Oh, need it be mentioned that Freddie Mac and Fanny Mae (loved by Congress and costing the tax-payer even more) have similar retention bonuses? Where is the outrage over Fanny and Freddie? That is the problem with people who have no moral foundation. Where is the fairness in accepting people's time and labor then demanding they repay their compensation and threatening to retake that compensation by force and throw the AIG employees into prison if they don't want to work for free or partial payment. THAT is a lack of morals.
Folks, whether you like the compensation agreement or not, whether you would have offered the deal or not, there is no justice, no FAIRNESS, if fairness depends upon whose ox is gored. The Federal Government, through its agents, offered and made the deal, the employees lived to their contract - no one is alleging that the employees failed or breached their contracts! The SHAME should be placed on the Federal Government, President Obama and all who ranted against payment of compensation to those who earned it, contractually. This includes any talk show host, particularly Michael Medved, who should have considered their thoughts as to basic principles of justice and fairness rather than responding to knee jerk populism. Even a fictional future devastated community in the movie 'Mad Max' understood, 'break a deal, face the wheel.' Those who kept the deal were not placed in peril. When did FAIRNESS and CHANGE require that those who kept the deal be demonized? Is this the CHANGE WE CAN BELIEVE IN? Or, is this the unveiling of the new Obamanist Manifesto where the Lord High Emperor Obama takes all; forces people into involuntary servitude, retrospectively; and encourages its sycophant Obamanists to threaten anyone who makes more money that the Obamanists think appropriate? Is Emperor Obama going to give taxpayers a share of his book royalties? SHAME ON ALL OF YOU.
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