What They’re Saying About AIG

Steven Pearlstein, The Washington Post:

At the end of the day, the thing to get outraged about is not the $440 million in bonuses at AIG or the $10 million that Citigroup is spending to redesign its shrunken executive suite. These may seem like princely sums, but they are almost insignificant compared with the real outrage: the hundreds of billion dollars of taxpayer funds that have been put at risk to keep AIG and Citi from failing and taking the whole financial system down with them. Let's keep our attention on the elephant rather than the pimples on its behind . . . .

During a financial crisis, fairness is a luxury we cannot afford. During the 1930s, bankers and financiers lost everything, but the outcome -- a decade-long depression -- was hardly fair to the ordinary American. The key question is not whether something is fair, but whether it helps get us through this mess faster and at a lower cost.

Simon Johnson and James Kwak, The New York Times:

AIG can hardly claim that its generous bonuses attract the best and the brightest. So instead, it defends the payments by arguing they're needed to retain employees who are crucial for winding down transactions that are "difficult to understand and manage." In other words, only the people who stuck the knife into the American International Group can neatly extract it for a decent burial.

There is no reason to believe this.

Similar arguments made during the 1997 Asian financial crisis, when currencies and stock markets collapsed in much of Southeast Asia, turned out to be a smokescreen to protect the executives who were partly responsible for the mess. Recovery from that crisis required Indonesia, South Korea and Thailand to close or consolidate banks. In all three countries, bankers protested, claiming that their connections with borrowers were critical to recovery . . . .

[W]hen insiders have broken a financial institution, the most direct remedy is to kick them out.

New York Daily News:

The vote by Congress to tax Wall Street bonuses out of existence was economic populism run amok. This was legislating by rage, fear, and panic.

Speaker Nancy Pelosi and House Democrats matched the gross excess of the AIG insiders who stood to gain $165 million in bonuses by ramming through a bill that would virtually eliminate bonuses in banks taking substantial federal bailout money.

Dispensing with calm deliberation, they distorted the tax code into a political weapon . . .

Enacting confiscatory taxes on bonuses could have dire consequences . . . .Like it or not, the U.S. needs the cooperation of the banks, and those banks need the most skilled people.

Richard Kim, The Nation:

The growing populist rage . . . at exorbitant corporate bonuses, especially at the $165 million AIG gave mostly to execs in its financial products division, made me think of Imelda Marcos' shoes and the 1986 People Power Revolution in the Philippines . . . .

What was so potent about those shoes? What did they symbolize? Gross inequality, corruption, the staggeringly brazen looting of public resources -- for sure (all qualities also evident in the AIG bailout). But something else too was represented by that collection of ruby slippers, a kind of insane magic by which Imelda transformed herself into something more than human. She could never wear all those shoes. They were beyond utility or even fashion. They existed only to represent the idea of excess itself . . . .

Put aside the fact that AIG's "best and brightest" helped destroy the global economy and ask yourself this -- what kind of work could merit a $6.4 million bonus (what one AIG manager received)? What could a CEO do to deserve $25.4 million (the severance package that [AIG CEO Edward] Liddy's predecessor Martin Sullivan got when he left AIG, having lost 99 percent of the company's market value during his tenure)? . . .

These are preposterous, abstract figures that have long since lost any relation to what even the most gluttonous among us might call "quality of life." What the corporate elite seeks to preserve is not any explicable measure of work and worth, but rather the right to transcend with impunity any measure of value itself . . . the right to hoard 1,060 pairs of shoes.