A letter published in the 19 March 2009 edition of the Spokesman-Review expresses very well exactly why there can be some real public anger over the excessive AIG bonus packages.
Please help me understand. I have a company and I agreed to pay my executives millions of dollars in bonuses, but my company isn’t doing well under their tutelage and is about to fold.
Alas, if we fold, no one will get bonuses. But along comes government and gives me money that hasn’t even been printed yet. Now we momentarily survive and I am able to pay my executives bonuses for how well they ran my company.
Is that correct? What a wonderful government.
It would seem that any legally binding contract does not simply require that bonuses be paid out annually but that they should be geared to best performance, how well you do your job, that assures the profitability of the company. And that even further, bonuses should be on a prorated scale, based on how much profit the company actually has accrued each year. If however the employee of the company makes the sort of disastrous decisons that costs the company millions of dollars, not only should that employee not get a bonus but should even be fired. And when employees create a string of disasters that can have catastrophic effects on the company’s entire operations, as was the case with AIG, then why should those employees get those bonuses? Especially when they hadn’t done their jobs? The GW era of rewarding failure is over.
Which brings to mind a Froma Harrop column republished in the same paper on the same day. While Ms. Harrop a columnist for the Providence Journal wasn’t exactly discussing the AIG fiasco as one of the examples of the economic meltdown, she was discussing in graphic terms the double standards that the Republican party holds for themselves versus the minorities they seek to reach out to. No doubt that many minorities would be polled as “socially conservative” to mean that they hold to some kind of high religious values in their lives. But while the GOP would preach “self-control” with plenty of gvt legislation to buttress it; I can see where they didn’t preach such “self-control” to the business sector. Indeed, the GOP were all about loosening the bonds of legislated self-control from the business sector. After all, the whole idea of setting up rules and regs from the federal gvt was only the first step toward a “central command” society. And we would never want that.
Problem for the GOP, was that Fannie Mae and Freddie Mac are now “nationalized” because of run amok business practices, AIG is 80% taxpayer owned, we have also seen collapsing banks and failing mortgage companies because of the elimination of rules and regs that would have guaranteed their profits and stability. If the GOP want to legislate moral behavior on an individual level, they should be just as prepared to legislate the same moral behavior in the private sector. “A sliding scale” indeed.