Let’s be clear here. Do I think American International Group has a public relations nightmare on its hands right now? Yes, I do. Do I think the traders who are getting huge bonuses at taxpayer expense deserve those bonuses? No I do not. Hell, they are partly to blame for the mess the economy is in.
But they do have valid contracts which require the money to be paid. I am quite sure AIG tried to find some way not to pay the money within the terms of the contracts. They are not totally stupid and know exactly how bad this was going to look. I think the traders in question are slitting their own throats, employment-wise in the long run.
But.
Regardless of how I personally feel about this, they have those contracts. Keep that in mind when you read this:
“In the last six months, A.I.G. has received substantial sums from the U.S. Treasury,” Mr. Obama said. He added that he had asked Treasury Secretary Timothy F. Geithner “to use that leverage and pursue every single legal avenue to block these bonuses and make the American taxpayers whole.”
Later in the day, a White House official disclosed that the administration would use a pending $30 billion installment for A.I.G. to recoup the $165 million in retention payments to A.I.G. employees in the business unit that brought the company to the brink of collapse last year.
“Treasury will be using this facility to address the excessive retention payments made to the A.I.G. Financial Products employees, which Treasury found to be completely unacceptable given that A.I.G. is already surviving on taxpayer funds,” said the official, who spoke on the condition of anonymity. “Treasury will be adding provisions to its new facility aimed at making taxpayers whole for the amounts of the offensive payments.”
If the government, based on current opinion polls or public outcry can simply abrogate existing, legal contracts, we have a huge problem. That the Obama administration is using this furor to divert attention from its failures to deal with the economic crisis is rather obvious. Others are seeing it as well.
I detest everything about this situation. AIG should not have to pay these people. But the contracts were not structured as performance-based, but as retention payments. There is nothing AIG can legally do to stop the payments. Nor is there anything the Obama administration can do legally to stop them. What they can do is behave thuggishly by punishing the company for obeying the laws of this land. Which Obama clearly intends to do.
I am not happy with AIG. I am considerably less happy with Obama’s populist posturing and obvious strong arm tactics.
Think about it. If Obama can do this, punish people and companies who abide by the laws, are you really safe in the long run?
