Tuesday, March 17, 2009

Kill the Patient, Reward the Disease

So President Obama, confronted with the actual sordid behavior of those who pretend to live by the free market, is now going to try to reverse the $165 million in bonuses that AIG managed to pay its worst employees as the country was bailing it out to the tune of $170 billion.

The ironies inherent in this whole fiasco are, of course, delicious – or they would be, if the slathering greed of the principles involved hadn’t cost millions of people their
mortgages, jobs and life savings. First, every time there’s a booming market we’re subject to endless paeans to the corporate executive, the stock trader and others who allegedly risk losing everything at the hands of the mighty economy so that they might stand a chance of winning the world.

The truth, however, seems to be a little more complicated – the everything they risk isn’t usually theirs, and if and when they do fail, they go running to Uncle Sugar (whether that’s investors, other corporations or – as a last resort – the government) crying about how they got a boo-boo and need a billion dollars or so. Then – humbled by said experience – they pack themselves off to a
spa in Arizona and sit by the pool congratulating themselves for a week. Or they keep giving themselves fat bonuses. After all, a derivatives trader can’t be denied the hookers and blow to which he’s become accustomed, can he?

Even more egregious is
who’s getting the bonuses:

The bonuses will be paid to executives at A.I.G.’s financial products division, the unit that wrote trillions of dollars’ worth of credit-default swaps that protected investors from defaults on bonds backed in many cases by subprime mortgages.
In other words, they’re going to the same bunch of commission-happy yahoos whose recklessness brought AIG to its knees in the first place. Oh, and they’re retention bonuses – because you don’t want bright minds like these getting snapped up by the competition. Or maybe becoming more willing to talk to the SEC, for that matter.

Unfortunately the Treasury’s hands might be tied on this one – apparently AIG is contractually obligated to make the payouts and they were already agreed to by the previous administration (who shall remain

Still, is it too much to hope that some lawyer somewhere can come up with a good justification for not giving more money to people who already proved themselves incapable of handling it carefully? Hell, it would be better spent retaining the services of the thousands of mail clerks, secretaries and other drones who make any organization function and who not only suffer low pay and parsimonious benefits, but also have to show deference to the yellow-tied assholes who have been the reason for so many secondhand toys this Christmas. Especially if, as in the case of AIG’s financial products division, they’re probably still strutting about like Napoleon on St. Helena, demanding to be addressed as "your majesty" and complaining about the food.

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