Wall Street arrogance meets Washington meekness on executive bonuses
Citigroup, once the world’s largest financial conglomerate, has fallen so far down that you can buy a share of its stock today for less than it costs to use one of its ATM machines.
A few days ago, however, Citi caused investors’ hearts to go pitter-patter with joy when it loudly trumpeted that it had operated at a profit in January and February. It just goes to show you what enterprising Wall Street financiers can achieve through hard work, creativity, perseverance — and about $45 billion in taxpayer bailout funds. Think how much larger the profit could’ve been if only taxpayers had done more!
Well, for that, look to American Insurance Group. AIG, the global insurance colossus, is the reigning King of Bailout Nation, having pocketed four bailouts in the past six months, totaling $170 billion.
This was necessary, we’re told, because the insurer’s cocky, unrestrained “financial products” division provided trillions of dollars worth of exotic insurance policies to cover even more exotic investments being made by big banking houses. AIG’s assumption in writing these policies was that there’d be few if any claims made on them. Whoops. Last year, as banks began crashing, the claims started pouring into AIG, which didn’t have the money to pay them off.
The insurer instantly became the poster boy of Wall Street’s “Too Big to Fail” movement, and Washington started shoveling in the cash. Where are our billions
going? That’s “proprietary information,” AIG execs told Congress, the media and the taxpayers. Excuse me, hotshot, but
our bailout money gives the American public 80 percent ownership of your
company. As Rep. Carolyn Maloney told New York Times columnist Gretchen Morgenson: “We are the proprietors now. Taxpayers own the store, and we should be able to
see the books.”
Right she is! But both AIG and its federal overseers in the Obama administration are stingy with such details, stiffing the paying public’s obvious right to know. On March 15, We the People were slapped again with AIG arrogance, learning after the fact that top executives were paying about $100 million in bonuses to the very same geniuses in the financial products division who broke the company. Without awarding bonus pay, explained the honchos, some of “the best and brightest talent” might leave. You don’t need a big nose to smell that garbage, do you?
Worse than missing a golden opportunity to say adios to such destructive “talent,” however, was the response by Obama’s bailout shovel crew. Larry Summers, the president’s chief economic advisor, trotted out to decry the bonuses as “most outrageous.” But, he wailed, there simply was nothing the White House could do to stop them.
Why? Because, said Summers, the bonus payments were included in the executives’ 2008 contracts, so AIG is contractually obligated to pay them.
Obligated? Ask the United Auto Workers how serious corporations are about honoring employee contracts. Indeed, Washington is demanding that auto companies abrogate wage, health care and pension contracts they signed with workers.
But suddenly we’re to believe that AIG’s executive contracts are so sacred that they trump sanity? So sacrosanct that even the president of the United States must stand meekly by while our public treasury is robbed? Come on, there are amoebas with more backbone than this!
Meanwhile, AIG refuses to divulge the names of any of its “best and brightest,” who’re drawing up to $6.5 million each from us in bonus pay. The company says it must honor “privacy obligations” to these talented ones.
Here’s my question: What kind of people are these? Why has not one of them had the integrity to step forward and say, “You know, I don’t deserve this, so I’ll just move on and make room for others”? Now that might be an employee worth keeping!
Wall Street’s problems don’t stem from a lack of expertise, but a lack of ethics.