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« Bank Bailout News: Complete Video And Transcript Of Tim Geithner's Interview With Erin Burnett Of CNBC | Main | Bank Bailouts: Nobel Laureate Joseph Stiglitz Argues For The Creation Of New Banks (Video And Links 3-22-09) »

Debate Over AIG Bonus Outrage: Nothing Beats A $35,000 Commode

It's interesting that some have criticized journalists for paying too much attention to the pay issue, while $170 billion already and likely $100 BILLION MORE will go to AIG.

These critics have missed the point, and rather obviously.  The goal is to awaken the American people, not quibble about the legitimacy of the alarm.

I believe people understand the difference between $165 million and $165 billion, just as they understand the difference between $45 billion for Citigroup and a $45 million private jet, and $45 billion for Bank of America versus John Thain's $35,000 commode with legs.

Particularly, with AIG, the outrage stems from the fact that we have been told the $170 billion was to prevent global financial collapse, while we all intuitively understand that the $165 million in bonuses were part of employment contracts agreed to BEFORE the failure of AIG.  Guess what?  Tough shit.  Virtually everyone has felt the sting of a broken contractual promise.  SOL.  We all get it.  The damning affront is, that because of our largesse, these AIG employees are actually shit in luck.

I have written about it repeatedly.  Advantage commode is what I call it for a lack of a better phrase.  Sometimes, it's the smaller, symbolic issue that resonates and does more to enrage than the ongoing glare of bailout after bailout.

I think the rub for most people is fairness.  If you took no TARP funds then pay your employees whatever you would like.  We are not unreasonable.

But if you are a failed company who needed our cash to survive, then there are different rules.

With regard to employee retention at TARP companies, we have heard the cries from CEOs Dimon, Pandit, and Lewis that the proposed legislation will destroy their companies as their employees will be lured away by NON-tarp firms.  First of all, GOOD.  That's what should happen when your company fails.  The winners are supposed to feed off your carcass.  It used to be called capitalism.  Your companies took excessive risks and now must pay the price.  The companies who did not fuck up as you did should be able to enjoy the spoils of victory.  But they won't.  Not in this era.

Secondly, who the hell is hiring in banking and financial services besides John Paulson. You will lose certain people undoubtedly, but again that is the desired outcome.

The argument from the CEOs is specious and has no merit.

They need to shut-up and return the money as soon as possible.

This legislation will help.

The Sherminator got it right.

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Reader Comments (15)

Off With the Bankers

Published: March 19, 2009

A.I.G. 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.

Mar 23, 2009 at 1:16 AM | Registered CommenterDailyBail
Great Read. Hat tip to patrick.net.

Wall Streeters Face Bitterness—And Shock

The worst trick of the credit bubble, a trick made crueler by the bubble's long life, was to convince so many that the money they made was more than an opportunity—it was a benediction. Not that a lot of my neighbors have been feeling so blessed lately. For the financial community, the crisis is entering its third year. It's becoming clearer that our way of life is changing irrevocably, and there's more than a little antagonism about who's to blame.

There's a civil war raging out here. It's not a class war in the traditional sense. It is a conflict between the haves and the used-to-haves.

Mar 23, 2009 at 1:18 AM | Registered CommenterDailyBail
By: Reuters | 21 Mar 2009 | 04:22 PM ET

Washington Mutual, the failed U.S. savings and loan, has sued the Federal Deposit Insurance Corp for well over $13 billion in connection with the loss of its banking operations, which was acquired by JPMorgan Chase.

In a complaint filed with the U.S. District Court for the District of Columbia, the thrift's former parent accused the FDIC of having on Jan. 23 made a "cryptic disallowance" of its claims, prompting the lawsuit.

It also accused the FDIC of agreeing to an unreasonably low price in arranging the a $1.9 billion sale of the banking business to JPMorgan on Sept. 25, when regulators seized Washington Mutual and appointed the FDIC as receiver.

Mar 23, 2009 at 3:17 AM | Registered CommenterDailyBail
Jobless to Topless: Stripping Their Way to Success

By: Associated Press | 22 Mar 2009 | 03:31 PM ET

As a bartender and trainer at a national restaurant chain, Rebecca Brown earned a couple thousand dollars in a really good week. Now, as a dancer at Chicago's Pink Monkey gentleman's club, she makes almost that much in one good night.

The tough job market is prompting a growing number of women across the country to dance in strip clubs, appear in adult movies or pose for magazines like Hustler.

Mar 23, 2009 at 3:18 AM | Registered CommenterDailyBail
Mar 23, 2009 at 10:58 AM | Registered CommenterDailyBail
Obama's Wall Street bailout failure

Before it can clean up Wall Street or do much of anything else, the administration has to clean up the way it's been trying to clean up Wall Street.

By Robert Reich

Mar 23, 2009 at 10:59 AM | Registered CommenterDailyBail
Yes, Virginia, the U.S. Treasury does have a plan to fix the banks and reignite markets in which loans are turned into securities. It exists as certainly as fear and greed exist, and you know that they abound and give the economy recurrent bouts of euphoria and despondency.

You hear from pundits and other all-knowing observers that the Treasury has no detailed plan. These people have been affected by the skepticism of a skeptical age. Their vision is clouded by a bewildering number of acronyms and proliferating "term sheets." Their attention is distracted by the spectacle of taxpaying families (typical income: $63,000) financing AIG "retention bonuses" (73 people: $1 million or more each on top of their salaries).

Mar 23, 2009 at 11:00 AM | Registered CommenterDailyBail
How I botched the bonus story
By JOSH GERSTEIN | 3/20/09 6:13 PM EDT

Mar 23, 2009 at 11:01 AM | Registered CommenterDailyBail
HR 1207 Co-sponsorship Skyrockets: Companion Bill in Senate

Ron Paul's "Federal Reserve Transparency Act" to audit the Federal Reserve is now up to 39 co-sponsors the House, and an identical companion bill, S604, has been introduced in the Senate. Here are the House co-sponsors:

Mar 23, 2009 at 11:01 AM | Registered CommenterDailyBail
By Catherine Hornby

AMSTERDAM (Reuters) - The Dutch Finance Ministry will seek to curtail bonuses among senior management at financial companies receiving government support, while ING (ING.AS) is asking some staff to give back their 2008 bonuses.

In a letter to parliament, Bos outlined stricter measures to regulate bonus policies at firms receiving government support, noting persistent social discontent regarding the bonus culture of the financial sector.

"A cultural change needs to take place with regards to remuneration policy, particularly in financial institutions receiving support from the government or who were taken over by the government," Bos wrote in the letter.

Mar 23, 2009 at 11:24 AM | Registered CommenterDailyBail
Krugman Op-ed from this morning.

Financial Policy Despair

Published: March 22, 2009

Over the weekend The Times and other newspapers reported leaked details about the Obama administration’s bank rescue plan, which is to be officially released this week. If the reports are correct, Tim Geithner, the Treasury secretary, has persuaded President Obama to recycle Bush administration policy — specifically, the “cash for trash” plan proposed, then abandoned, six months ago by then-Treasury Secretary Henry Paulson.

This is more than disappointing. In fact, it fills me with a sense of despair.

After all, we’ve just been through the firestorm over the A.I.G. bonuses, during which administration officials claimed that they knew nothing, couldn’t do anything, and anyway it was someone else’s fault. Meanwhile, the administration has failed to quell the public’s doubts about what banks are doing with taxpayer money.

And now Mr. Obama has apparently settled on a financial plan that, in essence, assumes that banks are fundamentally sound and that bankers know what they’re doing.

It’s as if the president were determined to confirm the growing perception that he and his economic team are out of touch, that their economic vision is clouded by excessively close ties to Wall Street. And by the time Mr. Obama realizes that he needs to change course, his political capital may be gone.

Mar 23, 2009 at 11:26 AM | Registered CommenterDailyBail
At what point does our President realize that this can't be fixed by playing the "game" by the rules set by the banks, AIG and the Fed?
He needs to look at this from a NEW perspective. Our govt. needs to take over the Fed and break up the banks. It really is that simple.

Mar 23, 2009 at 1:02 PM | Unregistered CommenterSoCalWoodworker
@ Socal

I agree with both points.

Ron Paul has a bill before to demand transparency from teh Fed.

Check it out and ask your congressperson to co-sponsor it.


HR 1207 Co-sponsorship Skyrockets: Companion Bill in Senate

Ron Paul's "Federal Reserve Transparency Act" to audit the Federal Reserve is now up to 39 co-sponsors in the House, and an identical companion bill, S604, has been introduced in the Senate. Here are the House co-sponsors:

Young (R-AK), McClintock (R-CA), Woolsey (D-CA), Rohrabacher (R-CA), Castle (R-DE), Stearns (R-FL), Grayson (D-FL), Buchanan (R-FL), Posey (R-FL), Kingston (R-GA), Price (R-GA), Broun (R-GA), Abercrombie (D-HI), Burton (R-IN), Fleming (R-LA), Alexander (R-LA), Bartlett (R-MD), McCotter (R-MI), Bachmann (R-MN), Peterson (D-MN), Akin (R-MO), Taylor (D-MS), Rehberg (R-MT), Jones (R-NC), Foxx (R-NC), Garrett (R-NJ), Heller (R-NV), DeFazio (D-OR), Platts (R-PA), Duncan (R-TN), Wamp (R-TN), Blackburn (R-TN), Poe (R-TX), Paul (R-TX), Marchant (R-TX), Burgess (R-TX), Chaffetz (R-UT), Petri (R-WI), Kagen (D-WI), Lummis (R-WY)

32 Republicans and 7 Democrats so far. [Urge your Representative to co-sponsor] [Discuss here]
Mar 24, 2009 at 1:51 AM | Registered CommenterDailyBail
Thanks for the heads up on this....I contacted Mary Bono's office but they were so damn rude. She really is a GW Bush repub.
Mar 24, 2009 at 12:29 PM | Unregistered CommenterSoCalWoodworker
Hickory dickory dock
your country's BROKE, what shock!
the clock struck two
and boy; YOU'RE SCREWED!
Next time don't vote for a FUCK
May 14, 2010 at 5:35 PM | Unregistered CommenterRecoverylessRecovery

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