We may finally be seeing the tipping point when the public takes to the streets shouting: "We're mad, and we're not going to take it anymore."
That's the kind of 'final straw' feeling stirred by the announcement that AIG has paid out $165 million in bonuses with tax payer money to executives who ran the company onto the public dole. You could argue that this is less than 1% of the $170 billion bailout AGI received, or you could argue that a $170 million dollar reward for ruining people's retirement funds is outrageous.
Never mind all the fine-tuned legalisms about retention bonus contracts that have to be met and about the fungibility of the money. None of that is going to fly with an outraged populace, 83% of whom favor a cap in exective compensation. It's the sort of thing that Marie Antoinette triggered with her supposed "Let them eat cake" and paved the way to the guillotine for her.
This is a risky moment for Obama too. Although the supposed ironclad contracts date back before he took office, his administration is hurt by claiming that its hands are tied and it is powerless to do anything about it. It makes him look ineffectual and his experts look like part of the whole financial system mess.
When things are about to blow up, you find a way to do something. If the US government now owns 80% of AIG, why do we not have control of what they do?
The administration has suggested that the uproar over this will make it more difficult to go back to Congress to get more necessary bailout money. I suggest instead that, if they try to paper over this explosive issue, Congress will get such a backlash from their constituents that it will become, not difficult, but impossible to get another dime for Wall Street bailouts.
This will be another test of Obama's steady hand and political skill.
Ralph
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Here's what Josh Marshall at TalkingPointsMemo says:
ReplyDelete"We're collectively taking our country's future in our hands, spending vast sums of money to keep these companies from suffering the consequences of their own folly and (in many cases) criminality. And in return we're receiving cavalier dictates about pay-outs and bonuses from executives who by any reasonable measure work for us -- dictates we promptly accede to. There's a beggars can't be choosers problem there. And the disconnect is so mighty that it fuels the impression that the whole enterprise is not what it seems, not what we've been told, that in addition to picking up the tab we're being played for fools."
I do believe that Obama gets the outrage and hit the right tone himself today, saying, "how do they justify this outrage to the taxpayers who are keeping the company afloat.
ReplyDelete"All across the country, there are people who work hard and meet their responsibilities every day, without the benefit of government bailouts or multimillion-dollar bonuses. And all they ask is that everyone, from Main Street to Wall Street to Washington, play by the same rules.
"This isn't just a matter of dollars and cents," he added. "It's about our fundamental values."
Barney Frank was blunter: "These people may have a right to their bonuses. They don't have a right to their jobs forever. . . . these bonuses are going to people who screwed this thing up enormously. Maybe it's time to fire some people. We can't keep them from getting bonuses but we can keep them from having their jobs. ... In high school, they wouldn't have gotten retention (bonuses), they would have gotten detention."
Republican Sentor Grassley was even harsher, calling for the AIG execs to publicly apologize and then either resign or commit suicide -- referring obviously to the Japanese tradition of honor, wherein a leader who has failed does the hari kiri thing.
ReplyDeleteHis office later clarified that he didn't literally expect that, but he was emphasizing the lack of shame and honor among these people.