The main excuse used to justify the outrageous bonuses to AIG executives is that like it or not, the company has to honor its contracts. Some contend that it's the only way for AIG to keep top talent... without quite explaining how the people who bankrupted the company can be considered top talent.
Yet this begs the question: why is there so much pressure on the UAW and other auto workers' unions to 'voluntarily' re-negotiate their collective bargaining agreements? Why aren't their contracts sacred too?
Is it because they work hard and make actual stuff rather than frittering away people's retirements, bankrupting the company and then stealing the taxpayer money used to save the company they bankrupted?
If AIG execs were black, held up people on a Manhattan street at gunpoint and stole their wallets, there would be an outrage at this 'crime spree' and hysterical demands that the thieves be publicly tarred and feathered before being sent to the electric chair.
Instead, AIG execs are white, so rather than using a gun to rob people, they use Congress instead. Instead of being sent to jail, they are sent large checks.
The main difference is that common street criminals can only rob a few people at a time and are usually evading the authorities.
White color criminals can rob everyone once and with the collaboration of the authorities.
But heaven forbid anyone whip up 'class warfare' by mentioning this.
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The ramifications of forcing a company to renege on a payment (and imposing a retroactive tax, which is probably unconstitutional, and would affect many people well beyond AIG), which is less than 0.1% of the total money AIG has been given, can cause critical harm to the industry at a time it probably cannot afford it. Retroactive punishment, particularly after these payments were known about months ago and *approved* as late as this month by the government, may crush investor and consumer confidence and cause an even bigger spiral. There is also the argument that keeping some of the people who got us into this mess is useful because they may know the best way of getting out of it. The NYT has had several good analyses explaining why we need to cool this wild-eyed anger: http://www.nytimes.com/2009/03/17/business/17sorkin.html?scp=7&sq=aig%20auto%20industry&st=cse and http://www.nytimes.com/2009/03/21/business/21nocera.html?scp=1&sq=nocera%20aig&st=cse
The AIG payments are probably small potatoes compared to the affect the UAW contract has on the car industry. And as Andrew Sorkin of the NYT put it: "The auto industry unions are facing a similar issue — but the big difference is that there is a negotiation; no one is unilaterally tearing up contracts."
Nate Silver has also had some good posts on why the AIG payments are a red herring and why this raging populism needs to stop ASAP: http://www.fivethirtyeight.com/2009/03/tax-banks-not-bankers.html
Look at that essay, and be sure to read the link saying the AIG bonuses "weren't really bonuses at all."
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