Monday, March 23, 2009

AIG: Enough Already!

A week has passed since the AIG bonus story broke, and we're all miraculously still alive. There have been no piano-wire executions or Japanese-style honor suicides. Oh, sure: Everyman's Hero Senator Grassley actually spoke the words "sucking the tit of the taxpayer" into an open microphone (Teat, Chuck. Teat is the word you wanted. You come from Iowa and I need to tell you this?), and the extreme circumstances apparently turned "tightening of sphincters" into a metaphor suitable for the House floor. Stunningly, a sitting United States President fell on his sword over the "scandal". Somewhere, just over the horizon, four dark men have mounted black horses.
Oh, but there was more: AIG's CEO Edward Liddy made a "don't ask/ don't tell" argument to Barney Frank, who didn't to my knowledge used the word un-American, but in almost every other respect cut quite the Joe McCarthy figure in Banking Committee hearings. The President clearly had to fight hard not to opine on the constitutionality of the "we hate these people: let's tax them" legislation that cleared the House with bipartisan support. Bipartisan support? Really? The black horses are in full gallop and on the move . . .

And then there's the $165 million question (asked in two parts, at $82.5 MM each): What did Treasury Secretary Geithner know about the bonuses, and when did he know it? That's a fair question, after all, since (1) the bonus payments were agreed under the previous Administration, (2) under even older compensation contracts to which the government was not a party, and (3) the skeleton crew currently in place at Treasury is more than sufficient to review the flowdown of the hundreds of billions of dollars in TARP money that Geithner is charged with distributing. Q. What's the fastest way to get the Four Horsemen of the Apocalypse to leave town? A. Offer them deputy positions at the Department of the Treasury.

In short, the brouhaha and hullaballoo over these bonus payments is getting to be at bit much. And by "bit" I mean "a hell of a lot." I hate to quote Charles Krauthammer, but $165 million is CC Sabathia's Yankees contract: it isn't all that much in the big picture. And it's a bit rich for folks in Congress, of all people, to get all sanctimonious over this piddling amount — that last omnibus spending bill alone had 45 times that in earmarks, and 15 different Senators did more pet-project damage on that bill than AIG did with its bonus distributions.

But Phutatorius, those earmarks add value to local communities, and in many cases they advance important federal priorities, including jobmaking.

Fair enough, Brother/Sister: it is important to consider what we're getting for our money. But just as an earmark isn't necessarily a waste of money, a bonus payment to an AIG executive isn't necessarily a reward for lousy work. Take, for example, Gerry Pasciucco, whom Liddy brought in to clean up the mess. Pasciucco had nothing to do with the trainwreck in AIG's Financial Products division, and from what I read, he's doing yeoman's work, and doing it well. I wouldn't begrudge a fat bonus paid to Pasciucco: he's serving his company's interest, and the taxpayer's. But in the present climate, folks would rather discuss the apparent irony of him showing up at a garden party in a Che Guevara T-shirt. Pasciucco credits Douglas Poling, who received the largest of the bonuses at $6.4 million, with presiding over AIG's selloff of 80% of the Financial Products unit's bad assets. The proceeds of those sales will be returned to the government. An "outstanding job," Pasciucco says, but just try to tell that to the folks gathered outside of Poling's house with torches and pitchforks.

In a comment to WC Redneck's post on this last week, I wrote that I did not understand the compensation culture on Wall Street — or, for that matter, the tin ear for PR matters — that caused these bonuses to be paid, given the circumstances. But I was willing to listen. By the time this story reached its fullest flower later in the week, I was so turned off by the Congressional scoldings and media effusions of outrage that I find myself casting about for any reason to defend AIG. I may be an exception to the rule, but I'm sorry: this sort of populism doesn't work for me, especially when it's practiced by a bunch of dissipated, self-centered hacks who think acronym-riffing like "Arrogance, Incompetence, and Greed" passes for wit.

Populism in any form is unbecoming and unconstructive. I don't like it when it targets Communists, gays, and immigrants, and I don't like this kind, either. Can't we just drop all the posturing and anger and get on with fixing the economy?

1 comment:

Mithridates said...

Amen, brother! Well said.

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