That's on the heels of a $62 billion quarterly loss (biggest in history) and more than $170 billion in U.S. bailout dollars.
The arrogant Ed Liddy, chairman of the discredited AIG, lectured the Secretary of the Treasury of the United States, no less on how his "hands are tied," and reminded Secretary Tim Geithner (if indeed this is the case) that the contracts were cast in stone well before AIG's current travails.
The bonuses must be paid out, he wrote Geithner. If he even attempted to abrogate the agreements, as Geithner requested, poor AIG would face litigation.
And it gets better and better. Liddy further argued that AIG needs to pay the bonuses in order to ensure that it continues to attract and retain top-quality people. Like the schlemiels who created this mess in the first place?
Give me a break. In this disastrous economic climate, which they did so much to create, these bozos are lucky to have jobs at all!
The last time Liddy dusted off this lame argument was right after the first bailout of AIG, when it came to light that the company had spent wads of money entertaining a group of its producers and executives at a lavish California resort. And here we are again.
Why shouldn't AIG at least be forced to make a show of trying publicly to challenge these odious agreements in the courts. Apparently, they just don't want to. The UAW had to do as much over at GM. Apparently there are different ground rules for blue-collar workers in Detroit than the fancy Dans of Wall Street.
(Since the writing of this, it has been reported that several bonus recipients have returned them, including 15 out of 20 of the leading recipients.)
Still, the country's anger, confusion and lack of confidence stretch from Main Street to the board room at the Federal Reserve. (Ben Bernanke said on 60 Minutes that nothing has made him angrier in this whole financial meltdown than the bailouts of AIG).
Never mind that the shenanigans at AIG had little or nothing to do with its insurance operation. The public doesn't make subtle distinctions like that.
Fact is, the insurance industry at large limps away from this debacle with two black eyes and a bloody nose nursing once again its perennially battered image.
President Barack Obama could do much to cut through the prevailing mood by abandoning his issue du jour approach. Face it, Mr. President, Warren Buffett is right. You're trying to do too much all at once, and your message is muddled.
It's all about the economy, stupid, and it requires your singular focus, for now. A good place to start might be to explain to us clearly and concisely just why AIG, as one example, is too big to fail. If you can't, then maybe a bit of creative destruction is just what the doctor ordered.
THOMAS J. SLATTERY,
a writer on industry affairs, is managing director of Slattery-Esterkamp Communications, Baldwin, N.Y.
April 1, 2009
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