I am shedding a little "lyte" on greed today. It is all over the blogosphere and the networks that AIG is awarding nearly $165 million in bonuses to the very division that helped to AIG to post a record $61 billion loss in February.
That loss is the largest ever posted by a corporation in history. Furthermore, AIG used a large part of their $150 billion bailout to make payments to other banks that also had received bailout funds. Oops! I just threw up in my mouth.
The government's hands are tied because when the TARP legislation passed, it didn't include any restrictions on bonuses or on how the bailout funds could be used. AIG isn't the only one playing fast and loose with our money. We have already heard about the rush to pay bonuses at Merrill Lynch.
A friend of ours sent us a 30 year old video clip of Milton Friedman extolling greed. We all remember the phrase "Greed is good!" from the movie "Wall Street". News flash, greed is a good motivator but is a piss poor regulator. Greed profits the few at the expense of the many. Our money has helped fuel this mess, now our money is being used to clean it up. But we are told that it is "contractual obligations" that force companies like AIG to pay bonuses for non-performance.
Contractual obligations? What about their obligations to their shareholders? To the taxpayers? If a corporation is considered an individual in the eyes of the law, what about its obligation as a citizen?
And don't forget, we are borrowing this money. From China, who is starting to get nervous about buying our T-bills. Does the behavior exhibited by AIG do anything to reassure China? I think not, and we would be in a lot of serious trouble if China stops buying our debt. You think the economy is in a hole now, you can't imagine how bad it would get if our credit got cut off.
So knock it off! Suck it up. Sorry AIG executives, you just might have to live on your salaries this year. Or we'll turn your name into something more representative of your true selves, like PIG.