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AIG executives have been the source of much public anger lately for accepting $165 million in bonuses from government money, which has now spurred a new bill passed to ensure that at least 90% of the money from these bonuses will be given back to the government.
But, you have to wonder if it were you, given the recession and the reduced value of cash in today’s recession, would you take the money?
Taking this money and awarding bonuses is saying, “Thank you Uncle Sam for the free money–now we’re going to spend it like millionaires right in yo face!”
Which is, ironically, a similar attitude individuals have taken to $600 per taxpayer stimulus package last year. It was not spent towards the cause for which it was created.
Uncle Sam is going to have to ignore any accusations about over-regulation and come up with more pro-active string-attached laws when offering up money to support drowning companies that don’t know how to manage themselves.
That would have been the more responsible thing to do rather than blame companies like AIG for spending stimulus money in any way they see fit.
That doesn’t mean that I think AIG should have given out bonuses though. It was an imprudent thing to do, and management needs to wake up and smell the recession.
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Comments
03.19.09
If anything, the whole situation has just made me think I'm in the wrong career field. Being able to fall flat on my ass and still get a $1,000,000 bonus for running a failed business is a very compelling job offer.
The general message to Wall Street up until now has been "we will keep giving you money until it is all better." It's not surprising it got taken advantage of.
03.20.09
Would I take the money? Yes and No. Of course I would want to, in fact I had to add 'and no' to my statement once I really thought about it.
The difference between me taking one million dollars (the minimum of what was paid/individual) and AIG Execs taking this money is a matter of class.
I'm in the lower-middle class. I don't make even $50,000/year. Those guys probably made at least $250,000 (I'm thinking conservative numbers). And I'm sure they lost a lot of their money that they had invested in the company because it almost failed. So if you were wealthy and then in a matter of months you lost a lot of your stock portfolio because you caused the company to almost fail, would you take this money and spend it or would you reinvest it to make money again?
I'm sure the Execs were still living comfortably, maybe their wives couldn't get their weekly pedicure for a while, so I'm sure they took the money and put it into their stock, or into an off-shore savings account.
Either way, it doesn't really 'stimulate' the economy.
However, had that money been used towards managing the company or even better, go directly to the economy, we *could* be in a slightly stronger economic condition right now.
When you look at the whole picture, 165M isn't that much, but right now, every single penny counts.
As for me, if I were given $1M, I would be spending it for the economy's sake! Only a small portion would actually go to savings. To me 1M is a lot of money. To AIG Execs, chump change.
03.20.09
Great post! Clara, you bring up an excellent point—the money spent by the taxpayers nor AIG were spent the way they were intended. However, I see nothing wrong with taxpayers choosing to do whatever they wanted with $600—I mean really you can only get so far on this amount of money so many people probably chose to save it, pay down debt, etc. I feel that the majority of us used our money in a responsible manner unlike those who took the bailout money and went to town redecorating their offices, buying unnecessary corporate jets, etc.
Again, taxpayers did not cause the situation that we are currently experiencing. AIG and the government are at fault for this mess. I am so angry about the situation and find it frustrating to me that the only recourse I have in voicing my outrage is a blog post (I wrote one as soon as I heard about the bonus situation). I am more upset that the government keeps expressing “outrage,” but then does nothing to stop it. They are in a position to solve these problems—unfortunately, we as taxpayers can only do so much. I am sick of the talk tough—actions speak louder than words.
03.20.09
There is a fundamental flaw in your comparison between the moneys paid to AIG et al. and the $600 stimulus money. The money give to tax payers is money that originally belonged to the tax payers. I don't know how other people spent their money, I paid off my bills with that $600. I don't *need* any more consumer goods :-)
The moneys given to AIG on the other hand did not belong to AIG to begin with. That was money given to them to help them get out of their rut. Paying someone a bonus means that they've gone above and beyond the call of duty to be exceptional producers. As we know these individuals not only didn't over-perform, they managed to collectively ruin the system and the tax payer (represented by the government) is left holding the bag. These individuals deserve no bonus.
03.20.09
@Dr. Pepper
My opinions of the AIG bonuses aside, the bailout money is likely more theirs than the $600 was ever yours or mine.
03.20.09
The money given to AIG was not theres to be had. I am almost more dissapointed with the politicans that allowed this to happen than those who received the bonuses.
03.23.09
From my understanding of the situation, I would have taken the money. Think about this: apparently, the people who were irresponsible with funding and ran the system down are no longer with the company. They got their BIG money and they're gone.
Those remaining that got bonuses were promised bonuses (it WAS included in the agreement for the bailout) based on meeting specific, definable goals. They know that their positions will not be there much longer. The bonuses were given to them as an incentive for them to stay and clean up the mess. In doing so, they've cut AIG's debt in half, from $2 trillion to $1 trillion. In essence, they've saved the company AND the government a LOT of money.
Is $165 million worth $1 trillion.
Sure is.
They were promised that money. They met their goals and they lessened the threat of the government's investment by cutting the debt in half.
Everyone's all offended because it was government money, but how much more upset would you all be if AIG did little or nothing to dent that debt, which would've resulted in a complete and total waste of the bailout to begin with.
This is media sensationalism.
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