Remember those yesterdays when we used to say "A man's word is his bond"? Or maybe one of those old movies where when hero is asked to sign a contract or agreement and he responds with how his handshake is all that is needed?
Did this ever exist?
I have never seen it. Well maybe I have to some extent.
I did buy my first car for $65. I handed over some cash and I got the state title and keys. This was an 8 year old car with around 110,000 miles on it, no dash lights, no working gas gauge, and a bad transmission. Was that deal the same as our mythological handshake? I guess it was close, but maybe not. The risk to the seller was nil. He got his $65 in cash. My risk was $65. Granted, this was back in the "good old days" when a dollar was a dollar but even then, if the wheels fell off on the way home, the loss of $65 was not going to put my entire life in to a tail-spin. So perhaps my example is but a pale imitation.
When I bought my house or when I bought my first new car, I had long complicated contracts that I did not understand anymore than anyone else.
So fast forward to yesterday. If you believe the media, every single member of the public is simply outraged by the bonus checks for AIG employees.
Well, that is not correct. I am not.
As best I can tell, at least some of these are essentially performance payments for employees who have worked and earned them. Perhaps not all of them. Details are sketchy as our media never wants to provide us with anything more than thin sound bites.
But does that matter?
These bonuses seem to be handed out now because they represent a year's worth of performance. Well that means people made these deals before our impending meltdown was known. Perhaps lots of people should have known, but how many of us knew where we were heading a year ago. It is my understanding that quite a few of the AIG divisions made a profit last year and were well run. That the problem that threatened to topple the company was in one or two specific areas.
Last fall, our government decided to bail out AIG. These bonuses were six months old. Seems like they were not hidden. When the stimulus package was passed, these bonuses were known. How are we sure? Well because they wrote an amendment in to protect them.
My outrage is that our government would dare to rip up a legal contract in response to the drumbeat of public polls. Now if they said to AIG last fall or last month, "listen, you want the money, you renegotiate the contract", I would say "that's fair". That would be the deal. But no, the government comes in after the fact and breaks a deal they were not party to. Breaks a deal that THEY wrote in to the law of the stimulus package.
How will you like it when you next buy a savings bond, wait say seven years for it to mature and then be told that there is a 100% fee to cash it in? Sound fair to you? Well that is exactly what the government is trying to do to AIG.
One day Chris Dodd says he doesn't know how the amendment got there. The very next day he admits that someone in Treasury pressured him to do it. Charlie Rangel says one day that the tax code does not exist to selectively punish individuals and the next day he has some BS reason why doing exactly that is ok. What about the Olympia Snow amendment: "Financial institutions that used "federal bailout" funds to pay employees bonuses in excess of $100,000 will be required to compensate taxpayers under a provision that will be introduced today by U.S. Senators Ron Wyden (D-Ore.) and Olympia Snowe (R-Maine)." Clearly this situation was known and anticipated. Why did this amendment fail?
Were are our leaders? They certainly are not leading.
President Obama says he has inherited this mess. Oh really? Didn't he vote 'Yes' last fall? Wasn't this his stimulus package? Geithner says he takes responsibility but not the blame. Obama says he takes responsibility but not the blame. Tricky Dick Nixon is that last one I remember saying that. Didn't buy it then and I don't buy it now.
Come on America. Your word is your bond. The honor comes from keeping it. You show your worth when keeping your word is hard, not when it is easy. Let these guys keep their bonus. Figure out where YOU went wrong and fix it.
Oh and while you're at it, President Obama. Senator Dodd. How about giving back those large sums of campaign contributions you got from AIG.
