The other side of the AIG bonuses debacle

While many of us lean right here at Mod-Blog, we try to tell both sides of the story whenever possible. So, it was with great interest that I saw the NYTimes had posted a resignation letter from an AIG executive who was in the middle of the bonuses scandal. It gives an eloquent defense of the bonuses and is worth a read.

The profitability of the businesses with which I was associated clearly supported my compensation. I never received any pay resulting from the credit default swaps that are now losing so much money. I did, however, like many others here, lose a significant portion of my life savings in the form of deferred compensation invested in the capital of A.I.G.-F.P. because of those losses. In this way I have personally suffered from this controversial activity — directly as well as indirectly with the rest of the taxpayers...As most of us have done nothing wrong, guilt is not a motivation to surrender our earnings. We have worked 12 long months under these contracts and now deserve to be paid as promised. None of us should be cheated of our payments any more than a plumber should be cheated after he has fixed the pipes but a careless electrician causes a fire that burns down the house.

Many of the employees have, in the past six months, turned down job offers from more stable employers, based on A.I.G.’s assurances that the contracts would be honored. They are now angry about having been misled by A.I.G.’s promises and are not inclined to return the money as a favor to you.

Obama seeks to regulate ALL bank CEO's pay

We're all familiar now with the AIG bonuses debacle. A group of AIG employees ran their business into the ground, sought a taxpayer-funded bailout, and then walked away with millions of dollars. This is clearly an injustice, which numerous government agencies and authorities are now looking to rectify.

But now the administration is looking for authority to regulate the pay of all bank executives. This means that the government could mandate the maximum amount that your bank - whether a one branch shop or a multinational corporation - can pay the people most responsible for how your money is protected. Presumably a bg part of this will be keeping salaries to "reasonable" levels.

What will this mean? One of two things. Either (1) the smartest people leaving banking for less regulated and thus more dangerous industries (energy conglomerates, perhaps) or (2) the people really running your bank leaving "executive" positions to places on the org chart with equal power but far less accountability. Do either of these options sound good for your future financial safety?

Who is responsible for this?!

From here.

Obama tries to block AIG Bonuses

It is no surprise that the President wants to take a stand against AIG's unreasonable bonuses. But now, he apparently has ordered the Treasury Secretary to prevent payment altogether.

“In the last six months, A.I.G. has received substantial sums from the U.S. Treasury,” Mr. Obama said. He added that he had asked Treasury Secretary Timothy F. Geithner “to use that leverage and pursue every single legal avenue to block these bonuses and make the American taxpayers whole.”

Later in the day, a White House official disclosed that the administration would use a pending $30 billion installment for A.I.G. to recoup the $165 million in retention payments to A.I.G. employees in the business unit that brought the company to the brink of collapse last year.

I'll say it again. It is time to stop trying to make corrupt banking executives do the right thing. It is time to start PUNISHING these executives for what they did wrong. Pay them their millions, and then start taking it back in fines and civil lawsuits. Who would want $6.5 million, if the cost is to have to pay back $20 million?