Re: Those AIG bonuses

Sure it’s sickening that AIG officials such as AIG CEO Charles Liddy are getting bonus money, but perhaps not for the reason you’d think.

First thing to note: these weren’t performance bonuses, but retention bonuses. That’s a whole different ball game, based on promises made long before anyone knew the terms TARP or bailout, and it has a very legal implication to it — you try to withhold it, and you’re going to lose in court, period. Comparing the Liddy bonus to performance bonuses, such as at Citi, are well off the mark.

Next, let’s not lose sight of where our true righteous anger should be aimed — CONGRESS!

Charles Krauthammer and Stephen Moore elaborate:

Syndicated columnist Charles Krauthammer: “The morning and afternoon of the interrogation of the head of AIG was Congress at its absolute demagogic worst. I mean, let me count the ways. Here’s a guy who comes out of retirement to work for a dollar a year, who is not even in AIG at the time of the take over by the government, who’s being attacked by members of Congress earning $175,000 a year, who have just received in January a raise of $4,700. Secondly, the Democrats are the ones who passed the stimulus package, which had this provision in it.”

More Krauthammer: “Lastly, the money here involved in the scheme of things is absolutely trivial; it’s $165 million. That’s what CC Sabathia is getting to front the Yankees for his left-handed changeup. If Bill Gates, out of the goodness of his heart were to pay the bonuses for 100 years, he would still have half his fortune left. … It’s a distraction and the Democrats and Republicans in Congress are using it for political advantage, and nothing else” (“Special Report,” FNC, 3/18).

… Wall Street Journal‘s Moore: “This guy [Liddy] is being totally scapegoated here. He was not the CEO when AIG took the fall. He’s actually a patriot. This is a guy who’s come in and almost no salary … to try to turn this thing around. So he was dealt a bad hand. Now, watching those scenes from that hearing, listening to people like Barney Frank bloviate against this guy — the people who are really the villains here are the members of Congress. They’re the ones who approved this bill that did not block this compensation package” (“On the Record,” FNC, 3/18).

Exactly. It’s just another reminder why government shouldn’t have gotten involved in the private market (at least not in this manner) to begin with.

Companies like AIG, Congress told us, were “too big to fail.” That’s manure wrapped in garbage surrounded by excrement. Indeed, the most important philosophy of capitalism is that it has a cruelly impartial self-correction mechanism. Companies that don’t perform should fail, as it forces restrucuring and better leadership. Even if bankruptcy had occurred at AIG, the businesses most profitable portions would have been sold off. Sure it can be painful, but that’s the point. And, it’s also a great deal for the smart and effective companies that can gobble up the remains. Lastly, one can’t argue that the government saved the jobs of the little guys working there — with an 8+ percent unemployment rate, clearly these sectors have laid off employees, even as they’ve accepted bailout money.