Adam asked me what I thought about the latest round of AIG bonuses. For posterity's sake, I'll recap the situation... although you've surely been avoiding the news if you've not been inundated with coverage of all the politicians on their soap boxes this week. The facts are that AIG granted bonuses to certain employees in their derivatives trading business (the very business that caused AIG to fail). The bonuses were granted before Lehman crashed, spurring the government's bailout of AIG. The government has now given AIG four rounds of capital, but now that it's time to pay out the bonuses, the newsies have picked it up, and the politicians have done their best to denounce it as loudly as possible. This article has a good explanation.
So my thoughts? I think the one thing that needs to be said is that we're talking about 'only' $165 million (with an m)... and they were awarded before the bailout. Sure, the bonuses were probably fool hardy, but that speaks to the incompetence of the former AIG management team. The facts haven't changed in months, it's just in the news now.
To put this in context, Merrill Lynch paid out $3.5 Billion (with a B) after their first bailout... and those bonuses almost assuredly forced the second round of capital infusions. (I read an article that said that NY AG Andrew Cuomo is investigating allegations that all the Merrill traders took massive book (paper) losses after their bonuses were awarded so their performance would look better next year. So the $15 B loss during the 4Q 2008 would be $3.5 in bonus compensation and a certain amount for unnecessarily conservative accounting.)
For further context, let's remember that Congress just passed a $792 Billion (with a B) 'Recovery and Reinvestment Act' that most assuredly included more than $165 million in wasted taxpayer dollars... but I don't recall Representative Barney Frank's outrage at the time.
Lets see, last week we witnessed the passage of the omnibus (budget) bill for 2008. The bill was over $400 Billion (with a B). Let's also remember from last week that President Obama condemned the presence of Earmarks in the bill... but still signed it anyhow, breaking a campaign promise. The earmarks in the omnibus bill were over 1%, or $4 Billion (with a B)... but I'm don't recall hearing too much outrage from Senator Chris Dodd.
So yes, it's bad that we've wasted, or misspent another $165 million (with an m)... but after $700 Billion (with a B) for TARP (Remember the extra $110 Billion (with a B) we spent on that?), $800 B for 'Stimulus', and so much more... can we please have a little perspective? I'm calling it now. Somebody's got an entire log forest sticking out of their eyeball, but they're damned confident that they can spot the speck at AIG.
So my thoughts? I think the one thing that needs to be said is that we're talking about 'only' $165 million (with an m)... and they were awarded before the bailout. Sure, the bonuses were probably fool hardy, but that speaks to the incompetence of the former AIG management team. The facts haven't changed in months, it's just in the news now.
To put this in context, Merrill Lynch paid out $3.5 Billion (with a B) after their first bailout... and those bonuses almost assuredly forced the second round of capital infusions. (I read an article that said that NY AG Andrew Cuomo is investigating allegations that all the Merrill traders took massive book (paper) losses after their bonuses were awarded so their performance would look better next year. So the $15 B loss during the 4Q 2008 would be $3.5 in bonus compensation and a certain amount for unnecessarily conservative accounting.)
For further context, let's remember that Congress just passed a $792 Billion (with a B) 'Recovery and Reinvestment Act' that most assuredly included more than $165 million in wasted taxpayer dollars... but I don't recall Representative Barney Frank's outrage at the time.
Lets see, last week we witnessed the passage of the omnibus (budget) bill for 2008. The bill was over $400 Billion (with a B). Let's also remember from last week that President Obama condemned the presence of Earmarks in the bill... but still signed it anyhow, breaking a campaign promise. The earmarks in the omnibus bill were over 1%, or $4 Billion (with a B)... but I'm don't recall hearing too much outrage from Senator Chris Dodd.
So yes, it's bad that we've wasted, or misspent another $165 million (with an m)... but after $700 Billion (with a B) for TARP (Remember the extra $110 Billion (with a B) we spent on that?), $800 B for 'Stimulus', and so much more... can we please have a little perspective? I'm calling it now. Somebody's got an entire log forest sticking out of their eyeball, but they're damned confident that they can spot the speck at AIG.
Found some editorial cartoons you might like.
