The Obama economic team, commentators and experts of every sort are scrambling to deal with the tide of public outrage over the million dollar bonuses announced by the government-subsidized and U.S.-owned A.I.G. for senior managers, including those who negotiated the high-risk deals that led to the company’s near-collapse. It is offensive enough that those who concocted these viral, losing deals should be even considered for bonuses. It is more deplorable still to hear that the A.I.G. CEO is contending that retaining these same people is necessary to attract the best talent. However natively intelligent the A.I.G. team may be, they were too clever by half, committing to high-risk debts on which the insurance giant couldn’t make do. Add to that they are contumacious in their greed, expecting outsized rewards when the company is being bucked up by the U.S. taxpayer. Rather than being the best and the brightest in finance, they should be known forever as the worst and the wickedest.
Commentators talk as if the administration is in a double-bind. Allow A.I.G. to pay the bonuses and public support for the Obama banking reform and a new economic stimulus will collapse. Or, don’t pay the bonuses and expect lawsuits and a loss of market confidence. Balderdash. Board members and compensation specialists appeal to pre-existing contracts as mandating the awards. But the contracts should be broken, just as they are in any other bankrupt or near-bankrupt industry. These evil geniuses should have been fired long ago for their bad judgement. They still don’t get it and neither does top management. Business will not recover by catering to players who lack both conscience and commonsense. A new beginning requires a clean sweep. Let’s find a business leadership that knows its limits and knows the failed models will only open to an even bleaker future.
Though Obama team inherited the A.I.G. mess from the Bush administration and so they may have been blind-sided by this latest development, one fears, nonetheless, they were reluctant to address the question more forthrightly because they too share in the failed fiscal mentality. Reviving credit and renewing the economy requires an outlook about the public responsibility of business that they are just not prepared to embrace. That is a failing which may mean we all have to pay a still higher price before things turn around.
Drew Christiansen, S.J.