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Washington’s Phony Outrage Over The AIG Bonuses

by @ 10:32 am on March 18, 2009. Filed under Barack Obama, Credit Crisis, Economics, Politics

As the outcry over the AIG bonuses continues to build in Washington and the company’s CEO appears gets dragged before a Congressional committee hearing show trial, it’s becoming fairly apparent that all the outrage and feigned surprise we’re hearing from both side of Pennsylvania Avenue is little more than phony political posturing.

For one thing, we now know that Treasury Secretary Tim Geithner was specifically informed about the impending payout well before it happened and that President Obama was informed about it immediately after Geithner spoke with AIG’s CEO about the matter.

More importantly, though, we also know that the bonuses in question were part of an employee retention that was written and made publicly available last year, that the bonuses themselves have been public knowledge in Washington since at least September, and that the stimulus bill passed in February included an Amendment that specifically protected bonuses such as those set forth in the AIG retention plan.

With all this information available, the phoniness of the outrage we’re hearing becomes readily apparent, as Bruce McQuain notes,

[W]hat you’re seeing out of the Obama administration is demagoguery at its worst. This was a plan being worked with the previous administration and the present administration, and when AIG payed those monies out last week Friday (they were required by law to do so prior to March 15), it was with the full knowledge and apparent acquiescence of the Obama administration, and, one assumes, key members of Congress.

(…)

All of this faux outrage, then, is politically calculated theater designed, as usual, to shift blame on the designated bad guy. It’s the usual reversion to populism when caught doing something unpopular. If you think a single politician, up to and including the President, is going to stand up and take blame, well, you have this example to dispel that notion. Instead of leadership, we get demagoguery.

In other words, politics as usual from the Administration that promised change we could believe in.

One Response to “Washington’s Phony Outrage Over The AIG Bonuses”

  1. Vanessa Jackson says:

    Agree that Geithner and the others did not want to deal with the bonus issue and are now trying to cover their tracks because it was not on their radar screen given all they have to do.

    However, I don’t believe for a minute that they “wanted” or “protected” the bonuses or were bribed because of AIG’s small campaign contributions, to ensure that AIG executives got the promised bonuses.

    The bigger issue to me is the way AIG was apparently run by its previous management who wrote such idiotic contracts. No wonder it under water. What were the base salaries of the bonus recipient’s who got $6M, $4M, etc.

    Having been in corporate America alll my career, I’ve heard of given even twice your base for a bonus, retention or otherwise but millions, that’s scandalous.

    This should be used as a teachable moment for all corporate America that AIG business practices were ridiculous to the nth degree!

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