March 18, 2009
I am beyond glad that I will avoid the temptation to tune into AIG’s, Edward Liddy’s, testimony before Congress today; if all goes well I should be on the golf course while that public flaying plays out. While the excoriation of Liddy seems rational, I have a different take on this than most of the nation which seems to have focused the scope of hate on the bonus issue.
First, the folks receiving the bonuses had contracts to receive them. No one has disclosed the language of the contracts, but I would imagine that they were created to give the employees a firm degree of security that the bonuses would be paid. Thus drafted and signed, the contracts created a liability to AIG, just as much a liability as its electric bills or Blue Cross Blue Shield payments. The nation loaned AIG 160 billion dollars to pay its bills and now everyone is mad that it did. Second, I have not read or heard what the legal fees to AIG would have been if Liddy had reneged on the contracts. Let’s suppose some of the employees used the contracts as security against loans and when the contracts were not paid they suffered financial and emotional damages: the awards and legal fees could really exceed, by far, the amount of the bonuses. As CEO, Liddy faced paying the bonuses to employees or paying possibly twice as much in legal fees; which solution made more sense? It seems to me that in this case Liddy was certainly in the classic lose-lose situation, more than I would want to face for a buck in salary.
Where these employees greedy and should they apologize to the country as some in Congress are requesting? I don’t know but it seems to me that people are considered suckers in our culture if they don’t grab as much as they can at every opportunity. Why are we so angry at a few folks getting a couple of million to a few thousand for working, when we don’t seem to get made when others make 25 million for playing a game well, win or lose? Has anyone demanded that Bonds, Canseco, or McGwire give back their salaries because they were greedy enough to use dope to hit a ball very far and consequently get paid millions? I imagine some have but no national outrage and no boycott of professional arenas took place. Why is one form of greed ok and another not?
Another bit of foolishness is being perpetuated by the most foolish of all commentators, Pat Buchannan, who is incensed that AIG paid money to foreign banks. We are in a global market, Pat, global means around the world, Pat, and if AIG owes money to hedge funds or banks from around the world, those debts are as equally payable to them as they are to American companies. A company cannot regain confidence if it arbitrarily pays its debts based on nationality. Buchannan should simply go away to some bone yard where he can mutter about how good looking Sara Palin is and avoid pontificating about matters of business to those who have at least a clue.
The national outrage should be direct at the people who are hollering the hardest right now: the moving lips on cable news like the foremost idiot, Joe Scarborough and the lying lips of every Congressperson who wants to perform a public crucifixion of AIG’s leadership. The failure of leadership is really in Congress for not constructing guidelines and conditions for the money which was lent to the businesses in trouble. It is most easy to sit now in judgment, and they will do it well in their five minutes of mouth time during the coverage of the hearing. Liddy will become another method for Congress’ deflecting the blame that should rightfully fall into its laps. Congress has failed once again to do its job.