Robert Reich posted the best commentary on the AIG scandal… and this REALLY is a scandal!… and I agree with him 100%. Here it is in total:
The real scandal of AIG isn’t just that American taxpayers have so far committed $170 billion to the giant insurer because it is thought to be too big to fail — the most money ever funneled to a single company by a government since the dawn of capitalism — nor even that AIG’s notoriously failing executives, at the very unit responsible for the catastrophic credit-default swaps at the very center of the debacle — are planning to give themselves $100 million in bonuses. It’s that even at this late date, even in a new administration dedicated to doing it all differently, Americans still have so little say over what is happening with our money.
The administration is said to have been outraged when it heard of the bonus plan last week. Apparently Secretary of the Treasury Tim Geithner told AIG’s chairman, Edward Liddy (who was installed at the insistence of the Treasury, in the first place) that the bonuses should not be paid. But most will be paid anyway, because, according to AIG, the firm is legally obligated to do so. The bonuses are part of employee contracts negotiated before the bailouts. And, in any event, Liddy explained, AIG needed to be able to retain talent.
AIG’s arguments are absurd on their face. Had AIG gone into chapter 11 bankruptcy or been liquidated, as it would have without government aid, no bonuses would ever be paid; indeed, AIG’s executives would have long ago been on the street. And any mention of the word “talent” in the same sentence as “AIG” or “credit default swaps” would be laughable if it laughing weren’t already so expensive.
Apart from AIG’s sophistry is a much larger point. This sordid story of government helplessness in the face of massive taxpayer commitments illustrates better than anything to date why the government should take over any institution that’s “too big to fail” and which has cost taxpayers dearly. Such institutions are no longer within the capitalist system because they are no longer accountable to the market. So to whom should they be accountable? When taxpayers have put up, and essentially own, a large portion of their assets, AIG and other behemoths should be accountable to taxpayers. When our very own Secretary of the Treasury cannot make stick his decision that AIG’s bonuses should not be paid, only one conclusion can be drawn: AIG is accountable to no one. Our democracy is seriously broken.
Don’t we own 80% of AIG? If that’s the case, why isn’t the government taking over its operation, INCLUDING THE PAYMENT OF BONUSES TO LOSERS WHO LOST MONEY!
The “Nationalization” argument is meaningless if, without federal control, we are throwing tax money into the pockets of the people who made the problem in multi-million dollar handfuls.
I keep hearing the “too big to fail” argument and I keep thinking that the only thing too big to fail is the United States of America… and we know from the history of countries going down the centuries that WE CAN FAIL, TOO. Nothing or no one is too big to fail.
We voted the Republicans out of office across the board because they FAILED. We expected that EVERYTHING would be approached in a different manner. Let’s get to it.
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