The American public, The Obama Administration, and journalists are all in sync for a change. They are all calling the 165 million Dollars of Bonuses that American International Group is handing out to its employees outrageous. And it certainly is! The executives at AIG’s Financial Products Division who were selfish, greedy, and irresponsible are now continuing their narcissistic ways by receiving 7 figure bonuses which is coming out of the American tax payer’s pocket. CEO Edward Liddy says that he understands the outrage but there is nothing he can do because these are contractual obligations that is legally required to fulfill.

Americans have full right to be outraged and President Obama has vowed to do everything in his legal power to prevent the bonuses from being paid and will do everything possible to recoup the money that was already paid out. There is a strong, forceful, moral, and ethical argument to be made but legally AIG is not doing anything wrong.  AIG has received $170 Billion of taxpayer money to bail themselves out from disintegrating and 2 weeks ago the Government agreed to inject an additional $30 Billion into the troubled company. To now give out bonuses to reckless and self centered executives is outrageous and contemptible. The excess and greediness practiced by Wall Street executives brought upon this financial devastation and to continue it seems completely wrong and shameless. At a time when 600,000 Americans are losing their jobs every month and those that remain employed are forgoing their raises and taking pay cuts so their companies can weather the storm, the actions being taken at AIG simply seem abominable. The American tax Payer owns 80% of AIG. It is frustrating to see this kind of behavior and be utterly powerless to prevent it. The money that was given to AIG was given to prevent an economic meltdown, not to line the pockets of a few self centered and stingy executives. 

It is ironic how the Democrats are screaming for blood when one of their own, Senator Chris Dodd of Connecticut attached a clause to the federal stimulus bill that imposed limits on executive compensation and bonuses but made an exception for pre existing contracts. In President Obama’s address to the Joint session of congress he said,  “I intend to hold these banks fully accountable for the assistance they receive.  This time, CEOs won’t be able to use taxpayer money to pad their paychecks or buy fancy drapes or disappear on a private jet”. The President made it clear that he wanted strings attached to the bailout money and congress did not act.

From a legal point of view AIG is not violating any laws. They had contracts in place and CEO Ed Liddy whose annual salary is $1 feels that he is required to honor them.  Democratic Senator Bill Nelson said he will pass legislation to Tax these bonuses and recover as much as 90% of the money. For the government to force AIG or any company to terminate legally binding contracts, would set an extremely bad precedent and we would have to live with the consequences. Not to say that the Obama administration won’t try. They did put forth an idea that would allow bankruptcy judges to renegotiate the terms of bad mortgages. That idea did not gain traction and forcing companies to violate legal contracts will probably not either get far off the ground. However with the public outcry so deafening, anything is possible.

Americans are infuriated by what is transpiring but we also need to remember another thing that President Obama said during his address to congress “in a time of crisis, we cannot afford to govern out of anger, or yield to the politics of the moment”. Let’s take a step back, take a deep breath, and remember that tomorrow we will have to live with the decisions we make today.

(Mordachai Siegel – YWN)