AIG almost brought down the financial system, but it was too big to fail. The reckless and greedy actions of some of the company executives were nevertheless rewarded with a taxpayer bailout.
Right now economic confidence in our nation is low. The resulting financial disaster of an economy in crisis has put average Americans in a slump. Many of our bubbles have burst. People are losing their jobs, homes, pensions and are standing in food lines. Some are even sleeping in tents.
So, why don't we have a right to be frosted when taxpayer monies are being used to pay big bonuses to those whose risky conduct contributed to our economic downturn?
Some argue that paying of bonuses to AIG executives is a contract matter. "Contracts must be honored." Yeah, but contracts can be renegotiated and failed companies can seek bankruptcy.
Lots of average Americans have had their contracts with their employers tossed to the winds in this financial crisis. It seems like if billions of taxpayer dollars are going to pay AIG bonuses, American citizens have a right to question where their money is being spent and if it is helpful in stimulating the economy.
Congress is furious over these bonuses. Senator Grassley of Iowa suggests AIG bonus recipients apologize, resign or commit suicide! House Speaker Pelosi asks return of bonus money. Rep. Barney Frank did not like the idea that bonuses rewarded incompetence. President Obama is outraged and wants his staff to find ways to reclaim the bonuses. Some officials want to know if Treasury Secretary Geithner did enough to stop this ensuing mess. Legislative committees are studying ways to recover these monies from AIG.
Some wanted to use the tax code to punish, while others said that was inappropriate and contracts must be honored no matter what the circumstances.
The picture of AIG got uglier, Congress is irate, the president is frustrated, and the Treasury secretary is on the hot seat. The taxpayers have been suckered again, and everyone seems to be ready for a visit to the funny farm.
Are we all too big to fail? These are not normal times and sacrifices are required by all of us. The AIG chief executive officer may agree. He has asked employees to return bonuses or at least a portion of them.
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Jack Simpson is a former educator, veteran, author and a law enforcement officer. His column appears each Friday.