AIG BONUSES: Someone Get a Rope… The Angry Mob is Already Here.
I cannot even believe what’s going on in our country today. I am so totally pissed off at greedy, obnoxious, mega-rich corporate executive fat cats that I can’t see straight.
Apparently, and I am not making any of this up, there’s a 55 year-old guy named Andrew “Jack” Whittaker Jr. who is yet another example of a corporate executive receiving boatloads of money… $315 million as a matter of fact… for doing damn near nothing. And to make matters worse, the money he received came right out of the pockets of millions of hard working American taxpayers. Unbelievable.
Yes, he’s a real dirt-bag, this Whittaker guy, and frankly I think our government needs to step in and do something about it… like pass a law to tax HIS windfall at 90%, as Senate Democrats are now trying to do to the employees at AIG that received million dollar bonuses.
To make matters even worse, Whittaker is the president of a home building corporation, and he was already a multi-millionaire before his recent windfall of $315 million, which is perfect… just perfect. He’s an obnoxious jerk too… apparently, he once gave a $44,000 tip to a waitress he liked, and then bought her a $123,000 house and a new Jeep. What a jackass.
When he was in St. Louis in 2004, he was arrested for allegedly threatening the life of a bar manager. He was also sued for groping a woman at a dog track. When he was arrested for drunk driving a few years ago, Whittaker told a TV station: “It doesn’t bother me because I can tell everyone to piss off.” And incredibly, Caesar’s of Atlantic City is suing him for bouncing $1.5 million in bad checks to pay gambling debts. Oh yeah… give me a break… this guy has got to go. But he won’t, of course, because he didn’t do anything illegal to get the $315 million.
Look… I think this is an open and shut case. Whittaker did next to nothing to earn his windfall. In fact, anyone could have done the same things he did. The money he received came directly out of the pockets of millions of hard working American taxpayers, who are all struggling right now as our economy slides deeper into its recession. And the business he became a part of is one that many see as harmful to our nation, and one that preys on and robs the poorest segment of our society.
It’s just plain wrong… anyone can see that, right? I don’t need to hear anymore so-called facts. Someone get a damn rope. No one in this country should be receiving windfalls of $315 million, for God’s sake, and certainly not multi-millionaire jerks from the home building industry. So, does everyone agree? Are you all with me? Ready to storm the castle? Overthrow congress? Set stuff on fire? Enough of this crap… LET’S ROLL?
Well, before we saddle up and ride out, there is one more little fact I should have probably mentioned in the beginning. I guess it just slipped my mind for a moment. Probably not that important… never mind… what else could anyone possibly need to know about this Whittaker guy anyway? Let’s get him… take our money back and justice will again be served. Ready?
Well, wait… I really think, in the spirit of full disclosure, I should tell you about the one fact I left out. Just in case it would cause you to change your mind. Is there anything that would get you to change your mind about this guy? It’s all 100% true… everything I’ve stated thus far… all 100% accurate and factual. So, what could possibly matter… what additional fact could possibly change your mind about this guy?
How about this:
Andrew “Jack” Whittaker Jr. was the winner of our nation’s largest Powerball lottery jackpot in history, winning $315 million back in 2002.
Oh come on… so what? Don’t tell me that little fact changes anything. Every single word I wrote about Whittaker was absolutely true. Don’t you all still want to bring the rope… come on… let’s get him. Who’s with me?
Hey, where did everyone go?
Wow, so I guess there are facts that matter to some people. I certainly don’t remember any sort of national outcry over lottery winners winning too much, while others are struggling to keep their jobs and homes. I don’t remember any politicians threatening to take Old Jack’s money away from him simply because a bunch of us Americans were all pissed off about it.
Should anyone be allowed to win that much money though… $315 million? I’d say, probably not. I don’t know how anyone could defend winning $315 million as being right as rain. Good, so we all agree… $315 million is an unreasonable amount to win, no matter what.
Alrighty then… so lets get to it… answering the tough questions related to our decision:
How much should we allow people in this country to win (or receive as a bonus) … Comrade?
Or, maybe it would be best if we just let the state decide… wait here, I’ll phone the Politburo…
So, here we are again. Populism. Class warfare. Angry mobs. Hell, even the President is pissed… I think. He couldn’t be just putting on a show, could he? How about the rest of congress… Geithner? Are they all unaware of the following facts, too?
Stop it… just stop it. Of course they’re aware of the following facts, and then some. But, they have to look mad. They better look mad, because whichever among them does not… well, that would be a career-ender, wouldn’t you think? Just the fact that the AIG bonuses are the ONLY issue that both the Democrats and the Republicans agree on should give us all pause… it’s positively creepy, if you ask me.
So, here we go… we’ve now got our elected officials chasing issues because they’re popular, but ultimately worthless in terms of accomplishing anything, for anyone, in any way. Let the hearings begin. Gosh, I do love the theater.
First of all, AIG’s top producers receiving large bonuses is beyond irrelevant to the overall effort to stem the course of the deepening recession. The amounts are 1/100th of one percent of the amounts loaned to AIG by the federal government. And second of all… oh, who cares about second of all… here are the facts of the situation. If you still want to get a rope after you’ve read the following facts, so be it.
Okay, so here goes…
Facts About AIG and its Infamous Bonuses…
1. AIG got into trouble because they issued credit default swaps, which are a type of derivative that acts like an insurance policy would against the potential of bond defaults. So, let’s say that General Motors issued bonds, and since bonds are debt, there’s always the risk that GM won’t be able to pay the bondholders when the bonds mature, or that the value of the bonds will fluctuate based on GM’s credit rating. So, a bank that bought GM’s bonds also entered into a credit default swap contract with AIG that promised to cover the bank’s losses if the value of GM’s bonds dropped, or if GM went bust. And AIG insured the vast majority of the bonds held by major banks all over the world.
2. When the housing market went into a free fall, the value of AIG’s assets, started losing value as the insurance giant was forced to take the same kind of write downs seen at virtually all of the major banks. As this happened, AIG’s credit worthiness declined, and as a result, the amount of monetary collateral AIG’s customers wanted AIG to put up to back the company’s CDS contracts increased. Over time, AIG found itself being dragged down by these rising collateral requirements.
3. The increased systemic risk that led our government to conclude that AIG was too big to fail could not have been created by any single bank or insurance company. The proximate causes of today’s crisis include inadequate regulations, new accounting rules that distorted the value of certain “hard to value” assets, and the excessively stimulating policies of our government, among other things. The list of our government’s failures as related to the crisis is much more significant than any deals done by AIG’s Financial Products Division.
6. We taxpayers DON’T OWN AIG… the government loaned money to AIG, because AIG had sufficient assets to secure the loan. The thinking was that letting AIG go under would very much put the global financial systems at risk, and since the company did have sufficient assets, they could always liquidate those to repay the loan. But, no one would have benefited from AIG having to sell assets in a hurry and at fire sale prices, so the government essentially bought the company time to either recover, or return to profitability, and if not they’d at least have time to liquidate their assets in an orderly fashion in order to repay the government loan.
7. Okay, so I’m a really bright guy who arranges for credit default swaps between AIG, and quite successfully, I might add. My bonus gets paid at the years’ end, and the company doesn’t want me to even entertain the offers I get from AIG’s competitors. I had no idea of the risk of a systemic meltdown. How could I have known? No one knew. I don’t run AIG? So, why shouldn’t I get my contractually binding bonus check? Because people who have no clue what’s happening have all decided that I should get screwed? Great, that’s just great. How was any of this my fault?
8. As Larry Summers said: “We are a country of law. There are contracts. The government cannot just abrogate contracts.” Absolutely true. And AIG’s CEO, Liddy said that he worries about the “Inability to retain the best talent.” AIG, he says, “will simply not be able to attract employees if they come to believe “that their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury.” Also true.
The contracts that provide for the AIG bonuses are legal binding, and there’s absolutely no legal basis called “unhappy public” that applies to this situation in our justice system. Pay them their money, or they will… and should… sue AIG until the cows come home.
The people that sold AIG’s credit default swaps aren’t any more guilty than the countless other players involved, and much less then some. Why single them out? Without those credit default swaps, a lot of pension plans and banks would have lost hundreds of billions of dollars when Lehman and others imploded.
AIG’s top executives are another story. They were responsible for the company’s health and they were asleep at the wheel. AIG’s top executives, however, took a $1 annual salary and no bonus for 2008 and 2009, but if you’d like… we can get all worked up and cut their pay to 50Â¢.
So, there you have it. Like hell you say? Very well then… I’m pissed about my house and 401(k) plan too… so go on then… fetch thy rope my loyal friend, because look… there… me thinks I saw those at AIG to be verily a witch… call for others to come see thy witch hang from the gallows so ye can kneel down and pray… Aye!
Get them… Arrrggghhhhh….. (Insert sounds of villagers marauding…)