Saturday, March 21, 2009

Why the Bonuses Do Matter

The public is in a fervor over the millions bailout recipients, especially AIG, continue to dole out to precisely those individuals and firms who manufactured the financial disaster and then conspired, with the aid of Timothy Geithner, Hank Paulson, and Ben Bernanke, to conceil the truth from the very people — the taxpayers — now funding the bailout. The newest detail is that the total given out by AIG is more, $50 million more, than the $165 million now widely reported, according to Connecticut's attorney general.

A real question here is whether AIG — 'too big to fail' — is leveraging that position to con the government out of more money to funnel on to Goldman Sachs, Citigroup and others. Frank Rich, one of several New York Times columnists who sounds a good deal more liberal than a year or two ago, put it this way: AIG "has, in essence, been laundering its $170 billion in taxpayers’ money by paying off its reckless partners in gambling and greed, from Goldman Sachs and Citigroup on Wall Street to Société Générale and Deutsche Bank abroad." [1]

Still another question, raised by many pundits of many stripes, is whether the bonus issue is bogus, whether it is a diversion from the more serious issue of the billions AIG is passing along.

The bonuses should be taken seriously, if for no other reason than that the con artists at AIG, Goldman, Citigroup do so. The executives at AIG, Goldman and all the others are motivated by one thing only — money. Any blather they offered about serving stockholders has been conclusively proven false. (It had already been proven false years ago in the US business culture driven by management and the demands of management as opposed to those of owners, namely stockholders.)

Nor are the executives driven by the intricacies of economic problem-solving, or they would not now be working so hard to find ways to keep those bonuses while conceiling the fact from the public and the government (or most of the government, since we now know that Timothy Geithner, Sen. Christopher Dodd and others did know about the bonus boondoggle [2]).

Hank Paulson, Timothy Geithner and their ilk are largely of a piece with this ethos. Paulson was smack dab in the middle of it as an exec at Goldman Sachs. Geithner comes out of an environment populated by willing slaves — lionizing, idolizing the Paulsons, Rubins, etc., much like Alan Greenspan or any of that fundamentally conservative wealth-is-virtue school.

This country has for some thirty years effectively been governed with0ut question by the demands of wealth. The US has always held wealth to be the finest repository of power. European nations and others had monarchs, sometimes not the most wealthy, who commanded the greatest power. Ages ago, religious institutions held the power. But the US broke with all that, exalting money as the greatest good. Indeed, George Washington may well have been the wealthiest person in the colonies at the time of the American Revolution. He was certainly one of the wealthiest.

(It would be interesting to poll people at random simply asking them to name a great American from the turn of the last century, or from 50 years ago. From the time of the revolution, they would almost certainly mention Washington. From the Civil War, Lincoln. That was the time of power in government. But then the US began to assume to role of world's leading industrial and economic power. So from 1900, who?)

Deregulation is the most obvious instantiation of the driving priniciple of Wealth as the Greatest Virtue. Trickle down 'theory'. The pattern of compensation in our private and public institutions. Our culture, with its unalloyed reverence for wealth and fame, further supports this conclusion. The titans of Wall Street may not be the flashiest. Athletes and actors enjoy that privilege, but the oligarchs are the economic decision makers, and their motive is money money money.

The meaning of their lives has one measure. To deny them the vast sums they clearly think they have a right to, regardless of the quality of their labor, is the greatest possible punishment short of actual imprisonment. It is wholly appropriate that We the People force this much from an Obama administration that is again proving itself too spineless or too corrupt to hold to account this nation's greatest criminals.


1. Rich's Times piece, by the way, is a beautiful example of the power of internet journalism. It is thick with cross-links to supporting stories. For example, Republican blowhards like Mitch McConnell now call for curbs on greedy executives. Not long ago, he and others were dead set against them. These are the same Republicans who opposed tooth and nail any Obama stimulus measure, then went home and took credit for the very thing they had opposed.

2. From CNN (emphasis mine): "Dodd told CNN . . . that he was responsible for language added to the stimulus bill to make sure that already-existing contracts for bonuses at companies receiving federal bailout money were honored. A Treasury Department official told CNN earlier that the Obama administration pushed for the language.

"Dodd initially denied he had anything to do with adding the provision.

"Treasury Secretary Timothy Geithner [told CNN] that his department asked Dodd to make the changes."

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