Do you think Obama lost the little sticky note on his desk that said: Do something about the AIG bonus payments due on July 15?
Maybe the computer hackers in North Korea wiped out the Outlook calendar pop-up that would have reminded Kenneth R. Feinberg, the financial bonus czar, to manage the AIG p.r. bonus problem.
Or maybe someone in Barney Frank’s office devilishly tinkered with the White House tickler system so the congressman could appear before TV cameras all flushed and outraged about a company that has received $180,000,000,000 in taxpayer money paying $2,400,000 to its 40 top-ranking executives — about $600,000 per person.
In case you’ve missed the news, AIG is asking the White House for permission to pay its top executives bonsues — as contractually agreed — on July 15. I can only guess that the the White House will pretend to be surprised that AIG is asking for its blessing. But if you emasculate a company, then put it on life support with a tube running directly into the Executive Branch of government, what can you expect? Considered, independent judgment?
It’s really too bad that no one had the nerve last fall to put AIG out of its misery and into receivership, which Federal Reserve Chairman Ben Bernanke told Congress earlier this year would have been a very good option. Then no one in the Administration would be forced to mumble something about how these contracts really, really count (no do-overs, except when it comes to handing out more and more $$$$) as opposed to the contracts that don’t count because when you’re about to go out of business and everything and anything should be up for negotiation. Now we’re stuck thinking once more about AIG, what a mess it is, and this whole bonus thing. Doesn’t everyone realize that it’s summer and we should be on the beach thinking about the little green shoots (aren’t they darling?) and how the world isn’t coming to an end after all? I feel like we just opened a national report card and the news is really bad. Summer school for everyone! The curriculum is brutal: wall-to-wall AIG with an emphasis on bonuses and the evils of Wall Street. First, we’ll be forced to review all the newspapers that wrote about those nasty bonuses; then we’ll read the bloggers; and if we still don’t get it, we’ll be forced to watch reruns of everyone shouting at one another on CNBC in surround sound.
I promise, next time round, to learn my lesson. But perhaps we can all avoid summer school by coming up with a solution to the AIG bonus problem. And believe it or not, I think I have it. Pay the bonuses in AIG stock. If these top guns think they can bring the company from the brink of oblivion, then they will welcome the opportunity for skin in the game. But if they secretly agree with Citigroup analyst Joshua Shanker, then they’ll be putting up their houses for sale. On Thursday, Shanker wrote that AIG stock has a 70% chance of going to zero, as in nada. Nothing. “That reflects the risk of further losses on credit-default swaps and the company’s increased willingness to sell businesses at low valuations, Shanker explained.”
Them’s fightin’ words. AIG stock slumped 21% after Shanker’s report made the rounds.
I say to the top execs of AIG, if you want to let Shanker know he’s wrong, then vow to take your bonuses in stock. Stand tall. Stand proud. And if you do a really good job — as in returning every last penny of American taxpayer money before my hair turns gray — you won’t ever have to ask the White House again for another compensation blessing.
Now, please, let us all return to our regularly scheduled vacation stupor.