Tuesday, March 17, 2009
Guest Blog by Rep. Ben Ray Luján: AIG Bonuses Reward Corporate Irresponsibility and Recklessness,
We're pleased to have a guest blog by Rep. Ben Ray Luján, who represents New Mexico's Third Congressional District. Rep. Luján has been very outspoken about the AIG situation. Yesterday, he joined 76 other U.S. House members in signing a letter urging Treasury Secretary Geithner to intervene to stop the extravagant bonuses for AIG executives.
Within the economic crisis facing our families and our communities are many stories. Some are tragic stories of families losing their jobs and homes. Some are inspiring stories of communities coming together to help a struggling family or a small business. And some are selfish stories of greedy and reckless companies exploiting the financial system and the generosity of American taxpayers.
This weekend we learned that the American International Group (AIG), a company that has received $170 billion in taxpayer money to ensure its solvency, planned to give hundreds of millions of dollars in bonuses to its executives. These bonuses are set to go to executives at the very division within AIG that helped precipitate our economic crisis by participating recklessly financial behavior.
Executives who engage in this type of reckless and irresponsible behavior do not deserve bonuses. They certainly do not deserve hundreds of millions of dollars in bonuses paid for by hard-working American taxpayers.
While small business owners in Aztec, Espanola, and Clovis are fighting to cover their payroll and desperate for credit to purchase resources they need to keep their businesses running, executives at AIG are giving themselves millions of dollars at taxpayer expense. This is wrong. We should not use tax payer dollars to reward corporate irresponsibility and recklessness, while New Mexicans are struggling each day.
I am extremely disappointed by reports of these AIG bonuses. At a time when families throughout New Mexico are struggling because of the irresponsible actions of bad actors, it is shameful for AIG to give its executives $165 million in bonuses that are paid for by hard-working taxpayers. Executives that requested federal dollars to keep their companies solvent should not funnel this money toward bonuses for their colleagues. The Obama Administration and Congress must explore every available option to prevent AIG from awarding millions of dollars of taxpayer money in bonuses to their executives.
This is a guest blog by U.S. Rep. Ben Ray Luján (D, NM-03). If you'd like to submit a piece for consideration as a guest blog, contact me by clicking on the Email Me link on the upper left-hand corner of the page.
Rep. Lujan - keep standing up for us citizens. Bring a new bill to the floor....saying we the people will not pay AIG any of the money allocated in the previous bill passed to bail these sorry asses out. We just gave them another $30,000,000,000 bil earlier this month. NO more money to these theives, let them fail!
Posted by: mary ellen | Mar 17, 2009 8:05:48 PM
The quants are not fat cats.
They are mathematicians/computer programmers. They made incorrect linear assumptions that have gone deeply non-linear. The fat cats are the programmer's greedy bosses that have no real understanding of the algorithms involved. The deals and trades can not be unwound even by the most genius mathematicians because they have become undecipherable with statistically unpredictable consequences. Those results that they can predict and unwind do not bode well at all.
The trades, deals and risks were based on complicated algorithms that were guaranteed to maximize short term profit. But, a bit longer term, the projections have steered way off predictable course. Past the short term profit taking, the deals, trades and risks become a tangled sticky web that cannot be unwound. With the huge short term payouts, not only can these deals, trades and risks cannot be unwound, there is absolutely NO incentive for these self-serving enriched fat cats and mathematicians to try.
Posted by: qofdisks | Mar 18, 2009 10:02:23 AM
Remember Teddy Roosevelt? He broke up the big railroad, finance and other "trusts" that were essentially bullying monopolies. AIG and other giants need to be broken up in a similar way. We can't allow corporations that are "too big to fail." We need to nationalize AIG, break it down into components that make sense and relaunch those as separate companies. Why don't I hear this obvious solution being proposed anywhere?
Posted by: Change or Rust | Mar 18, 2009 10:11:29 AM
Mary Ellen, I agree that the bonuses are a travesty but do you honestly think we can let AIG fail? From my understanding of our economic system, the collapse of AIG will destroy the entire banking industry. While the destruction of AIG might make us feel vindicated it will severely limit, if not ultimately destroy, our President's ability to make the various reforms we elected him to accomplish: namely, healthcare reform.
Posted by: Buck Glanz | Mar 18, 2009 11:12:33 AM
What makes you think that propping up AIG will save them from failing?
If we do want to "save" them we should seize all their assets and nationalize the outfit. Then we should call the shots on how they spend their money and operate. Did you know that billions of dollars we gave to AIG is being funneled by them to Goldman Sachs, Deutchebank and many other foreign banks. This is criminal and people are being kept in the dark.
Posted by: Bill | Mar 18, 2009 11:35:47 AM