Republican Senator: AIG executives should quit or kill themselves
Sen. Charles Grassley, a Republican from Iowa, declared war on insurance company AIG yesterday after the company’s executives gave themselves their trades a bonus (even though they had to accept many billions in federal aid).
“The first thing that would make me feel a little bit better towards them if they’d follow the Japanese model and come before the American people and take that deep bow and say I’m sorry, and then either do one of two things — resign, or go commit suicide,” he said.
Most impressive is that Grassley seemingly doesn’t understand that companies are allowed to do what they want to do. Handing out bonuses in a time of crisis isn’t smart, perhaps, but it’s not up to Grassley to tell people how to run their business. He’s a politician in a country with a (relatively) free market. Last time I checked, the Constitution doesn’t allow federal lawmakers to dictate CEO’s what to do.
Grassley spokeswoman Jill Gerber clarified Grassley’s comments a little later, however: “Clearly he was speaking rhetorically – he meant there’s no culture of shame and acceptance of responsibility for driving a company into the dirt in this country. If you asked him whether he really wants AIG executives to commit suicide, he’d say of course not.”
“Point being, U.S. corporate executives are unapologetic about running their companies adrift, accepting billions of tax dollars to help, and then spending those tax dollars on travel, huge bonuses, etc,” Gerber said.
Although that explanation makes the statement less unacceptable, it’s still not entirely acceptable for a Senator to speak in this way about companies. In the end these companies are run by citizens. These citizens don’t have to explain themselves to politicians. No, it’s the other way around. Politicians have to explain themselves to citizens (and thus to companies’. Grassley is wise to keep that in mind.
Does that mean that CEO’s are acting responsibly? No, of course they’re not. They do not know shame. They aren’t responsible for their own failures. They take credit for successes, but blame others for failures. These CEO’s deserve to be criticized.
But customers, citizens that means, not politicians should make this clear to AIG by simply taking their money somewhere else. Politicians should not get involved.
President Barack Obama is also angered by the bonuses. He is now doing “everything in his power” to stop AIG from giving these bonuses to people who do not, according to Obama, deserve it.
WASHINGTON – Joining a wave of public anger, President Barack Obama blistered insurance giant AIG for “recklessness and greed” Monday and pledged to try to block it from handing its executives $165 million in bonuses after taking billions in federal bailout money. “How do they justify this outrage to the taxpayers who are keeping the company afloat?” Obama asked. “This isn’t just a matter of dollars and cents. It’s about our fundamental values.”
What I said about Grassley also goes for Obama, albeit even more so. Grassley is just one of many senators. There is, however, only one president. Obama is behaving very irresponsibly.
Lastly something of immense importance:
And do keep in mind – this is not an “incentive” bonus pool, it is a “retention” bonus pool. In the spring of 2008, after AIG eased Joe Cassano to one side and realized he had presided over a train wreck, they had a serious question about whether they should remain in the derivatives business and how they might keep a derivatives team together. Rather than watch as everyone drifted to other firms they guaranteed a bonus pool (it was generally obvious that earnings wold not justify bonuses in 2008).
Furthermore, the Feds are providing more support to the AIG securities lending business than to the credit derivatives business, so the AIG-FP people can make the case that they are being used as a scapegoat by insurance regulators who would rather point the finger elsewhere [the WSJ notes this as well]. In this gambit the insurance commissioners will be aided and abetted by everyone who believes that the answer to any problem is more regulation.
In other words, they aren’t receiving these bonuses for the reasons Obama thinks. AIG and these traders signed contracts with each other. The company will have to do what it said it would do in the contract, whether that makes Obama happy or not.
Of course Obama (D.) and Grassley (R.) know the above as well. They’re fully informed. But they’re now using public outrage – uninformed public outrage – to their own advantage.
How sad that an elected official has such little regard for human life that he finds it acceptable to advise someone to commit suicide. I find Senator Grassley’s remarks to be ignorant and racist. I hope the people of Iowa take a good look at the man they elected to office.
First, Grassley’s comment was incredibly inappropriate.
Second, Obama’s faux outrage is absolutely ridiculous. His administration could have held up bailout money until the board and execs agreed to rework their contracts- they either neglected to do so or decided not to do so. I don’t know whether their failure to address this in their own policy means that their ignorant (certainly some of Obama’s economic statements have shown a gross lack of knowledge of the financial system and business in general) or more likely, a political calculation. They probably knew very well that they could use the bonuses to direct the public’s outrage at the ‘greedy capitalists’.
BJ, you’re being ridiculous. The expression “falling on one’s sword” is well-known in business and commonly used by executives who need to make a sacrifice for the organization.
Let’s not lose sight of the fact that the issue is that a failing company that has in effect been bought out by the feds pay massive bonuses to the people who created the financial black hole in the first place, not whether we like the phrasing of a bit-player senator whose message, if not his word choice, a useful one.
When taking government money, they become “de facto” government people.
So they are subjected to scrutiny from the politicians and the common citizens that pay for their bail out.
The bail out money is only for the cronies of the government and their friends. Plus pork and pork.