Roger Simon Roger Simon Tue Mar 17, 5:12 am ET
The only real difference between Bernie Madoff and the management of AIG is that when Bernie Madoff got caught, he pleaded guilty. When AIG got caught, it asked the government for $170 billion.
And it got it. Now the American International Group is going to pay $165 million to its executives as a reward for the fine job they did in duping everybody.
The Obama administration is officially outraged by this. It is stamping its feet. It is jumping up and down. It is issuing stern statements.
But some are getting ready to pay. Some are getting ready to let the fat cats get fatter.
Larry Summers, director of the president’s National Economic Council, went on ABC’s “This Week With George Stephanopoulos” on Sunday and said the AIG bonuses were “outrageous” but might have to be paid.
“We are a country of law,” he said. “There are contracts. The government cannot just abrogate contracts.”
Baloney. Contracts get abrogated all the time. That’s why there are lawsuits.
It’s not enough for AIG executives to continue to get their huge annual salaries because of a government bailout — they want bonuses, too? Let them sue to get them.
The way the courts work, they should get a ruling within the next century or so.
But while we are waiting, the taxpayers should not stand idle. We should demand the immediate resignation of Edward M. Liddy, the government-appointed chairman of AIG.
Liddy recently wrote a letter to Treasury Secretary Timothy Geithner saying the bonuses must be paid to the AIG executives because, otherwise, their morale might suffer.
“We cannot attract and retain the best and the brightest talent to lead and staff the AIG businesses — which are now being operated principally on behalf of American taxpayers — if employees believe their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury,” Liddy wrote.
The best and the brightest? Is this guy serious? As of Sunday, AIG stock had gone down 99 percent over the past year because of these geniuses. But we have to worry they might quit and go elsewhere?
Fine. Let them go. Maybe they can get jobs in Zimbabwe, where kleptocracy is official policy. I think some of them would feel more comfortable there.
Liddy is scheduled to appear at a congressional hearing Wednesday. Actually, I would feel better if he were going on “The Daily Show With Jon Stewart.” That guy really knows how to interrogate.
But I hope our elected representatives get to the heart of the matter with Liddy: Why do Wall Street fat cats believe they operate in a separate world, one where ordinary rules don’t apply and democracy doesn’t work?
Monday afternoon, President Barack Obama accused AIG of “recklessness and greed.”
And he said he is going to “pursue every legal avenue to block these bonuses and make the American taxpayers whole.”
The key phrase, of course, is “every legal avenue.” We do not want our president to act illegally. But I hope he is not going to throw up his hands in helpless outrage if AIG lawyers say the bonuses must be paid.
There are more than 1.14 million lawyers in America. Some 40,000 new ones are produced every year. And believe me, we can find a lawyer to say we don’t have to pay these bonuses.
I really don’t think the public will settle for any less. Not from a president who promised change.
Robert Reich, former labor secretary under Bill Clinton, told Adam Nagourney of The New York Times, “Never underestimate the capacity of angry populism in times of economic stress.”
Angry populism? You don’t have to be a populist to be angry about this. You have to be something other than brain-dead.
We must shake off the notion that our government is a helpless giant. Instead of shoveling money to these companies, we should be investigating them. AIG may be too big to fail, but its management is not too big to go to jail.
Bernie Madoff could use the company.
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