AIG's right thing?

You’ve no doubt heard that Edward Liddy, CEO of AIG, has gone before Congress to perform a—well, not heart-felt; maybe head-felt—nostra culpa over the $165M in bonuses he paid last week to employees of the Financial Products division.

That would be the very unit that cratered the company & caused Congress to lavish $170B in bailout funds because AIG is “too big to fail”. Those “retention bonuses”—meant to ensure that the stellar performers (who evidently have the financial acumen of a plate of yesterday's ravioli) remain with the company to drain the swamp they created—ranged from $1000 to $6.4M.

& many of the recipients have already departed the swamp. (Dunno about you, but any place I’ve ever worked, if you leave a nanosecond before the bonus payout date, you’re out of the money. How is it that these guys not only destroy half the western world’s financial systems but get a performance bonus after they’ve left the swamp?)

Liddy’s appearance has been sparked by Congress waking up belatedly, realizing that the American public is mad as hell & not going to take it any more, & starting the process of passing legislation that will tax said bonuses (above $250K) at a rate of up to 90%. He announced, “We’ve heard the American people loudly & clearly these past few days,” & said the company’s asked recipients of more than $100K to “step up”, “do the right thing” & return at least half of the bonuses they haven’t really, you know, earned.

The company had been defending the payouts a variety of ways—the agreements were put in place a year ago, they were set based on 2007’s success rate & were necessary to retain these valuable staff members. Plus—this was a contractual obligation, you know, & AIG was just unable to do anything other than pay out the dosh.

Well, except for the fact that they did dick around with the arrangements—so they actually did have some wiggle room. When it suited their purposes.

Really—ignore the man behind the curtain.

It’s interesting, then, that only now, after Congress is threatening to take some actual, you know, action & tax the hell out of bonuses (which could affect all their other bailout buddies & sour the single malt down at the yacht club), does it become “the right thing” to return, grudgingly, a portion of the bogus bonuses.

Oh—there’s also the spate of death threats. That might have had something to do with Liddy’s crocodile contrition. (Not sure whether the threateners realize that they’d have to fly to Britain to get their garrotes around the throats of the guilty; this division is headquartered in the backwater of Wiltshire. But I’m sure that if someone went on Craig’s List to take up a collection, they’d get enough for the air fares.)

So we’ll have to see if these masters of an imploding universe know what “the right thing” is—even when someone draws them a picture.

I’m not holding my breath.