AIG Bonuses - Almost a Good Idea
While away I had no internet connection, but I did have a T.V to watch CNN on. In typical CNN style, as soon as the AIG bonus scandal hit they were all over it for 24 hours each day (seriously). I do agree with CNN that it was very shady that AIG executives got paid out such extreme bonuses ($165 million in aggregate) with taxpayer money but at the same time you must understand that top level executives need bonuses or else they will move on to a company willing to pay out the appropriate bonuses.
In order to keep their top level executives, AIG paid them. Right now AIG needs talent to try to get their ship afloat and without them there isn’t much hope. One could argue these top level executive got AIG in this mess in the first place and that they should not be paid anything, but if AIG lost their top-level employees they would be in more trouble and therefore the U.S. financial system also would be in more trouble.
New legislation should not take away a firm’s ability to pay out bonuses if it has received taxpayer dollars, but it definitely should stipulate caps. I am outraged at the excessive bonuses these executives (in my mind criminals) received, but bonuses are necessary to run a successful company as you need the best of the best, especially when a company is in a state of turmoil. So yes, stipulate bonus payments in legislation regarding institutions who receive taxpayer dollars, but do not take them away completely.
Also, to those that believe firms such as AIG should just fail and not receive any bailout funds, then prepare to go into a deeper recession and harder financial times. These institutions have unfortunately become integral to the whole financial system and there failure would create a domino effect wiping out many innocent people and firms, which would be a disasterous. Yes, It is extremely frustrating to see these companies receive such large bailouts, but given the circumstances we face, it is necessary. Hopefully, in the future one firm will not hold so much power that if it fails it threatens the entire nation. Good luck to President Obama on that.
