The A.I.G. Ripoff

President Obama has vowed to fight A.I.G. over its use of $165 million in bail-out money to reward the very people who put A.I.G. in the hole. Am I a hypocrite for pointing out a precedent that would allow A.I.G. to not pay the contractually guaranteed bonuses?

In 2005, the predecessor to Loose Feathers carried an opinion piece by my alter ego, concerning United Airlines pensions. A Federal judge allowed United Airlines to nullify their contract with retired employees because United Airlines said it could not afford to pay their pensions. As that piece points out, United Airlines mismanaged their employees’ pension fund, leading to the shortfall. United, and other airlines, received Federal bail-out money after 9/11 dampened the public’s enthusiasm for air travel. At the time, I complained about the judge’s decision. Now I’m complaining about A.I.G.’s bonuses. What’s the difference?

Simply put, United never claimed their former employees were inept, greedy, or just plain stupid — whatever epithet applies to A.I.G.’s managers. Their employees faithfully put in their time, and had every right to expect their former employer to faithfully pay their pensions.

There may have been corporations managed worse than A.I.G., but it’s pretty hard to square the need for billions in taxpayer bailout money with corporate largess to the guilty parties. That’s the difference. In what universe does it make good business sense to reward people for running the corporation in the ground? Where’s the incentive to succeed? A.I.G. managers prospered handsomely when the company appeared to be doing well. Now it’s proven they weren’t doing well at all, it is nuts to pay them bonuses. Let them take their lumps along with the stock holders and the rest of the tax-paying population that is suffering for their terrible mistakes.

Obama needs to find a judge to tell A.I.G. it should not have paid those bonuses, and must refund the money (I’d rather they made the employees give it back). You-know-who in Texas can probably suggest a few candidates.


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