AIG is facing angry unemployed mobs, which is exactly why they deserve gobs of bonus money, argues the NYT's Andrew Ross Sorkin in the least persuasive case possible for rewarding failed finance executives.
Most defenders of the $165 million in taxpayer funded bonuses to AIG executives argue that a contract is a contract is a contract, and that to simply tear up existing bonus agreements because the U.S. has pumped $170 billion into the company would be unfair. But that one doesn't hold much water for the rabble sharpening their guillotine blades, and it's gotten so bad that one AIG executive told the Washington Post that the "mob effect" is "putting people's lives in danger."
A.I.G. built this bomb, and it may be the only outfit that really knows how to defuse it. A.I.G. employees concocted complex derivatives that then wormed their way through the global financial system. If they leave - the buzz on Wall Street is that some have, and more are ready to - they might simply turn around and trade against A.I.G.'s book. Why not? They know how bad it is. They built it. So as unpalatable as it seems, taxpayers need to keep some of these brainiacs in their seats, if only to prevent them from turning against the company.
In other words, they have us by the balls, AIG is a Doomsday Machine, and its executives are monacled villains in some mountain redoubt ready to set it off. Except: These people are some of the most staggeringly incompetent financial executives in the history of money. Sorkin seems to think they're evil capitalist geniuses whose cunning knows no bounds. If that were true, they probably would have just made AIG a successful business, no?
But also, Sorkin says, they deserve the money because their jobs really suck:
"The jobs are terrible," said Robert M. Sedgwick, an executive compensation lawyer at Morrison Cohen who represents a number of employees of banks that have taken government money. "You have to read about yourself in the paper every day. These people are leaving as soon as they can."
Yes, the consequences of their failure have brought such condemnation and public ridicule that it's only fair to reward them for that very failure.
And look out, Sorkin says: The AIG execs are hot properties, ready to jump ship if they don't get their payout.
Let them leave, you say. Where would they go, given the troubles in the financial industry? But the fact is, the real moneymakers in finance always have a place to go. You can bet that someone would scoop up the talent from A.I.G. and, quite possibly, put it to work - against taxpayers' interests.
It may very well be true that "the real moneymakers" always land on their feet, and could conceivably jump ship and destroy their former employer, thereby necessitating more bailouts. Good thing, then, that nobody working for AIG has any clue how make any fucking money.
[Photo, of Irish rioters not (yet) AIG offices, by Harry Crews]