It seems the proposed bailouts of GM, AIG and a host of others are not all that popular right now; many in the US feel that the law of the jungle — of the free market — should prevail no matter how big the company. If you can’t survive, then you will justifiably become extinct — repercussions be damned. If Detroit and the surrounding cities turn into a 3 million strong refugee camp (there are camps in Fresno already), then so be it — at least that’s the current vibe. (Thing is, those refugees won’t stay put in Flint, if the Dust Bowl and Katrina were any indication.)
This sink or swim attitude was reinforced when the executives of AIG gave themselves bonuses this week — $165 million (or more) in bonuses — and GM executives flew on private jets to ask Washington for taxpayer money. These guys are all unreformed bubble heads — they claim that only they know how best to run their companies, and are therefore essential to keeping them afloat... but weren’t they the ones who drove their companies to bankruptcy? (Of course they’ll blame it on the credit crisis.) Besides, some of those who received these bonuses have already left for greener pastures — so much for the argument that the bonuses are incentives to stay.
It’s human (and often animal) nature to help those in one’s group who have fallen behind — and we instinctively look after those close to us. Occasionally we allow our friends and family to fail — maybe not too frequently, but once in a while — but more often we come to their aid, at least some of the time. But somehow this seems different.
For one thing, these guys have proven that they aren’t likely to change their behavior. They’ll drive their companies right back into the ground, because that’s their modus operandi. They’ve made no serious statements about changing their ways. None have said they’re sorry, or that they were wrong. Most of us say we should get rid of the bums and let someone else try to keep these behemoths afloat — if they deserve to be kept afloat at all.
The new head of AIG says in the NY Times: “We cannot attract and retain the best and the brightest talent to lead and staff the A.I.G. 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.” [Link]
In other words, his type of executives will leave to work for the highest bidder — the implication being that they have no loyalty to either AIG or to the taxpayer. They don’t really love their work — they just love the money and perks. They’re not even accepting bonuses based on performance! These guys don’t believe their own “market forces” bullshit when it comes to their pay — they expect a bonus no matter how bad they are at doing their jobs! Can I get a job like that?
One of the AIG execs recently wrote a resignation letter, reprinted in the Times, claiming that his department didn’t lose money; his department didn’t engage in questionable creation of assets; and his group worked really hard for years and deserves their bonuses. He felt they were being unfairly lumped in with the bad apples across the hall. They’re all being forced to pay for the unscrupulous behavior of some rogue departments.
I’m tempted to agree, but that kind of behavior was tacitly encouraged in the banking world. There were no reins, and anything that made money was OK; just like at Gitmo and Abu Ghraib, that reckless culture and behavior was part and parcel of the whole deal. If this guy knew a while back that others in the company were engaged in rash and risky behavior, why didn’t he blow the whistle or resign then?
Here in Europe, there will be a G20 conference in London in a couple of weeks. Like the AIG execs in Connecticut, London bankers have been warned that demonstrators may not take kindly to their strutting about in public. Therefore they might consider dressing down — in disguise, as it were — or not going out at all. It was suggested that AIG employees go out in pairs, and only in daylight hours. Bankers incognito — what a concept! That guy might look like a homeless person or a rent boy, but he’s a billionaire. The Masters of The Universe may think that going tie-less in khakis will do the job — but the internal memos also suggested that they think again and try harder, because people can still recognize a “dressed down” banker. Get your glam and punk gear out of the closet — now’s the time to sport it one last time.
