⭐🔥 Click here to check Latest Celeb News & Celebrity Gossip in 2022! 🔥⭐
The Washington Independent
The Washington Independent

Has the AIG Bonus Backlash Gone Too Far?

In some corners, the anger over the AIG bonuses has turned into mindless populism that serves no purpose. That’s the viewpoint of The Washington Post, which

Thomas Dixon
News
Last updated: Jul 31, 2020 | Mar 18, 2009

In some corners, the anger over the AIG bonuses has turned into mindless populism that serves no purpose. That’s the viewpoint of The Washington Post, which weighs in today with a scolding editorial.

YESTERDAY, we were more skeptical than most about the “populist” backlash against the $165 million in bonuses that went to some employees of government-owned AIG. The events of the past 24 hours have only confirmed our view. We don’t love the fact that the men and women of this disgraced company are insisting upon the compensation they signed up for before the company collapsed into the arms of the taxpayers. But whether they are being greedy, or simply human, is hardly relevant to what is in the public interest now. AIG’s demagogic critics in both parties should keep that in mind.

There is something to the argument that it’s in the best interest of the taxpayers and their money for AIG to do what it takes to strengthen the company’s bottom line — and if it means giving bonuses, so be it.

But at the Financial Times, of all places, investment editor John Authers takes another view: It’s wrong to dismiss the outrage. It’s genuine, and it highlights the fact that bonuses themselves represent a market failure that needs to be resolved.

According to the model of grief outlined by Elisabeth Kübler-Ross, investors are in the second stage of a cycle in coming to terms with financial crisis. First comes denial. Next comes anger.

That anger is now everywhere and it is aimed at bonuses. While the UK tries to claw back the pension of Royal Bank of Scotland’s Sir Fred Goodwin, the US wants back the $165m paid in bonuses to AIG executives for last year. The amounts involved may be trivial given the scale of the crisis; the anger, however, is real and justified. It cannot be dismissed as cheap populism.

Going forward, Authers sees an opportunity to end the incentive structure that helped to create this crisis in the first place:

Basing rewards on one-year performance, with no ability to claw them back later, actively encourages the creation of bubbles. Pumping up gains on the back of excessive valuations, whether in internet stocks or credit, made total sense for anyone being paid this way.

When working for public companies, bonus recipients took capital from shareholders, who had no recourse when the profits backing the bonuses proved illusory.

While the going was good, the market failure was impossible to correct – anyone paying bonuses on a more long-term basis would have lost talent. But the current anger might force a resolution.

This might include a return to the private partnership model for investment banks. Partners would have a strong incentive to deter short-termist behaviour, and would be much more able to get their way than indirect shareholders.

Auther’s ideas are worth pondering, whether or not you agree. The Post, on the other hand, represents an elitist viewpoint that entirely misses the bigger problem. It’s true – the anger over the nation’s financial crisis often has descended into cheap populism, with banks and Wall Street as easy targets. But The Post and others dismiss as mindless an outrage that, while sometimes outsized, is based on something real — a system that has been deeply corrupted, to the detriment of just about everyone. You don’t have to be an elite to figure that out.

Brushing off the AIG backlash means more of business as usual. And people trying to save for retirement or college aren’t going to accept that anymore, regardless of how those in power try to rationalize it.

Thomas Dixon | He creates the ideal marketing experience by connecting online brands with their target audiences. He recently completed a research paper on consumer conversion and took part in a community project on SEO optimization. Thomas is working on his Bachelor of Arts in Communications and plans to intern in an online marketing department soon.

Related

EPA Administrator Addresses Concerns About Oil Spill Waste Management

At a hearing of the national oil spill commission today, Environmental Protection Agency Administrator Lisa Jackson addressed concerns about waste disposal from

EPA administrator defends allowing Florida to write its own water pollution rules

The EPA seal (Pic via sentryjournal.com) The Environmental Protection Agency has come under fire for its decision to allow the state of Florida to write its own water pollution rules (known as “numeric nutrient criteria”). EPA Regional Administrator Gwendolyn Keyes Fleming is now firing back, writing that the Agency commends the state Department of Environmental Protection for its draft of a proposed standard. A host of environmental groups filed suit in 2008, seeking to compel the EPA to implement a strict set of water pollution standards in Florida, arguing that the state was in violation of the Clean Water Act.

E-Verify Mandate Begins Today

The Obama administration today begins implementation of a new mandate to require all federal contractors to check the legal status of their employees to confirm

EPA administrator fires back at critics in op-ed

EPA Administrator Lisa Jackson (Pic by USACEpublicaffairs, via Flickr) EPA Administrator Lisa Jackson penned a new op-ed for the Los Angeles Times , criticizing House Republicans desperately seeking to undermine the authority of the agency they have dubbed a “job killer.” Arguing that the environment affects red states and blue states alike, Jackson writes that “it is time for House Republicans to stop politicizing our air and water.” As head of the Environmental Protection Agency, Jackson has faced harsh criticism from House Republicans and GOP presidential candidates who say the agency’s regulations are an undue burden on businesses that have to cut jobs simply to comply with clean water and air rules. Presidential hopeful Michele Bachmann  has pledged to end the EPA if she takes office. “Since the beginning of this year, Republicans in the House have averaged roughly a vote every day the chamber has been in session to undermine the Environmental Protection Agency and our nation’s environmental laws,” writes Jackson.

EPA administrator says federal nutrient criteria is a ‘myth’

In testimony given late last week, EPA Administrator Lisa Jackson said that false accusations about her agency’s numeric nutrient criteria to govern Florida waterways are proving to be a detriment to their implementation. # Testifying before the House Agriculture Committee, Jackson said her agency’s work was often “mischaracterized” and addressed several myths surrounding its work

EPA and California Near Deal on Fuel Efficiency Standards

Two weeks ago, the Obama administration raised fuel efficiency standards by an average of two miles per gallon -- a modest change that disappointed some

EPA: BP Has 24 Hours to Find a Less Toxic Chemical Dispersant

Thought the massive quantities of oil pouring into the Gulf of Mexico were the only major threat to the country’s southeast coastal waters right now? Think

EPA announces hold on nutrient standards if Florida can come up with own criteria

The EPA announced today that it is now prepared to withdraw a portion of its proposed numeric nutrient criteria (a set of standards governing water pollution in inland waters) and delay the portion related to estuarine waters, to allow the state Department of Environmental Protection to develop its own criteria. # From a statement released by the EPA earlier today: # EPA recognizes that states have the primary role in establishing and implementing water quality standards for their waters. Therefore, EPA is prepared to withdraw the federal inland standards and delay the estuarine standards if FDEP adopts, and EPA approves, their own protective and scientifically sound numeric standards

EPA Chief Overruled Calif. Waiver, Too

The Washington Post reported in March that EPA Administrator Stephen Johnson was overruled by the White House in setting an ozone standard. Now, documents

© Copyright 2022 The Washington Independent All Rights Reserved

Terms & Privacy | twi.news@washingtonindependent.com

⭐🔥 Click here to check Latest Celeb News & Celebrity Gossip in 2022! 🔥⭐