Obama: Channel Anger at AIG to Fuel Reform « The Washington Independent
In an impromptu press conference today on the White House lawn, President Obama tried to channel anger about AIG multi-million dollar bonuses towards reform of the financial system to make sure this sort of situation doesn’t happen again.
People are “rightly outraged” about the AIG bonuses that were paid to executives notwithstanding the firm’s huge losses, Obama said, but “just as outrageous is the culture these are a symptom of.” He cited a culture that rewards “excess greed and risk-taking.”
As we get out of this crisis, as we work towards getting ourselves out of recession, I hope that Wall Street and the marketplace don’t think we can return to business as usual. The business models that created a lot of paper wealth but not real wealth in this country can’t be the model for economic reform. We have to move beyond a constant bubble-bust mentality. We have to be thinking about economic growth … increasing our productivity across sectors. Shareholders and boards of directors have to hold executives more accountable for their compensation scales. The fact that these guys are looking for bonuses after having run down AIG raises the question of why were they making this kind of money beforehand? This kind of culture has to change.
Obama said he’ll be working with his economic team — including Treasury Secretary Timothy Geithner, who he expressed full confidence in — to develop “smart regulations” so the government never has to step in again.
Although he assumed responsibility for having to clean up the situation now, Obama took a not-so-subtle swipe at Republicans who’ve long resisted any regulation of executive pay.
A whole bunch of folks now are feigning outrage about these bonuses, but a year or two ago they said we should never meddle in these compensation plans. That it’s part of the market. Now suddenly they’re outraged. …
My hope is that one of the lessons we learn here is that putting smart regulations in place is important. These things are not anti-market, they’re pro-market.