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March 26th, 2009
06:35 PM ET

Why the AIG bonus story matters to America

Program Note: Tune in to the CNN Money Summit on Friday at 11 p.m ET to hear Ryan Mack and others weigh in on the economy.

Ryan Mack
President of Optimum Capital Management

AC360° Contributor

Somewhere in Detroit, right now, there is a union worker sweating as he helps to produce cars for this country on the assembly line. He thought that his contract with the UAW was set in stone but, unfortunately, to his dismay it was renegotiated and he has just found out that his salary was cut in order to keep his job. As well, he is now overly concerned that his health care will be reduced when he retires and his retirement will not be fully funded. All around him he hears horror stories of those who retired without the promised full pension and he sees the numbers of workers around him decrease every month by the dreaded pink slip.

The market falters because of the failure of the banking system, and the government calls upon this worker for help. Bush, Paulson, Bernanke, and other members of the government explain to this worker that if the banks fail he will be negatively impacted. This same story is repeated by Obama, Geithner, Bernanke, and other government officials. This worker is a little reluctant at first but he eventually gets the bigger picture. He understands how the system works so he reaches into his pocket with his calloused hand and pulls out some of hard earned capital to give to the banks to support the system.

Soon after, on his way to work at 4:30 am, getting prepared to do a double shift, he picks up a cup-a-joe and a newspaper with a headline that grabs his attention. Headline: “AIG Gives $165 million in Bonuses!” He doesn’t really follow the news that closely but thinks to himself, “I wonder if they used my hard earned money to bail out AIG as well?”

When he gets to work, in the locker room, many of the co-workers are talking about the same story. They ask him, “Do you see that we bailed out THOSE GUYS only to help them get their million dollar bonuses!?”

Shocked at this injustice, the worker sits down to consume what he has heard. He begins to think of the numerous times the media called people “losers” who bought houses without proper information and how he has close friends who are in that exact situation- foreclosure. He thinks about how the president of his company was demonized for flying to Washington D.C. on a private plane and didn’t get any support…but those on Wall Street flew to Washington D.C. on the same private plane and were allowed to have $2 million carnivals, $1.5 million offices, $400 thousand weekend getaways, $50 million proposed planes, and millions of dollars to put their name on the side of a stadium. Their penalty for the most part was that they were given MORE of his money just to give out heavy bonuses!

He thinks about how he is fighting so hard just to keep his job and they are fighting to keep their bonuses. Feeling like the odds are stacked against him doubt enters his mind and he starts to question why does he get up so early if he is only going to get fired? He feels as if this country was designed for the rich to get richer, the middle class to shrink, and the working class to increase. “I was going to go back to school but what is the point?” He begins to leave work earlier, come in later, his production decreases, and his apathetic attitude worsens.

This worker isn’t by himself. Teachers, coal miners, waitresses, and many across America saw the AIG story and felt the same way. They reacted in a similar manner by decreasing production and losing hope of a brighter tomorrow promised to be fulfilled by the American dream if one works hard and believes. We see evidence of this by decreased production and record low consumer confidence.

In the grand scheme of things, the amount of AIG bonuses was very small compared to the amount of funds being thrown around to fix this economic crisis. However, the impact on the American people was quite large. Faith is one of the most important commodities to the American people. Is $787 billion enough to create enough jobs and restore this economy? No. However, the government was never meant to be the fix-all of our economic woes. The stimulus was only meant to “stimulate” the economy…provide the jump start that we need to get going in the right direction. The faith of the people is going to fill the void.

Faith is one half believing in a brighter future and the other half is acting on that belief. If the people lose hope of a brighter tomorrow they will not believe and consequently will lose their motivation to work as hard as they can for themselves, families, and community. In this economy it really is “all hands on deck”. We need EVERYONE to work as hard as they can to be as productive as possible. Without faith people will not go back to school or get re-trained to help solve this unemployment crisis. Without faith people will not purchase homes and stunt the decrease in home values to help fix this housing crisis. If we don’t have faith, we will see the level of apathy continue to rise while production continues to decrease causing this recession to lengthen.

It is time for all of us to do what American’s have done throughout this country’s brilliant history and answer to a higher calling. Just because something is legal does not make it right. I pray that one of the valuable lessons we have learned from this economic crisis is that we are all in this together, and all of our decisions should be made for the good of the commons, the people and NOT for the good of our pockets.


Filed under: AIG • Bailout Turmoil • Economy
soundoff (19 Responses)
  1. Chris, Ohio

    I truly fail to see the logic in these bonuses paid to AIG executives. After all, isn't a "bonus" supposed to be for work well done? Somehow I don't consider leading your company to the brink of insolvency, leaving it to teeter on the edge and requiring massive infusions of taxpayer money to keep operating to be "well done". These executive contracts need to be rewritten to include language restricting employee (and executive) bonuses including stocks etc., to only be paid when the company is profitable. NO bonuses should be awarded when the company loses money.

    Retention bonus – if an executive, or any employee for that matter, has acted in a manner to cause the company to lose money, there should be no bonus. Why would you want to keep an employee who has shown him/herself to be incapable of doing their job and/or making bad decisions? The answer to this should be a "no brainer".

    AIG should be required to return ALL bonus monies AND have any future expenditures approved prior to releasing funds. No more expensive junkets, celebrations, etc., especially on the taxpayer's money.

    March 27, 2009 at 8:28 am |
  2. Neo

    I think people DID take their money out of AIG, that's why they went crying to the gov't for the difference. (govt) failed to realize that.

    Businesses in general need to stop promising that we will be taken care of should something happen to their company. They obviously aren't insured (Who insured AIG btw?). Therefore give employees a stock option. It's almost illegal to promise someone that their company will still be thriving 30 years from now and thus they will be taken care of. Very few companies thrive. That assumption puts too many people in a bind. The only thing a business can gurantee is how it is doing in the moment. There4 compensate on that basis.

    March 27, 2009 at 6:15 am |
  3. Heidi F

    The fuel that fires these white collar thieves is the con and the abuse that they dish out. It makes them feel good about themselves. They have no regard and are not capable of feeling shame. The human characteristics that they once might have had as a small child have been extinguished out.

    The ones that gave back the "bonus" just did not want the government on there back. These people are really cowards. They have the same mentality as a bully.

    March 27, 2009 at 2:27 am |
  4. maureen

    This is when frustration turns to rage. My 401k has dwindled to a mere 40% of what it was two years ago. After 35 years of 50 hour weeks, missing my childrens basketball games, school plays and dance recitals I was ready to retire. I am outraged by the sheer irresponsibility of our business sector and our governement.
    Hope is nothing but a concept- a feeling and has no place in this conversation.
    Americans are clearly not who it used to be, since when do we put up with this crap and cry "We just need to have hope that everything will work out." We used to be proactive, we used to be leary about our government- that is what made us great- we were fighters and we didnt want our goverment to do for us- we wanted to do for ourselves. I am sickened by this- and to know that my children and grandchildren will miss out on being born in a truly great country.

    March 26, 2009 at 11:47 pm |
  5. mathew martinson

    Itsawsome that their making them give it back, but yet none of the earmarks that made goverment officials millions were ever concidered to be given back? well isn't that funny. MPM

    March 26, 2009 at 11:27 pm |
  6. Chris Warren Iowa

    If AIG would have filed chapter 11 would those bonuses have been paid out?

    March 26, 2009 at 11:25 pm |
  7. Chris Warren Iowa

    If our country is so wealthy then why are we selling our debt to China and other countries? If our country is so wealthy then why bail AIG type companies out MAKE THEM FILE Chapter 11 and restructure.

    March 26, 2009 at 11:23 pm |
  8. mike

    Helping
    Other
    People
    Endure

    March 26, 2009 at 8:03 pm |
  9. kaz

    After the fact I was more mad at Dodd, Obama and Geithner then the people who got the bonus's. For good or bad it was in their contracts.
    The fact that Geithner lied and Dodd lied and OBama lied about when they knew about the bonus and that they instructed Dodd to change the bill so that they could get the bonus is an outrage. Geithenr knew way back in the original AIG bailout. It is just a sham to say It was an oversight. To me they are the ones who let us down.

    March 26, 2009 at 7:59 pm |
  10. Judie Ferreira

    I recall my friend from Mexico telling me that the one thing the U.S. has to offer is "hope". That struck me profoundly then, as now when so many of us are losing 'hope'.

    March 26, 2009 at 7:53 pm |
  11. mike

    You can do it CNN, step up be the whistle blower. Tell America that we do not live in a Democracy. Tell America to read the Pledge, the Constitution, and the Bill of rights. You can do it CNN. Do not fear. You will be loved above all others if you are the outlet that helps save our country.

    March 26, 2009 at 7:52 pm |
  12. mike

    Can you respond directly to me CNN. Or will you just not post my responces? How is America going to survive this if there are no news outlets that will inform America of the truth?

    March 26, 2009 at 7:49 pm |
  13. Joe E.

    I think that just by moving our business although it would fix a little of it but it won't get rid of the bad seeds in the Wall Street good old boys club fold. There needs to be something higher than that done. I mean these people took our 401K's and basically gambled them away. Because it is not just the insurance end of this company that are giving these loosers bonuses with our money. When one of us gets fired we just get escorted out. We don't get a bonus or an exit perk. We just get broke. What could possibly make these people worth any more than us when it comes to a good honest days work. Whether it's with a pen, calculator or your hands. Good work is defined by your productivity. These people did not produce. Fire them all and escort them out the door so they don't take the staplers.

    March 26, 2009 at 7:44 pm |
  14. Larry

    Thw White House & Congress are trying to make this story go away as fast as possible so that their sins get overlooked.

    March 26, 2009 at 7:39 pm |
  15. Terry, TX

    The story matters to America...because we had Mr. Liddy screamed at by the very same people who inserted the authorization for them to get paid. This was all orchestrated by Geithner, Chris Dodd and President Obama. Now to unconstitutionally grab power over private business by the same people ...Geithner, Chris Dodd and President Obama. This is getting creepy.

    March 26, 2009 at 7:30 pm |
  16. Dave

    AIG – Quick FIx : Ask your insurance agent or broker if your policy is with one of the hundreds of AIG “companies” if so, CANCEL it! AIG is not the only insurance provider and if everyone would just cancel their policies and move their business to another company this would all be over very quickly. Yes, AIG would fail and their good employees would be soon hired by the new companies receiving all the transfer of business. The large risk exposures I hear on the news state AIG is the only underwriter in town. They have not talked to Travelers, Lloyd’s or Munich.

    The Feds better take a serious look at some other companies that are so “big” they cannot fail also because of their impact on the world economy. One BIG BOX retailer comes to mind rather quickly! If they were to fail the entire world ecomony would be hit as they control so much of it! Maybe it is time to implement size limits and over your shoulder regulations.

    March 26, 2009 at 7:14 pm |
  17. FREEDOM 76

    These are sad days. Government and media are targeting individuals. The Constitution is being ignored. Congress is breaking the law established by the Constitution. These proposed punitive taxes questionable on both moral and legal grounds. We expect and demand better from our elected officials. I pray cooler heads prevail and this behavior stops and is not repeated.

    March 26, 2009 at 7:09 pm |
  18. Chris MacDonald

    The word "bonus" is being tossed around an awful lot, these days, as if it always refers to some goodie given out as a reward for service above-and-beyond. My understanding is that in executive suites of the corporate world, the word "bonus" is a technical term that refers to several different kinds of payments, including payments in lieu of salary, retention payments, commissions, etc.

    It would be great if articles like this recognized that fact.

    It's understandable if the hypothetical union worker discussed above doesn't know the difference. But those who do know, ought to say so.

    March 26, 2009 at 6:58 pm |
  19. Chris Warren

    At his news conference on Tuesday night, President Obama was asked directly about the tent cities and responded by saying that it was “not acceptable for children and families to be without a roof over their heads in a country as wealthy as ours.”

    March 26, 2009 at 6:51 pm |