Listening to the hackneyed incantations of House committee members this morning on the AIG (“Arrogance, Ignorance, Greed” — there ought to be a “C” for “corruption”) bailout, I kept waiting for someone to say the obvious. No one did, so here it is.
To everyone asking why all those execs got the big bucks bonuses, the answer has to do with the way the corporate world works. They had nothing to do with merit, of course. So why keep asking the question over and over about rewarding the folks who created the mess.
Let’s posit in a sudden lightning-bolt of insight that AIG had decided not to grant bonuses. Say one of their executives, or the guy at the top, decided to send the memo: No bonuses, guys. We screwed up. You don’t deserve ’em. Now get back to work.
They then have one helluva mess on their hands.
People are mad. People quit. People talk. And inevitably, one and then maybe more people blow the big effin’ whistle. They decide to leak some emails to the press. They slip their local congressman or attorney general a fat little file crammed with “interesting” docs. They don’t even have to go public. It can all be done in a way to ensure their identity is kept out of harm’s way.
Now if you’re an AIG manager, you don’t want that to happen with the people below you. And if you’re the top dog running the show, you certainly don’t want it to happen to ANYone in the company. For one thing, you guarantee you don’t get to keep YOUR bonus. Hey, you might even go to jail.
But there’s an easy way around it: You just give everyone bonuses! That way, they’re all in on the fix. They can’t exactly blow a whistle stained with their own fingerprints.
So the real reason all those bonuses got awarded is, simply, to pay everyone off.
They were hush money. The sooner the press or Andrew Cuomo or Barney Frank says this, the quicker we can get to the bottom of the mess and move forward to, in Obama’s words, ensuring that it never happens again (just like the Keating Five and Enron and…)