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What Happened? The AIG Bonus Kerfuffle

By Brian | March 17, 2009 | Share on Facebook

[The third in a series of “What Happened” posts that endeavor to explain the causes and impacts of the Current Financial Crisis(TM) – the first two parts are available here and here.]

Today’s discussion is inspired by AIG’s payment of retention bonuses last Sunday, March 12, 2009, and the stinging reaction it engendered from Barack Obama, Barney Frank, Ben Bernanke and others. As before, those who are bored by such things should move along quickly and quietly.

First, the standard disclaimer:

This comes from me and from me alone. While I

Topics: Money Talk, Political Rantings | 10 Comments »

10 Responses to “What Happened? The AIG Bonus Kerfuffle”

  1. Ilya says at March 18th, 2009 at 5:43 am :
    All I can say is I wish I could express myself on this subject as lucidly as you do, Brian. But then, I don’t have to. I can always use your rants as the expression of my own thoughts. Thanks!

  2. Brian says at March 18th, 2009 at 8:08 am :
    Thanks, Ilya. I appreciate the endorsement, especially from someone who also works in the industry and understands this stuff well…

  3. Konstantin says at March 18th, 2009 at 9:21 am :
    Thank you for the article Brian. When will the people stop counting other people’s money?

  4. FamilyGreenberg.Com - AIG - One more thing… says at March 18th, 2009 at 5:05 pm :
    […] What Happened? The AIG Bonus Kerfuffle […]

  5. Clancy says at March 24th, 2009 at 7:10 pm :
    Thanks so much for this “series”. I’ve never paid much attention to economics and now that I actually want to, I didn’t have a clue where to start or what had happened. This was a good “base” for me to start from. Thank you for taking the time to write them. :)

  6. Jeff Porten says at March 25th, 2009 at 10:01 pm :
    Coming late to this parade, but… you’re kidding, right? The last time I saw this idea floated, it was a Saturday Night Live sketch parodying Ross Perot.

    Good point made re nationalization, although a bit overblown and dismissive. Will refute at great length sometime shortly.

  7. Brian says at March 25th, 2009 at 11:39 pm :
    No, actually, I’m not kidding. Let me ask the question in a way that’s more palatable to your way of thinking: George W. Bush got paid his full salary for each of his eight years. Do you think he earned it?

  8. Jeff Porten says at March 27th, 2009 at 11:52 pm :
    Sure do.


    Let’s put it this way: anyone who is president and who needs his salary to incentivize a good job should be impeached immediately.

    Hence: there are no requirements to fulfill to get paid for the job. You’re elected, you get paid until impeached. That’s the step we skipped, but I’ve got no problem with his salary.

  9. Brian says at March 29th, 2009 at 8:22 pm :
    anyone who is president and who needs his salary to incentivize a good job should be impeached immediately.

    Well, two thoughts here:

    First, impeachment doesn’t work that way. Impeachment is for when Congress accuses the President of committing a crime. How he is or is not incented is not a crime by any stretch of the definition.

    Second, I was not suggesting that Bush (or any other President) was motivated solely by his salary. The salary is a quantitative way to measure progress against a set of metrics. Right now, the only external incentive (read: other than self-motivation, love of country, etc.) a President has to do a good job is re-election, and in the second term, there really is none. Have you noticed how both Clinton and Bush’s troubles really accelerated in their second term?

  10. Jeff Porten says at March 30th, 2009 at 1:28 am :
    Yes, I used “impeached” metaphorically to mean, “anyone who is president and who would be the least bit affected in their actions by a pay-for-performance structure has no business serving in office.” Sorry, I presumed that was obvious.

    Last time I checked, W just got a $7 million bonus for his presidential work in the form of a book deal. I’m not sure that I’ve ever heard of an ex-president going hungry. So the idea of using salary as a presidential incentive strikes me as batshit crazy.

    As for your interesting misreading of presidential history: Clinton’s troubles started in 1994. Bush’s troubles started when he invaded Iraq, although it took the country a few years to catch up to the obvious mistake it was to the contemporaneous few of us who said so.

    That said, I do agree with you about the problems of a lame-duck presidency, which is one of several reasons why I oppose presidential term limits — or term limits for any elected office.