Monday, March 23, 2009

AIG and the House of Thugs

The US House of Representatives actually caved in to the rising clamor of populist rhetoric and passed some kind of bill that would ostensibly tax AIG bonuses at 90%.

I only hope that the world sees this as the grandstanding which it is, not as a true willingness to use the United States Tax Code not just as a tool of social policy but as a device to enforce the Members’/Thugs’ code of ethical behavior.

The AIG bonuses do upset anyone, me included, at first hearing. But calmer people think about it a bit and reflect on why they perhaps make sense. There is also a long history -- well, several months -- of Fed and/or Treasury employees dealing with this issue. Our President and his Treasury Secretary would be well advised to stop fueling the populist fires.

Let’s see if the Senate can put the damper on this craziness. If not, Obama’s chickens will have come home to roost.

2 comments:

Curious Tuckie said...

Putting the taxation issue aside, your post hints that the AIG bonuses may make some sense? Is there any economic logic for paying them?

If AIG's management is truly acting in the interest of shareholders (regardless of the fact that the US Government is the main shareholder), shouldn't they withold the bonuses and replace these people with competent ones?

And more broadly, how can Wall St. justufy paying out $18B in bonuses -- the fourth highest ever -- in a year that bankrupted the industry, and arguably the global economy. Isn't this some sort of market failure?

Silent Eddie said...

[crickets]