We're all angry about the bonuses at AIG and on Wall Street but I say, "Enough about the bonuses!" Going back to the day several weeks ago when Wall Street announced $18B in bonuses, we've been listening to the outrage and feeling more and more angry. Remember when Obama called those bonuses "irresponsible" just a couple of weeks into his presidency? Well, AIG then announces bonuses of $165M this past week and we've reached the tipping point.
Well I say, enough already. This debate is topical and we all can relate to it, but that's exactly why it's been blown out of proportion. In the grand scheme of things, these bonuses are small rounding errors in the whole mess, but it really puts things in perspective. When the news is dominated by multi-billion dollar bailout packages nearly every week for one thing or another, the money starts to lose it's meaning. How many zeros are in a trillion? So when we think about some executive at AIG or some Wall Street firm bringing home a $5M or $10M bonus, we get angry. Why should they get paid when their companies got us into this mess?
What we should really be angry about is that Congress has been acting just as irresponsibly, and in the name of fixing things! How can Congress honestly get on their high horse and grandstand when they didn't even take the time to read the bill that gave AIG the discretion to determine the amount of these bonuses? You can't have it both ways. Regardless of your political leanings, Congress is being exposed for how irresponsibly they spend our money. It's really that simple.
The bottomline from my perspective is that we need continued action by Treasury and the Fed to fix the financial system. Let's keep Congress out of the spending business and allow our companies to make their own decisions on how to allocate capital. Executives in financial services make a lot of money. Unless the government plans to nationalize the banks (and they don't), we're just going to have to let great CEOs like John Mack and Jamie Dimon make those decisions. Quite frankly, I'd rather have those two guys making more decisions, and I hope this uproar over bonuses doesn't empower Congress to really screw things up.
What do you think? Do you think that capping bonuses or having AIG executives pay them back will make any positive difference? Could it actually have huge negative consequences?
