Friday, March 20, 2009

Outlawing greed

In the frenzy over the huge bonuses paid to AIG executives recently, Congress has jumped on the bandwagon without thought or care. As we once learned the hard way, it's virtually impossible to legislate morality...be it alcohol, sexual conduct or greed.

The outrage over the thousands and thousands of dollars being paid to men and presumably women in a division that may be largely responsible for the company's collapse is certainly understandable. To most people making a base salary in the low five figures or even higher, the sheer size of these bonuses is mind-boggling. To those who've lost jobs or fear losing their jobs, to think that anyone at a failing company now being supported by taxpayer dollars is receiving any kind of bonus seems ludicrous.

AIG executives may be tone deaf when it comes to hearing public perception of their actions, but Congress obviously is not. The new tax code provision which was written in haste to try to recoup the money is political grandstanding at its worst...and both parties are guilty of it. Laws written in haste are seldom effective and quite often wind up dragging through the courts before being tossed right back out.

Years ago, here in Miami, a group of activists tired of hearing so much of the community's business being conducted in Spanish, wrote and drove through an English-only ordinance. No one thought it through. No one considered the long-term ramifications. The goal was simply to immediately halt the erosion of English. As a result, however, the airport couldn't post signs in any language other than English. Imagine the chaos at an international airport. The hospital at which I worked wound up with return visits from many newborns, because the homecare instructions couldn't be written in the mother's native language, whether Spanish or Creole. As a practical matter, the law caused as many problems as it solved, because it wasn't written with due diligence.

I fear we're heading down that same path with the knee-jerk reaction on Capitol Hill. Perhaps if we and our Congressmen all took a deep breath and actually examined what happened, there's another far more rational way to accomplish the same goal. AIG's CEO, Edward Liddy, whose own compensation for trying to fix the mess created by others, is $1 per year (yes, $1.00) has already asked for and received commitments from some of the executives to simply return the money. What a novel concept! Hold an actual conversation and negotiate a solution! Amazing.

The most worrisome thing to me in all of this is the tone of some of those who've seen fit to email the company. Vocal outrage is one thing. Death threats are quite another. While it seems egregious that these executives received such huge sums of money from a taxpayer bailout, the reality is that they were entitled to it by contract. It wasn't handed out on a whim. I do think there should have been negotiations before those checks were ever written to try to negate the contracts, just as is happening in the auto industry, but I can't blame an individual for depositing a check that was written to them for an amount to which they were contractually entitled.

Someone should have sat them all down and said, "Here's where we stand. Public perception of this is going to be outrage. This is taxpayer money. We have to use it in an appropriate and meaningful way to save AIG. You need to defer or cancel any bonuses until we are on sound financial footing and the taxpayers have been paid back." Bring in the lawyers. Make it all nice and legal.

And keep Congress the heck out of it.

Sherryl Woods

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