The AIG bonus issue has me on the defensive – and all because I was silly enough to open my mouth in support of the rule of law. I opined out loud that it seemed very heavy handed for any government, let alone the US Federal Government to try and overturn existing contractual arrangements – a true slippery slope argument if ever I saw one.And then the flood gates opened. Most of you thought I was wrong. The malfeasance at AIG being so great that anything short of the Public Stocks of Victorian England would be too good for the executives who got retention bonuses.
So let me clarify – I agree that the way AIG was run into the ground is amongst the most heinous of corporate acts. I don't believe retention bonuses should be paid, or indeed any bonuses. But if you were lucky enough to get some sucker to agree to such a term in your contract then it has to be honoured.
I am pleased that the US government appears to have found a way out – by deducting the bonus amount , $160m, from bailout funds being paid to AIG. After all, it is the US government money keeping the company afloat and it is entitled to say what should be done with it. The old phrase He who Pays the Piper...comes to mind.
A simple solution that preserves the rule of law – decisions have consequences and the result of this one leaves the mess where it belongs: With AIG and its ill-deserving employees.
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