Peter Tulupman, an AIG Press flack, came to this site in December and January. He was trying to build good will towards a failed firm. He was trying to distract us from the fact that his bosses were cashing in bailout welfare checks to pay for their lavish lifestyles. He repeatedly claimed that AIG Executives were receiving no compensation or bonuses. Today, we found out he lied.
On January 13th, Tulupman claimed that AIG had an understanding of issues surrounding executive compensation. Tulupman also said that AIG would be careful to limit executive compensation as long as it was on the public dime. According to the January version of Tulupman, paying back the government--and not executive bonuses--was AIG's priority:
"We fully understand the concerns surrounding executive compensation, which have been capped at the highest levels of AIG. Our new Chairman and CEO, Edward Liddy, will receive an annual base salary of $1 for 2008 and 2009. He will not receive a bonus in those years. Also, AIG’s top seven officers will not receive annual bonuses for 2008 performance or salary increases through 2009, and AIG’s top 60 managers will not receive salary increases through 2009...
no 2008 annual bonuses and no salary increases through 2009 for AIG’s top-seven-officer Leadership Group; and no salary increases through 2009 for the 50 next-highest executives, in addition to other bonus, severance and retention award restrictions."
Many, including myself were very skeptical of Tulupman at the time. After all, out here in the real world we're witnessing economic devastation. Local parks are now turning into Bushvilles and Cheneytowns--tent cities of ruined dreams. In an America where the use of food bank services is through the roof, we want to think that everyone in this country is tightening their belts and making sacrifices.
But the Wall Street luxury addicts who created this mess with unrestrained greed just can't give up their ridiculous lifestyles. They live in ridiculous penthouses. They spend more on Sunday brunch than most Americans spend on food in a six months. Then their hacks like Jim Cramer say that we have to take care of them first, and then we can get around to vital issues like health care.
Why? So Mr. Cramer can buy a bigger house? So he can get better season tickets his beloved New York Jets? So he can acquire an even faster car? So he can purchase a yacht? Are these things really worth the lives of uninsured Americans? The answer is absolutely not.
But Wall Street doesn't get it. They don't get that the American dream is not obscene wealth, but merely a college education, a good job, a three bedroom house, two kids, and a Shoney's brunch after Church on Sundays. To the lions of Wall Street, they are living the American dream. Any attempt at reigning in the excesses of their lives is attacking the existential notion of the American dream. Hence, they call the President a "socialist" after his modest attempts at reining in excesses.
And so they claim that the system requires them to pay out hundreds of millions of dollars in bonuses as Americans starve. Even the President's chief economic adviser backs them up on this:
"Larry Summers -- President Obama's top economic advisor -- chimed in, saying, "We are a country of law. There are contracts. The government cannot just abrogate contracts."
Of course, any good contracts lawyer would tell Mr. Summers that contracts are written to be broken. Further, what exactly are all those foreclosed homes? They are, of course, broken contracts.
But an executive contract which calls for a bonus just can't be broken. After all, penthouses might be vacated, yachts might sink, and $800 brunches might be empty if such a horrendous thing happened. And meanwhile, out here in the real world, Americans face the prospect of lost retirements, lost homes, lost jobs, and lost spirits.
Robert Reich eloquently writes of a government with no options, and an AIG which is accountable to no one. And perhaps there is nothing President Obama can do. Perhaps this is the last pile of reeking sewage to be found under George W. Bush's rug. But I think there is something the President can do: raise marginal tax rates on bonuses over $100,000 to 99%. It'd effectively eliminate the Wall Street shell game that AIG and the other queens of bailout welfare like to play.
Update: I go for a walk and to buy a cheap sandwich and return to see my diary on the top of the rec list. Thanks for brightening my day.