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Posted by on Mar 21, 2009 in Economy, Politics | 1 comment

AIG Bonuses May Be More Than Reported


It now turns out the big, fat, controversy-sparking bonuses given to bailed out company AIG may have been substantially more than the dollar amount that sparked a massive bipartisan controversy, the AP reports:

The attorney general of Connecticut said Saturday that he is asking American International Group Inc. why documents appear to show the company paid $53 million more in bonuses to its financial products division than previously reported.

Documents turned over late Friday show AIG paid $218 million in bonuses last weekend, higher than the $165 million that was previously disclosed, said the office of Attorney General Richard Blumenthal, who had issued a subpoena.

Bonuses were “showered like confetti” on AIG employees, Blumenthal said.

AIG had previously disclosed that the company was contractually obligated to pay a total of about $165 million of previously awarded “retention pay” to employees in the financial products unit, based in Connecticut, by March 15. It said another $55 million in retention pay had already been distributed to about 400 AIG Financial Products employees.

That total of $220 million is about $2 million more than the figure disclosed Friday, and Blumenthal said he was seeking clarification from the company on whether the new papers differ from what was previously reported.

There could be some explanation that is forthcoming, but this is one more indication that short term prognosis is that Obama administration’s recovery plans are in for a bumpy ride. Already a bipartisan mob which includes well-fed politicos of both parties (whose hands share the dirt in what brought the country to the controversy over the bonuses) has been figuratively storming the AIG, torches in full flare. The danger is that it’ll set Obama’s long agenda on fire. Salon’s Walter Shapiro puts it this way:

But the reality is that apolitical populism–a spasmodic outpouring of ideologically incoherent rage–could easily drown Obama’s inevitable request for more bank bailout funds. The White House, according to insiders, is very concerned that pitchfork-wielding voters are already raging against any future bailouts of the banking industry or even Detroit. Mellman, whose polling clients are on Capitol Hill, says, “People are angry. And the angrier they get, the greater are the limits to political action on behalf of the banks.” As a result, the contours of Tim Geithner’s rescue scheme may not matter, though recent history suggests that the details will only be comprehensible to those with Ph.D.s in Rube Goldberg Studies. Rahm Emanuel’s ability to browbeat recalcitrant House Democrats may not matter. Nor will Harry Reid’s likely fecklessness in the face of a Republican filibuster

This week Obama will be busy indeed: an appearing on 60 Minutes, and then another prime time press conference carried by all (unhappy-to-lose-advertising income) networks. Can Obama channel the “terror” and rage? Or is he on the brink of being considered one of “them” by many voters who continue to be outraged as they read about the big bucks who went to the executives of a bailed out failed company when they worry about how they’re going to feed their kids, keep their jobs and keep their homes?

As they read about the Postal Service laying of 3,000 employees, how will this news — and the likelihood of more unfavorable news about AIG — play on the nation’s voters and steer the political culture? And is Obama adept enough to — as he often says — seize “this moment” or will he be short-circuited by it?

New York Times columnist David Brooks looks upon the focus on AIG as being symptomatic of a “perverse cosmic myopia.” He writes about general world myopia, but referring to Obama, the political class and AIG he writes:

In times like these, you’d expect prudent leaders to prepare for the worst. After all, the pessimists have recently been vindicated by events. But that’s apparently too painful to think about. In normal times, leaders like to focus on the short term at the expense of the long term. But now the short term is really confusing, so leaders take refuge in projects that are years or decades away.

The president of the United States has decided to address this crisis while simultaneously tackling the four most complicated problems facing the nation: health care, energy, immigration and education. Why he has not also decided to spend his evenings mastering quantum mechanics and discovering the origins of consciousness is beyond me.

The results of this overload are evident on Capitol Hill. The banking plan is incomplete, and there is zero political will to pay for it. The president’s budget is being nibbled to death. The revenue ideas are dying one by one, while the spending ideas expand. By the latest estimate, the health care approach will cost $1.5 trillion over 10 years and the national debt will at least double, while the Chinese publicly complain about picking up the tab.

The Obama administration is at least distracted by important things. The Washington political class has spent the past week going into made-for-TV hysterics over $165 million in A.I.G. bonuses. We’re in the middle of a multitrillion-dollar crisis, and our political masters — always willing to throw themselves into any issue that is understandable on cable television — have decided to risk destroying the entire bank-rescue plan because of bonuses that account for 0.001 percent of the annual G.D.P.

Cartoon by Eric Allie, This cartoon is copyrighted and licensed to appear on TMV. All Rights Reserved. Unauthorized reproduction prohibited.