by Geezer Power
By Elana Schor – March 16, 2009, 2:52PM
I just spoke with Rep. Alan Grayson (D-FL), a freshman on the House Financial Services Committee who’s become a fast-rising star thanks to his tenacious advocacy for transparency in bailout lending by the Federal Reserve.
Grayson joined fellow Democrats as well as Republicans in blasting AIG for its refusal to give up hundreds of millions of dollars in bonus payments. He painted the government’s choice as a stark one, using the metaphor of treating a wound versus amputating a limb.
“It’s not clear to me at all that we’re taking the correct approach by allowing AIG to continue to operate, regardless of who owns it,” Grayson told me. “At this point, ownership is becoming an amorphous concern when comes to a company that borrows millions and millions without any prospect of paying it back. … Do we continue to allow the bleeding or not?”
Converting AIG from a ward of the state in all but name to an outright arm of the government would be a politically controversial move, given the level of apprehension in Washington over calls to nationalize failing banks.
But Grayson views the dilemma facing lawmakers as a common-sense decision: AIG executives who made more than a million dollars while running the company into the ground should immediately be fired. “The people who caused the problem are not going to be able to solve it,” he said.
While I generally agree with some of Grayson’s views, I do not believe these so-called bonuses have been accurately described. Some of the $400 million in what the politicians tell us are bonuses is actually deferred compensation, i.e., money earned in prior years. In the same way that an employer is barred from taking away earned vacation time, so too is Uncle Sam barred from taking away lawfully earned deferred compensation. Time for the politicians to step away from simply lashing out thru misleading theatrics.
I’m sure that Grayson’s view is that AIG should have never been handed one red cent. The exec’s were being overpaid by AIG because of political affiliations, which is of course their business, but money borrowed from the taxpayers should never be used for their enrichment.
The folks who were hoodwinked by such programs as “The Ownership Society”, Fannie Mae, and Freddy Mac have lost their homes. Some of them who don’t have charitable relatives are living in tent cities, casualities of the careless lending practices promoted by the Bu$h administration. Where is their bailout money?