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AIG Bonuses Feed Existing Populist Sentiment

AIG Bonuses Feed Existing Populist Sentiment

Finally, an issue conservatives & liberals can agree on.

Every now and then an issue transcends the toxicity of the American political divide.  Both conservatives and liberals are expressing outrage over AIG’s decision to pay out $165 million in retention bonuses to the insurer’s executives has developed into one such issue.  In this case, outrage over AIG’s actions is heightened by an already existing populist atmosphere related to the worldwide financial crisis in general.

If AIG executives think that this issue is going to blow over, they are sorely mistaken.  Perhaps they should consult the producers and on-air personalities of CNBC.  After last week, they know better than most that the public is growing intolerant.

Of course, I’m referring to the cable financial news authority getting its pants pulled down on The Daily Show with Jon Stewart.  It was fascinating to watch.  It started March 4th when Stewart aired a segment highlighting CNBC’s journalistic ineptitude. Between then and last Thursday, Stewart’s criticism, and CNBC’s exception to it, came to dominate straight news coverage, building to a climax when the network’s personality, Jim Cramer, appeared on the Comedy Central “fake-news” program.

During the interview, Stewart articulated the behavior of the banks before the collapse and the reason behind the rise in populist sentiment among Americans.  He claimed there were essentially two markets. The first is where Americans are encouraged to invest for the long term.  Stewart, aptly, went on to conclude:

There’s this other market; this real market that is occurring in the back room where giant piles of money are going in and out and people are trading them and it’s transactional and it’s fast … What it feels like to us — and I’m talking purely as a layman — it feels like we are capitalizing your adventure by our pension and our hard earned money…

The Stewart v. Cramer/CNBC story was all over the mainstream media last week and over the weekend.  That’s somewhat ironic in that Stewart’s message was an indictment of the media as a whole, as well as the banking industry.  Jim Cramer was merely its poster boy.  A March 15 post at the Oxdown Gazzete summed it up well:

The war against the big banks began Thursday night, when The DailyShow’s Jon Stewart nuked the ethical pretensions of the entire industry and its media shills…

Using CNBC’s Jim Cramer as both Exhibit A and an accessory, Stewart laid out a devastating indictment of the industry and CNBC’s facilitating, coverup role. As Cramer fumbled to defend himself and CNBC, Stewart showed clip after clip of Cramer describing stock price manipulation, insider scams, and how cool and easy it is to fool federal and state regulators.

And in the process, the “comedian” as Cramer tried to belittle Stewart with Joe Scarborough’s help, not only humiliated Cramer; he showed by contrasting example how shallow and inept most of the MSM has been in covering the financial scandal.

AIG should treat this as a warning.  When news coverage goes viral like the Stewart/Cramer kerfuffle, it inevitably stirs up politicians and the news media.  The media reacts twice:  first for being called out publicly for its poor performance.  Secondly, and almost certainly the more powerful of the two reactions, they feed off the public outrage regarding big bank bailouts.  Bank on it, the AIG bonuses issue will lead every newscast for the next several days.

Politicians react similarly to the public outrage generated by The Daily Show bit.  Of course, they share in the blame of the financial meltdown, having let their regulatory guard down over the past three decades.  However, politicians relish in the opportunity to be the shouters, rather than the one’s being shouted at.  They can’t resist an opportunity to be seen engaging in the populist charge while banks are in their constituents’ cross hairs.

Tell me what you think.  As we’re discussing AIG’s “retention bonuses,” I’d love to hear from someone willing to rationalize the payment of incentives to individuals who failed so miserably in their work.  Keep in mind, however,  we can’t forget why they were bailed out by the government in the first place; the reason being, AIG was so intertwined with other financial institutions around the world that their failure would wreck the entire financial system.  That fact has not changed.

For now, I must admit that I’m enjoying the show.  The mere fact that many people, occupying opposite ends of the political spectrum — those whom ordinarily would foam at the mouth at the sight of one another — are now engaged in a common goal.  AIG, and other bailout recipients, would be wise to heed the message of this convergence.  Any scandal outrageous enough to distract from the culture wars, as Frank Rich noted over the weekend, is not going to end well for those associated with it.

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91 comments

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5:37AM PDT on Mar 31, 2009

If this company was "to big to let fail" then it was too big and should be broken up into little pieces like Bell Telephone was.
If "we" now own 80% of the company then we should fire top management and not reward the.
Use part of this company to buy up all the "toxic assets" from banks so they can get back to lending and the good parts of AIG can continue on with it's business and retain most of it's workers...just not it's management.
If you agree, write your congress person:
www.congress.org

3:46PM PDT on Mar 29, 2009

"I went by the field of the slothful, and by the vineyard of the man void of understanding; And, lo, it was all grown over with thorns, and nettles had covered the face thereof, and the stone wall thereof was broken down. Then I saw, and considered it well: I looked upon it, and received instruction. Yet a little sleep, a little slumber, a little folding of the hands to sleep: So shall thy poverty come as one that travelleth; and thy want as an armed man." - (Proverbs 24:30-34)

4:34PM PDT on Mar 28, 2009

Blaming never accomplishes anything good. We all make mistakes, let's just acknowledge the mistakes and not the blame.

1:53AM PDT on Mar 27, 2009

This all began even long before Clinton! Study some reliable history and you will gain a better understanding of where any blame belongs.

7:45PM PDT on Mar 26, 2009

Janice WAKE UP and do your home work... RESEARCH... Clinton started this MESS!!!! Place the blame where it belongs!!!

4:03PM PDT on Mar 25, 2009

I agree that they should never have gotten away with what they did. Contracts can and should be broken when their agreement NEVER coincide with the welfare of the people. I understand that the contract was not LITERALLY with the people of the U.S., BUT ultimately AIG's contract devastated the American people, so in that regard, we should be able to argue, "NO MEETING OF THE MINDS." The American people NEVER agreed to get financially screwed if AIG F____ked up. The people should not take the fall for this. I say, deny those cockroaches any benefits, and rescind any agreements that hurt the American people.

Also, I agree with the gentleman who mentioned a democratic socialism in America. I'm all for it!!!! If we keep going the way we are, capitalism will destroy this country b/c the wealthy are out for themselves more than ever at the expense of everyone else. The Bush administration created this monster, and it's flourishing. AIG is only one example. STOP IT before it eats up America.

2:11PM PDT on Mar 24, 2009

While the bonuses are clearly unjustifiable, just how and why they were enabled in the latest stimulus nonsense is the real issue.

Those enablers are the people that deserve your wrath- at least as much as the overindulged recipients. But, what do we get? Feigned anger and outrage from the very individuals that made the scandal possible.

And what are you doing about it? Nothing. I dare say nothing but carp and complain about greedy corporate this and that. Well, they're greedy and spoiled because they make the proper contributions to the right people that will make sure that the bed is nice and comfortable. And, if they should make some errors along the way, they don't have to worry because they have their bought and paid for senators and congresshacks ready and willing to assign their gambling debts to the taxpayers. Quid pro quo should replace In God We Trust on currency- it's more to the point.

Unless all of us start showing some nads, and vote out the obviously crooked incumbents, we will continue to get what we deserve. Drop the partisan BS for once and smell the rotting corpse of a once great nation. Demand term limits to keep things from getting too cushy for career hacks and limit their influence. Remove the special pension and health benefits- we can't afford them. Vote for the person-not the party. Demand better. Make yourself heard and felt!

Lastly are the puny millions in these bonuses just a distraction? Got to wonder what's actually going down.

10:11AM PDT on Mar 24, 2009

This mess with AIG demonstrates all the more why the US should become a Democratic Socialist nation. It is my opinion that the current economic crisis we are in is actually the death of Capitalism, and we are at a golden opportunity in history, a time when we can introduce Democratic Socialism to America.

8:28AM PDT on Mar 24, 2009

The AIG incident is disgusting.

Worse is that greedy swine Madoff and his wife. I thought no one was supposed to profit from crime? Why is it that a drug dealer has all assets seized but these white collar thugs get to keep all their stuff - worth millions and millions?

8:24PM PDT on Mar 23, 2009

This is disgraceful

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