Why the AIG Bonus Story Matters to America

Somewhere in Detroit, right now, there is a union worker sweating as he helps to produce cars for this country on the assembly line. He thought that his contract with the UAW was set in stone but, unfortunately, to his dismay it was renegotiated and he has just found out that his salary was cut in order to keep his job. As well, he is now overly concerned that his health care will be reduced when he retires and his retirement will not be fully funded. All around him he hears horror stories of those who retired without the promised full pension and he sees the numbers of workers decrease every month by the dreaded pink slip.

The market falters because of the failure of the banking system, and the Government calls upon this worker for help. Bush, Paulson, Bernanke, and other members of the Government explain to this worker that if the banks fail he will be negatively impacted. This same story is repeated by Obama, Geithner, Bernanke, and other Government officials. This worker is a little reluctant at first, but he eventually understands the bigger picture. He understands how the system works, so he reaches into his pocket with his calloused hand and pulls out some of his hard earned capital to give to the banks and support the system.

Soon after, on his way to work at 3:30 am, getting prepared to do a double shift, he picks up a cup-a-joe and grabs a morning paper because the headline grabs his attention. The headline stated, "AIG Gives $165 million in Bonuses!" He doesn't really follow the news that closely but thinks to himself, "I wonder if they used MY hard earned money to bail out AIG?"

When he gets to work, in the locker room, many of the co-workers are talking about the same story. They ask him, "Do you see that we bailed out those guys only to help them get their million dollar bonuses!?"

Shocked at this injustice, the worker sits down to consume what he has heard. He begins to think of the numerous times the media called people "losers" because they bought a house without proper information and how he has close friends who are in that exact situation -- foreclosure. He thinks about how the President of his company was demonized for flying to Washington D.C. on a private plane and didn't get any support without multiple strings attached and close scrutiny (this is the proper way to provide loans)...but those on Wall Street flew to Washington D.C. on the same private plane and were allowed to have $2 million carnivals, $1.5 million offices, $400 thousand weekend getaways, $50 million proposed planes, and millions of dollars to put their name on the side of a stadium. In his mind, their penalty for excessive, imprudent spending was that they were given more of his money just to give out heavy bonuses!

He thinks about how he is fighting so hard just to keep his job and they are fighting to keep their bonuses. Feeling like the odds are stacked against him, doubt enters his mind and he starts to question why he gets up so early -- just to be fired eventually? He feels as if this country was designed for the rich to get richer, the middle class to shrink, and the working class to increase. "I was going to go back to schoo,l but what is the point?" He begins to leave work earlier, come in later, his production decreases, and his apathetic attitude worsens.

This worker isn't by himself. Teachers, coal miners, waitresses, and many across America saw the AIG story and felt the same way. They reacted in a similar way by decreasing production and losing hope of a brighter tomorrow promised to be fulfilled by the American dream if one works hard and believes. We see evidence of this by decreased production and record low consumer confidence.

In the grand scheme of things, the amount of AIG bonuses was very small compared to the amount of funds being thrown around in this economic crisis. However, the impact on the American people was large. Faith is one of the most important commodities to the American people. Is $787 billion enough to create enough jobs and restore this economy? No. However, the Government was never meant to be the fix-all of our economic woes. The stimulus was only meant to "stimulate" the economy -- provide the jump start that we need to get going in the right direction. The faith of the people is going to fill the void.

Faith is one half believing in a brighter future and the other half acting on that belief. If the people lose hope of a brighter tomorrow they will not believe and will act on that lack of belief accompanied by the burden of a negative mentality. In this economy it really is "all hands on deck". We need everyone to work as hard as they can to be as productive as possible. Without faith people will not go back to school, get re-trained and help solve this unemployment crisis. Without faith, people will not purchase homes and stunt the decrease in home values to help fix this housing crisis. If we don't have faith, we will see the level of apathy continue to rise while production continues to decrease causing this recession to lengthen.

Those on Wall Street do not like being demonized. As a former equities trader myself, I can tell you that the majority of my colleagues were honest, hard working men and women who worked diligently to get to where they are in life. Conversely, those on Main Street don't mind that others in this country are better off financially. They only want to believe that they are living in a country where no matter their race, creed, religion, or income level they will be treated fairly and equally. When a worker turns on the television and sees Obama take CEOs of Wall Street out to lunch but forces a CEO from Main Street to resign, that matters. Perceived double standards, whether intentional or not, destroy consumer confidence and can keep us in this recession much longer than desired.

Follow Ryan Mack on Twitter: www.twitter.com/ryancmack

Comments

[Bethany Quinn]

Um...a CEO from Main Street? I understand that you mean a CEO whose company contributed tangible products and value to the market, but don't for one minute kid yourself into thinking that he's from Main Street. With the UAW (and now government workers whose contracts are being reneged on) the issue is more about the issue of contracts - on Wall Street, contracts are "sacred," and result in million dollar bonuses, on Main Street, contracts are something to be renegotiated and reneged on, resulting in canceled health coverage, retirement, and reduced working-class wages.

[PragmaticStatistic]

Dear Ryan,

There is more to the banking issue than you imply and it is not fair to compare the work ethics of banking vs. non-banking employees in the way you did. The problem goes deeper than that. Go back and research how Sen. Barry Goldwater predicted an economic conspiracy and match it up against the recent activity like I did. Match up the bank industry's control over Congress via contributions, grooming, and lobbying. Match up how governement and banking leaders were part of the Trialaterlal Commission that sought a one world government under the control, of an elite group. Match up how the banks are so integrated in ownership and shared risk. Match up how the deregulation and other government activities allowed conditions to make risky but highly profitable investments at taxpayer expense. It isn't a matter of whether bank and investment employees were good at their jobs. The policies and practices of their industry were so fraudulent it smells of conspiracy. I can understand their wanting to be rewared for doing a good job, however, what many were being rewarded for was out right fraud.


Check it out my research on my blog:
http://pragmaticstatistic.blogspot.com/2009/04/13-facts-you-should-know-about-bank.html

[ryancmack]

You totally missed the point of the article. I understand and have done my own research on everything that you have stated, and report on it frequently on CNN. However, the message to my article is only about the danger of the percieved double standards that exist between Wall Street and Main Street. I spent 5 years as a Wall Street stock trader. I didn't participate in Credit Default Swaps or any other instrument that allowed market manipulation and the consequenting collapse of financial markets. I was at work every morning at 6:30 am and worked straight without a lunch break until at least 5:00 and most of the time even later.

[ryancmack]

Cont'd....

My work ethic was honest, as was most of those at my trading firm. It isn't fair to group ALL of Wall Street into a group because of the poor ethics of a few just as it isn't fair to group ALL of Main Street as a bunch of people with their handout looking for support from the Government because they need help in purchasing their home. This was not an article about policy, financial markets, or legislation but an article that attempts to demonstrate the negative impacts that can and do occur when we do not show love and respect to ALL of America regardless of their income level. Where there people on Wall Street who because of their inappropriate actions caused the collapse of this market, oh absolutely. I wasn't one of them, and most of those on Wall Street weren't one of them either. Were there people on main street who should have done more research before purchasing a home or should have not read Rich Dad Poor Dad and assumed that they were an expert real estate salesman purchasing/flipping properties using excessive credit...a­bsolutely. However, only 1 out of 9 homes are in foreclosure so that means that 90 of America is making the right decision.

[gabberwok]

All I have to say about this has been said better by xkcd.com: http://xkcd.com/558/

Is it outrageous that these guys got $165 million in bonuses? Yes.
Is it worth our time to focus on it considering the size of the rest of the bailout? No.

For those of you who don't want to follow the link, here's the gist of the comic...

"Dear News Organizations, Stop giving large numbers without context or proper comparison. The difference between a million and a billion is the difference between me having a sip of wine and 30 seconds with your daughter, and a bottle of gin and a night with her."

Dishonest:

Bailout: $170 billion
Bonuses: $165 million

Honest:

Bailout: $170,000 million
Bonuses: $165 million

[airforce-army]

As long as were talking about the 175 million in AIG bonuses the crooks that stole 18 billion in bonuses from the TARP are getting away with it. The politicans who are against President Obama's Stimulas Package both democrates and republicans who voted in favor of or didn't vote on the Gramm-Leach-Bliley Act in 1999 are to blame. Why are we destroying whats left of our Unions? How can we give trillions to Wall Street and let our Auto Industry fail? In December President Bush gave 17.4 billion to General Motors and Chrysler filled with concessions, but 18 Billion in TARP bonuses to the banks and not a word. PEOPLE WAKE UP!!!

[WallStreetNobody]

As a Wall Street guy myself I can tell you a lot of us are as disgusted as well by the double-standard that has always been applied to Wall Street vs. Main Street. But don't be fooled, a lot of this is because of Main Street as well. Go to any right-wing messageboard and you will see thousands of posters screaming about "socialism" while they are working/mi­ddle-class­. A lot of it stems from jealousy, not them being jealous of those of us on Wall Street, they don't relate to Wall Street. They don't understand the money and the bs of how capitalism really functions in practice. But they do get jealous about someone like auto workers, someone also in their same working/mi­ddle-class who actually has a decent contract and isn't a glorified slave like most of them are. So it doesn't bother them to force their fellow auto worker neighbors contracts to change, but don't dare change the contracts of multi-millionaire and billionaire bankers who have fleeced taxpayers out of trillions with billions of it going straight into their pockets.

[waynesmyer]

WHAT IF!

1. What if the Government gave an April 15 tax party and no one attended?

2. What if everyone reduced their monthly tax withdrawals state or federal government to Zero?

3. What if every one declared a tax free year where no one paid any tax, at all?
Do you think this would get the attention of the powers that be, who give tax money to the bonus
funds of Wall Streeters? All contracts are sacred! but some consracts are more sacred than others! Right? God Save The Union!

[larry278]

I am distressed at AIG executives getting retention & other bonuses. Since 9/15/08 a large number of competent executives have been seeking employment. In the event AIG executives who were given retention bonuses did not like working for AIG, AIG should have allowed the discontented executives to resign. The discontented executives could have been replaced easily. The newly hired, replacement execuitives should have been paid at a lower rate than the disgruntled executives who resigned from AIG. There is no employee who can't be replaced; that has been proven a number of times. It has become a cliche in the USA. Why didn't the AIG executives who paid the retention bonuses know of this hoary saying? Why were retention bonuses paid? It's past time to fire the AIG executives who suggested & paid these retention bonuses.