Based on this latest story in The Washington Post about millions in bonuses being paid to AIG executives, there are any number of words whose meanings need to be revised:
1) Bonus: My understanding is that a bonus is related to performance. At a company that needed a federal bailout to remain afloat, what metric is being used to assert that the bonus payment is positive? If there is no metric, then why is it called a bonus at all?
2) Retention: The bonus payments are sometimes referred to in the context of retaining these employees. In what universe have the talents of those at AIG Financial Products just become more valuable? Are there other financial firms just lining up at the door of AIG FP, begging these folks to come wreck their companies like they wrecked AIG?
3) Ownership: The article notes that for its $170 billion, the government has an 80% ownership stake in the company. And the "owners" are being told by the CEO that they cannot determine compensation levels of the "workers?" This is yet another reason why the government should not "own" corporations.
Even more importantly, this is another example of why bailout in lieu of bankruptcy is a terrible idea. Do we now still think that we couldn't have done better with our $170 billion by selectively supporting AIG's creditors after AIG went into bankruptcy than by shoveling that money to AIG so that it could be siphoned off in any number of ways, including these bonuses?<!--break-->