Nathan Scandella (personal)

Well, It's About Time

At long last. Our Treasury secretary decides he's going to actually crack down on somebody in the financial services industry. Not one of his old cronies at the banks, mind you, but an insurance company will do nicely.

http://www.cnn.com/2009/POLITICS/03/18/aig.bonuses/index.html

AIG will have to pay back an amount of money equal to what they let out in bonuses, plus a penalty. Unfortunately, the employees who received the bonuses will not be similarly penalized. They'll pay a tax on the bonuses, but still get to keep a large chunk of it. Considering that they deserve less than zero (no bonus, plus they should be losing their jobs), that still seems overly generous. And make no mistake, this crisis is not the result of the evil machinations of corporate executives alone; this goes right down to each and every employee that was involved in the design or execution of investment strategies at these massive credit factories.

But, I'm going to try to be positive today, and will certainly acknowledge that this is a step in the right direction.

Are there downsides to this? Of course. Companies teetering on collapse can hardly afford to be paying stiff penalties as a result of contractually-obligated bonus payments. But, unless we grow a pair, and start dishing out some punishment, we can be sure to have Wall St. continue ripping us off for years to come. We're going to have to endure lots more pain, but the guilty among us need to endure more than most, not less (which has been our policy to date).

Kudos to Secretary Geithner for not listening to that fraud Larry Summers and actually respecting the will of those who didn't help architect our financial disaster.

Posted at 01:51AM Mar 18, 2009 by Nathan in Economics  |  Comments[0]