With his article The Case for Paying Out Bonuses at A.I.G. , New York Times financial columnist Andrew Sorkin elicited my ire. I actually wrote him an email, and you can do likewise at this link. Or you can just read my strident reply below, that quotes the salient points of his meritless arguments, and tell him you agree with Charles Carreon.
1. “This isn’t just a matter of dollars and cents,” he said. “It’s about our fundamental values.” *** the “fundamental value” in question here is the sanctity of contracts. ***If government officials were to break the contracts, they would be “breaking a bond,” Ms. Meyer says.
Contracts are only sacred if they are entered into voluntarily with full understanding of their consequences. The anger of the public is not “buyer’s remorse;” rather, it is justified rebellion against having terms imposed upon them by an AIG management that obtained money under false pretenses and used it for purposes that, if fully known, neither Congress nor the voters would have agreed to. Therefore, these contracts are voidable because of a defect in their formation, i.e., fraud or a mistake as to material terms known exclusively to one party – AIG.
2. A.I.G. built this bomb, and it may be the only outfit that really knows how to defuse it.
“prevent them from turning against the company. In the end, we may actually be better off if they can figure out how to unwind these tricky investments.”
This contention is downright silly. Nothing is being “unwound.” AIG has just been paying off its “counterparties,” and in many cases, according to the New York Times, under circumstances where nothing was due under the “Credit Default Swap” insurance policies that AIG had issued. This is insurance malpractice, if you think about it – as if my insurance company gave me a check for the value of my wrecked vehicle because their statistics suggested I was likely to have a wreck someday. These people “turned against the company” long ago by digging the financial hole it is now in. They need to be turned out of their offices by any means less drastic that actual defenestration.
3. A.I.G. knew it needed to keep its people.
“We cannot attract and retain the best and brightest talent to lead and staff” the company “if employees believe that their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury,” he said.
Excuse me, but funding the operation of AIG provided these bonus-grabbers with a subsidy for salaries that would simply have evaporated in insolvency. Being subsidized is not being subjected to “continued and arbitrary adjustment.” Your uncritical repetition of this bilge is bizarre. Since when did the New York Times turn “garbage in, garbage out” into a journalistic maxim?
4. [T]he real moneymakers in finance always have a place to go. You can bet that someone would scoop up the talent from A.I.G. and, quite possibly, put it to work — against taxpayers’ interests.
The “real moneymakers” seems like a strange definition for people who lost billions of other people’s money. Perhaps you could get a job as a meaning distorter for Fox News.
- Perhaps they will “volunteer” to give some of their bonuses back or watch their names hit the newspapers. But in the meantime, despite how offensive and painful it might be, let’s honor the contracts.
Are you deranged? Your solicitousness toward these robber barons has utterly undermined your credibility as a commentator. You are a handsome man, as depicted on the New York Times website, and thus must come from a good family. If you will send me your email address, I will paypal you a dime, like Prof. Kingsfield in Paper Chase, so you can call your parents and tell them that there is grave doubt you will make a real financial reporter.