Thursday, March 19, 2009

AIG Bonus-nanza

We could have built schools with that money. Or bought food and medicine for starving children. Or hell, built that fictitious monorail between Los Angeles and Las Vegas. Anything but gifts for criminals.

That's my response to the AIG bonus story. But I have to admit, a Totenkopf grin threatens to break out across my face when I read of recent public outcry. Why so concerned America? This sort of thing goes on all the time. Yes, AIG is running on government fumes. Are companies that sell stock to pension funds and municipalities and then waste their investor's money-in blatant disregard for the fiduciary duties that are supposed to make the corporate system workable-really any better? This is Wall Street folks. They were your heroes 2 years ago. They'll be your heroes again in 10.

One example is found in In re The Walt Disney Company Derivative Litigation, 907 A.2d 693 (Del. Ch. August 9, 2005). "By virtue of his Machiavellian (and imperial) nature as CEO, and his control over Ovitz's hiring in particular, Eisner to a large extent is responsible for the failings in process that infected and handicapped the board's decisionmaking abilities. Eisner stacked his (and I intentionally write “his” as opposed to “the Company's”) board of directors with friends and other acquaintances who, though not necessarily beholden to him in a legal sense, were certainly more willing to accede to his wishes and support him unconditionally than truly independent directors. On the other hand, I do not believe that the evidence, considered fairly, demonstrates that Eisner actively took steps to defeat or short-circuit a decisionmaking process that would otherwise have occurred." The court found in favor Eisner and Ovitz.

Ah well, this line of thinking isn't very productive. I hope this time real limitations on corruption and fraud in the financial markets will be put in place. We all make fun of Obama's hope mantra, but if he doesn't fix things who will? The next-best seems to be nothing at all.


Little Earl said...

This is a very fascinating cultural moment, is it not? Here is where the long-cherished ideals of many Americans have finally bumped up against reality. I think people are being forced to grapple, perhaps for the first time, with the notion that some of their ideals may have to give way somehow (unless their name starts with a Lim and ends with a baugh). Let's see: they don't want the government regulating the financial sector, but they don't want corporate criminals doling out absurd bonuses to failed employees. So which is it gonna be, folks?

ninquelote said...

I say let them fail. If the company you're investing in is giving outrageous bonuses to the losers that are causing the company to fail, pull your money and invest in something else. If you're still making a mint off that company - or they are giving you a bitchin' fixed interest rate - then why do you care if the execs are making out big time?

The only reason people (me included) even care about AIG giving out the outrageous bonuses is because they are using the tax-payers money to do it. Doing that does not further "our investment" in AIG, and thus the money should be pulled.

yoggoth said...

And if you've already lost all your money by the time you find out?

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