Robert Stein 1924-2014

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Tuesday, March 17, 2009

AIG Lynch Mob

Of all people, Barack Obama is the unlikeliest to be stirring up a lynch mob, but there is no other way to describe his stoking of public anger over the AIG bonuses.

"In the last six months, A.I.G. has received substantial sums from the U.S. Treasury,” Mr. Obama took the podium to say yesterday. “How do they justify this outrage to the taxpayers who are keeping the company afloat?” He railed against "recklessness and greed."

Undoing unconscionable bonuses in the company that keeps getting huge taxpayer bailouts is a fair exercise of government power, but demonizing a relative handful of people who were part of a huge systemic failure is out of character for a president who is a peacemaker by instinct and an economic optimist by necessity.

The growing anger is leading to a mob mentality. "A tidal wave of public outrage over bonus payments swamped American International Group yesterday," the Washington Post reports.

"Hired guards stood watch outside the suburban Connecticut offices of AIG Financial Products, the division whose exotic derivatives brought the insurance giant to the brink of collapse last year. Inside, death threats and angry letters flooded e-mail inboxes. Irate callers lit up the phone lines. Senior managers submitted their resignations. Some employees didn't show up at all."

It's disheartening to see Obama leading a pack of tinhorn politicians and media mouths when he should be confirming his stand against unfairness but emphasizing the positive steps he is taking for national recovery, as he did with his announcement yesterday of a "substantial program" to get credit flowing to small businesses.

A New York Times editorial notes that "the bonuses are something of a distraction. Seen by themselves, the payments are huge, but they are less than one-tenth of 1 percent of the money already committed to the A.I.G. bailout."

Billions of the money, we learned Sunday, has gone to American and European banks on the other side of AIG's failed deals.

"Congress must investigate," the editorial urges, "and the new disclosures give them enough to get started. Untangling all the entanglements is not only essential to understanding how the system became so badly broken, but also to restoring faith in the government that it is up to the task of fixing it."

If public anger needs an outlet, that's where it should go.

1 comment:

Anonymous said...

I'm concerned about a useless mob mentality as well, but I also see this as a potential case of people waking up - sort of the straw that broke the camel's back. If people see this, get angry, and realize there's more, then good. If not . . . then bad.

I'm curious if AIG will become a "face" for the issues, a sort of ultra-Bernie Madoff to be used as an icon to rally people.