TheLoop21.com

By: Devona Walker (Add to your loop)
Wed, 03/18/2009 - 00:00

AIG is in a lot of trouble for those bonuses.

Obama gave financial insurer AIG a massive tongue-lashing on Monday, after it was reported the flailing company distributed $165 million in bonuses to derivative traders as part of its “retention program.”

Then, on Tuesday, came the smack down — a pledge from the administration that it would do all it could to get that money back.

But the question is, will it be enough? Is there really anything we can do to force executives to return that money? One thing I do know: Anything short of a good, old fashioned tar and feathering in the town square will fail when it comes to extinguishing the populous firestorm AIG has ignited.

Obama’s precarious predicament

“This is a corporation that finds itself in financial distress due to recklessness and greed," Obama said. "It’s hard to understand how derivative traders at AIG were rewarded any bonuses much less $165 million in extra pay. How do they justify this outrage to the taxpayers that are keeping the company afloat?"

Obama went on to the say the administration will use every feasible, legal avenue to get that money back and make the American people whole.

Clearly, the president knows just how deeply this situation has offended the American people. The upside for the administration is it no longer has to worry about appearing “anti-business.” That angry populism all the pundits have been cursing for weeks, well, that would now belong entirely to the American people.

With that said, this new financial nonsense puts Obama in a tough position, politically and economically. Rebuilding the economy is entirely predicated on whether the administration can unravel the banking mess. Doing that will require more money. The original banking bailout barely squeaked by Congress, and that's before we all realized just how recklessly they were going to use the funds. Now, with the boneheads at AIG at the forefront of everyone's minds, we might as well ask the man to walk on water. 

AIG's ruthless ways

Here’s a little short history lesson about the financial insurance giant. It has take four bailout installments totaling more than $150 billion.

The bonuses it awarded last week, reportedly to “retain” executive talent was, in fact, paid from taxpayer money. The “retention program” gave money to 73 staff members in its financial services division. These are the very folks that brought AIG to its knees in the first place. Eleven of these folks left the company anyway.

But wait, it doesn’t stop there.

AIG also used taxpayer money to high a veritable army of PR firms: Kekst and Company, the lions of New York’s finance spindustry, Sard Verbinnen, Hill & Knowlton and Burson-Marsteller.

Burson-Marsteller, the fifth largest PR firm in the world, is run by Mark Penn — who was Hillary Clinton’s campaign manager during the presidential election. Some of its most notable clients: Blackwater, the private security company accused of killing 17 Iraqi civilians; the Colombian government; and the Nigerian government, when it tried to dispel rumors that it was committing genocide. 

They don’t just specialize in spin but crisis management and corporate protection.

In short, we are paying millions to the most expensive public relation firms in the world so AIG can pretty itself up for us, delude us into believing this mess is not entirely of its own making, and ensure no one on the bankroll ever faces criminal charges behind it, ever.

Nice, huh?

Wonder if Burson-Marsteller helped AIG turn bonuses into a "retention program”?

Folks are angry for good reason. The majority of Americans will not blame Obama for it, but it will undoubtedly make them less willing to accept any additional expenditures on behalf of the banks.

And it’s really quite tragic. After all, we own a good chunk of the banks already. If we totally abandon them, it will come back to bite us in the butt. It’s hard to imagine a strong economy, much less our currently weakened mess, surviving that kind of blow.

Devona Walker is The Loop's senior reporter/blogger. She writes the Post-Race? blog.

Is Obama compromising too much in the health care bill?

Yes, we need public option

No, he's keeping the peace

Republicans will block it anyway

Let's wait until the health care summit

I don't know