How about we throw them into a tank of boiling oil? And then we could put piranhas in there," the outraged Congressman, Mr. A, proposed.
"That doesn't make any sense," replied the incensed congresswoman, Ms. B. "Why don't we just bring back the guillotine? It's all about efficiency."
"No way. Those scumbags don't deserve such a romantic death. It would be a far, far better thing to just send them to Guantanamo; we all know what happens in Gitmo stays in Gitmo. Pity we closed it down," retorted Congressman A with bloodlust in his eyes.
"Arrrrgghhhhhhhhh," cried Congresswoman B as she vomited with rage. "Those thieves! Those scoundrels! They robbed us! And we must punish them! We shall have vengeance!"
I imagine this was a typical conversation between congressmen before the CEO of American International Group, Edward Liddy, went before a House of Representatives Financial Services subcommittee last Wednesday. The House committee summoned Liddy to answer its questions regarding the $165 million in bonuses-and recently surfaced documents suggest an even higher figure-that AIG recently doled out to 418 current and former employees after the company received about $173 billion--with more on its way-in government bailout money.
At the hearing, Liddy read samples of death threats to AIG employees; one read, "All the executives and their families should be executed with piano wire around their necks." Such a threat is either the result of an overactive imagination after a Godfather marathon on Turner Classic Movies, or a sign that Americans are mad enough to start collecting heads. I would guess the latter.
When people hear that executives in the financial industry are getting millions of dollars as the Dow plummets, unemployment skyrockets and Americans' savings evaporate, expect anger as a response. Add the Madoff-fueled perception that financial executives are criminals, and mix in the fact that taxpayer money funds these bonuses and that anger escalates to a murderous fury.
Certainly, this reaction is understandable, but it is not quite justifiable. For one, AIG was contractually obligated to pay out these bonuses. If they had withheld the money, lawsuits probably would have followed. The cost of litigation and the damages that would most likely be awarded to the plaintiffs could far exceed $165 million. It may be outrageous and perhaps unethical for a company that has received bailout money to give such bonuses, but it is not illegal.
Before the House committee hearing, Liddy said he asked employees who make more than $100,000 a year to return half of their bonuses. Although some have, I imagine Liddy received quite a few "Oh, you didn't get my check.... I definitely sent it in the mail last week" responses. AIG employees met Liddy's request with limited compliance, and while bonus money remains in their pockets, public outrage persists.
The government has a number of options to choose from to quell populist anger; unfortunately most of them are either borderline illegal, detrimental to the economy or an unpleasant mixture of both. For instance, the House passed a bill last Thursday with overwhelming bipartisan support that will tax 90 percent of executives' bonus payments from companies receiving more than $5 billion of bailout money. If this tax passes, it enters the territory of being a constitutionally prohibited bill of attainder, which is a law that has a negative effect on an individual person or particular group.
The government could also cut bailout funds to AIG. Such a spiteful move would only exacerbate the problem that the original bailout money intended to fix.
Unfortunately, no one seems to have a way to simultaneously to satisfy the public, keep AIG afloat and honor the contract that stipulated the bonuses. Taking out our frustration on financial executives may relieve our anger, but it does more harm than good. We easily forget that few were so enraged when these very same financial executives made savings funds, university endowments and the like rise at impossibly high, unsustainable rates. It took all of society to build this economic Tower of Babel, but we're intent on blaming its collapse on a select few.
Outrage directed towards financial executives may be partially justified, but it must be contained. Americans need to enroll in an anger management course. No guillotines, no piano wires and no rash government action.
Jordan Rice is a Trinity junior. His column runs every other Monday.
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