The Lessons of AIG: Deceit, Mob Rule and Leadership

An open letter to Congress and the Administration.

Outrage by Congress and the Administration over AIG retention bonuses is a deceitful mask. You will not admit these bonuses are allowed in the stimulus bill you passed but did not read. If you knew it was allowed in the bill and now pass yourself off as having been deceived you are fundamentally dishonest.

I don't know, you don't know and the American public does not know if the individuals in AIG's Financial Products Group receiving retention bonuses deserve them or not. We don't specifically know if these individuals are the cause or the solution to the current AIG problems. Trying to be "more Catholic than the Pope" you feign outrage to impress your constituency with your fake passion, threaten AIG employees compensation with unconstitutional taxation and now, perhaps inadvertently, jeopardize their safety. And, in the process, you have failed as the stewards of our investment by condemning the management and employees of AIG without study or logic.

When you in the administration and the congress decided to get involved in the financial crisis you also decided to ignore the old axiom “buyer beware”. You erred by not understanding the implications of the AIG bailout, failed after the fact to mitigate the weaknesses of the plan, failed by passing a bill you did not read and then failed to understand you did not know how to manage your new “business”, and when the s—t hit the fan you blamed everyone except yourselves.

The response of principled politician on the public outcry over retention bonuses should be “we have obviously made some errors here. The American people need to understand many AIG employees are talented people involved in very technical, complex financial products that are essential to making financial markets work. While many of the public may not understand how and why they get paid what they get paid, it is important to know that some of these people have education, training and experience that very few people possess and therefore they are essential to the future success of AIG and to the protection of our investment. On the other hand, because of the AIG mess, it is clear some people who worked at AIG or still work there are stupid or criminal. Since the government is now a majority stakeholder in AIG we must make sure AIG management knows into which group their employees fall and reward and eliminate them accordingly. That is what I, as your elected representative, will make sure is done from here on out.”

This is how you lead. Not by running to the front of misguided, emotional mob and heightening its rhetoric. Instead be a leader. Be a statesman (stateswoman). Help the electorate understand the complexity of the the problem, how it must be fixed and what you will do to insure it is done. Do what is right or go home.

Omen VI: The Chicago Incubus

I sent this to the White House based upon a New York Times article regarding the Administration's plan to limit all Financial Service Executive compensation.

The NY Times article is coming out tomorrow.

Email:

So you are floating the banking salary and bonus limitation story through the NY Times to see what the reaction is.

Here is my reaction.

While banks are an important element of the business cycle, they are still basically private concerns under our capitalistic system. How they operate and what type of performance measurements they deploy and rewards they offer should largely be monitored by the shareholders.

Unfortunately most shareholders don't have a clue about how a performance measurement goal should be written and how to determine if it is being met.

But of course you knew this when you saw the country accept your ridiculous, unmeasurable goal of 'saving" four million jobs. How can one measure saving jobs?

Instead of trying to create class warfare, mob rule and hatred of the rich, something you gathered at your liberal mother's knee and hid from your schoolmates at the elite schools you were able to attend, and now are using to deflect attention from your own limitations and not so hidden aspirations to socialize this country, you should instead focus not on micro managing and destroying the banking system and you should be trying to construct legislation that helps shareholders determine what reasonable performance measurements are and for banks to clearly report against these measurements.

And in this way, shareholders and citizens can more effectively monitor and manage our capitalistic system instead of you and your cabal trying to dictate it from the White House and spread the riches around to your needy supplicants.

I, for one, believe, over the last sixty days, I have been watching the next installment of the movie "The Omen" where the anti-Christ moves to destroy the world by internally destroying the only country standing between good and evil.

I have long held the belief the American people are well centered and have always put us back on course. I only hope this is true before you do too much damage.