The AIG bonus checks have already been cashed. Taxpayers’ money was presented to this elite club of millionaires by Friday, March 13.
The White House’s “damage control” operation can’t fix the AIG executive bonus scandal.
President Obama and his chief economic advisor, Lawrence Summers, are rushing now to go on TV to rant against the outrage of AIG executives receiving $165 million in personal bonuses after the company received $170 billion in bailout money from the public treasury.
But it was officials in the administration, including Summers and Treasury Secretary Timothy Geithner, who worked behind the scenes with AIG to allow the $165 million to be paid out to the executives by March 13. These same officials said they had no right to interfere with AIG’s “contractual obligations” to pay these huge bonuses.
The concept of inviolable “contractual obligations” apparently applies to capitalists, but vanishes when it comes to workers. The government insisted, as a pre-condition for bailout money, that the United Auto Workers union exempt GM and Chrysler of its “contractual obligations” lodged in the collective bargaining contract regarding pay, job security, health care benefits and pensions for retired auto workers.
The much vaunted “rule of law” turns out to be nothing more than a legal nicety masking the theft from one class and the transfer of wealth to the already rich.
The irony in capitalist society is that the plundered class is indispensable for the function of society. If AIG executives don’t come to work tomorrow, no one will notice or care. They produce nothing of use. But if autoworkers, transit workers, janitors and sanitation workers decide not to come to work, it will have a monumental impact on all of society.
Those who do indispensable work are unprotected in the face of growing unemployment, while the millionaire “deal makers” are treated like little gods.
In exposing the AIG bonuses as another indicator that capitalism is a form or organized crime, it is important to recognize that AIG is not the “bad capitalist.” In fact, AIG is the tip of an easily visible iceberg.
AIG Financial Services is now something of a shell company, an entity well understood by all as an organized, criminal enterprise. The public argument by the Bush administration and now the Obama White House is that AIG is “too big fail” because of the dire consequences to the rest of the economy. But AIG Financial is just a funnel for additional bailout money to the biggest bankers.
The public is only learning now, in the middle of this scandal, that the Treasury Department—under both Bush and Obama—knowingly gave AIG executives $90 billion in their federal bailout money to pay out to foreign and domestic banks. Many of these same banks had already received their own multi-billion dollar U.S. government bailouts.
The banks that quietly received the AIG money were Goldman Sachs at $12.9 billion, and three European banks—France’s Societe Generale at $11.9 billion, Germany’s Deutsche Bank at $11.8 billion, and Britain’s Barclays PLC at $8.5 billion.
Henry Paulson, Bush’s treasury secretary, was the architect of the bailout legislation. He had been the CEO of Goldman Sachs.
Merrill Lynch, which provided its executives more than $70 million in personal bonuses at the end of 2008, received from the AIG executives another $6.8 billion as of Dec. 31.
If plundering the national treasury to the tune $9.5 trillion (cash and loan guarantees) and giving it directly to the richest bankers and corporate executives is the requisite for stabilizing capitalism, then that system has lost all legitimacy. Socialism will rise again as the only alternative.
