Spare me the populist outrage. Members of the House Financial Services Committee sounded more like an out-of-control mob than leaders who could help solve one of the worst financial crises in U.S. history when they confronted AIG CEO Edward Liddy this week. And the president wasn't much better. They are whipping the American people into a nasty and destructive frenzy that won't do anything to help fix the economy and will likely make it worse.
Mr. Liddy is not public enemy No. 1. Liddy had nothing to do with the credit-default-swap mess that threatened to unravel the financial system last year. He came out of retirement (from a different company) at the urging of government officials to take over AIG when it was on the verge of collapse. After Wednesday's disgraceful performance by Committee Chairman Barney Frank and others -- Republicans as well as Democrats -- who could blame him if he decided to return to the golf course and let somebody else take the abuse?
But if Liddy's not to blame, neither are the AIG employees who received bonus checks this month. These are not the same people who devised the credit default obligations that jeopardized AIG. Those individuals are long gone. The bonus recipients are the people whose job is now to try to mitigate the financial risk those complex instruments caused. They are highly skilled and could, like Mr. Liddy, walk away and let the company implode, with consequences that even critics of AIG agree could affect all of us. In order to ensure they not do that, the company last year promised them financial incentives to stay in their jobs.
When a company is collapsing -- as AIG certainly was at the time these contracts were negotiated -- everybody who has an alternative is looking to jump ship. Think about it. If you knew that your employer might not be around in a few months and you had very specialized skills that were much in demand elsewhere, would you be willing to go down with the ship? Not likely. But if your employer offered you a handsome financial incentive to stick around, you'd be far more likely to take the risk. Well, that's exactly what AIG did when it negotiated retention bonuses.
But what about the people, who received those bonuses, that had already left the company? It's legitimate to question whether those bonuses are deserved, but it's ridiculous to jump to the conclusion they aren't based solely on the information we currently have.
Linda Chavez is chairman of the Center for Equal Opportunity and author of Betrayal: How Union Bosses Shake Down Their Members and Corrupt American Politics .
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