Dear Democrats: On AIG, Quit Gnashing Your Teeth. Start Doing Your Jobs.

No, seriously.

I've seen you on TV this week, outragedly expressing your outrage about the outrageous outrage that is the outrageous AIG bonus payout.

All that outrage sure makes for good populist theater. But that's what it is, isn't it? Theater.

Because the fact is, you should have seen this coming.

Bush, Paulson and Bernanke may have been the ones behind the notorious TARP Part One, the taxpayer-funded bailout that handed out no-strings-attached cash to failing financial firms like a lonely grandma passing out Halloween candy. The application for the Bush version of TARP required less information from floundering banks that had publicly admitted risky behavior than I, as a fairly responsible private citizen, would have to provide in order to secure a Victoria's Secret credit card.  

But the fact is, you, Democrats, most of you in Congress, anyway, voted to give the Bush Administration the power to craft such a mind-bogglingly unregulated plan, and President Obama supported it. Democrats may not have created the original version of the TARP, but you did vote in favor of the Emergency Economic Stabilization Act of 2008, which authorized the Bush administration to create the TARP. And you failed to demand, in that original piece of legislation, that certain regulations be put in place that might have given the government more control over just how government bailout funds would be used.

Did you remember, at the time, what had happened the last time you gave President George W. Bush blanket authorization to take whatever actions he deemed necessary to solve a crisis?

Because we've hit the sixth year anniversary of that adventure this week, and some of those who were made to participate in it are no longer here to count the years with us.

Now here is where I will confess: I am being an armchair quarterback, and a bad one. I do actually recall that the stock market, and indeed, the world financial market, was in a panic when Congress passed the Economic Stabilization Act. I saw the Dow plunge the first time a bailout bill failed to pass. I remember that the House Republicans chose to express their anger about losing an election by shutting the door to cooperation with their fellow representatives in a time of crisis.

I know this legislation was rushed through by necessity. Was chopped up and rewritten and cobbled together again and again, by necessity. You were caught in an emergency. I get that. 

But you've had two months, now, with a Democratic President and a Democratic majority in Congress, to fix it. You've had two months now to correct the lack of regulation attached to the TARP funds, two months to try and get someone, anyone, from the Federal Reserve, from the banks, to tell you clearly where the first half of the TARP money went — and why it did not go to loosening the credit markets to allow responsible small businesses and responsible citizens to take out necessary loans, or to helping struggling homeowners renegotiate their mortgages.

Two months to call Fed Chairman Ben Bernanke, AIG, Citigroup, Bank of America, Capital One, and all of the other corporations that took government aid to account in the public square and ask, as investors, where has our money gone?

So excuse me if this week's public display of government outrage over the AIG bonuses rings a little hollow in my ears.

Sure, I'm angry about these bonuses. Millions of dollars in bonuses for executives from the very financial division of AIG that drove the company into the ground? Ridiculous. Especially considering that many of the AIG executives receiving these so-called "retention bonuses" that AIG claims were needed to keep so-called "top talent" working at the company in a time of crisis went to people who are no longer employed at AIG.

Sure, I wonder about the role of the Treasury and the White House economic advisory team in the AIG matter. Why, for instance, did Treasury Secretary Tim Geithner and White House Economic Advisor Larry Summers, reportedly encourage Senator Chris Dodd to weaken language in an amendment to the recent economic stimulus bill that would have retroactively prevented companies receiving federal bailout funds from awarding bonuses of this size to executive employees?

According to this Februrary Wall Street Journal article, Summers and Geithner were concerned that employees who had existing contracts, created before the executive pay cap legislation, that guaranteed them bonuses might sue their employers or the government for the cash their contracts said they were owed. Such legal action, as MOMocrats resident econ wonk Kady Liang explains in this AIG post, might have caused both businesses and the government a good deal of trouble, and cost AIG more money than the bonuses themselves.

But as MOMocrat (and contract law expert) PunditMom points out in her AIG piece, renegotiation of corporate contracts in the midst of a crisis is a fairly common event. The federal government already forced U.S. car manufacturers to renegotiate existing contracts with unions and workers in exchange for bailout funds; why didn't the government demand the same compromises from white collar banking, insurance and investment executives that the government demanded from car factory workers?

And if Geithner and Summers already had intensive discussions with Senator Chris Dodd over the legality of retroactively limiting executive bonuses for companies receiving government funds a month ago, why did they appear so blindsided when the AIG bonus fiasco exploded in the media this week? Could they really have not known what the result of weakening Dodd's amendment might be? Could they really not have guessed what the public reaction would be to a floundering firm on government life support awarding million dollar bonuses to some of the very same executives who helped to run that firm into the ground?

These are important questions to consider. But all of the handwringing over AIG in the White House, on Capitol Hill and in the press this week is a tempest in a teapot compared to the fiscal hurricane I'm really worried about.

Let's stop for a minute, and take a look at the big picture.

The $165 million in bonuses that AIG recently gave to current and former executives and employees actually represents less than one tenth of one percent of the $170 billion in bailout money the federal government has given to AIG.

But while Congressional Democrats, the President, and the press are pillorying the AIG bonus package on national television; while the Treasury Department and Senator Dodd trade barbs about who is responsible for legislative language AIG has used to defend its bonuses as legally protected; while Congress schemes to tax the AIG bonuses into oblivion; while shamed AIG executives offer to voluntarily return some of the bonus funds:

What I'd really, really like to know, as a taxpayer, is: Where did the other 99.9% of the bailout money we gave AIG go?

For that matter, where did the other 700 billion dollars in TARP bailout funds go?

Really? Where did it go?

Because my homeowner's insurance policy rate just went up for no stated reason. My credit card company just drastically increased the interest rate on a card I've never missed a payment on, citing "the economic climate." I have friends with good credit who still can't get a home loan at a reasonable rate, and another foreclosure auction seems to pop in my hometown every other week.

So I sure don't see how TARP has saved homes, saved small businesses, or sufficiently unfrozen consumer credit, as Fed Chairman Bernanke and former President Bush claimed it would. 

Democrats, President Obama: I know you inherited this economic mess from an administration that gutted financial industry regulations, allowed reported criminal activity like the Madoff scheme to go uninvestigated and unpunished, and recklessly cut taxes in a time of war. 

But we, the American people, elected you to clean it up. And striking a populist pose for the cameras over the AIG bonus debacle is not going to solve the economic crisis. 

You do a disservice to the American people when you allow the public discourse on executive malfeasance to be so simplified as it has been in the past week. Yes, wealthy financial executives continued to act like like clueless crooks as ordinary middle and working class American people suffer.

But you already knew that companies like AIG had a history of ridiculous executive compensation, shady record-keeping and irresponsible spending when you gave them the bailout money.

So go right ahead and punish AIG now. Tax the bonuses to recover that 0.1% of the $170 billion the American people have given AIG.

But quit pretending you had no part in this problem. The truth is, our entire society had a part in this problem. We as a society failed to properly question the health of a financial system that was clearly troubled long before it collapsed. And now, regardless of who many be most directly responsible for this crisis, we all need to roll up our sleeves and work together to fix it before it gets even worse.

Quit allowing the press and the public to focus on millions of dollars wasted and ignore billions more that have essentially disappeared. It may be convenient for you to allow the public to pick such a truly deserving scapegoat as AIG on which to heap their scorn, but unless all of bad actors behind the current crisis are publicly called out, their bad behavior will persist. You know more about who was really behind on this crisis than average Americans do. Share your knowledge.

Quit grandstanding about disgruntled Republicans who are standing in your way declaring themselves the Party of No, and find a way to work with them. If there is no way to work with them, work around them.

Quit expressing your outrage at the reprehensible actions of corporate thieves many of you wittingly or unwittingly helped enable, and start closing the legal loopholes they snuck through.

Quit pointing fingers at one another over policy mistakes that were made, and start fixing them.

Quit gnashing your teeth and start doing your job.

The people who elected you need you, right now, to work harder than you have ever worked in your lives. The stakes are too high right now for Americans to afford any more economic policy mistakes, or any more delays due to partisan sniping. We need sweeping reform, and we need it now.

We understand that you are only human. That you are all in over your heads, that any leader would be in over his or her head in a disaster of this magnitude.

But we are underwater, too.

Comments

[Donna]

Amen.- Thank you for your balanced call for accountability and sanity.

[Amy@UWM]

Actually, I think you're being a pretty good armchair quarterback. I'd only add that it's not only Democrats that should do their jobs, but Republicans too. I really wish Congress as a whole would get off their asses, move away from the microphones and start actually working together to get some things done.

[jaelithe]

Oh, don't worry-- I'll be calling out the Republicans too, shortly ;)

[Jane]

Oh, thanks! I really enjoy how you take what is in my mind and what my friends and I discuss and make all so clear! I will pass this along - please keep sharing.

[Sharon]

Well said. The men and women we've elected need to get down to business, and if they can't get this figured out soon they need to forego their spring recess. There is too much at stake.

[Eric]

I think in general, regardless of affiliation, saving a failing company with other people's money is a bad deal. If my company were to go under I wouldn't expect anyone to bail me out, it would be my own fault for running a bad company (no one bailed out Circuit City, then again, no global market depends on wide screen tv sales!).

The Obama admin is trying left and right to buy themselves time from public scrutiny, focusing on little fluff pieces that feel important like AIG bonuses, while the amount of debt they're proposing is what.. three times that of all prior presidents combined, and it's only a few months in?

No offense to Obama, but I wouldn't have hired him to run my small business, he doesn't have any financial or CEO experience - he's fine as a figure head but i think he's depending too much on the advice of others, repub and dem alike, who are in a power-hungry cycle/power grab while everyone's running around with their heads cut off. And currently, he's in charge of the worlds largest most complex company, the US. I think he needs to own up to the mess (it is his mess now, you can only point the finger for so long) and learn as he goes. I know he's an intelligent man, he just needs to get his agenda right, and needs to stop making friends with the wrong people who give bad advice. & quit hiring lobbyists!

Anyway, i'm baffled on how to even spend 1 million, so to sink 700b into something and not even get a report to where it went is amazing. I hope my kids have high paying jobs, so when they get taxed 75 cents on the dollar in the year 2018 they'll still be able to afford their middle class house payment with 25% interest rates.