Alright so, there was this outcry over the weekend about the bonuses paid to AIG folks amounting to millions of dollars that will come from the $160bn the company got in bailout money. The Obama Administration was on the defensive of course, displaying a combination of tactics, saying “this is outrageous” and “but this is the best we could do”. They probably understood (Summers and Bernanke are the two I saw) that they had to show empathy and reflect what 99% of folks out there were thinking (it is outrageous) and then they could explain what the administration did, i.e. they had to comply with existing contracts that included clauses about bonus payments (not sure how those were calculated – even when the company loses billions of dollars, those guys get bonuses – pretty good deal…).
That is the story. We have to pay those people to retain them. I don’t know who those folks are, nor what they do exactly, so I won’t make a definite judgment about how valuable they are. But it does seem to me as though the Administration, now holding a 80% stake of AIG, could be more creative and offer something that would be in line with Obama’s Call for Service (in his victory and inaugural speeches and in his state of the union address).
Since working for AIG is basically a government job tantamount to a “rescue mission”, why not call on the thousands of folks unemployed / ill-employed / seeking a challenge / willing to help who would be happy to get involved in salvaging AIG for a set period of time (6 months for instance, renewable once) for a decent amount of money but something lower than they would get in a Finance job (e.g. $100k)? That short experience would look good on their résumés – it would be a quasi-Obama Administration job (something likely to be carried as a badge of honor in the future) focusing on a complex and difficult mission (preventing the AIG-Titanic boat from sinking and thus avoiding a snowball effect in the rest of the global financial system). The opportunity cost for those folks would be acceptable – being away from high-paying jobs (assuming they could get one of the few that are left…) for only 6 months to a year would not be that bad…
I love the Obama Administration – don’t get me wrong… But they have been showing two facets that I don’t like that much: they have not been hugely creative in coming up with solutions to this mess and they have adopted a very middle-of-the-road approach that probably makes sense in a lot of cases (this mess is more complex that most of us understand, so let’s not be tempted by rash solutions) but sometimes they should draw the line in actions vs. in words (saying “this is outrageous” is not enough).