AIG Execs Play Deal or No Deal with Taxpayer Funds

One of the more identifiable catch phrases today is the question posed by Howie Mandel to his television game show contestants. His earnest "deal or no deal?" prompts players to either take the money and run or risk it all in the hope of a big payoff. More often than not, the contestant chooses to follow their gambler's heart and risk the free money all ready on the table. The audience applauds the player's guts and commitment to rely on dumb luck to make a quick buck. It is the American way, after all.

It follows then, that failed financial giant AIG would employ the same approach to the free money Congress recently gave them as a reward for risky business practices. After recovering from the disbelieve of their dumb luck, AIG executives speculated that another round of Deal or No Deal played with bailout money could not possibly go that wrong. Gathering the group of employees and management most culpable for the financial debacle at AIG, they headed off for an all-expenses paid spa vacation with a price tag of $440,000. The feeling shared by many taxpayers is that AIG's management either believed that no one would notice the trip because of all the other news worthy goings-on or they just did not care. Personally, I am leaning heavily towards the just did not care scenario.

From an arrogance standpoint, the actions of the AIG executives easily match the attitude expressed by Marie Antoinette and her cronies just before the unpleasantness in Paris, 1792. For those who may have missed that high school history class, the French Revolution was brought on by economic calamity caused by the numerous costly wars pursued by King Louis XVI, the heavy tax burden levied on the majority of the wage earners, and the refusal of the aristocracy to tone down their excessive lifestyle. The crushing debt caused prices to skyrocket and priced even bread out of the reach of the average French citizen. Any of this sound familiar?

The United States national debt is calculated to be in excess of $10 trillion. On October 8, 2008, the National Debt Clock in Times Square removed the dollar sign in order to add another digit to the rapidly increasing number. The percentage of homeowners who are significantly behind in their mortgage payments or are in foreclosure, is at the highest rate since the Mortgage Bankers Association began tracking these figures in 1969. Unemployment is at a 5-year high, grocery and gasoline prices have escalated at a frightening pace, and small businesses by the thousands are closing their doors due to a lack of available credit and the demise of consumer confidence. Doom and gloom may be the most optimistic response to the country's current economic situation.

Earlier this week, executives Dick Fuld of Lehman Brothers and Michael Sullivan and Robert Willumstad of AIG met with members of Congress and attempted to blame everyone except themselves for the collapse of their companies. As illustrated in the testimony presented to the House committee tasked with investigating Wall Street, these executives who were at the helm of former financial giants AIG and Lehman Brothers are categorically unrepentant. According to them, it was the Fed or those darn short-sellers, or the ever popular excuse of excessive media attention that caused the problem. It certainly wasn't the risky business practices or the creative accounting that their firms employed and they absolutely deny any personal responsibility. Not surprisingly, these three men have also pocketed hundreds of millions of dollars in bonuses, consultancy fees, and severance agreement payments while their firms wrote off billions in bad debt. It is up to Congress to finally stand up for the American taxpayer and aggressively pursue the return of any monies spent on non-essentials by any entity that is included in the bailout and to follow through with investigations into fraud and irresponsible business practices perpetrated by these firms. Individuals, such as Fuld, Sullivan, and Willumstad, who were directly responsible for the management of the firms and approved the risk taking, excessive bonus and pay structures including little goodies like the AIG spa vacation, must be held personally liable for their behavior in both a financial and legal manner.

Considering the financial and conceivably criminal exposure these individuals may experience, perhaps it is no coincidence that Deal or No Deal's "Banker" is seen only in silhouette.

Sources:
http://www.boston.com/news/nation/articles/2008/10/08/nyc_national_debt_clock_runs_out_of_digits/
http://www.aldridgeshs.qld.edu.au/sose/revrespg/french/aolnote1.htm
http://online.wsj.com/article/SB122341352084512611.html?mod=googlenews_wsj#
http://www.guardian.co.uk/business/2008/oct/08/lehmanbrothers.banking1