Let's have a quick show of hands. If your employer gives you a paycheck and then wants it back, do you give it to him?
"Hell, no!" you say, "I earned this money." So why is it a big surprise that the U.S. government can't get its hands on most of the $165 million that was given to employees of American International Group's Financial Products unit?
That bonus money created quite a stir in Congress in March, because the bonuses were for a unit that was responsible for the collapse of the entire company and the subsequent $182 billion bailout of the world's largest insurer. New York Attorney General Andrew Cuomo threatened to publicize the names of the bonus recipients, who were already getting death threats, according to then AIG Chief Executive Ed Liddy.
And yet, with all the sound and fury, even Cuomo's heavy-handed bullying couldn't get a promise of more than $45 million back, much of it from 18 of the top executives. Now it appears that only a miniscule $19 million is actually being returned, and the owners of the other $26 million have, to use a phrase, "lawyered up" and are keeping theirs.
Cuomo is, for once, strangely silent, but pay czar Ken Feinberg is reportedly "adamant" that the bonuses have to be returned.
Good luck, Ken. In the first place, why should the ax fall on some people's paychecks and not others? Most of the people who got the bonuses, many of whom were in London (where AIGFP was originally based), never agreed to give them back and there was no way any U.S. official, however, self-important, could make them. Those who did offer to return them now feel like chumps and are therefore standing their ground.
As The Washington Post points out, they are looking out to 2010 and saying that if they don't get some kind of compensation then, they are not going to give up what's already in the bank. And they are getting a clear inclination that paychecks in the coming year are going to be paltry, at least by Wall Street standards.
You can dislike the AIGFP people, and blame them for what their bosses did, but it's worth asking: why should they stay? It's very clear that within a year or two the whole unit will be shut down as AIG gets rid of its exposure to derivatives, and this will all be a bad dream. Don't feel too sorry for the people who work there. They have a marketable skill, and many have already left. As for the rest, charity begins at home.