The scandals that most move public opinion are those that ordinary people can understand. Though the failure of our financial institutions has often seemed shrouded in headspinning technical jargon and the mysteries of the market, the AIG bonus controversy hinges on a fairly simple and compelling narrative : AIG has received $170 billion in taxpayer bailout money; executives ran the company into the ground; and now reports have emerged that lavish bonuses are going out to those same people. If, as Marc suggests, the "gloves have come off" and the Obama administration intends to use AIG as an example to catalyze public support for significant regulatory reform, this is clearly a reflection of the extent to which this outrageous narrative has been internalized across the country. A new Gallup poll shows that three in four Americans (76%) want the government to to block or recover the bonuses AIG paid its executives. The editorial pages of newspapers across the "purple states" are also a revealing window into Americans' current frustration with AIG and their desire for government action.
The editors of the The Cleveland Plains Dealer see a "grotesque corollary" at work in the public's ongoing bailout of AIG. The more taxpayer dollars entrusted, "the more the company spends on questionable payouts - and the more conspicuously absent are Treasury officials who should be safeguarding the public trust." While they commend President Obama for declaring his intention to use every legal means to block or reverse the insurance giant's payouts for bonuses, they argue that these were contractual obligations Treasury should have known about well before now and insisted be restructured -- as was done with the auto industry and its union contracts. They conclude that "federal officials must exercise far sharper oversight in exchange for taxpayers' 79.9 percent share of AIG."
The Orlando Sentinel views AIG's "obscene bonuses" as the latest in a seemingly endless series of outrages committed by bailed-out companies. Pointing out that AIG lost enough money in the 4th quarter to bankroll Florida's entire state government for a year, the editors are infuriated that Washington hasn't demanded more restrictions on expenditures from companies that have been rescued with public money -- especially ones that, like AIG, have received multiple cash infusions. In the editors view, the Obama administration needs to start waving a bigger stick around bailed-out companies. "The Treasury is still acting like a minority shareholder when it owns 80 percent of the firm", they conclude.
The Las Vegas Sun believes that President Obama summed up the feelings of Americans when he said that it was "hard to understand" how AIG traders deserved bonuses. AIG received federal money because it was determined to be "too big" to fail. Now, the editors argue, "it sounds as if AIG is too big to think it should play by the rules." But the editors also argue that the AIG bonus controversy is symptomatic of a broader need for accountability under the bailout program. They argue that the companies involved should be pressed to provide a complete explanation of how they've been spending taxpayer money.
The Kansas City Star argues the AIG bonus controversy is comparable to the U.S. House bank scandal of 1992. In the editors view, outrage over AIG is real, and justifiable. They argue that AIG CEO Edward Liddy should explain how AIG's bonus policies can be changed so that executives are no longer rewarded for such spectacular failure.
The editors of the Raleigh News and Observer say Obama is fed up with AIG "for good reason." With AIG behaving so badly, they worry that future stimulus efforts or other measures to improve the awful economy could be jeopardized by skepticism in Congress as to whether "this is another AIG." It is valuable, they argue, when the president shares with the people "a degree of exasperation that indicates he's ready to stir the tar and pluck the feathers."
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