AIG CEO: Washington's Bonus Outrage 'Just as Bad' as Deep-South Lynching
Um. No. It wasn't.
Ryan Chittum finds an utterly disgusting quote in an otherwise ordinary-seeming WSJ interview with AIG chief executive Bob Benmosche. For context, here is the full quote. The offending section is in italics:
Mr. Benmosche on the government’s campaign against partial “bonuses” to be paid to hundreds of employees in the AIG financial-products unit as they unwound massive, ill-fated bets on mortgage bonds. He said “less than 10” employees were behind the bad trades.
“That was ignorance … of the public at large, the government and other constituencies. I’ll tell you why. [Critics referred] to bonuses as above and beyond [basic compensation]. In financial markets that’s not the case. … It is core compensation.
“Now you have these bright young people [in the financial-products unit] who had nothing to do with [the bad bets that hurt the company.] … They understand the derivatives very well; they understand the complexity. … They’re all scared. They [had made] good livings. They probably lived beyond their means. …They aren’t going to stay there for nothing.
The uproar over bonuses “was intended to stir public anger, to get everybody out there with their pitch forks and their hangman nooses, and all that–sort of like what we did in the Deep South [decades ago]. And I think it was just as bad and just as wrong.
“We wouldn’t be here today had they not stayed and accepted … dramatically reduced pay. … They really contributed an enormous amount [to AIG’s survival] and proved to the world they are good people. It is a shame we put them through that.”
To be precise, this is the analogy Benmosche is making: Shaming employees of an endangered firm for keeping bonuses is "just as wrong" as hunting down and killing people in the Deep South in the 1960s. Perspective!
Whether mid-level employees in well-functioning divisions of bailed-out financial firms deserve bonuses is, actually, an interesting question. Whether or not lynching people is wrong is not. The inability of self-righteous bankers to appreciate the difference—or to stop themselves from speaking of financial rewards as the moral firmament of the universe—is exactly the problem.