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By Anonymous Mike, pseudonymously.

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Friday, March 20, 2009
A Run on Whiskey and Revolvers

Well judging from my e-mail, yesterday's post caused a stir so here's a little bit more

The other week, Senator Grassley caused a stir by stating that he would feel better about the AIG bonus fiasco if the executives involved either committed suicide or resigned; while he was talking about the Japanese way of leaving I think he would have been satisfied if the people involved simply retired to a room with a bottle of whiskey and a loaded revolver.

The suicide part of Grassley's comment is what caused the public uproar but if you take it in the context of the overall statement with the words of "resign" and "or" you can see that he was talking about a lack of accountability in the business culture. AIG executives, who I seriously doubt are still employed, drove the company into the ground while making a pretty penny in salary and bonuses and whose only punishment, social or criminal, is to while away their copious free time spending their even more copious dollars. To take Grassley's comments and apply them retroactively, such people should have (after they cleaned out their offices) handed that revolver and whiskey and asked if they wanted to do the right thing.

Now let's turn the accountability one step further and apply it to the political arena.

There's a gross lack of accountability when it comes to politics and the AIG bonuses. Not just in terms of who slipped in the bonus language into the "stimulus" bill or who suggested it in the first place or the fact that the very same legislators who are screaming the loudest about are the ones who voted for it last month. Nope, I'm talking about bigger fish. I'm talking about societal accountability.

For various reasons, right and wrong both, we decided to bail out certain companies rather than allowing them to proceed to bankruptcy. Both the wrong and right reasons centered around the notion that such companies were too important to allow to fail. Once we started pouring money into them, politicians and the media began to see them as government property and started to look askew at how those bailed-out companies were spending money on large salaries, meetings, and other perks. Right or wrong, that sort of attention was inevitable.

The problem with that attention was that it distracted public debate from the critical question, which was what we were going to do with those companies. The prevailing notion was that these bailouts were a temporary step; they would be cleaned up of their toxic assets and put back onto the street as going concerns. If that was to be the case, then the companies would need smart management and smart management in those industries tend to get paid outside of the GSA wage scale.

So here's the lack of accountability part. Apparently some people in Treasury knew that the AIG people would need to get paid, if not to keep them from heading for the door then for contractual reasons. That's why it looks the language was inserted. Perhaps the politicians that be, going back to the previous administration last fall, should have arranged a different structure for the bailed-out companies but they didn't... this was the game they had chosen to play, turning them into quasi-public entities. However in their attempt to run Wall Street from Washington, it never occurred to the people in the Bush and Obama Administrations or in Congress that things work differently in New York than in Washington.

In other words they didn't have the guts to explain to the public, to take the political heat, that the people on Wall Street that they had grouped as a single class and dehumanized as villains would have to still be employed and paid a very handsome (though reduced) compensation if these bailed-out companies were going to be righted and sent back out onto the Street.

If you in Washington cannot do what it takes to bail-out companies, then maybe you shouldn't have taken that route. Maybe you should have thought through the implications of your actions and the fact that you tack to the political winds before you started pumping hundreds of billions of dollars into the private sector. Nope you didn't, you spent first and then started looking for the political pinata later which just makes everything worse.

So where's the accounatbility for Washington?