There is nothing quite so ridiculous as a bunch of Washington politicians running at break-neck speed to get in front of an American public frothing in a righteous uproar over something in the news. The first casualty in such episodes is invariably a clear picture of who actually deserves the public’s anger, and so it is with $165 million in AIG executive bonuses. Leading the charge now are members of the same Congress that approved the $700 billion bailout and the $787 billion economic stimulus bill that authorized the bonus payments without reading either of the 1,000-page monsters. These same people are screaming to confiscate a bonus amount that equals one-tenth of one percent of the $1.5 trillion total they blindly approved for the bailout and stimulus legislation. The lack of proportion here is staggering.
But let’s not forget that the sturm und drang over AIG bonuses serves a serious purpose for those politicos fueling the drama – it diverts the public’s attention away from other far more revealing facts like those surrounding the role of Goldman Sachs, the once-mighty investment bank that became a commercial bank last September as the financial crisis threatened its existence. Goldman Sachs has been everywhere in the crisis, yet has almost entirely escaped critical public attention. Goldman Sachs alumni have been in the forefront of the government’s response to the crisis under both the present and former presidential administrations. Tim Geithner served in multiple roles at the Treasury Department in the Clinton administration when long-time Goldman Sachs head Robert Rubin was Treasury Secretary. Geithner then worked closely with Bush Treasury Secretary Henry Paulson, another long-time Goldman Sachs executive, in crafting the $170 billion AIG bailout. Also among the many other Goldman Sachs alumni who have served in key Treasury Department positions under recent presidents is Assistant Secretary of Treasury Neel Karshkari, who heads the Office of Financial Stability.
What Goldman giveth, Goldman also taketh away. While little is known about where the AIG bailout money went, we do know that Goldman Sachs received $12.9 billion of it. As one Wall Street insider recently observed to The Examiner: “This is an investment bank that earned more than $12 billion and paid its CEO $68 million in 2007. Even in 2008, this self-proclaimed home to the ‘Masters of the Universe’ paid out more than $10 billion in compensation and received its own $10 billion in taxpayer funding.” Congress ought to stop swatting at AIG bonus gnats and take on the real masters of the bailouts.
