GM CEO Resignation vs. AIG Corporate Bonuses?

I have a question for the wise sages of ATK…

President Barack Obama released a statement today about GM. In it, he said that Rick Wagoner, CEO of GM, would be resigning so that GM could be taken in a new direction. Specifically, he said, “This is not meant as a condemnation of Mr. Wagoner, who has devoted his life to this company; rather, it’s a recognition that it will take a new vision and new direction to create the GM of the future.”

Now, I am not as big of a supporter as others in Michigan and on this blog of the Big Three. I believe that they have dug their own grave a bit here, and that they are asking for taxpayer dollars to create new competition after they have misjudged automobile purchasers. That being said, though, I don’t think they are any worse than AIG and others who also severely misjudged their actions yet are being given a clean slate by the American taxpayers.

So, my question is this…

Why should CEO Wagoner be forced out of GM in order for them to get federal aid, while this was not true at all of the corporate executives at AIG (who, instead, received bonuses from the taxpayer bailout dollars)?

I look forward to your reasoned input on this…

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Populist Angst or Good Public Policy?

I found myself in DC last week for work. I met up with an old friend, who also happens to be a US Congressman. He was really upset with AIG for giving bonuses (or, retention payments…whatever you choose to call it). Because they were given out in the form of contracts, there was nothing the government could do to retract them, even though they were paid for by taxpayer bailout dollars. So, he had the idea that the government would tax the bonuses. Technically, the bill he introduced would tax bonuses (retention payments) for companies that have a certain percentage of ownership by the federal government (70%, I think). Thus, this will pertain to AIG and to Fanny and Freddie (thus preventing this from being punitive to one company only).

He argued that this company shouldn’t be using taxpayer bailout dollars for bonuses to the people who got us in this mess in the first place and almost decimated the economy.

The opponents said that the retention payments are needed to keep talented people at AIG in order to clean up the mess. They also said that this punishes anyone in the company who was not involved in the bad stuff that AIG did.

The House of Representatives passed a very similar bill on Friday, and the Senate will take it up and the President has said he would sign it.

Someone else told me, upon hearing about this bill, that “good public policy never gets in the way of populist angst” and that he thought this was more political than policy.

I think this is good policy and good politics, but I am open to hearing the other side. I know that the general public wants this done (I heard so at an irish bar on St. Patrick’s day!). What do you think? Good policy, or just good politics?

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