In the wake of increasing dissatisfaction with corporate executives for paying themselves millions of dollars in bonuses as their companies receive billions in stimulus money, some folks are taking their frustration to the streets.
On Saturday, The New York Times reported that a motley crew of protestors that included a pastor, an out-of-work steelworker and about 40 others participated in what they called the “Lifestyles of the Rich and Infamous” bus tour, a day long protest meant to bring the outcry over corporate bonuses to the doors of executives.
The trip, sponsored by a Connecticut labor and community group, took participants to two Fairfax, Conn. homes of Douglas Poling and James Haas, both executives for the American International Group. The protestors, greeted by security guards, assembled peaceably and read aloud a letter condemning the recent announcement of the payout of $165 million in bonuses to AIG executives before depositing it in the executives’ respective mailboxes and adjourning.
This protest, however, was just a small part of the fallout from the multimillion-dollar AIG bonuses.
This move comes after several bailout payments from the federal government to improve the health of the company to the tune of $150 billion total, according to The New York Times.
As could be expected, criticism has come out on all fronts against the company, overtaking the opinion pages of local papers all the way up to the president’s offices. But we need more than empty words and individual reprimands to solve this problem.
This is a systemic problem that requires a systemic solution. And fortunately, some are already in the works. The downside is they may not be enough.
While the original stimulus bill passed under former President George W. Bush was mostly hands-off in terms of what was and was not considered an acceptable use of funds, and the more recent bill lacked on the same token, there are options.
Just last week, a bill was proposed in the House to tax bonuses given by bailed out companies to its executives. Naturally, some — mostly Republicans — are not big fans, but really, they should reconsider.
As it stands now, the federal government has absolutely no authority to tell bailed companies like AIG not to spend company money on executive bonuses in excess of one-third of the employee’s annual pay. If the bonus payout falls below this level it is perfectly legal and the harshest sanction the government can give is a wag of the finger.
This bill would allow the government a retroactive out to punish companies receiving financial assistance for using their aid to pad already high executive salaries.
Unfortunately, the bill lacks approval from the White House and will almost certainly die in favor of a watered down oversight set-up for banks and Wall Street firms.
President Obama is looking instead to grant the Federal Reserve greater power to track executive pay rates of publicly traded banks and other financial companies. The findings of this increased oversight could then be used to develop future regulations on executive pay and bonuses.
While this program is a good idea and probably should be implemented, it does nothing to solve the immediate problem. We need something with an immediate punch to prevent the abuse of stimulus funds now.
The federal government currently holds 80 percent of AIG’s assets and is pumping billions of our tax dollars into these companies; it should really have some say over how that cash is being spent.
Hopefully, public outrage over the continued abuse of these funds will finally prompt Congress and the White House to do something about it.
Editorials Editor Sean Reed is a senior political science major. His column appears Mondays in the Collegian. Letters and feedback can be sent to firstname.lastname@example.org.