With AIG, Congress enters new phase in ecomony's crisis
If there is a silver lining to the outrage over the AIG bonuses, maybe it's this: We are in a new phase in the financial crisis.
We're playing the blame game. We're going after the scoundrels. And we're not -- at least not at the moment -- worrying about the collapse of the world economy.
Make no mistake, the financial system is still in deep trouble. But Congress and the White House are now focused on $165 million in AIG executive bonuses that are more loathed at the moment than even admitted swindler Bernie Madoff.
Double the gall
The anger is understandable. It's galling enough to prop up companies that helped cause the worst financial crisis since the Great Depression. It's beyond the pale to ask taxpayers to pay bonuses to individuals involved in the mess.
That's why Congress is mulling a shareholder suit, a nearly 100 percent tax, almost anything to get that money back. (Click here for a look at the prospects.)
The scale, however, is telling. Having seen Americans lose $11.2 trillion in household wealth in 2008 alone, Congress is bound and determined to get back 0.0015 percent of it.
When you've lost so much, it's hard to let go of the last little bit.
AIG Chairman Edward Liddy elegantly flipped that argument around Wednesday, telling a House panel that it was better to pay the bonuses so current employees would stay to fix the mess rather than risk a much more expensive debacle and default.
But Congress wasn't buying it. Sensing Americans' mounting anger and, perhaps, that the economic contraction is easing, representatives got down to brass tacks and delved into the details of AIG's contracts.
The congressmen had better be right about the financial crisis. (Where does the economy stand? Click here.)
If they're not, it's going to be nearly impossible to convince Americans to pony up even more cash in emergency bailout money. Not now, not after so much Wall Street gall.