What if a company had a really great money-making near-monopoly business, and then decided to enter a not-so-good high-risk eventually money-losing business which lost all of the profits from the good business and them some? The owners of this company, should they be rewarded? If you believe employees of AIG should be DENIED bonuses while working at a company massively funded by taxpayer sweat, you'll want to keep your eyes out for other companies and employees who figure out new ways to siphon taxpayer dollars into their own pockets. Not sure how an insurer can seperate itself into two seperate entities when owned by public shareholders without making those same shareholders liable for losses from a legacy business. Is this Constitutional? Our citizens are outraged over government-funded or "saved" business handing out bonuses to division managers whose divisions made money in an overall loss-making enterprise. Yet, will we allow a similar thing to happen via restructuring in other failing businesses? So lets let AIG spin off the divisions with the bonus-receiving managers, such that AIG shareholders get two stocks for the price of one. Yes, one stock will surely go to zero, that stock contains all the bad assets which are now backed and paid-for by US gov't/Taxpayer. But the other business gets to be owned by the same shareholders (including employees mind you!) who held shares in the "bad" business which costs taxpayers plenty. Is this fair or right? How long will it take our citizens to figure out a scheme of giving shareholders free money. We, as a country, aren't just giving out $150mm in bonuses to employees of uber-failing companies, we're TRENDING towards allowing shareholders (the owners who technically control the CEO) a get-out-of-jail free card. So if I'm the old CEO of CitiGroup who helped that bank fail (without the aide of the gov't), I still own shares that have value? How is this possible or fair? I contend that the news media and the taxpayers (this one for sure!) will protest the giving away of taxpayer printed money (which in effect raises all of our costs of living via eventual inflation) to owners of bad businesses, businesses run by managers who made poor decisions yet are allowed to keep valuable shares whilst the taxpayer loses. Obama's team must figure out a way to allow shares to go to zero in bad companies, or else he will be blamed in history for favoring rich CEOs of failed financial institutions over the taxpayer. He'll be labelled as supporting AIG bonuses, no matter what comes out of his mouth. The government already effectively owns AIG, so why do we leave a 20% stake still in the hands of some shareholders? This is madness. Meanwhile, we punish better-run insurance companies by allowing a zombie AIG to undercut them on premium prices at a time they should be rewarded for running safer operations. The same goes for auto companies, allow GM and Chysler to fail in order to save Ford. Why is this a hard concept for the gov't to grasp. If it doesn't grasp it soon, it will gaurantee its own failure, as the dollar will one day be worthless. I have full confidence that Americans are smart, and will soon realize that leaving zombie company stocks which favor bad CEOs at taxpayer expense, is no different than the AIG bonus fiasco which already has them amassing in anger at bank HQs around the country.
$0.8801 (03/23/09)
