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Rage is All the Rage

Federal Washington's ire about AIG new bonuses broke out into the open this weekend, echoing widespread public sentiment against the government's bailout of banks and financial institutions that made bad bets.

In a Pew poll released today, nearly half of all Americans said they were angry about propping up financial firms that made poor decisions, and about four in 10 more said the funding bothered them.

Anger about the bank bailouts peaks among Republicans (55 percent angry), independents and those with family incomes of $75,000 and up (both 53 percent), but is broadly shared across political and economic groups. (Among Democrats, 39 percent are angry, as are 41 percent of those with sub-$30,000 incomes.)

There's also brewing hostility toward using federal money to support homeowners who took out mortgages beyond their means (39 percent of all Americans are angry on this score), the increasing federal budget deficit (37 percent) and spending on special interest projects, or earmarks (34 percent).

Amid this volatile brew of public sentiments, both President Obama and the GOP leadership in Congress have seen their ratings slip in the Pew data. The full report is here.

By Jon Cohen  |  March 16, 2009; 12:00 PM ET
Categories:  Polls  
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John Stewart perfectly summarized the ire that all Americans are feeling when he interviewed Cramer. We have been "forced" into 401K retirement programs so companies can drop their pension plans. How many Americans really know how to invest and maximize their 401K plans.

In addition, since I started investing in the market, there have been four busts. The Dow collapse under Reagan, the Dot-Com bubble collapse, the 9/11 market collapse, and how the housing bubble collapse. In all those instances, I have lost most of what I had in my 401K.

Why are we having all these bubbles. I would rather have a steady market, even if it went up very slowly, then these horrific ups and downs.

I really feel that the millions of dollars we middle class Americans have pumped into the stock market has led to the risky gamesmanship by the Investment Banks. If they didn't have all this money to play with, they wouldn't be making all these deals.

We need to bring back strict regulations or else bring back pensions. All companies that offer 401K's should also provide help to employees in investing their money and it should be educated stock brokers and their advice should be conservative.

Posted by: cape_codder1957 | March 16, 2009 12:56 PM | Report abuse

I can't believe that people are all buying the spin that there is no way to nullify these bonuses. Union workers are asked all the time, and pressured, to give back benefits guaranteed in their contracts. Can't any of these outraged members of Congress and the Administration do more than wring their hands over this? Where is the "audacity" that we need from our leaders? Why do we lay down and play dead with every pronouncement from the pro-business interest groups INCLUDING members of Congress....

Posted by: farhorizons | March 16, 2009 3:34 PM | Report abuse

The only reason America is the great nation that it is, is because of it's people. Unfortunately, most never get involved at any level, except election day, because most Americans are lazy about picking up a phone and making noise to their elected officials.

Remember when a Dubai based company was awarded a port security deal under W? That pissed off so many americans, that the switchboard at the senate and congress
were completely inundated with complaints about the deal.

Where is that same passion when AIG gets bonus money? The banks? when we invaded Iraq?

I guess as long as the beer is cold and the cable is hooked up, we really don't care so much as to really do something about it.

Posted by: jfern03 | March 16, 2009 4:24 PM | Report abuse

I understand why the American people are angry, Mr Bernanke said.
No Mr Bernanke, you do not know why “we” are angry. We are angry because the AIG bailout is and was a sham because unregulated insurance policies (the Swaps) are nothing less than a back alley crap game and the Treasury should have just picked up the dice and told everyone to go home or go to jail. But you and others honored this crap shoot –and all the markers, with “our” money. In short, Mr Bernanke, instead of busting the crap game, you busted us. And that is why we are angry…that you honored the Goldman Sach’s of this world at the expense of the American people.


And fyi, Mr Bernake, you didn't have to worry about any bonus payments if you let AIG go into Chapter 11, and then restructure...which is the way it usually happens in the real business world. But then Goldman Sachs would be left holding all its ill gotton markers, wouldn't it?
As opposed to its now ill gotton gains....

Posted by: kyoto27 | March 16, 2009 4:25 PM | Report abuse

You people really just don't get it. I'm about ready to throw my hands up with regard to posting comments on these boards.

First of all, if AIG was allowed to fail, there would be more than just a ripple through the financial world. Financial institutions big and small would face huge losses, and many would also fail. The stock market would fall (much farther), and forget about credit, which would essentially dry up.

I'm all for eliminating any kind of performance-based or retention bonus, but many of these bonuses are guaranteed. I know it sounds illogical, but in financial services bonuses are a major part of compensation. Most of these folks earn fairly "modest" base salaries and earn most of their take-home through bonus and stock, a portion of which is generally guaranteed. I don't particularly like it but that is the way it is.

John Stewart did not impress me as someone who really understands what has happened. While Cramer did recommend numerous stocks on his show that went down, he doesn't claim to be an objective journalist. There is other programming on CNBC that is objective news, and Faber, Gasparino and a few other reporters there are second to none. With regard to not calling the market fall, Cramer did miss it. So did about 98% of everyone else! You want to blame an investment professional for your 401(k) losses, blame the fund managers who manage its underlying funds. Blame the analysts who had buy ratings on most companies. Blame the rating agencies, who didn't adequately stress test companies before rating them. The fact is that Meredith Whitney and maybe one other analyst saw this coming. Otherwise there is plenty of blame to go around.

For those of you who had too much of your savings in stocks, or too much in one or two stocks, you might even consider blaming yourselves. Taking responsibility for our own actions, what a concept.

Posted by: RambleOn | March 16, 2009 4:47 PM | Report abuse

The "experts" say that we must pay these bigwigs their big bonuses least they decide to leave for a better deal. What would we do without their "expert" advice? Good grief, they SHOULD leave. They should be forced out! NOW! I really don't understand who would want to hire them anyway.

Posted by: clematis77 | March 16, 2009 5:30 PM | Report abuse

Perhaps AIG execs should just all be fired. They have been pretty worthless. If the US owns 80% of AIG, can't the government just fire these greedy people? Lots of other people have lost their jobs for much less.

Posted by: sross9 | March 16, 2009 5:35 PM | Report abuse

Right On, RambleOn.

Posted by: j616 | March 16, 2009 5:55 PM | Report abuse

This is bizarre and arrogance at the same time...Tell me where would these promised bonuses come from if there had not been a bail out? And please tell me why someone deserves a bonus after running a business into the ground??? I do hope our leaders stand up to this and shut this foolish waste of money down...GET REAL.

Posted by: mrvance | March 16, 2009 5:57 PM | Report abuse

I did not know that anyone in his/her right mind would still be interested in Cheney's or Bushe's anykind of ratings, let alone rantings.One should wish never to hear about them again. Not seeing them ever again would be a real gift. But that may be asking too much.It's like bad odor; try to cork the bottle and it hust keeps creepig out.

Posted by: rafael1 | March 16, 2009 6:07 PM | Report abuse

I realize that legally there is no way to prevent these bonuses from being paid out. That doesn't mean we have to make it easy for the recipients. If the Government was willing to play hardball with these guys it could willfully breach the contract and then tell the AIG Execs to sue them to get their bonuses. Eventually AIG would win, but I'm sure there would be enough government red tape to keep it tied up in the courts for years (perhaps even until after the economy recovered). That would at least show the tax paying public that there is still some small reason to have faith in the belief that it is the Government, and not the Banks, that are running this country.

Posted by: tarheelraj | March 16, 2009 6:30 PM | Report abuse

Don't get mad, get even. What's the current tax treatment of these bonuses? Whatever it is, the taxes should increase sharply.

Posted by: PostSubscriber | March 16, 2009 6:37 PM | Report abuse

how about someone doing some actual reporting on the AIG bonuses? . . . like what performance time period does it cover, what were the terms of the performance bonus program, what kind of "bonus" is this relative to their regular salary, how iron-clad are these "contracts" that must not be abrogated? All I read so far is the total number and that it is a bonus. If it was for work performed before mid-year this year, it might have been earned -- if it included the last few months and had no provision for losses -- well, that is another story. I want the story, not the story on the outrage!

Posted by: RBCrook | March 16, 2009 6:53 PM | Report abuse

RambleOn, sounds like you work for AIG. I was fortunate enough not to have a seat at the roulette table so I didn't lose anything from the stock market crash. What I did lose is my share of the $150 billion in taxpayer money ($500 for every single American citizen) which has been given to AIG to keep it from collapsing. As a taxpayer, I don't want to see a single cent of my money going to the gambling fools in AIG's financial services group who took down their entire company, and the entire world economy with it, by making reckless bets backed by AIG's AAA credit rating.

Or maybe they weren't so foolish after all -- they knew that, regardless of who else gets screwed, their own bonuses would be safe. This is the pure essence of moral hazard.

It's time for Obama to break out his whip and throw the money-changers out of the temple...

Posted by: jerkhoff | March 16, 2009 6:56 PM | Report abuse

OK, RambleOn, my gloves are off.

What is the cost of breaking those contracts ? What are those employees gonna do if they don't get their bonuses? Sue AIG ? Alright, let them. If and when they do that, they should be fired. Out of the millions pink-slipped in the past year, I am sure we can find a few hundred who are qualified to do their jobs.

In their own interest, they better not take that route. We (remember, I am now part owner of AIG and I intend to be very vigorous with my congressman/senator) can make sure those lawsuits are drawn out way past the time they are out of their "Depends" needs. If they are prudent enough not to sue, then they will atleast have jobs for a few months that cover their monthly expenses and ride out this recession, and maybe, just maybe, get another better paying job further down the road.

My wife and I are struggling day and night to hold on to our jobs in two very responsible companies who have been severely affected for no fault of their own, and you expect us to show any understanding for these unrepentant shameless fellows ? Think again.

Posted by: sandharm | March 16, 2009 7:26 PM | Report abuse

Article V U.S. Constitution should take care of business. 2/3 of both U.S. House of Representatives and Senate to propose amendment, then ratification by 3/4 of state legislatures. This could be done in 48 hours. (Really) And I'd hardly consider financial executives to be a suspect class.

Evita to the Aristocrats: The actress hasn't learned the lines you'd like to hear. She won't join your clubs, she won't dance in your halls. She won't help the hungry once a month at your tombolas. She'll simply take control as you disappear.

Posted by: ashafer_usa | March 16, 2009 8:12 PM | Report abuse

if the government really wants to do something, then all that needs to happen is for the congress to pass a law requiring all monies paid out as a bonus from any company which has received bailout funds be taxed at a rate of at least 100% (110% if they want to punish the greed), and then obama can sign voila..probably ain't agonna happen..

Posted by: w04equals666 | March 16, 2009 8:42 PM | Report abuse

The bonuses are a distraction from the real scandel: the payouts from credit default swaps to hedge funds and banks that bought insurance policies as a means of gambling on other people's failure. That's what Warren Buffet was calling "financial WMDs".

I have a theory about this. It's like the movie Double Indemnity. You take out an insurance policy on someone, kill them and collect the insurance - only Wall Street style. Take out an insurance policy on some bank, short them until they go under, then collect the insurance from AIG. AIG gets bailed out out by the taxpayer, so you can keep doing this repeatedly.

Yes, if AIG went under, there would be contaigion. Some people actually bought legitimate insurance against debts defaulting. But the CDS/CDO market supposedly exploded to several times the original size. So those people would be a minority.

If there was some way to do this fairly, I suspect a bankruptcy judge could descriminate between people that were insuring real debts, and people that were just gambling. Or the government could appoint a judge to say "You get paid. You don't." So at least the jerks who were just taking out CDOs for the fun of it wouldn't be getting my money from the failed AIG. What happens when a casino goes bust? Does the government step in to honor all the bets?

Posted by: tjk1 | March 16, 2009 9:13 PM | Report abuse

It is no wonder that AIG went broke. The people that are running it are like the rest of Wall Street, most of the banking industry and government. They are completely clueless. They perform no real work or have any product. They only handle other people's money and take a big percentage of it in the process. The only generators of wealth are the growers, the ranchers,the miners, the builders, the factory workers and all the people that create a product for someone else. These people just handle paper and think that the world will stop without them. What they don't realize is that when they take too much of the wealth from those that are making it those people will give up and make only enough money to live on and the money stops. For every one of these over paid begets we have ten or more people holding two or three part time jobs with no health insurance just to make a living for their families. If these people don't wake up and smell the coffee they are going to have a bigger problem then the recession. They will have a revolt.

Posted by: OldCoot1 | March 16, 2009 9:18 PM | Report abuse

Start the litigation ! I would rather that the government lost in court and was forced to pay damages than sit by meekly. Contracts are broken all the time - its all about hardcore negotiating.

Posted by: rds7481 | March 16, 2009 10:18 PM | Report abuse

When the auto industry asked for a bailout, the UAW was told that it must renegotiate its contracts. But these AIG contracts with the employees who took huge risks and put the company into what would normally be bankruptcy are somehow ironclad and we are told that the government cannot just abrogate contracts in exchange for bailing out AIG. Such is the legacy of the Bush Administration, where all contracts are equal under the law, but some are more equal than others.

Posted by: BuddyK | March 17, 2009 12:07 AM | Report abuse

Let's get a few things straight. They ALREADY HAVE THEIR BONUSES. So the posts about not giving them are futile. Second, these were guarantees contractually given last April, so there is no performance element to the bonuses. Obviously if they were performance based then they wouldn't get a dime. They were given at the time because these people are the most expert at unwinding the transactions, and if they left, AIG would be in an even worse mess (if you can believe that). Now yes, these people were responsible for getting us into the mess, but they unfortunately are best positioned to help the company going forward. So that's why the guarantees were given. Now they are paid out, so if the government wants the money back, they will have to sue....or tax. Just so you don't think I am an AIG plant, I agree with the above posting about imposing a 100% tax on bonuses given to TARP recipients, or at least for the AIG bonus holders. Yes, some of the people might leave, but guess what - i heard that some people that already left got their "retention bonus". Now this seems stupid, but perhaps i don't understand the details - retention bonuses usually require that you stay through a period of time. At a minimum, some of the bonus should have been deferred pending retention THROUGH THE ENTIRE CRISIS. But I'm not an employment lawyer. Anyway, tax these bonuses at 100%, and some of them will indeed likely leave, but there aren't a ton of jobs out there right now anyway. My two cents.

Posted by: realfinanceguy | March 18, 2009 12:49 PM | Report abuse

Everytime I see our Representatives on television with indignant rage on their faces I immediately become suspicious that they don't have a clue what is going on.
This time is no exception. Watching these so called representatives of our government today interview the CEO of AIG was embarrassing. Even I understood what Mr. Liddy was saying after his opening statement while these clowns continued to ask the same questions and posture for the camera. First thanking him for his service then pretending outrage as though he were the enemy.

Liddy was brought in to oversee the company that was on the brink of collapse, taking only $1 a year in salary. He explained when he joined AIG in Sept. 2008 the company's overall structure was too complex and unwieldy for its component businesses to be managed as one entity. Their strategy has been to isolate the value in the company's component parts, capture that value to pay back money owed to the government and allow AIG's healthy insurance companies to prosper. He said the original employees that had helped bring the company down had been dismissed. Money was offered to executives in AIG's financial products section where risky investments finally became the entire company's undoing. He said they were each offered money to dispose of his "business book," meaning the transactions he had been in charge of handling, and thus far, the company's financial derivatives had been reduced from $2.7 trillion to $1.6 trillion. He had decided it was worth paying the money to retain the services of executives who knew the business best. These executives were each promised retention bonuses to remain and bring their individual "business book" to a successful completion before leaving. He was balancing the 165 million against the risk of losing 1.6 trillion. Liddy added there was still danger of financial catastrophe if the remaining 1.6 trillion in financial instruments were not handled properly. Although we have wound down more than $1 trillion in the portfolio of the AIG Financial Products Unit that is the root of the company's troubles, there remains substantial risk in that portfolio. The financial risk for taxpayers is potentially very large, he stated and that is why we're winding down this business.

I don't know about everyone else but given the choice, I would rather he pay the millions in bonuses if that will allow AIG to become solvent and repay the billions to the taxpayers.

Posted by: MaggiePi | March 19, 2009 12:49 AM | Report abuse

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