“We’re a Mess”: What the Backlash Over Bonuses and AIG’s Bailout Says About America
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1/20/10by Aaron Task
With big banks revealing massive 2009 bonuses, Fed chairman Ben Bernanke now supporting a “full review” of AIG’s bailout, and Treasury Secretary Tim Geithner due to testify on the same, this is shaping up to be a watershed month in the bailout backlash department.
“This whole situation is a mess for Bernanke, it’s a mess for the banks ultimately and I’m not sure how we get out of it because the public wants blood,” says Christopher Whalen, managing director at Institutional Risk Analytics, and a longtime and critic of both Bernanke and Geithner.
Whether either regulator loses his job over this remains to be seen but Whalen says politicians are slowing awakening to the public’s outrage, with election setbacks proving a big wake-up call to the Democrats. “They’re sniffing the wind and realizing they weren’t gauging the electorate correctly, maybe they weren’t in harmony with what the voters were thinking on these issues, even though nobody [in Congress] understands AIG,” he says.
If AIG is the most galling symbol of the government’s inept response to the financial crisis, Goldman Sachs is viewed as the most cunning beneficiary. Later this week, Goldman is expected to report robust fourth-quarter results and a bonus pool approaching $20 billion. (On Tuesday, Reuters reported Goldman delayed telling its U.K. employees details about their bonuses, amid reports the Financial Services Authority (Britain’s SEC) has raised concerns about the plans.)
“Despite the money, despite the supposed political savvy of Goldman, they still don’t know how to manage their public image,” Whalen says.
A former Congressional staffer, Whalen laments the politicizing of these events because the theatrics mask the bigger issue: “We can’t control ourselves in terms of the fiscal functions of our government,” he says. “We’re a mess. We can’t even have a process in place that is transparent and easy for people to understand. That’s why we have a problem – this was all done in the dead of night.”
