Outrage reaches such levels that some AIG employees receive private security details; House passes bill imposing 90 percent tax on bonuses given to bailed-out companies; Gallup finds three-quarters of Americans saying AIG bonuses should be blocked or returned; some execs begin returning their controversial bonuses

NEW YORK and WASHINGTON
The revelation that foundering insurer AIG, kept on life support with a government bailout, has doled out as much as $218 million in bonuses is fueling what some say is an unprecedented explosion of public indignation.

As this issue of Newsline goes to press, the Associated Press is reporting that 15 of the top 20 bonus recipients at AIG have agreed to return their controversial bonuses. New York attorney general Andrew Cuomo announced the news, saying the commitments currently amount to more than $30 million.

Among the story’s angles making headlines last week:

• The New York Times reports that AIG executives are being targeted by demonstrators, who in some cases have gone so far as to protest in front of the executives’ offices and homes. Writes the Times’s James Barron and Russ Buettner: “[B]onuses in years past helped make A.I.G. executives into prominent local citizens…. Now these executives are toxic, and those communities are rattled and divided. Private security guards have been stationed outside their houses, and sometimes the local police drive by. A.I.G. employees at the company’s office tower in Lower Manhattan were told to avoid leaving the building while a demonstration was going on outside. The memo also advised them to avoid displaying company-issued ID cards when they left the office and to abandon tote bags or other items with the A.I.G. logo.” Some AIG workers tell the Times they feel betrayed and are victims of a new type of McCarthyism, maintaining that the so-called bonuses are payments that had been promised long ago to workers, including technical and support personnel.
• Congress last week moved to slap punitive taxes on AIG-type bonuses — with the House approving a bill that would impose a 90 percent tax rate on those who received more than $125,000 while working for a firm that received a government bailout. The Senate is poised to consider a similar measure. The Washington Post reports that some industry representatives protest that such actions harm middle management and weaken already tottering firms. Some lawmakers however appeared to be aware of the potential consequences, but were unfazed. “Bonuses for what?” asked Sen. Olympia Snowe (R-Me.). “They have to engage in more financially prudent behavior.”
• Some critics of the move to block or confiscate bonuses argue that interfering with the payments constitutes an unlawful violation of contract. Maclean’s Ottawa bureau chief John Geddes makes that argument in his blog, disputing President Obama’s contention that while there may be a legal claim to the bonuses, there are “moral and ethical” aspects that have to be considered. “In other words, withholding the bonuses would have been an unlawful violation of contract rights, and so carried with it a penalty,” writes Geddes. “Does Obama seriously believe some nebulous ‘moral and ethical’ considerations might trump the rule of law in this case?… No matter how hard it is to face angry people, elected politicians in democracies must first affirm the law.”
• A Gallup poll indicates that more than three out of four Americans want the government to take action to recover the bonuses that AIG paid to its executives after receiving bailout funding. A separate Gallup poll found 50 percent of Americans saying they were personally “outraged” by the bonuses. Those views essentially cut across party lines, according to the pollster.

Sources: AP, Mar. 23 — AFP, Mar. 22 — Maclean’s, Mar. 20 — Washington Post, Mar. 20 — New York Times, Mar. 19 — Gallup, Mar. 18.

For more information, see: Related Newsline Commentary, Mar. 9 — Related Newsline story, Mar. 9 — Related Newsline story, Mar. 2 — Related Newsline story, Mar. 2 — Related Newsline story, Feb. 23.