AIG is just one example
“Greed is all right, by the way I think greed is healthy. You can be greedy and still feel good about yourself.”
Ivan Boesky
It is greed that makes people want to do things, since they will be rewarded for their efforts. America is built on this principal that creates enormous wealth, opportunity and innovation but is also one of the primary causes of the denigration of our economy and society. The lust for power and wealth are two of the primary motivators in our society. Theft, fraud, abuse of power, reckless behavior, risk taking on and on even pride, power and politics are driven by greed. Advancement in our society, not just the financial sector, is driven by personal desires to obtain a higher social status and the acquisition of wealth, power and property. This beast is within us all and very few tame it. And the genie has gotten out of the bottle.
In the case of AIG and other large financial institutions that have failed, are failing or have caused catastrophic economic conditions the GREED is excessive and appalling at best. Yes there are contractual obligations but there are moral obligations too. The fact is there is little correlation between morality and greed.
Sure in good times derivatives traders, investment bankers and heads of corporations made off with billions in bonuses. Yes it is BILLIONs not just hundreds of millions when you add it all up. Executives and employees that reap enormous rewards for running their businesses and our money right into the ground are the very ones profiting – certainly not us! This is the way the financial industry and business world at large works. People get paid but do not give back when their actions cause havoc and massive economic loss. This is never more true than in the case of the derivatives group at AIG. The contractual obligations of the business are obvious and the government is caught in a mess of good money after bad. So how do we navigate this issue that has Americans screaming across the country.
Some executives forfeiting their bonuses is a start. You would think that everyone involved would forgo being paid on actions that are the underpinnings of why insurers that guaranteed the mortgage derivatives would be paid back are collapsing. AIG is the just the highest profile one. Why can’t we use the Securities and Exchange Commission to change laws against this ridiculous behavior like they did by implementing Sarbanes Oxley laws also known as the Public Company Accounting Reform and Investor Protection Act of 2002. This legislation came as a response to a number of major corporate and accounting scandals including those affecting Enron, Tyco International, Adelphia, Peregrine Systems and WorldCom. Well the economic meltdown is hugely more damning than even those illegal scams. But we just sit back and allow it happen.
Outrage just isn’t enough. I believe bonuses will be paid across the board even for the most grossly negligent and inferior executives in the world. The first thing shareholders and the government should do is to stop signing any contracts within public companies that have golden parachutes, guaranteed bonuses and contract buyout clauses. If you blow it as an exec and get the boot lets say why the heck should shareholders pay you in the first place. This would halt much of this excess.
I also believe that if a company is taking any federal money than all bonuses should be withheld and if anyone wants their money than sue for it and face the government as the primary defendant. This will bring the full weight of legal system to bear on the companies, the individuals and related parties. I think this will then create sweeping changes in public company pay structures which I believe should be strictly performance based but contractually obligated to owe money back in subsequent years if things go bad. Seems pretty logical to me – you make me money – great you are rewarded. You lose money beyond a threshold then that money should be “clawed back”. That would use greed in a positive way as people would pull the reigns in and certainly try not to lose it all.
“Greed is all right, by the way I think greed is healthy. You can be greedy and still feel good about yourself.”
Ivan Boesky
It is greed that makes people want to do things, since they will be rewarded for their efforts. America is built on this principal that creates enormous wealth, opportunity and innovation but is also one of the primary causes of the denigration of our economy and society. The lust for power and wealth are two of the primary motivators in our society. Theft, fraud, abuse of power, reckless behavior, risk taking on and on even pride, power and politics are driven by greed. Advancement in our society, not just the financial sector, is driven by personal desires to obtain a higher social status and the acquisition of wealth, power and property. This beast is within us all and very few tame it. And the genie has gotten out of the bottle.
In the case of AIG and other large financial institutions that have failed, are failing or have caused catastrophic economic conditions the GREED is excessive and appalling at best. Yes there are contractual obligations but there are moral obligations too. The fact is there is little correlation between morality and greed.
Sure in good times derivatives traders, investment bankers and heads of corporations made off with billions in bonuses. Yes it is BILLIONs not just hundreds of millions when you add it all up. Executives and employees that reap enormous rewards for running their businesses and our money right into the ground are the very ones profiting – certainly not us! This is the way the financial industry and business world at large works. People get paid but do not give back when their actions cause havoc and massive economic loss. This is never more true than in the case of the derivatives group at AIG. The contractual obligations of the business are obvious and the government is caught in a mess of good money after bad. So how do we navigate this issue that has Americans screaming across the country.
Some executives forfeiting their bonuses is a start. You would think that everyone involved would forgo being paid on actions that are the underpinnings of why insurers that guaranteed the mortgage derivatives would be paid back are collapsing. AIG is the just the highest profile one. Why can’t we use the Securities and Exchange Commission to change laws against this ridiculous behavior like they did by implementing Sarbanes Oxley laws also known as the Public Company Accounting Reform and Investor Protection Act of 2002. This legislation came as a response to a number of major corporate and accounting scandals including those affecting Enron, Tyco International, Adelphia, Peregrine Systems and WorldCom. Well the economic meltdown is hugely more damning than even those illegal scams. But we just sit back and allow it happen.
Outrage just isn’t enough. I believe bonuses will be paid across the board even for the most grossly negligent and inferior executives in the world. The first thing shareholders and the government should do is to stop signing any contracts within public companies that have golden parachutes, guaranteed bonuses and contract buyout clauses. If you blow it as an exec and get the boot lets say why the heck should shareholders pay you in the first place. This would halt much of this excess.
I also believe that if a company is taking any federal money than all bonuses should be withheld and if anyone wants their money than sue for it and face the government as the primary defendant. This will bring the full weight of legal system to bear on the companies, the individuals and related parties. I think this will then create sweeping changes in public company pay structures which I believe should be strictly performance based but contractually obligated to owe money back in subsequent years if things go bad. Seems pretty logical to me – you make me money – great you are rewarded. You lose money beyond a threshold then that money should be “clawed back”. That would use greed in a positive way as people would pull the reigns in and certainly try not to lose it all.
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