We’re All Secretaries Now: AIG and the Growing Challenge to Corporatism

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March 17, 2009

Back in my 20s, I found myself from time to time in a job as a “secretary” (now dressed up as “administrative assistant”). I quickly learned how challenging such a position could be, then later as the concept of job stress emerged, I learned how secretarial positions rank pretty far up the stress scale, because they trap the hapless employee in a position of responsibility without authority. I suspect this is true of nearly all customer service positions as well.

So when AIG announced that it was issuing $165m in “retention awards” to the Financial Products Unit (the ones that brought the whole economy down through their approval of high-risk credit default swaps), I got that old familiar feeling of being a secretary again. This on top of the $440K party, the $86K executive fox-hunting trip to the UK (outrageous in itself), and who-knows-how-much to hire four PR firms to spin us into liking them.

Money Without Strings — Time to Par-tay!!!
Last September, the Federal Reserve Bank acted within its authority to loan $85bn to AIG. Without us propping them up, AIG would not exist. We should note that this is not a part of TARP nor of any bailout funds approved by Congress, but a 24-month loan arranged by the Fed.

When our naive Fed made the loan, they assumed that AIG would act responsibly and in the interests of the American people (HA!), a laughable extension of the “free-market fundamentalism” that has been nearly thoroughly discredited. The loan was granted with few strings attached, and certainly none regarding employee compensation. However, the purpose of the loan is stated in the letter announcing the loan as,
. . . to assist AIG in meeting its obligations as they come due. This loan will facilitate a process under which AIG will sell certain of its businesses in an orderly manner, with the least possible disruption to the overall economy.

However AIG got plenty of those too, though with more restrictions, to a total of $170bn. The result: Now the government owns 80% of AIG. That’s you and me — we own 80% of this donkey.

But still, the government (Treasury, Congress) has asked for no control and little oversight over the corporation. Evidently, the dreaded ghost of nationalization looms too large for us to consider it. This brings us to that old, bad feeling of responsibility without authority: We have to pay for it, but we have no control over how the money is used or what the outcome will be. We are all secretaries to AIG.

We May Not Be Secretaries for Long.
The money is clearly NOT meant to be used for employee bonuses. However, can anything be done to stop it? Tim Geithner (who incidentally was head of the NY Fed when it doled out the cash) has said that nothing can be done through legal channels. AIG says its hands are tied — it has to honor the contracts. What’s more, AIG refuses to produce a list of names of those receiving bonuses. The message from AIG to the government (that means us): “Get stuffed.”

However, other sources are not so sure. Senator Arlen Specter thinks the awards violate public policy and would not stand up in court. Congress isn’t waiting, however. There are two bills afoot to tax the bonuses at a high rate, one with a tax rate of 100%! We may not be beholding to AIG for long.

This is a classic David-vs.-Goliath struggle of the behemoth corporation against the people it has victimized. As Pluto, in the second year of its Capricorn transit, slows to a near stop before its retrograde (apparent backward motion) begins on April 4, let’s call this the opening salvo in the battle to take the government of the US people to be by and for the people once again, instead of bought and paid for by big business.


© Terry Lamb

3 comments:

neith said...

let’s call this the opening salvo in the battle to take the government of the US people to be by and for the people once again, instead of bought and paid for by big business.

Yes!! :-D

I love your "administrative assistant" story - done that myself. It is not a fun place to be at times.

Say, have you noticed how quickly Obama has moved from saint to sinner in some liberal circles? What comes to my mind is his elevated Neptune square his Sun. Extremely elevated expectations are very typical with that too.

We just have to grow up as a nation and take responsibility for ourselves and not expect any one individual to pull our chestnuts out of the fire for us. duh

Terry said...

I try to ignore the whiners on the left too, who will never be happy no matter what is done. I agree about the Sun-Neptune square and projection of idealism. I think Obama buys into that ideal too, which is part of why he listens so closely to others. Of course, he is incredibly altruistic, and that is his main motivation imo.

It's good to hear from you again!

inishglora said...

Tim Geithner (who incidentally was head of the NY Fed when it doled out the cash) has said that nothing can be done through legal channels.

Surprise, surprise. Thick as thieves, these shady bankers.