AIG gives bonuses, General Motors hands out pink slips

Another slighted middle-class worker (AFP File)

America…the land of opportunity. But not for all.

The tale of two mega-companies, AIG and GM, their rise to behemoth proportions, and their simultaneous, yet very different, roads to demise, might one day be an epic saga for the US history books. Today, however, as we live through and witness the pain of the collapse of two iconic corporations, an all-too-common picture of the middle class in America, and ironically, its painfully similar demise, is also being painted.

Last week, AIG, acting under supposed contractual obligation, opted to pay over 70 of the top employees in their Financial Products Division, a combined $165 million in bonuses. Citing accusations that the Financial Products Division was largely responsible for the downfall of the company, I probably am echoing millions of other Americans when I ask, “For what?” Contractual or not, shouldn’t the bonuses have been tied to some kind of performance metric, presumably, a positive performance metric which would have rendered such astronomical bonuses to be maybe somewhat more tolerable to the public who is paying for them?

Today, General Motors handed out the first 160 of 3,400 US salaried pink slips to be given in 2009, while all 62,000 of its US hourly workers were faced with the life-altering decision of accepting a buyout package from the company, or sticking it out with the hopes that company fortunes will turn around.

Here is why I am utterly astounded by the latest headlines surrounding these companies: AIG has been bailed out by the US government, and essentially, fellow taxpayers, four times thus far, to the total tune of over $180 billion in aid, and also posted the biggest quarterly loss in US history in the fourth quarter of last year. Worse, though, than their pitiful financial state, is that Treasury Secretary Tim Geithner and other government officials knew that bonuses were going to be given when they gave the first round of bailout funding, and they did not do a thing to stop them then, or now.

General Motors, on the other hand, begged the US Congress for a loan, not a bailout, late last fall, and was voted down. The US Treasury came to the rescue with a mere $13.5 billion bailout package, but also specified certain conditions which had to be met as part of the deal. Along with CEO Rick Wagoner accepting a downright embarrassing salary reduction, GM had to implement a massive restructuring plan, worthy of convincing Congress, who collectively cannot even define what a ‘supply chain’ is, that the plan is working. Oh, and it had to be working by the end of three months.

The auto executives were further subject to public ridicule, scorn and shame for flying in private jets, not building what the marketplace wants, and building cars with sub par quality in comparison to foreign automakers. Executives were grilled for hours before Congress, like criminals on trial; an automotive task force was assigned to evaluate the automaker’s progress and essentially, decide the company’s ultimate fate.

And now here we stand. In America, as part of a government-sponsored bailout, one company’s rich became richer, while another was mandated to put thousands of average, hard-working Americans out of work. For AIG, fully 80%-owned by US taxpayers, it was acceptable to pay $165 million of our money as bonuses, because they were contractually due. For GM, breaking the UAW contract and reducing middle-class pay is the only way they can secure more government funding, and possibly, remain afloat.

One government, two companies, two very different standards of conduct and expectations. Why is this okay?
 

For more info: 
AIG Bonus Backlash
GM Hands Out Pink Slips