You would think, with so many lawyers standing around, that the Obama administration would have come up with a variety of creative but legally sound procedures to dramatically reduce the salaries at AIG, the world's worst performing insurance agency, after handing them so many billions of taxpayer dollars, especially since this seems to be the only part of the bailout that the public understands.
A buddy of mine, who runs his law practice out of a high rise office tower in Buckhead, Atlanta's financial district, made an interesting comment back in November, right after the election, when I asked him how the people in his building were taking the Obama victory. "Come on, man," he said to me, "the kind of professionals who work in my building plan on being there whoever is on top. They'll just rationalize it like they do everything else. They can rationalize anything."
Very few professionals will admit this, but it is the truth - we all have to bend reality here and there when we need to make the logic we are using today hold water. The longer you stay in the cocoon your industry provides, the easier it is to generate the truly ridiculous explanations a lot of us come up with to justify the actions we take instead of admitting "I have to say this to save my own ass."
But how wrong do you have to be in this environment before you are really wrong? Does anybody know these days? Is it when you can no longer fake the funk, and have to admit that you are completely responsible for your own ineptitude? Or is it after you are finally humbled enough to consider accepting all the blame that goes along with being wrong?
The Obama administration seems to insist that we all tiptoe around our troubled Wall Street banks and insurers as if they are crying babies we've finally gotten to go to sleep, babies we dare not wake once they've nodded off. But this isn't playing at all in the mythical Peoria that the "Yes We Can" camp calibrated their campaign for last fall. As a matter of fact, it isn't playing in Philadelphia, or Portland, or Phoenix either.
The banking bailout will depend in part on breaking mortgage contracts in a creative, yet legally sound manner. The controversial "cram down" provision in the latest mortgage bill will allow bankruptcy judges to ignore contractual agreements between mortgagors and mortgagees in order to reduce the principal balances of mortgage loans on upside down properties. It has passed the House, and is being deliberated in the Senate right now.
So if we are finding ways to break or alter mortgage contracts, why does Larry Summers tell us these half truths on TV about iron clad employment contracts between AIG and their employees? These are the kind of nonsensical statements that will be repeated and reprinted for days on end, until they transform the illogical into the surreal.
Maybe this is the kind of detachment from reality that makes White House advisor David Axelrod lament that we in the public are getting in the way of the administration's rescue efforts. According to the New York Times, Axelrod said in a recent interview, "We've got enormous problems that need to be addressed. And it's hard to address because there's a lot of anger about the irresponsibility that led us to this point."
I like the Obama administration because of the capacity they have shown to be able to admit when they are wrong, or when they have totally misread public sentiment. Will we get to see more of this common sense approach this week? Will someone in this administration finally realize that AIG, the company most responsible for the exponential magnification of this economic downturn, cannot in good conscience hand out huge bonuses to their employees when they owe their existence to emergency infusions of over $160 billion in taxpayer dollars?
Maybe Obama's team needs to watch some movies. Not just any movies, but old Westerns, the ones shot in black and white. In a lot of these films, just-captured criminals were often conscripted into duty by the sheriff when there was an emergency, or a frontier town was under attack by Indians. "There's time for hanging later" was a constant theme in these movies. But these outlaws didn't get the biggest plate of grub or sleep on the plushest bedroll while they were doing it. They were on temporary duty, with their freedom set to be revoked the minute the crisis was over.
That's what the country is trying to telling you and your administration, President Obama - that last year's superstars at AIG, from the CEO to the hot shot traders, are only doing temporary duty right now. America is as angry about the letters "AIG" as they are about the name "Madoff".