Over the last week, the newswire has been flooded with stories about AIG, first about the retention bonuses it had paid out, and then about the angry backlash. Much has been written about what caused AIG to get in this mess in the first place, and whether or not American taxpayers should be bailing out the company, and so I won’t rehash that, but why is everyone so mad all of a sudden? I think the answer lies in the American Dream.
America, as built by its immigrants, has always been as much an ideal as it has been a place. The American Dream, put simply, is that one could come to this land of opportunity and not hit a glass ceiling because of social standing; that if one was willing to work hard, no dream was too big. America was built on a solid work ethic! Contrast that with many places where life operated according to the “Golden Rule” — he who has the gold, makes the rules.
The AIG bailout has brought a lot of scrutiny to the firm and everyone connected to it. On some level, I think people are looking for a scapegoat — someone they can blame the whole mess on and be done with it. While a solve-all scapegoat has yet to be decided on, the interconnections between Wall Street firms have started to come to light and it seems everyone is out to scratch each other’s backs. Were the CEO’s really that clueless? Where were the company’s internal controls? Where were the regulators? How did they get away with this for almost 10 years? How does one company get to the point where it can bring down the American economy? But for all the other questions, I think the question that irks us the most is How did AIG figure it could make money out of nothing and make off like bandits? And why are everyday, hard working Americans footing the bills of these slackers as this party comes crashing down?!?
Hindsight is 20/20, and so chances are that the regulations placed upon the firms that rise up to replace AIG will be quite different from what AIG faced. The real challenge, however, will be for the lawmakers in Washington and elsewhere to convince the public that those who caused this mess have not been given a free ride, that the economy is better for bailing out AIG and the like, that the regulators and government have the will to regulate these companies and protect the taxpayers; in short, that the American dream lives on — that he that works hard will be rewarded for his efforts.