Everybody's howling this week about insurance giant AIG's recent payouts to its executives and foreign banks, and with good reason, but payouts the company made over a much longer period – to politicians – have been largely overlooked. But one is surely tied to the other.
In the last 20 years AIG contributed more than $9 million to federal candidates and parties. The company carefully hedged its bets over the years, giving almost exactly half of its donations to Democrats and the other half to Republicans. AIG showed a meteorologist's fixation with the direction of the winds. When they blew in the Republicans' direction, the company's money followed. When they began to fill the Democrats' sails, AIG redirected its largesse.
These "investments" paid handsome dividends. Lax government oversight. Tens of billions of dollars in handouts to save the company from itself.
P.S. What kind of company obligates itself to pay employee bonuses? Aren't bonuses, by definition, supposed to be discretionary? Something a manager can choose to give an employee whose performance exceeds expectations? AIG insists it had no choice but to pay all those bonuses to people who ran the company into the ground. A contract is a contract. Washington pundits have been fond of saying AIG is "too big to fail." I'm thinking the company is actually too stupid to live.