Jim Manzi has a good post about the kerfuffle over those bonuses being paid at AIG. It’s nice to see some sanity on this issue. Here is the thrust of his argument:
“…their total headcount of 116,000 as of 12/31/08 is in the current 10K. If we assume (conservatively) total average loaded comp per person of $50K, this is about $5.8 billion per year of aggregate headcount cost for rough figuring. $165 million is less than 3% of this number…”
Moreover, the majority of those bonuses are contractual obligations, freely agreed to by all involved parties. They deserve the protection of the law. If Barney Frank doesn’t think that the taxpayer should be liable for those payments he should have voted against the bail outs.
Manzi’s closing thought can end this post as well:
In the end, what I think this highlights is the need to get the government out of the business of managing risk capital as rapidly as is feasible.