Re: Personally, I think bonuses should be a private matter, between employee and employer and not subject to the whim of government, public sentiment or internet message board posters.
It can be, as long as that employer is not a company that I am giving tax dollars to in order to prevent a collapse that would bring down the financial lending system. I also take issue with any company that is "too big to fail", and complaining about corporate costs, at the same time they are awarding big bonuses to executives. The regulations I would insist on would prevent any company from getting big enough that it could take down the financial system - or any system that we as citizens are dependent on. If you disagree on philosophical terms (i.e. the system should be able to take care of itself without the govt), then we'll have to disagree, but it won't change my expectations for what I want the current administration to achieve.
Re: For example, AIG's troubles are due almost entirely to credit default swaps, a derivative instrument that was deregulated by the Clinton administration. Much of the current crisis is due to strict mark-to-market and leverage caps, (over-regulation), that resulted from SarbOx in the Bush administration. Sub-prime mortgages are in large part a result of the Community Reinvestment Act that goes back to the Carter administration.
In other words, a child sets fire to someone's house, but it's not the child's fault at all - rather, the mother's fault for not paying attention to her child's destructive tendencies.
I can see why people would feel that way - after all, our society is very much focused on parental responsibility. Likewise, I would expect the government, like a parent, to have lawful restrictions on how child businesses would operate, and enforce the kind of regulation that would prevent these businesses from lighting fire to our country's financial stability.
Re: I will agree with you in that greed is a powerful motivator, and government has a role to play in regulating how greed impacts society. Personally, I would prefer to see the government effectively enforce existing regulations before adding new ones (a la Madoff, et. al.). However, for government to seize legally earned income for any reason is reprehensible.
Both I and President Obama agree with you. As Obama said in response to an interview question, he would prefer that whatever solution is found does not single out particular individuals, which he feels is a slippery slope to unfair government intervention.
The right thing to do would have been to put the same kinds of programs in place for AIG (an insurance company) that the FDIC already has in place for winding down banks. There is no system for insurance companies like AIG right now, which is one of the reasons why a case like these bonuses could have gotten away with not being regulated properly in the first place.
In other words, AIG would not have been able to sign any contracts for bonuses to begin with, because they would have been bankrupt, the government would be paying the employee's salaries, and pieces of the company would have been sold off to repay debts, and in many cases put under new administration until new non-govt ownership can be found.
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