A dude named Steven Brill (more on him later) wrote a long article for the New York Times Magazine about the actual worth of the various companies that received bailout money (mostly it’s about AIG), and about Kenneth Feinberg’s role in negotiating the various bonus compensations that are going to be doled out to executives at AIG, BofA, and various other institutions.
Now, so much ink, digital and otherwise, has been spilled about these compensations that nothing I could possibly say would shed any interesting light on this. But what’s interesting to me is that in an essay that’s ostensibly devoted to a journalistic explanation of what went down, we find the following:
While it’s understandable that the A.I.G. bonuses fueled that firestorm, there’s an argument that they were not as outrageous as they seemed, and that they were not even bonuses. I’m going to let a friend — a longtime A.I.G. employee who received one of the multimillion dollar payouts — make the case. It’s worth considering if only to understand the distance between Wall Street and Main Street.
My friend (who did not want his name used because, he says, “being associated with A.I.G. is not safe for my family”) is a mild-mannered math whiz who worked at a unit of A.I.G. Financial Products that, he says, had nothing to do with the small London-based credit-default-swaps group that sank the company. Over the last half-decade, he made millions every year from a bonus pool composed of the profits supposedly made by Financial Products. But he had to leave roughly half of his bonuses in the pool for five years so that the payouts could be adjusted for any subsequent gains or losses from Financial Products’ trades. (That’s an extreme version of what’s called a “claw back,” another reform that Feinberg’s guidelines would require.) When the credit-default-swaps unit went bust, he personally lost tens of millions in that pool. (Which would also mean that he took home tens of millions over those five years.)
In early 2008, he and his colleagues were offered “retention contracts,” he says, because it was becoming clear that “one business within our firm had issues that could kill the entire bonus pool… They needed us to stay, because we were still making them lots of money, and we had the kind of business we could take to any competitor or, if they wanted, that we could wind down profitably.” Thus, the retention agreement, which was actually a contract, not literally a bonus payment, guaranteed that in 2008 and 2009 he would make 75 percent of what he had made in 2007 regardless of the amount of the bonus pool for those years, and that he would be paid those bonuses in March 2009 and 2010 (for work done in 2008 and 2009).
“Why should I simply walk away from a contract?” he now argues. “I earned that money, and I had nothing to do with all of the bad things that happened at A.I.G.”
“The people who make these companies go work really hard,” adds one of my friend’s former colleagues. “They think: I’m making lots of money to support my family, but I’m not with my family. I can’t go to the soccer games or the dance recitals. Stop paying them well, and they’ll leave.”
Now, in fairness, Brill does immediately follow the preceding paragraphs with a quote from Chris Dodd expressing some pretty justified outrage (“What do I tell a guy who worked in an auto dealership in Bridgeport — who can now go to all of his kid’s soccer games, because he’s lost his job and his health insurance and his 401(k)?"). I mean, the sheer lack of any kind of social awareness required to even make the above statements in light of the massive shit your company (if not your department) took on the economy is bad enough as it is (and this from a dude that actually grossed millions from the system before the bottom fell out of it). But what is that nonsense doing in a supposed piece of journalism?! Why is Steven Brill’s friend getting massive column inches, much more than any rebuttal to his sociopathic sentiments is allowed? And why did the Times allow it?
It’s one of these little vignettes that perfectly illustrates the extent to which journalism is in bed with moneyed interests and how inoccuous the process begins. It’s not that Brill wants to shill for AIG execs, it’s just that he’s got this friend, you see, and the friend is a really nice guy who works so hard and just wants to go to his kids’ soccer games.
And who is Brill anyway, with his high-powered executive friends? The blurb at the end of the article is unhelpful:
Steven Brill, the author of “After: The Rebuilding and Defending of America in the September 12 Era,” is the co-founder of Journalism Online.
Fortunately the magic of Wikipedia tells that Steven Brill is a Yale-educated lawyer and an entrepreneur, the founder of CourtTV and various other journalistic-type ventures, some of which have succeeded and many of which have not. None of this disqualifies Brill from writing for the Times, but it’s pretty clear he’s not just some random journalist who’s written about security issues or what have you, he’s a well-connected operator at the higher levels of finance. He’s got friends in the industry that he’s reporting on and he’s letting those friends have non-negligible space in his article to defend their position.
You’d think the conflict of interest would be pretty clear here. You’d think that articles about sensitive topics such as these might be commissioned from actual working financial journalists who don’t have friends in the industry they want to protect. You’d think.