Bonus Boomers

The WSJ’s Online Executive Editor has become a Tweetmaster. This morning he points to a WSJ Forum poll running 8-1 that feels Congress is out-to-lunch in its response to the AIG bonuses. How the Obama administration has handled the bonus issue is a bit of mystery. It would seem Obama is trying to steal some of the populist positioning away from the Republicans. In the process, they’ve created a lot of confusion and stirred up some demons, according to the New York Times:

One A.I.G. executive, who spoke on the condition of anonymity because he feared the consequences of identifying himself, said many workers felt demonized and betrayed. “It is as bad if not worse than McCarthyism,” he said. Everyone has sacrificed the employees of A.I.G.’s financial products division, he said, “for their own political agenda.”

The Times also explains that Douglas Poling, a former Merrill executive brought in by Liddy after the government takeover, had sold off 80% of the Financial Products division’s assets. Poling gave up his $6.4 million bonus and now becomes, like Liddy, someone doing the government a service.

As this issue rages, I’ve tried to explain what life is like in one of these suburbs of New York City where the financial class lives and bonuses are more than compensation, they’re a way of life:

For the bonus class, the work-hard-play-hard mentality was a badge of success. It began with the scrum to get into the best schools, the best grad programs, the best firms and ended with the push to be the best in one’s community. Social and professional competition was a way of life.

Money is the one thing that gives this group a sense of solidarity. It’s the admission ticket but also the defining factor of their identity. It’s hard for someone to feel shame when admitting fault means resigning from their way of life.

Take away the bonuses, and the financial class has no safety net. Lose your job out here and you’ve got little margin for error. There’s little social cohesion, too. We live our lives interdependently. Someone might give you business opportunity, but no one can carry you. No one expects to be carried. Affluent towns are not communities; they’re clubs. If you cannot pay the dues, you have to resign.

Sources:

Scorn Trails A.I.G. Executives, Even in Their Driveways
By JAMES BARRON and RUSS BUETTNER
New York Times; March 20, 2009
http://www.nytimes.com/2009/03/20/nyregion/20siege.html?hp

Bonuses Make the Busted Go Boom
Tales from the Suburbs Where Bankers Do Think They Deserve Their Bonuses
By MARION MANEKER
The Big Money; March 19, 2009
http://www.thebigmoney.com/articles/judgments/2009/03/19/bonuses-make-busted-go-boom