Tuesday, March 17, 2009

Barney Frank: Owner

Politicians are quite adept at seizing upon the public's anger for no reason other than to score political points. Case in point, during the oil price run up in mid-2008, we noticed that politicians made a habit of mentioning the "pain at the pump". Eventually, hearings were even held on the subject. Notably absent was any politician able to proffer forth a legitimate solution(assuming one existed). In the end, of course, the politicians did nothing, which was probably for the better.

Today's situation however, is fueled by seemingly unprecedented public anger concerning $162 Million worth of bonuses paid to AIG executives. To be clear, we feel that in all of the history of modern corporations, it would be difficult to find one more poorly managed, and with more inept risk controls than AIG. Clearly, these men/women do not deserve to be rewarded for their role in the Debacle. However, we are concerned that the Politicians could go too far, essentially smothering any life the Company has left in it.

Now, it seems to us that it would be counterintuitive for the taxpayers to wish harm upon AIG. Apparently though, Barney Frank feels that he has a public mandate to "exercise our ownership rights". If the public's interest is in getting its principal back, plus interest, we would hold that allowing the Government to exert an undue amount of management control over the company is not in line with the public's best interest. Unfortunately, at this time, it feels good to be angry.
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