Grassley: A.I.G. Must Take Its Medicine (Not Hemlock)

From President Obama to lawmakers to the public, rounds of condemnation have been uttered about bonuses handed out by American International Group, a mega-bailout recipient, to its employees. But none perhaps were as severe as remarks made by Senator Charles Grassley, Republican of Iowa, yesterday (and again today), as he demanded that American corporations adopt some of the ways of societies like the Japanese, whose executives — when shamed — may commit suicide or publicly express deep regret.

In a conference call with Iowa reporters this morning that’s posted on his Web site, Mr. Grassley tried to clarify the remarks he first made yesterday to a radio station in his home state, saying he was not calling for corporate executives to commit suicide. But he still offered up the example of harakiri as he denounced the lack of accountability by corporations receiving bailout money.

Mr. Grassley said today:

What I’m expressing here obviously is not that I want people to commit suicide, that’s not my notion. I do feel very strongly that we have not had statements of apology, statements of remorse, statements of contrition, on the part of C.E.O.’s, of manufacturing companies, or banks or financial services or insurance companies that are asking for bailouts.

That they understand that they are responsible for running their corporation into the ground and now they’re coming to the taxpayers for help and have been coming to the taxpayers for help for the last six months. And it’s very difficult for the American people to understand the justification for it. And one thing that would help with the justification is if these executives would make an apology.

I say that other societies accept this, and i’ve seen other writers write about what the Japanese do. and Japanese CEOs either go out and commit suicide and probably in most cases, they don’t.

And when they don’t, they come out before the public and bow very very deeply and express regret, and may resign or may stay on, but the point is they accept full responsibility and the entire society knows they accept full responsibility.

And I haven’t heard this from CEOs, and it just makes it very difficult for the taxpayers of my district to just keep shoveling money out the door. …

Here are his remarks from the interview with WMT radio in Iowa interview yesterday:

The attitude of these corporate executives and bank executives, and most of them are in New York, that somehow they’re not responsible for their company going into the tank.

I suggest, you know, obviously maybe they ought to be removed, but I would suggest that the first thing that would make me feel a little bit better towards them — if they would follow the Japanese example and come before the American people and take that deep bow and say I’m sorry, and then either do one of two things: resign or go commit suicide.

Mr. Grassley added, “In the case of the Japanese, they usually commit suicide before they make any apology.”

Now the senator’s aides and the senator himself note that he has used the Japanese ritual for accountability in the past. According to a transcript provided by his office, he made similar remarks to reporters back in October as Congress considered the bailout: “I’ve suggested it wouldn’t be a bad thing that the leadership of these institutions would take a Japanese-style approach to corporate governance, and I’m not talking about going out and committing suicide as some Japanese do in these circumstances, but I am talking about scenes I’ve seen on television where in belly-up corporations the CEOs go before the board of directors, before the public, before the stockholders and bow deeply and apologize for their mismanagement.

“Something like that happening among Wall Street executives would go a long way toward satisfying my constituents and many Americans that help might be needed and would more gracefully be given by the taxpayers of this county.”

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Grassley and his legislation in 1999/2000 is a big reason we’re in the mess we’re in now.

He has foot in mouth syndrome.

The one thing that Democrats and Republicans can agree upon is blaming somone else for the financial crisis.

Yes, there was abuse but we rely upon our Government to protect us and the Government — the Bush White House, the Clinton White House, and the miriad of Democratically and Republican colntrolled Congresses over the years were asleep at the wheel — and now are trying to redirect our anger at someone else.

It looks like Abraham Lincoln is caught trying to spin Geithner out of the mess he created. Geithner was naive enough to give our billions to an inept company, with no strings attached, and now Abraham Lincoln is question integrity?
I don’t know who is more naive, but it is obvious Abe and Tim think the public is twice as stupid.

see…another wishy-washy republican just like steele et al….first they make clear statements, then they backtrack and apologize to rush.

Grassley had it right the first time.
[for once]

Waiting for the greedy pigs at AIG to do the right thing is a waste of time. A better use of time and energy is a campaign that teaches Americans that the “too big to fail” theory is history and the new motto and plan of action is is “too corrupt to be saved”

Not a tough formula to figure out here. Grassley is just trying to surf the wave of populist resentment against rapacious corporate ceo’s. Say something ‘outrageous’ about them and get some headlines and score some points. But it’s baloney coming from Republicans right now. The GOP has pushed hard for deregulation of corporations as a core of their platform for decades. This is cheap, fake populism from a cheap, dishonest politician.

I agree that the exec’s at AIG who drove the company over the cliff should fall on their swords. That said, perhaps the corrupt politicians who hide their accountability like Barney the Frank and Chris Dodd should follow those AIG execs. At least in the private sector, incompetence and corruption are ultimately punished by the market, in the public sector the politicians never take responsibility for their failures, and never hold themselves accountable. They hold hearings and phony investigations only in attempts to hide their responsibilities, and cover up their corruption.

This AIG fiasco about bonuses is nothing more that populist nonsense that this administration is using to hide their Obama and companies incompetence. Smoke and mirrors.

Maybe Senator “Harakari” Grassley should just resign and avoid the embarrassment of defeat.

Amazing that the great US congressman wants to emulate the example of “paltry” Japan. When the debate first came out about limits on exec pay, Grassley and other repubs were shouting that gov’t cannot dictate what “private” companies do. They claimed that these people were paying to “retain talent”, as if this kind of talent that drives a company into the dust is worthy of keeping. Notwithstanding, it is now hypocritical that when Paulson demanded these bailouts in the beginning WITHOUT strings, Grassley did not speak out. In Japan, the enabler is also encouraged to commit suicide.

How can the government force the Big 3 automakers to renegotiate their contracts with autoworkers, while it can’t do the same for AIG traders? Why are derivatives traders’ contracts more sacrosanct than those of autoworkers?

We, the voters, are supposed to term-limit incompetent politicians. But the realities of gerrymandering and limited choice prevent that.

The Senator’s comments were certainly hyperbolic, but he did get the point across.

What’s insane about this situation is that the Obama administration wants to give even more money to AIG. Forget it! This is part of the reason the recent Pew poll shows Obama’s popularity dropping to 59% from 64% last month. Folks are waking up to the fact that our secret smoking, vodka martini drinking President just doesn’t know what he’s doing…

Where do find these morons?

AIG should be scrapped as we own it 80% of it. We should sell its assets and collect the bailout money. close the company and case is closed. All other banks should be done in same way.

Nation of Bank of America should be created to employ all the people laid off from financial industry and all loans should be insured by FDIC. Let the small compete and grow and help people in communities and small businesses. Let big corporation beg loan money at government doors at National Bank of America.

For too long there has been a disconnect between compensation and performance. Enron was the most famous example but payment of bonuses has been fraudulent for years. The entity being defrauded, the corporation, does not have an effective voice and the company’s balance sheet had not been effected until this year because of the fraudulent profits that allowed for these fraudulent bonuses. Now that the profits become losses and it is the taxpayers and not the shareholders that are being soaked there is an uproar.

This problem has required a solution since Enron was uncovered and demonizing just AIG is silly when it is the entire financial services industry that should be pilloried.

Meanwhile, trading in credit default swaps continues as though there were no questions about them at all.

Mr. Grassley added, “In the case of the Japanese, they usually commit suicide before they make any apology.”

How exactly, Mr. Grassley, do you apologize after you’re dead?

To Pete T. @3:03PM:

I would add that there also is a disconnect between compensation and performance when it comes to our elected officials – at all levels and of all parties and political persuasions. When I watch committee hearings on C-SPAN the questioning is often surreal.

What’s insane about this situation is that the Obama administration wants to give even more money to AIG. Forget it! This is part of the reason the recent Pew poll shows Obama’s popularity dropping to 59% from 64% last month. Folks are waking up to the fact that our secret smoking, vodka martini drinking President just doesn’t know what he’s doing…
— Augustine 25

Give it up John D. Have a look around – you and Gerald Leibnitz are members of a dying breed.

Steve Bolger–unfortunately, I think most of the public doesn’t pay attention what is going on, and the incumbent has become rich enough to litter the neighborhoods with signs, commercials, and “supporters”.

Most sane people wouldn’t want the thankless job, unless there was a pot of gold at the end of the rainbow…and there’s the rub.

According to Ron Shelp a former AIG VP, as printed on the opinion page of the WSJ, the job of these traders is to unwind these credit default swaps. If there is objective evidence that there performance improved the company’s financial status, they should be paid. As long as both the befits and the deficits are included in the pay equation.

I think members of the House and Senate should stand before the country and beg forgiveness. They are the ones to blame for this–Dems and Rep alike. And if they don’t, I’m sure few of us would mind if THEY took the advise of Sen. Grassley.

From #!:

“Grassley and his legislation in 1999/2000 is a big reason we’re in the mess we’re in now.”

If anyone should be in jail is him, Summers and Clinton who push through the deregulation to a GOP Congress; who were glad to deregulate. Plus, all the greedy executives at the financial houses and their so called bankers. They all should join the executives at AIG and have commit hari-ikari. Better yet, they should be sent to prison for the rest of their lives and placed in dungeons. But, before incarceration we should have the chance to tar and father them and parade them down the Washington Mall on a rail for all to see.

Medieval justice can be useful in modern times.

To Gerald Leibniz at post number 7:

I hate to intrude with a few facts here–but the contracts to hand out those bonuses were signed in early 2008–when Bush was still running the country and Paulson was still the Treasury Secretary.

Obama, and Democrats in Congress had NOTHING to do with the first $70 billion that was sent to AIG–the Fed did it entirely on their own, entirely without strings-operating on authority the Fed was given back in the first Depression.

To Augustine 25 at post number 13:

Your ongoing ability to seek out a single poll most favorable to your right wing worldview–and then glom onto like a bum on a baloney sandwich, and hold it up as if it the one and only poll–and totally accurate to boot– never ceases to amaze me.

Last week it was Rasmussen’s daily tracking poll.

Today, it’s Pew.

Personally, I’d argue that citing the RCP Average probably comes closer to reality–but I’d also say that after working for over 20 years with opinion researchers–I know that none of them would bet their next paycheck that this week’s poll numbers are some sort of gospel truth.

No matter–both of you are so blinded by your ideology, as usual, you’re unable to post a comment that is more than just tangentially connected to the topic of the story at the top of the thread.

Which in this case is Senator Grassely’s apparent belief that American CEOs should adopt the sort of acts of personal contrition that Japanese CEOs perform after they drive their companies into the ditch.

A few points seem in order–in response to that idea.

Starting with the fact that those practices–public apology, resignation and yes, even suicide–are not limited to CEOs and the business sector–officials in the Japanese government, over the years, have probably done such things at least as often–if not more.

Sauce for the goose, Senator, really should equally be suitable for the gander.

And as long as the Senator believes it makes sense to impose that sort of culture on our business leaders, why stop there?

From where I sit, I think there’d be a whole lot more to be gained–if we’re going to be turning Japanese on anything, rather than adopting their protocol of failure–why not adopt their pay practices?

The average CEO in Japan is paid 11 times as much as the average worker is.

In the U.S.–that average is 475 times as much as the average work makes.

Guess which is the only country that comes even remotely close to the obscene disparity in pay that exists between the fat cat CEOs in the U.S. and the rest of us?

This is going to kill Gerald and John D…um…I mean Augustine 25 :-):

Yes–it’s the paradise of Marxist/Socialism/Latin American-style.

Hugo Chavez’s Venezuela.

Of course, those wascally redistributors of wealth down there have held the rate down to a mere 50 times as much.

Still, as banana republics go, that’s bunch of bananas.

TR, if I follow your logic correctly, a US president has to expect to enrich himself in office and afterwards to demonstrate sanity. Is that inference correct?