When in doubt, follow the money…
I still remember that quote from my Auditing class at Loyola College in 1981. Unfortunately it still applies today in all of the controversy about the AIG bailout. When you see the contributions by AIG and the scrambling by everyone to explain away this mess, it really starts to make me wonder (and worry).
Do you find it troubling that there were major AIG political contributionsto Obama ($130,000) and McCain ($59,499) and a total of $630,000 from AIG executives to politicians (According to ABCNEWS)? In the same article by ABC, they talk about an additional campaign contribution to the President of $23,000 by AIG and bring up the possibility that this could be from the first round of bailout funds?
One can make the case that this is very smart business - those contributions (say $700,000) produced over $ 170 billion in taxpayer money to AIG and written permission to pay huge bonuses to the people (AIG Financial Products division) who either created or sold the financial WMDs that destroyed our economy. Not a bad return on investment. But wait there is more...
Then we have Congress grilling the now embattled AIG CEO on national television, when the "bonus payments" were all approved and written into the stimulus bill. See this post titled Read the Bill: Stimulus Bill and Bonus Loopholes. There is still a debate as to who and when, but it is clear that the these bonuses were included in the Stimulus Bill
Apparently, many of our elected representatives did not even read the 1,100 pages of language that indebted all of us to trillions of dollars. I can't wait to see what other surprises show up from this hurried "must pass" legislation. And now we have yet more legislation trying to take back the first legislation as Charlie Rangel (accused of tax evasion himslef) introduces a tax law with a 90% tax rate directed at the AIG employees who took bonuses.
See the WSJ article titled Some Will Pay Back AIG Bonuses
See the actual AIG retention contractthat started this on the NYT's Deal Book by Andrew Ross Sorkin.
All I can say is that based on the money trails I am reading about, I am more concerned than ever about government and business getting tied together closer and closer through these bailouts. The chance of greed, corruption, and just plain incompetence has warning signs all over the place for me. Or as they say caveat emptor, let the buyer beware - in case you did not know it we are all "buyers" in this system since we are ultimately footing the bill. What do you think?
The words that Supreme Court Justice Louis Brandeis wrote about our broken financial system in 1913 ring true today, "Sunlight is said to be the best of disinfectants. Electric lights the most efficient policeman."
How can we as CPAs help bring more transparency into business and government which will begin the slowprocess of rebuilding trust again?As the most trusted advisers to business, what would you recommend?