Mar 16th 2009

AIG Bonus Scandal Spotlights the Bankruptcy of Wall Street's "Greed is Good" Values

by Robert Creamer

Robert Creamer is a long-time political organizer and strategist and author of the recent book: "Stand Up Straight: How Progressives Can Win," available on

When reports spread that insurance giant AIG would give top executives huge bonuses after a $170 billion taxpayer bailout, you could feel the anger rumbling in Middle America like boiling magma before the eruption of a volcano.

Many top officials of the Obama administration were beside themselves with outrage.

And just imagine how protestations from AIG's CEO about its "contractual obligations" sounded to UAW workers who are being asked once again to modify their contractual agreements to keep the auto industry in business. But the titans of the financial sector seem to have very different standards for themselves and the rest of the American economy.

Recall that these bonuses are going to executives at AIG's financial products division -- the very unit that wrote trillions of dollars of "credit-default-swaps" that insured investors against defaults on bonds backed by sub-prime mortgages. The problem was that AIG used a loophole in the law to argue that the "credit-default-swaps" were not really insurance, so they weren't required to abide by insurance laws which would have assured that they had the capital on hand to pay claims when defaults actually occurred. That caused AIG to collapse and helped precipitate the global financial crisis. Seven of these executives get from $3 to $6.5 million. So much for responsibility.

Now the CEO of AIG has the audacity to argue that it has to pay bonuses because, if AIG loses it best employees, it would be harder for the company to recover and help the government recoup its investment. These are the best and the brightest? Could the gang in the financial products division of AIG done any worse? They helped precipitate the worst economic collapse in more than half a century.

But the really important thing about the AIG bonus scandal is that it is emblematic of the need to fundamentally change the culture of Wall Street and the American economic elite in general.

In 1987 Michael Douglas starred in a film called Wall Street where he famously intoned: "Greed is good."

That has been the motto of the American financial sector for the last thirty years -- and it became the accepted moral frame for much of American economic and political dialogue -- culminating in the "markets uber alles" philosophy of the Bush years.

The "Greed is good era" is over. It died on September 15, 2008 with the collapse of Lehman Brothers and the right wing myth that if everyone looks out for his own self interest the "invisible hand" would assure that the public interest would take care of itself. More than Lehman Brothers went bankrupt that day. So did Wall Street's entire system of "greed is good" values.

In fact, of course, "greed" was never "good". The ethical and religious teachings that have evolved over thousands of years of human development don't hold up "greed" as a value. The minister, priest, imam or rabbi doesn't get up on the Sabbath and encourage his congregates to go be "greedy".

Commitment to others -- commitment to our country -- selflessness -- that's what is good. Most everyday Americans understand that to their core. They get chills when they hear about the soldier who sacrifices his life for his buddies. They are inspired by the doctor who devotes himself to heal people who can't afford health care.

They know instinctively that hard work -- and sacrificing for your kid's future -- and teaching the next generation -- and inventing cures for diseases because they will help other people -- and creating something that is beautiful, or improves the lives of your fellow human beings - those are the things that are "good" and should be valued by our society.

They know that the highest calling of human beings is not to go make as much money as you possibly can, but rather to live a life of service to other people.

Normal people know that, but it has been completely lost on the Wall Street crowd and the American economic elite. They see no contradiction to paying CEO's of hedge funds $450,000,000 while day care workers make $19,000 a year. They think it made perfect sense for Martin Sullivan, the former CEO of AIG to have received a $47 million severance package when he retired from the firm as the financial tsunami swamped his company last summer. They are the first to urge UAW employees to lower their middle class pay, but don't hesitate to dole out $6.5 million to people whose actions lead AIG to disintegrate.

Last week an analyst for government-bailed-out Citicorp had the gall to argue that the Employee Free Choice Act would be bad for the economy because it would allow more everyday people to join unions and raise their wages -- this from a company that gave its retiring CEO a $29 million retirement package just last year.

The sense of entitlement is awe-inspiring. But the failure to understand the values and economic circumstances of average Americas is even more breathtaking.

In fact, of course, the notion that "greed is good" is just so much self-serving drivel. It has nothing to do with the traditional progressive values that have always defined what is best in America. It has nothing to do with "good" -- only "greed".

Future generations will look back on "greed is good" values the same way that we now view the ethical systems that once legitimated the view that "slavery is good" or that it is right for a king or emperor to conquer and dominate others through military force.

The good news is that out of the ashes of the "greed is good" world view, a new ethic of service, sacrifice, responsibility, patriotism and hope have swept America. It is up to all of us to reestablish those traditional progressive values as the bed rock for political decision making at this critical time in the history of our country and our planet.

Robert Creamer's recent book: Stand Up Straight: "How Progressives Can Win" is available on

If you wish to comment on this article, you can do so on-line.

Should you wish to publish your own article on the Facts & Arts website, please contact us at

Browse articles by author

More Current Affairs

Apr 16th 2021
EXTRACT: "When we examined the development of nations worldwide since 1820, we found that among rich Western countries like the United States, the Netherlands and France, improvements in income, education, safety and health tracked or even outpaced rising gross domestic product for over a century. But in the 1950s, even as economic growth accelerated after World War II, well-being in these countries lagged.
Apr 11th 2021
EXTRACT: "Some presidents indulge in the “Mount Rushmore syndrome” making an obvious effort to achieve greatness. Normally soft-spoken and apparently modest Biden is making his own bid for immortality."
Apr 9th 2021
EXTRACT: "New ways of thinking about the role of government are as important as new priorities. Many commentators have framed Biden’s infrastructure plan as a return to big government. But the package is spread over eight years, will raise public spending by only one percentage point of GDP, and is projected to pay for itself eventually. A boost in public investment in infrastructure, the green transition, and job creation is long overdue."
Apr 7th 2021
EXTRACT: " One can, and perhaps should, take the optimistic view that moral panics in the US blow over; reason will once again prevail. It could be that the Biden era will take the sting out of Trumpism, and the tolerance for which American intellectual life has often been admired will be reinvigorated. This might even happen while the noxious effects of American influence still rage in other countries. For the sake of America and the world, one can only hope it happens soon.  "
Mar 28th 2021
EXTRACT: "By refusing (despite having some good reasons) to end electoral gerrymandering, Chief Justice John G. Roberts, Jr., has directly enabled the paralyzing hyper-partisanship that reached its nadir during Donald Trump’s presidency. By striking down all limits on corporate spending on political campaigns in the infamous 2010 Citizens United decision, he has helped to entrench dark money in US politics. And by gutting the 1965 Voting Rights Act in Shelby County v. Holder, Roberts has facilitated the racist voter-suppression tactics now being pursued in many Republican-controlled states."
Mar 24th 2021
EXTRACT: "the UK’s tough choices accumulate, and the problems lurking around the corner look menacing. Britain will have to make the best of Brexit. But it will be a long, hard struggle, all the more so with an evasive fabulist in charge."
Mar 15th 2021
EXTRACT: "Over the years, the approach of most American policymakers toward the Israeli-Palestinian conflict has been Israel-centric with near total disregard for the suffering endured by the Palestinian people. The architects of policy in successive US administrations have discussed the conflict as if the fate of only one party (Israel) really mattered. Israelis were treated as full human beings with hopes and fears, while Palestinians were reduced to a problem that needed to be solved so that Israelis could live in peace and security.  ..... It is not just that Israelis and Palestinians haven’t been viewed with an equal measure of concern. It’s worse than that. It appears that Palestinians were judged as less ​human than Israelis, and were, therefore, not entitled to make demands to have their rights recognized and protected."
Mar 8th 2021
EXTRACTS: "XThere’s a global shortage in semiconductors, and it’s becoming increasingly serious." ...... "The automotive sector has been worst affected by the drought, in an era where microchips now form the backbone of most cars. Ford is predicting a 20% slump in production and Tesla shut down its model 3 assembly line for two weeks. In the UK, Honda was forced to temporarily shut its plant as well." ..... " As much as 70% of the world’s semiconductors are manufactured by just two companies, Taiwan Semiconductor (TSMC) and Samsung."
Mar 5th 2021
EXTRACT: "Back in 1992, Lawrence H. Summers, then the chief economist at the World Bank, and I warned that pushing the US Federal Reserve’s annual inflation target down from 4% to 2% risked causing big problems. Not only was the 4% target not producing any discontent, but a 2% target would increase the risk of the Fed’s interest-rate policy hitting the zero lower bound. Our objections went unheeded. Fed Chair Alan Greenspan reduced the inflation target to 2%, and we have been paying for it ever since. I have long thought that many of our economic problems would go away if we could rejigger asset markets in such a way as to make a 5% federal funds rate consistent with full employment in the late stage of a business cycle."
Mar 2nd 2021
EXTRACT: "Under these conditions, the Fed is probably worried that markets will instantly crash if it takes away the punch bowl. And with the increase in public and private debt preventing the eventual monetary normalization, the likelihood of stagflation in the medium term – and a hard landing for asset markets and economies – continues to increase."
Mar 1st 2021
EXTRACT: "Massive fiscal and monetary stimulus programs in the United States and other advanced economies are fueling a raging debate about whether higher inflation could be just around the corner. Ten-year US Treasury yields and mortgage rates are already climbing in anticipation that the US Federal Reserve – the de facto global central bank – will be forced to hike rates, potentially bursting asset-price bubbles around the world. But while markets are probably overstating short-term inflation risks for 2021, they do not yet fully appreciate the longer-term dangers."
Feb 28th 2021
EXTRACT: "To be sure, calls to “build back better” from the pandemic imply some awareness of the need for systemic change. But the transformation we need extends beyond constructing modern infrastructure or unlocking private investment in any one country. We need to re-orient – indeed, re-invent – global politics, so that countries can cooperate far more effectively in creating a better world."
Feb 23rd 2021
EXTRACT: "So, notwithstanding the predictable release of pent-up demand for consumer durables, face-to-face services show clear evidence – in terms of both consumer demand and employment – of permanent scarring. Consequently, with the snapback of pent-up demand for durables nearing its point of exhaustion, the recovery of the post-pandemic US economy is likely to fall well short of vaccine development’s “warp speed.” "
Feb 20th 2021
EXTRACT: "Human rights abuses under Erdogan are beyond the pale of inhumanity and moral decadence. The list of Erdogan’s violations and cruelty is too long to numerate. The detention and horrifying torture of thousands of innocent people for months and at times for years, without being charged, is hard to fathom. Many prisoners are left languishing in dark cells, often in solitary confinement. The detention of tens of thousands of men and hundreds of women, many with their children, especially following the 2016 failed coup, has become common. It is calculated to inflict horrendous pain and suffering to bring the prisoners to the breaking point, so that they confess to crimes they have never committed."
Feb 20th 2021
Courtyard of the Amsterdam Stock Exchange, circa 1670, (Job Adriaenszoon Berckheyde).
Feb 12th 2021
EXTRACT: "Global regulators will no doubt be concerned about a potential volatility spillover from digital asset prices into traditional capital markets. They may not permit what could quickly amount to effective proxy approval by the back door for companies holding large proportions of a volatile asset on their balance sheets."
Feb 11th 2021
EXTRACT: "Since Russians began protesting opposition leader Alexei Navalny’s imprisonment, the security forces have apparently had carte blanche to arrest demonstrators – and they have done so by the thousands. If Russians so much as honk their car horns in solidarity with the protesters, they risk personal repercussions. The official response to the protests goes beyond the Kremlin’s past repression. It is war."
Feb 6th 2021
EXTRACT: " Biden, Roosevelt was certainly no revolutionary. His task was to save American capitalism. He was a repairer, a fixer. The New Deal was achieved not because of Roosevelt’s genius or heroism, but because enough people trusted him to act in good faith. That is precisely what people are expecting from Biden, too. He must save US democracy from the ravages of a political crisis. To do so, he must reestablish trust in the system. He has promised to make his country less polarized, and to restore civility and truth to political discourse. In this endeavor, his lack of charisma may turn out to be his greatest strength. For all that he lacks in grandeur, he makes up for by exuding an air of decency."
Feb 2nd 2021
EXTRACT: "Europe must not lose sight of the long game, which inevitably will center on China, not Russia or relations with post-Brexit Britain. China is already establishing a presence in Iran, and demonstrating that it has the capital, know-how, and technology to project power and influence beyond its borders. Should it succeed in turning the Belt and Road Initiative into a line of geopolitical stepping-stones, it might soon emerge at Europe’s southeastern border in a form that no one in the EU foresaw."
Jan 29th 2021
EXTRACT: "One sign of this change is that, unlike all recent Democratic administrations, Biden’s hasn’t paid obeisance to Wall Street by giving bankers top jobs. The new Secretary of the Treasury, Janet Yellen, is a former Federal Reserve chair and academic who has made it clear that she understands the country’s pressing social needs. Moreover, Biden consulted Warren on her economic views, and has named a former Warren adviser as Yellen’s deputy. Yellen’s appointment demonstrates that Biden shares the insight that enabled Trump’s rise: that too many Americans feel that they cannot get a fair share. "