President Obama lashed out against the plan of AIG to pay roughly $165 million in bonuses after accepting about $170 billion in bailout money. He was quoted saying that the bonuses were an “outrage”, violating “fundamental values”, which underscore the need for financial regulatory reform.
I’m curious. Which fundamental values is President Obama referring to?
It couldn’t be the fundamental values of a capitalistic society. If he was, AIG shouldn’t have gotten a dime from the government in the first place. After all, we are still a capitalistic society aren’t we?
Come to think of it, if that was what he was referring to, there wouldn’t be a “need for overall financial regulatory reform” either. The free market would be left to allow bad companies to fail and good companies to prevail.
The fundamental values of a free market shouldn’t allow the government to interfere – that’s why it’s called a free market.
To add insult to injury, Treasury Secretary Geithner said the administration will require the top banks receiving federal aid to include small-business loans in their monthly reports. “We need you to put that assistance to work for the American economy,” he said. Not only do these companies have to recover from one of the worst economic times they probably have ever faced, but now they’re going to be pressured to make small business loans with the bailout money they received.
So what happens once these small businesses go under? Is AIG going to be left holding even more bad loans? Are we going to have to pump even more money into AIG if they start making loans to struggling businesses who ultimately will never be able to pay the loans back?
Businesses come and go. The strong ones just stick around a little longer. If AIG was destined to fail in 2008, we should have let it fail. The same goes for GM, Ford, and any other business that was determined to be “too big to fail”.
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