Having worked in the financial services industry, I understand the rationale behind giving employees retention bonuses, as an incentive for knowledgeable staff to stay with the firm. When my then employer, CIBC World Markets, purchased Merrill Lynch Canada, they paid the top brokers a retention bonus to prevent the Merill brokers from leaving for other competitors, taking their valuable client books with them. Many were paid six-figure (and a few seven-figure) bonuses.
However, that was normal business practise in normal economic times. The current AIG (and allegedly applicable to Fannie Mae and Merrill Lynch) bonus payouts are reprehensible, because of a number of reasons. The obvious and number one reason, is that it is an inappropriate use of taxpayer money to pay obsence amounts when millions of hard-working Americans are losing their job. Secondly, if these people are responsible for the near collapse of AIG, then to reward them for putting the company and their fellow 100,000 AIG colleagues in peril, is beyond comprehension. This amounts to the epitome of rewarding failure.
For the recipients of these bonuses to not feel shame in accepting the payouts underscores the greed and me-first attitude of Wall Street. Any ethical and moral person would have rejected the bonuses in the first place, or at the very least, donated the proceeds to a charity. The swift passage of a bill in Congress to massively tax these bonuses is merely a visceral reaction to the issue.
Let's hope that it will deter future obsence payouts (until the economic situation has dramatically approved) and shame those financial wizards to put the nation's interest ahead of their own. And while the US remains the land of opprtunity, hopefully, there will be a greater sense of country first, individual pursuits second.
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