First, the visceral response to AIG bonuses, as espoused by Sen. Charles Grassley of Iowa: These greedy executives should do the honorable thing and commit ritualistic suicide.

(Grassley has backtracked from this comment, but it’s out there.)

Now, the pragmatic response to AIG bonuses, as espoused by Sen. Olympia Snowe: If Congress had shown any foresight in the stimulus, it would have enacted my amendment to either retrieve bonuses made by Bailout Babies or tax the snot out of them.

(Just like it’s trying to do now.)

We’re with Snowe. As much as Grassley’s reaction satisfies a certain populist bloodlust for the fiscal pirates who pillaged the American economy, huffing, puffing and stuttering outrage from so-called watchdogs on Capitol Hill won’t bring one cent of taxpayer money back.

It’s gone. AIG’s tone-deaf bonuses were not only contracted, but paid out before anybody caught wind. Congress blew it. It trusted the Dark Lords of Finance to put taxpayers’ – or call us what we are, investors – fiscal priorities before their own.

Shock of shocks, then, that AIG would ensure they get paid first. Was Alan Greenspan speaking another language when on Oct. 23, in testimony before Congress, he said, “those of us who have looked to the self-interest of lending institutions to protect shareholder’s equity (myself especially) are in a state of shocked disbelief”?

In short, this should have been expected. The government and taxpayers are frogs and the big banks are scorpions. They’ve proven this time and time again. The chance for Congress to scream “How Dare They!” is over. Instead, Congress should hear “How Could You?”

Sen. Snowe and her co-sponsor of the stricken amendment, Sen. Ron Wyden, D-Oregon, are loud voices in that chorus. On Tuesday, they demanded their proposal be re-examined by Treasury Secretary Timothy Geithner, because it would have prevented this shortsighted mess.

Geithner should. And the johnny-come-lately legislators spewing spittle and plans to recoup the bonuses should take a seat. They’re being reactive. Snowe-Wyden was proactive. These two senators have earned their place at the head of the line.

The financial crisis has two distinct hallmarks: an undeserved trust in management of the big banks and government failure to regulate these entities responsibly. AIG bonuses are portraits of these bleak realities. In this topsy-turvy world, they have become self-evident truths.

More outrage is wasted energy, then. How many times can Congress and the Obama administration become enraged at banks before realizing they’re part of the problem? Enough is enough. It’s high time to clamp down on banks and regulate them tightly and transparently.

And stop being so shocked when they do something greedy and stupid.


Only subscribers are eligible to post comments. Please subscribe or to participate in the conversation. Here’s why.

Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.