I understand Americans’ frustrations with the recent story of AIG paying large bonuses out to executives who helped bring the company to it’s knees. We, the taxpayers, are now staking our future on the idea of bailing out companies like AIG and we have a significant amount of skin in the game. I agree in theory with the idea that paying these large amounts out?is insulting to the taxpayers who are essentially subsidizing these incompetent leaders. It also comes at a time when many Americans are losing their jobs and struggling to pay their own bills. In private equity, as a control investor, you have to approve salaries of the underlying management teams and in essence, the U.S. Government is the control shareholder of some of these bailout companies (and an 80% shareholder of AIG). However, there are three significant points to understand: 1) We are being punitive and I believe that this bill will be struck down by the Supreme Court as it is a bill of attainder (assuming it passes which it seems it will). There are ways to do things and ways not to do things. It seems as if Senator Chris Dodd struck out the original parameters put around executive compensation in TARP and I believe that would have been a more level headed approach to address this issue. We could have limited or significantly tied compensation to certain turnaround benchmarks.; 2) We, the investors (U.S. Taxpayers), are never going to be able to recover our money unless we are able to attract smart, motivated talent at all levels of these companies at price points that are possible (over $250k bonuses); 3) There were a number of companies that were essentially forced to take the bailout money and are going to do everything in their power to repay it now rather than use the money to increase lending (which was its designed purpose). This could cause another tightening of the credit markets.

I am upset too, but this is not the way to deal with our frustrations. I think the President and Congress are pushing through this bill because of perception rather than spending time to really understand the implications. This just once again proves that Washington does not know or understand Wall Street.