Bailout Backlash: A.I.G.'s Not Alone

In times like these, there are good ways and bad ways to hand out bonuses, at least when it comes to the court of public opinion. As Wal-Mart basked in the warmth of increased market share and a decision to award nearly $2 billion in financial incentives to its hourly employees, the House overwhelmingly approved a bill to tax away 90 percent of the taxpayer-funded $165 million worth of bonuses awarded to execs at A.I.G. and other firms that received bailout money.

As President Obama again denounced the A.I.G. payments, the Senate considered its own A.I.G. bill and New York State Attorney General Andrew Cuomo sent subpoenas to the insurance giant while probing bonuses at Merrill Lynch.

Thursday, Rep. John Lewis, chairman of a House Ways and Means subcommittee overseeing the Wall Street bailout, delivered a new bombshell: word that at least 13 of the companies rescued by the feds are behind in their taxes, by a total amount of over $220 million. That turned up in an audit of 23 companies, and Lewis plans to probe further. "If we looked at all 470 recipients, how much would they owe?" says the Georgia Democrat. He notes that all bailout recipients had been required to sign contracts which stated they did not owe taxes. The inspector general of the bailout program says that, potentially, could be a crime.

Even if it isn't, there's a question of ethics. "Step up and do the right thing," said A.I.G.'s top boss, Edward Liddy, as he urged recipients of bonuses over $100,000 to return at least half the cash. Ethics also has a lot to do with how the public feels about executive pay.

Public Agenda's report, "A Few Bad Apples," based on focus groups conducted in collaboration with The Kettering Foundation, found that citizens define business ethics more broadly than executives do. When typical citizens talk about business ethics, they cite executives who enrich themselves while driving their companies into the ground. Protecting employees' jobs, they say, should be a top ethical priority. When executives talk about ethics, they are concerned about the damage recent scandals have done to business' reputation and the need to restore public trust.

Views on big paychecks differed depending on how the companies were doing. Executives who cashed in while their companies were failing attracted ill will, but many focus group participants did not seem to begrudge high salaries for executives who were instrumental to the success of their companies, and admired those who protect their employees, provide a good product and respect their customers. "I know with our CEO, I personally think he's worth ten points of our stock price or value right there," said one man, in Arizona.