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Thread: A.I.G. Planning $165 Million in Bonuses After Huge Bailout

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    A.I.G. Planning $165 Million in Bonuses After Huge Bailout

    From today's edition of The New York Times

    The American International Group, which has received more than $170 billion in taxpayer bailout money from the Treasury and Federal Reserve, plans to pay about $165 million in bonuses by Sunday to 400 executives in the same business unit that brought the company to the brink of collapse last year...

    In a letter to Mr. Geithner, Edward M. Liddy, the government-appointed chairman of A.I.G., said at least some bonuses were needed to keep the most skilled executives.

    “We cannot attract and retain the best and the brightest talent to lead and staff the A.I.G. businesses — which are now being operated principally on behalf of American taxpayers — if employees believe their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury,” he wrote Mr. Geithner on Saturday.
    http://www.nytimes.com/2009/03/15/business/15AIG.html

    Several points are in order:

    1. Without taxpayer money, AIG would be insolvent. The company lacked the funds to make the bonus payments. Under such circumstances, there typically are legal avenues to delay or reduce such payments.

    2. Even as it seems reluctant to do so, the federal government should take steps to claw back the money that amounts to a misappropriation of taxpayer funding.

    3. Mr. Liddy's argument about seeking to retain the "best and the brightest talent" fails on two grounds. First, in the deep recession, financial services jobs at all levels are disappearing. It is not very likely that most of those the payments are aimed at "retaining" would be likely to depart in the current environment. Second, it is highly questionable (to be kind) that the individuals who transformed the company into a giant hedge fund are anything close to the "best and the brightest talent" in the field unless "success" is measured by the size of the financial hole they created.

    4. A carving out of the company's viable insurance business and auctioning of it to a viable insurance company and orderly dissolution of all of the firm's non-viable operations remains preferable to continuing to feed taxpayer funds into the company, some of which are now being misappropriated.
    Last edited by donsutherland1; 03-15-09 at 02:10 AM.

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    Re: A.I.G. Planning $165 Million in Bonuses After Huge Bailout

    FTA

    Mr. Liddy, whom Federal Reserve and Treasury officials recruited after A.I.G. faltered last September and received its first round of bailout money, said the bonuses and “retention pay” had been agreed to in early 2008 and were for the most part legally required.

    The company told the Treasury that there were two categories of bonus payments, with the first to be given to senior executives. The administration official said Mr. Geithner had told A.I.G. to revise them to protect taxpayer dollars and tie future payments to performance.

    The second group of bonuses covers some 2008 retention payments from contracts entered into before government involvement in A.I.G. Indeed, in his letter to Mr. Geithner, Mr. Liddy wrote that he had shown the details of the $450 million bonus pool to outside lawyers and been told that A.I.G. had no choice but to follow through with the payment schedule.

    The administration official said the Treasury Department did its own legal analysis and concluded that those contracts could not be broken. The official noted that even a provision recently pushed through Congress by Senator Christopher J. Dodd, a Connecticut Democrat, had an exemption for such bonus agreements already in place.
    It would be nice if the employees would forego their bonuses, but if they don't AIG has no choice but to pay them.

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    Re: A.I.G. Planning $165 Million in Bonuses After Huge Bailout

    Quote Originally Posted by donsutherland1 View Post
    From today's edition of The New York Times



    http://www.nytimes.com/2009/03/15/business/15AIG.html

    Several points are in order:

    1. Without taxpayer money, AIG would be insolvent. The company lacked the funds to make the bonus payments. Under such circumstances, there typically are legal avenues to delay or reduce such payments.

    2. Even as it seems reluctant to do so, the federal government should take steps to claw back the money that amounts to a misappropriation of taxpayer funding.

    3. Mr. Liddy's argument about seeking to retain the "best and the brightest talent" fails on two grounds. First, in the deep recession, financial services jobs at all levels are disappearing. It is not very likely that most of those the payments are aimed at "retaining" would be likely to depart in the current environment. Second, it is highly questionable (to be kind) that the individuals who transformed the company into a giant hedge fund are anything close to the "best and the brightest talent" in the field unless "success" is measured by the size of the financial hole they created.

    4. A carving out of the company's viable insurance business and auctioning of it to a viable insurance company and orderly dissolution of all of the firm's non-viable operations remains preferable to continuing to feed taxpayer funds into the company, some of which are now being misappropriated.

    Obama could easily fix this by taxing bonus over $500,000 at a rate of 55% or higher.

    The way I see it ... AIG could easily declare bankruptcy and have automatic protection from any legal proceedings that arise out of non-payment of bonuses.

    Mr. Liddy is a lying ass-rag who wants to pocket they money.

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    Re: A.I.G. Planning $165 Million in Bonuses After Huge Bailout

    Quote Originally Posted by Kernel Sanders View Post
    FTA



    It would be nice if the employees would forego their bonuses, but if they don't AIG has no choice but to pay them.

    AHh..... corporate greed. How it doth worsen the recession!


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    Re: A.I.G. Planning $165 Million in Bonuses After Huge Bailout

    $165M, damn that's a pay cut!!!! Outrageous!!!!
    "He who does not think himself worth saving from poverty and ignorance by his own efforts, will hardly be thought worth the efforts of anybody else." -- Frederick Douglass, Self-Made Men (1872)
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    A.I.G. planning huge bonuses after $170 billion bailout

    The American International Group, which has received more than $170 billion in taxpayer bailout money from the Treasury and Federal Reserve, plans to pay about $165 million in bonuses by Sunday to executives in the same business unit that brought the company to the brink of collapse last year.
    Can't wait to hear the wailing from those that thought that the government getting into the business of bailing out private companies is such a great thing.
    Last edited by TOJ; 03-15-09 at 12:33 PM.

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    Re: A.I.G. planning huge bonuses after $170 billion bailout


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    Re: A.I.G. planning huge bonuses after $170 billion bailout

    Quote Originally Posted by sazerac View Post
    Oops, my bad. I forgot that. Thanks.

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    Re: A.I.G. Planning $165 Million in Bonuses After Huge Bailout

    Quote Originally Posted by Vader View Post
    Obama could easily fix this by taxing bonus over $500,000 at a rate of 55% or higher.
    The problem with that is that AIG's bonus cash came from the government in the first place, so it's just a big whirlpool of wasted funding. Vote third party, I suppose, if you want someone to actually do something about this ridiculous inaction.
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    Re: A.I.G. Planning $165 Million in Bonuses After Huge Bailout

    wow!

    Once you take bailout money, all those bonuses should be removed.

    Things like this make me sick ...

    If they were making money or privately owned, they could have all the bonuses they want.

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