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

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donsutherland1

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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.
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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.
 
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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.
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It would be nice if the employees would forego their bonuses, but if they don't AIG has no choice but to pay them.
 
donsutherland1 said:
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.
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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.
 
$165M, damn that's a pay cut!!!! Outrageous!!!!
 
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.
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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. :rofl
 
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Vader said:
Obama could easily fix this by taxing bonus over $500,000 at a rate of 55% or higher.
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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.
 
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.
 
Bonuses....

That is not a term I wish to ****ing hear during any sort of economic troubles. Since when did we pay people to screw up? If I haphazardly lose all the money in the bank account, my dad might give me some money just so I don't starve to death, but he sure as hell won't give me a bonus because I did a good job by telling him my bank account was eating itself.
 
Re: A.I.G. planning huge bonuses after $170 billion bailout

This all works very favorably for lawyers. Bankers will now become the occupation that people make jokes about for the next 25 years.


Q: What do you call a thousand bankers at the bottom of the ocean?

A: A good start! :lol:
 
Re: A.I.G. planning huge bonuses after $170 billion bailout

All of those AIG executives are Republicans
 
no worries about the CEO bonuses, I'm sure the money will somehow trickle down to the poor and stimulate the economy </snark>
 
Moderator's Warning:
Threads merged.
 
I really think Obama should make an example out of these executives.

I hate to use the term 'sacrificial lambs' but that is exactly what should be made of these execs. It would be both ethical as well as great politics to lay down the law and set an example.

The more dramatic the better. Perhaps sending federal agents to take back this $165m that has been stolen from the tax payer for reasons clearly not related to maintain AIG's ability to meet its business obligations.

One thing is clear: Obama cannot merely talk about how these execs are being bad boys and that next time we won't give them so many billions. Hell no, that reeks of incompetence and naivete. Instead, Obama needs to make sure that no one ever takes the US taxpayer for suckers again.
 
Joby said:
I really think Obama should make an example out of these executives.

I hate to use the term 'sacrificial lambs' but that is exactly what should be made of these execs. It would be both ethical as well as great politics to lay down the law and set an example.

The more dramatic the better. Perhaps sending federal agents to take back this $165m that has been stolen from the tax payer for reasons clearly not related to maintain AIG's ability to meet its business obligations.

One thing is clear: Obama cannot merely talk about how these execs are being bad boys and that next time we won't give them so many billions. Hell no, that reeks of incompetence and naivete. Instead, Obama needs to make sure that no one ever takes the US taxpayer for suckers again.
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He might get away with declaring the crisis was so drastic he must declare marshal law and that gave him the authority to do such things.

Sounds like a hellava good idea to me. 'course I'm not one who would have to live under it. ;)
 
TOJ said:
He might get away with declaring the crisis was so drastic he must declare marshal law and that gave him the authority to do such things.
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He already does.

It's right under the part that gives him the authority to give billions of taxpayer dollars to private corporations. That is, give them billions for doing us no other service than fail miserably.

Sounds like a hellava good idea to me. 'course I'm not one who would have to live under it. ;)
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So do you not live in the US or do you not pay taxes?
 
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As I understand the situation, AIG is paying 'bonus's' already contracted for 2008, it is a legal requirement that these be paid.
I have read that the top six executives currently running AIG have refused to accept these 2008 Bonus's.
It is also my understanding that 2009 Bonus's will be decided at a later date.
 
Joby said:
He already does.

It's right under the part that gives him the authority to give billions of taxpayer dollars to private corporations. That is, give them billions for doing us no other service than fail miserably.
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Really? That your own personal opinion or do you have a source? .... thought so.



So do you not live in the US or do you not pay taxes?
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What does paying taxes have to do with having to live under marshal law?

Where one lives can be easily changed. Now, citizenship? That's another matter. ;)
 
jujuman13 said:
As I understand the situation, AIG is paying 'bonus's' already contracted for 2008, it is a legal requirement that these be paid.
I have read that the top six executives currently running AIG have refused to accept these 2008 Bonus's.
It is also my understanding that 2009 Bonus's will be decided at a later date.
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Damn. Couldn't you have held off for a day or three. The gnashing of teeth has been so entertaining. Especially from those willing to have the rule of law ignored just so they would feel better. :lol:
 
Didn't Obammy put a ceiling on bank CEO's salaries to the tune of $500,000?
So how does he not go after this with both sleeves rolled up? Is there anyone out there that believes the democrats did NOT know this was coming after dumping bilions of our tax dollars on these gangsters? Obammy has two faces andlike his buddy Biden will say anything to make himself look good. Recall, he got elected because of what he "said" not becasue of his achievements.
 
Re: A.I.G. planning huge bonuses after $170 billion bailout

AIG is at .50 a share....


Hmm.... do I throw a couple bucks at it? Chevy and ford have been real good to me the last couple of days.... :mrgreen:
 
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