WTF More Bonuses for AIG Exec.
 

From the New York Times

Obama administration officials and Republicans alike were nearly universal in condemning the $165 million in bonuses that the American International Group, which has received more than $170 billion in taxpayer bailout money from the Treasury and Federal Reserve, is to pay executives in the business unit that brought the company to the brink of collapse last year.

Edward M. Liddy, the government-appointed chairman of A.I.G., argued that some bonuses were needed to keep the most skilled executives.

“There are a lot of terrible things that have happened in the last 18 months, but what’s happened at A.I.G. is the most outrageous,” said Lawrence H. Summers, President Obama’s chief economic adviser, during an appearance Sunday on ABC’s “This Week With George Stephanopoulos.” “What that company did, the way it was not regulated, the way no one was watching, what’s proved necessary — is outrageous.”

Let them all sink. No one is bailing me out.

F'em, Don't give them ****, let them whine and quit then watch them try to find a new job.

It's clear what these executives are skilled at. :mad:

Something is grossly wrong if a bonus is paid to someone and the company is performing poorly/under performing, seems to me that the company set the measurements incorrectly and consequently should be charged w/ gross negligence. As an officer of a publicly traded company, every time I received an annual bonus the company had to improve it's performance. My bonus had three components, individual, division and company.

Welcome to the world best capitalism system.

Come on guys. You know better.

Many bonuses are paid based on measures that have nothing to do with the company's profitability. Number of cold calls in a month, etc. The bonuses were often part of employment contracts with specific employees. You made 600 cold calls, you got a $4,000 bonus. Also, many divisions of AIG were profitable, but one small division pretty much lost much more money than the rest of the company makes. You have a lot of people who were doing what they should have been to contribute in a positive way to the bottom line. It's not their fault their efforts were wiped out by a few idiots who decided to play with subprime mortgages and credit default swaps.

I don't think it's a good idea to decide not to follow the contract, even if it was clearly a bad contract (i.e. millions when the company needed billions in loans to stay afloat). Some of the bonuses should have been paid with pink slips. Next time around, they should include some language in the contracts that has bonuses only being paid if the company, or division, or whatever is profitable.

I think there will be a sorting out for these types when the economy stabilizes. Right now it seems that there are other issues at hand that these guys understand and they are taking advantage.

Actually, the more I think about it, the best way to have avoided this mess would have been to not give AIG any money in the first place--then they would be bankrupt and not paying anyone any bonuses. Absent that, renegotiating employment contracts should have been a condition of receiving any money, just like it is for GM and Chrysler. This is Geihtner's failing and lack of foresight and he is just trying to get the heat off of him.

Who else go would bankrupt as a result of letting AIG die, and what would be the fall out to our economy? Just curious.

We'll never know. It's all speculation until it happens. I'd like to think that most businesses are adaptable.

why is O so peeved..
he /or the new dog should have read the darn thing..
perhaps maybe even some INPUT...
outrage...that's silly TV talk..
while I don't agree..I hope the AIG folks tell O..
nah nah suck this...
Germany and France told O lets wait and see ..
why..no need for them to bail their banks..
as AIG funneled billions to the Deutsch /Frog banks..
slipped right by them as well.

Rika

I recently read an article about where AIG's bailout money has gone. I did a quick search and couldn't find the article for you.

A lot of it went to Goldman Sachs. Quite possibly if you let AIG fail on its obligations, you sink Goldman, if you sink Golman then you sink JP morgan, if you sink JP morgan then you take out Bank of America, and around the wheel we spin. That is why the fed and the government are keeping AIG around. If they could let them fail, I believe they would.

American International Group Inc. used more than $90 billion in federal aid to pay out foreign and domestic banks, some of whom had received their own multibillion-dollar U.S. government bailouts.

The embattled insurer's disclosure on Sunday came amid outrage on Capitol Hill over its payment of tens of millions in executive bonuses, and followed demands from lawmakers that the names of trading partners who indirectly benefited from federal aid to AIG be made public.

The company, now about 80 percent owned by U.S. taxpayers, has received roughly $170 billion from the government, which feared that its collapse could cause widespread damage to banks and consumers around the globe.

"The ability of AIG to meet its obligations is important to the stability of the U.S. financial system and to getting credit flowing to households and businesses," Federal Reserve spokeswoman Michelle Smith said.

Some of the biggest recipients of the AIG money were Goldman Sachs at $12.9 billion, and three European banks — France's Societe Generale at $11.9 billion, Germany's Deutsche Bank at $11.8 billion, and Britain's Barclays PLC at $8.5 billion. Merrill Lynch, which also is undergoing federal scrutiny of its bonus plans, received $6.8 billion as of Dec. 31.

The money went to banks to cover their losses on complex mortgage investments, as well as for collateral needed for other transactions.

Other banks receiving between $1 billion and $3 billion from AIG's securities lending unit include Citigroup Inc., Switzerland's UBS AG and Morgan Stanley.

Municipalities in certain states, including California, Virginia and Hawaii, received a total of $12.1 billion under guaranteed investment agreements.

The company said it used billions more to fund its Maiden Lane business, which was set up following the federal bailout to purchase toxic assets, and to repay debt and provide capital for some of its operations.

"I've been asking for this information for months. This is a good first step, but I'm concerned by how long it took,' said Rep. Carolyn Maloney, D-N.Y., who is chair of Congress' Joint Economic Committee.

The details from AIG came after Obama administration officials and top Republicans voiced sharp criticism over $165 million in bonus payments AIG said it must make Sunday. The contracts are part of a larger total payout which has been reportedly valued at $450 million.

In a letter to Treasury Secretary Timothy Geithner dated Saturday, AIG Chairman Edward Liddy said outside lawyers informed AIG that it had contractual obligations to make the payments and could face lawsuits if it did not do so.

Liddy said the company entered into the bonus agreements in early 2008 before AIG got into severe financial straits and was forced to obtain a government bailout.

AIG has agreed to the Obama administration's requests to restrain future payments.

———

Associated Press Writers Candice Choi in New York and Jeannine Aversa in Washington, D.C. contributed to this report.

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AIG used it's AAA rating to get involved in this financial mess. Derivaties, credit swaps, toxic mortgages, etc. Their triple-A rating allowed them to chase 'profits'
in all these areas with NO fallback position (basically, no collateral to back them up). The head of this division was being payed (drum roll please) one million dollars PER MONTH!

All the major banks (worldwide) saw the big players (AIG, etc.) making huge profits and decided to not be left behind.

Rating agencies (again worldwide) all put on the rose colored glasses that indicated 'prices of homes would NEVER fall'.

...humm, so how'd that work out for y'all?

NY Attorney General Cuomo is keeping the pressure on AIG:

http://i.cdn.turner.com/cnn/2009/images/03/16/aig.letter.3.16.09.pdf

Since the American people bail out AIG and since the American people now own a large interest in AIG, why is it that we can't just tell AIG that bonuses are now rescinded?

They were legal contractual agreements but then again it wouldn't be the first time the govt. broke a contract. It would set a good example for the unions that they should take some concessions as well. The govt. breaks contracts every day, it's just that this is so public and the "O"man has his rep it.

According to who...the AIG legal staff (who are hired by the execs receiving the bonuses)? IMO, the insurance co's have a long track record of disregarding their contractual obligations (when claims are due to be paid), and take the approach of "let 'em sue us"...

My comment was made w/ tongue placed in cheek, I agree w/ you. I'm just as tired of this BS as you probably are. It's unethical at best.

One part of me emphatically says "let them fail", yet these mega-banks, investment houses, and AIG are so intertwined that the whole "house of cards" (i.e. the US economy) will tumble if the gov't does not intervene imo. I don't like it a bit, but don't think they have any other choice at this point (and it's not a Dem/Repub issue, both know it). My take, despite all the talk about "socialism" (not to make this PARFy) is, once co's are allowed to become so large (banking deregulation since the mid-80s), that they're "to big to allow failure", then we are already well down that path...just my .02 worth.