AIG to pay $165 million in bonuses this year

[Askthepizzaguy]

Are we talking about AIG or Barney Frank and Chris Dodd?

I hope you know Devastatin Dave, that I hate those guys. I hate anyone who steals from the middle class and gives to the undeserving. I am struggling my way through college and I refuse to suck on the teat of government intervention.

This welfare state is big enough. That's another reason I hate these big bailouts. That's corporate welfare, not to mention an unregulated form of welfare.

I just want to know who gets the money. that's all. Is it really so much to ask?

[Major Robert Dump]

I don't think us knowing who gets the money matters to a certain extent because we can't do anything about it. Yeah, I know, democracy blah blah vote them out of office i2 2 years assuming we actually remember or they don't figure out a way to convince us that they weren't responsible because they were taking care of workers, or had to vote with the party, or needed to vote for it to get something else passed because it was attached to the bill or a quid pro quo on a future issue.

At this point, I'd honestly rather not know. The money is gone. And all this talk of paying back loans is comedic, because if the company still fails -- and many of them will -- guess what, the loan only gets repaid to the extent of liquid company assets and employees 401k plans, and the company executives are not liable, no way, no how.

What we are seeing now are corporations using the same budgeting, borrowing and spending techniques that our federal government has been using for the last half century. I just want to know when I get my turn.

[Devastatin Dave]

I hope you know Devastatin Dave, that I hate those guys. I hate anyone who steals from the middle class and gives to the undeserving. I am struggling my way through college and I refuse to suck on the teat of government intervention.

This welfare state is big enough. That's another reason I hate these big bailouts. That's corporate welfare, not to mention an unregulated form of welfare.

I just want to know who gets the money. that's all. Is it really so much to ask?

Sorry for my flippent remark, I'm glad to see you are not only looking at this thing from one angle. As my dear friend MRD said, they should have been allowed to fail. The government are simply prolonging the death. AIG is Terri Shiavo and the government keeps shoving a feeding tube back down the throat of a corpse. Let it die and allow someone else to take its place.

This whole bailout thing is not a way to "help" these companies and survive, its a way for the government to have more and more control over everything and to transfer more wealth from the private sector to the likes of Shummer, Pelosi, Reid, and Dodd. Scary stuff.

[Askthepizzaguy]

At this point, I'd honestly rather not know. The money is gone.

That's your emotional disgust talking, not your logical side. It is never a good move to become more ignorant of the facts, nor shoot oneself in the foot when we have already made a mistake.

Sorry for my flippent remark, I'm glad to see you are not only looking at this thing from one angle. As my dear friend MRD said, they should have been allowed to fail. The government are simply prolonging the death. AIG is Terri Shiavo and the government keeps shoving a feeding tube back down the throat of a corpse. Let it die and allow someone else to take its place.

Never apologize for being yourself, Devastatin Dave. This place would be awfully boring without you.

[Don Corleone]

It's not, but that's not being discussed here. AIG was given a blank check, and now we're demanding - without knowing anything about the actual situation - that the bonuses be returned. Is a "one size fits all" approach to demanding the bonuses be rescinded responsible?

I agree. This isn't about your kids future or mine. This is about getting what you can from the government while you can. We decided we weren't going to play ball with a free market. Fine. Hand me my welfare check.

AIG isn't as a whole, they're merely compensating employees (who may not have had anything to do with AIG falling apart).

Were you this full of vinegar when they were bailed out to begin with? Because that's where the real outrage belongs. Not here. Like you said, the story ended right there.

I'm not social engineering anything.

Okay, you must have missed me screaming in large, bold letters "LET THEM FAIL".

Dude, I'm old-forest/new-forest capitalism. I want them going belly-up. I wanted them belly-up last year. I want a dozen smaller insurance companies feasting on their remains.

What I don't want is $.02 coming out of my pocket, keeping these zombies alive.

If THAT'S what you and Strike are getting at, that "pay bailouts, may as well pay bonuses", we sort of agree there. But the money we gave AIG was supposed to be sort of a loan... keep them solvent long enough to break them up, then pay government back first. Don't see how executive bonuses fits into all that, especially given that the bonuses are going directly to the guys that caused all the trouble in the first place.

[Askthepizzaguy]

I love that part about high end capitalism where they say the market should determine who lives and who dies, and thus they are opposed to bailing out the poor. But when they need help, it's a double standard.

Hypocrisy.

[Xiahou]

Why does this whole story remind me of the same overheated rhetoric that swirled around the Dubai Ports World (DPW) deal not to long ago? Just replace "terrorists will be running our ports" with "fat cat crooks are stealing our money".

I never thought the 165M was a big deal- like I said, its about a tenth of a percent of the bailout money that AIG received. Be mad about that if you must be outraged. The 165M is small change, in fact, it barely even rates as small change.

AIG is finished, there should be no doubt about that. The government's role should be to ensure a soft landing instead of an outright cratering. The employees of AIG have to know they're on a sinking ship- and I'm sure their natural instinct would be to jump ship and look for a new job before the labor market is completely flooded. However, if the government wants to liquidate AIG, they going to need to keep on some staff, managers, and yes, even the "evil" executives who know the business of selling assets. The only way they're going to get people to be willing to go down with the ship is by offering financial incentives for them to do so.

[Askthepizzaguy]

I never thought the 165M was a big deal- like I said, its about a tenth of a percent of the bailout money that AIG received. Be mad about that if you must be outraged. The 165M is small change, in fact, it barely even rates as small change.

How many people could be sent to college with that money? How many doctor's bills could be paid? How many abandoned children could be fed?

I object to wasting 10 dollars, let alone 165 million of them. Forgive the moral outrage, as I am sure it sounds like grandstanding, but it's a fact. There is no reason to waste 165 million dollars on unaccountable expenditures when we have higher priorities.

Gosh, Xiahou, it seems like we never agree. It's nothing personal man.

[Major Robert Dump]

well thats the inherent problem with american politics as it is......

If they get this, I want that. How can you be against social welfare but for gratuitous corporate welfare or vice versa? How can you spend money on this but not on that? I'm voting against this bill knowing full well it will pass so I'm gonna stick my own pork in it anyway because if they get a piece I want a piece, too. How can you spend money on prevention but not punishment or vice versa....

goes on and on. very few in office have balls, and the ones who do usually get castrated by their party or their constituents for not bringing home the bacon.

I voted against the bill because it had 489 expenditures unrelated to the primary bill intent

He voted against police/education/military/disaster funding!!! throw him to the wolves!!!!

[Askthepizzaguy]

I voted against the bill because it had 489 expenditures unrelated to the primary bill intent

He voted against police/education/military/disaster funding!!! throw him to the wolves!!!!

THAT is the primary dishonesty that goes on. Over and over again the accusation was that the Dems, for example, didn't support the troops because they disagreed with things they added to the bill unrelated to the bill.

The rule should be: you pass one law at a time. Don't pile a bunch of things in one bill if it is an expenditure bill, and it's unrelated expenses. Wait 5 minutes and pass a second bill. Vote for each bill, not all at once.

That kind of slimy has to end immediately.

[Devastatin Dave]

Over and over again the accusation was that the Dems, for example, didn't support the troops because they disagreed with things they added to the bill unrelated to the bill.
.

This is how the democrats "support" the troops...

http://hotair.com/archives/2009/03/1...-sacred-trust/

This could start another thread but you have to understand I'm a vet from 95 (Clinton years) till 2005 and I can tell you, the democrats are not big fans of the troops.

Any Carter Vets out there like to back me up?

Anyway, back on topic, should the government now dictate companies to void contracts they have already entered with people? Would you like the government to come into your job and tell your boss that you are underserving for a raise our your Christmas bonus? This has many legal implications that could cause serious damage to all business and industries as we know it.

[Major Robert Dump]

Man if the government showed up and told my boss my contract was void and I had to start paying for my own nipple pasties I would so totally quit the gay bar

[Seamus Fermanagh]

Man if the government showed up and told my boss my contract was void and I had to start paying for my own nipple pasties I would so totally quit the gay bar

DevDave, you should sig this....



Don C:

I agree with you. It really is galling that they're doing this all on the public nickel. I DO work for an insurance company. We not only didn't leverage our debt -- we never have HAD any debt. All of our members (we function like a mutual in most respects) can rely on us to honor our contracts without having to beg the taxpayers for the money. Is that old-fashioned of us? Did we miss the chance to increase profits by leveraging debt? Yes, and thank God for the foresight of our officers in doing so.

Yes, of the amount they were given, 165M is but a small percentage. What's really annoying is that, had these companies been allowed to fail as their decisions warranted, they'd have been in chapter eleven and able to bypass those contracts. Instead, the taxpayers have "saved" these companies -- for now -- but must pay out contractual promises to the very leadership cadre that screwed things up in the first place. I VERY much understand Don's anger.

[Askthepizzaguy]

Anyway, back on topic, should the government now dictate companies to void contracts they have already entered with people? Would you like the government to come into your job and tell your boss that you are underserving for a raise our your Christmas bonus? This has many legal implications that could cause serious damage to all business and industries as we know it.

If the government bailed out my company, it would have a right to do so.

That's the difference. Private businesses; no right to do so. If the Fed just bailed out your company and it now owns 80% of your company's assets (or whatever the case may be) then it's basically an arm of the government until it pays the government back for its investment.

Look, I'm no expert, so if I am ignorant of something here, please educate me

[Major Robert Dump]

well....a contract is a contract.....

if the fed is gonna step in and void contracts that were perfectly legal then we may be setting a bad precedent. i believe hugo chavez just did something similar down south but with a different intent. whats happening is the legislative branch is trying to do after-the-fact legislation when they find out they got duped, and any harsh punishment at this poitn vould arguably hamper the company's ability to pay back the loan......its extortion i tell ya

[Xiahou]

Well, I can certainly tell you that the threats from some blowhards in congress to tax the bonuses at 99 or 100% is completely unconstitutional.

[Askthepizzaguy]

I don't like it I tells ya! But since I can't counter the argument, being an amateur, and because I wouldn't be able to convince you anyway, I'll bow out, courteously.

[Strike For The South]

We gave AIG the money
We told them that all there contracts still held weight.

What AIG is doing is a unethical but not illegal. Nor can we do anything about it. So we are simply going to have to accept it. It sucks but our reps should've payed more attention.

I'm no idealist, a fool maybe, but certainly not an idealist.

[Diana Abnoba]

First of all, I just want to state my opinion, I don't wish to argue with anyone over this. I am upset that these CEOs and executives get these huge bonuses when they didn't do anything which merits a bonus, while the hard working employee gets little or no bonus for doing all the actual constructive work. At my work, I save lives every day and I have to work two jobs to pay my bills and I get no benefits. However, our new CEO which just got hired was given a $500,000 sign-on bonus plus $500,000 stock option sign on bonus. At the same time we are all getting our salaries reduced, no raises, fewer people per shift, so people's health and lives are on the line. This is much more important than CEO bonuses. We skimp on supplies and run out of supplies constantly, this is to save money, but it doesn't save any money because when a patient needs something, we cannot just shrug and say sorry, we are trying to cut back on expenses. I have done everything right, I have an impeccable credit rating, I've paid on time, and I am covering my mortgage the best I can. However, due to other people's bad decisions, my home has lost 50-100K in value and I cannot get it refinanced for a lower interest rate because the new loan won't cover the value of the home currently due to the loss of equity, and due to local foreclosures, and the bad loans given out by all these companies such as banks. Innocent hard working people are getting shafted and irresponsible people are getting rewarded with taxpayer dollars. My dollars. I should have a say in how that money is spent, and frankly, I want it back. Also these people who got some of these retention bonuses weren't even retained, they no longer work at AIG.

Don't mean to start an argument, but I feel firmly that there should be oversight, and since the government now owns 80% of AIG, they should assert their right reject the irresponsible bonuses being handed out to people who may not have earned it and don't deserve it. I believe they are the ones who tanked us anyway. But I don't know for sure, that's why I want the government to find out for sure who is getting these bonuses.

Ok I think that's all I wanted to say.

[Askthepizzaguy]

I think that at least being able to publicly vent frustration is a small form of catharsis. So even if we disagree we can vent our frustrations without directing it at people.

[a completely inoffensive name]

First of all, I just want to state my opinion, I don't wish to argue with anyone over this. I am upset that these CEOs and executives get these huge bonuses when they didn't do anything which merits a bonus, while the hard working employee gets little or no bonus for doing all the actual constructive work. At my work, I save lives every day and I have to work two jobs to pay my bills and I get no benefits. However, our new CEO which just got hired was given a $500,000 sign-on bonus plus $500,000 stock option sign on bonus. At the same time we are all getting our salaries reduced, no raises, fewer people per shift, so people's health and lives are on the line. This is much more important than CEO bonuses. We skimp on supplies and run out of supplies constantly, this is to save money, but it doesn't save any money because when a patient needs something, we cannot just shrug and say sorry, we are trying to cut back on expenses. I have done everything right, I have an impeccable credit rating, I've paid on time, and I am covering my mortgage the best I can. However, due to other people's bad decisions, my home has lost 50-100K in value and I cannot get it refinanced for a lower interest rate because the new loan won't cover the value of the home currently due to the loss of equity, and due to local foreclosures, and the bad loans given out by all these companies such as banks. Innocent hard working people are getting shafted and irresponsible people are getting rewarded with taxpayer dollars. My dollars. I should have a say in how that money is spent, and frankly, I want it back. Also these people who got some of these retention bonuses weren't even retained, they no longer work at AIG.

Don't mean to start an argument, but I feel firmly that there should be oversight, and since the government now owns 80% of AIG, they should assert their right reject the irresponsible bonuses being handed out to people who may not have earned it and don't deserve it. I believe they are the ones who tanked us anyway. But I don't know for sure, that's why I want the government to find out for sure who is getting these bonuses.

Ok I think that's all I wanted to say.

Dang, I am sorry that it has gotten so bad for you and your coworkers.

[Sasaki Kojiro]

hmm. Retention bonuses for employees were were actually retained don't bother--if I were in that situation and had been supposed to get that amount I'd want it. The 17 million other, if we didn't have bigger fish to fry I'd have something to say about.

But from where I'm sitting we have three parties responsible for the current mess:

The finance people who knowingly drove a bubble for short term profit
The government people who relaxed regulations that allowed that
The media peopl who didn't report on what was going on (see the thread on cramer et al)

With the AIG thing it seems like the media and congress are jumping all over the finance people while ignoring their own faults...they're the last people I care to hear complain about 17 million in bonuses.

[HoreTore]

Hah!

You certainly are my favourite capitalist pig-dog, Don Corleone

I think I'll spare you and your family when the revo-lotion comes... And it's never to late to join us, ya know

[Devastatin Dave]

If the government bailed out my company, it would have a right to do so.

That's the difference. Private businesses; no right to do so. If the Fed just bailed out your company and it now owns 80% of your company's assets (or whatever the case may be) then it's basically an arm of the government until it pays the government back for its investment.

Look, I'm no expert, so if I am ignorant of something here, please educate me

The problem is Chris Dodd did tell them they could gove bonuses BEFORE the firestorm hit. So the government did ok this BEFORE the outrage. Again, this is why the government should have not jumped into this mess to begine with...


MRD and Seamus Fermanagh, the government can peel my pasties off on my cold dead nipples!!!

[Devastatin Dave]

Don't mean to start an argument,

Welcome to the Backroom.

[Major Robert Dump]

The outrage by the administration at this point is completely misguided considering the deals that were brokered beforehand. This is a typical example of politicians feigning outrage over something they had a large hand in. Outrage should be focused not only at AIG, but also at the politicians who allowed this to happen, but for the most part the media machine ignores this because its just too goshdarned deep for the average person to comprehend.

I have no love for AIG, but this posturing and OMGZ HOWDAREUZ stuff is really hilarious

[drone]

It sucks, and if the employees had any sense of decency they would turn down the bonuses (but they work for AIG Financial Services, so we all know they don't). The problem here is that the bailout money had no strings attached. The blame here lies solely with Congress for writing and passing a bad law, and W for signing it. It doesn't take a genius to figure out what is going to happen when obviously failing companies full of greedy finance gurus are given gobs of taxpayer dollars without any real restrictions.

Raid on the Treasury. Easier to pull off than taking Fort Knox. Every congressman and senator that voted for these bailouts should lose their jobs next election as they are either incompetent or in on the scam.

[Lemur]

If the employees had any sense of decency they would turn down the bonuses (but they work for AIG Financial Services, so we all know they don't).

Not only are they not willing to turn them down, but gosh darn it, they deserve them.

AIG’s new management team last year proposed that its employees give up their “retention” bonuses, or at least reduce them. The response from the 370 or so employees set to rake in $450 million in bonuses through 2010? Take a hike. “We suggested that early on, but there are people who feel this money was due them,” a source close to the company told The Hill.

And anybody bellyaching about the financial services idiots at AIG taking home $6 million dollar bonuses is just a stooge for Obama Antichrist. So sayeth the Rushbo:

A lynch mob is expanding: the peasants with their pitchforks surrounding the corporate headquarters of AIG, demanding heads. Death threats are pouring in. All of this being ginned up by the Obama administration. [...] And the president's own teleprompter is telling him to say that these executive are greedy and selfish and this is inciting people to behavior that could lead to violence if their threats are acted out. This whole thing is a boondoggle. It is a mess brought to you by the United States government led by Democrats.

Strange, I thought the current Administration was behind the curve on this issue, and reacting more than instigating. Maybe it's part of their super-secret plot ....

-edit-

On a more serious note, here's the best summary/analysis of the AIG fiasco that I have yet read:

My basic points are the following

1. From comments made by AIG executives it appears that the company fundamentally misunderstood the nature of risks that it was underwriting. Those risks were

a) much more highly correlated than they assumed (due to the nature of bonds in CDO structures as well as the likely performance of super-senior tranches in event of impairment)

b) actually mark-to-market risk, not default risk which made AIG’s business much riskier than it thought. This is because long before super-senior tranches became impaired (the only risk AIG was worried about), AIG will have had to post more collateral than the cash it had on hand effectively guaranteeing its bankruptcy.

2. The logical consequence of the previous point is that buying protection from AIG on ABS CDO’s is horribly wrong-way (discussed below) or, to use an analogy, akin to buying deep out-of-the-money puts from a company on its own stock. In other words, that protection is worthless.

[KukriKhan]

Liddy (AIG Chief, being grilled by Congress) says The Fed knew about these bonuses for months. And the SEC, and the GAO, all of whom receive monthly and quarterly mandatory filings from AIG. And Fed rep's sit on all board meetings.

So: The Fed never told Geithner (Sec Treas) about them? Or Giethner didn't tell POTUS, so that POTUS and he went on nat'l TV to express outrage, about something they either knew about, or should have known about?

What the.....?

I say again: bad law, passed in the middle of the night, coming back to bite the lawmakers, and they're trying to deflect blame.

With all this heat being generated, it just makes me more determined to watch the magician's hands more closely, for surely, our attention is being mis-directed by this faux outrage, to draw our attention away from something much bigger and more sinister.

[Don Corleone]

Liddy (AIG Chief, being grilled by Congress) says The Fed knew about these bonuses for months. And the SEC, and the GAO, all of whom receive monthly and quarterly mandatory filings from AIG. And Fed rep's sit on all board meetings.

So: The Fed never told Geithner (Sec Treas) about them? Or Giethner didn't tell POTUS, so that POTUS and he went on nat'l TV to express outrage, about something they either knew about, or should have known about?

What the.....?

I say again: bad law, passed in the middle of the night, coming back to bite the lawmakers, and they're trying to deflect blame.

With all this heat being generated, it just makes me more determined to watch the magician's hands more closely, for surely, our attention is being mis-directed by this faux outrage, to draw our attention away from something much bigger and more sinister.

They're lowering the tolerance threshold for direct government intervention. Swing back to August, 2008. Barney Frank and Chris Dodd announce that in an effort to bolster solvency, they're going to start directing strategic actions at some large financial services companies. Imagine the reaction.

Now, however, after playing up the outrage factor for a while, not many people are that opposed to just such a scenario. There are broad calls for the government to DO exactly that. Therefore, if it comes up as an election issue in 2010, they can simply state "We only intervened because the American public insisted we do".

We should not be paying bailouts. Hank Paulson, Timothy Geitner, Ben Bernanke and the crew from both administrations should be answering to a grand jury for gross misappropriation of public funds. AIG and other financial instutitions that were caught standing when the music stopped SHOULD topple. And my money should be in my pocket, not AIG's vice-president of sleaze's bonus check.