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Tax-payer funded AIG to give tens of millions in bonuses

They should have been fired.

quote:

WASHINGTON March 15, 2009, 05:27 pm ET � American International Group is giving executives in its most troubled business unit tens of millions of dollars in new bonuses even though it received a taxpayer bailout of more than $170 billion dollars. AIG has said it must pay out the executive bonuses to meet a contractually obligated Sunday deadline, but the troubled insurance giant has agreed to administration requests to restrain future payments. The Treasury Department determined that the government did not have the legal authority to block the current payments by the company � which are part of a larger total payout reportedly valued at $450 million. AIG declared earlier this month that it had suffered a loss of $61.7 billion for the fourth quarter of last year, the largest corporate loss in history. http://www.npr.org/templates/story/...oryId=101916194

Weren't these AIG guys contractually obligated to not lose a metric fucktonne of customer's money?

I think the one contractual obligation outweighs the other.

They should be happy they still have jobs.

It's way worse than first reported...

quote:

AIG Bombshells: $1.2B in Bonuses, Over $100B Paid to Goldman, Other Banks AIG was lambasted as disclosures of its $1.2 billion bonus pool came to light. About $450 million of the bonuses were planned for employees of its financial services unit, the rogue hedge fund insider the insurer, which lost $40.5 billion later year. The Wall Street Journal reports at least seven individuals at that unit were due bonus payments of $3 million each. AIG CEO Edward Liddy says "the firm's hands are tied" because those bonus payments are "contractual commitments"; apparently, both he and regulators fear the fallout of trying to abrogate contracts, which may be legally binding but were signed before AIG became a ward of the state. Second, in part to quell the outrage over the bonus revelations - which apparently only came to light because a $165 million payment was due on Sunday - AIG released the names of its counterparties who, thus far, have received at least $90 billion of the $173 billion of government funds the firm has received in what amounts to a backdoor bailout of Wall Street firms, banks and foreign institutions. (Reports vary but Bloomberg says the counterparties got $105 billion of AIG bailout funds.) Along with Merrill Lynch, Bank of America and Citigroup, the prime beneficiaries of the AIG bailout bonanza include European banking giants Societe Generale, Deustche Bank and Barclays. But at $12.9 billion to date, Goldman Sachs is at the top of the list AIG bailout beneficiaries. This only reinforces the perception the AIG bailout was really a bailout of Hank Paulson's former firm. And, by the way, AIG's Liddy had to resign from Goldman's board in order to take the AIG job last fall. http://finance.yahoo.com/tech-ticke...,BAC,DB,BCS,XLF

So i have been listening to shit talk about AIG from the nice people at CNBC from the second i came to work today. Then the market opens and this happens.





Go figure.

quote:

Originally posted by Moongoose So i have been listening to shit talk about AIG from the nice people at CNBC from the second i came to work today. Then the market opens and this happens. Go figure.

I wonder who bought 10,000,000 shares of AIG. I'd like to step in their shoes for a day. They did a terrible job hiding it.

I'm telling you - the world has gone crazy ...

quote:

Originally posted by Krypton It's way worse than first reported...

the entire point of bailing out AIG was so that AIG would be able to compensate the counterparties so that the banks (which purchased insurance [credit default swaps] from AIG) wouldn't take a huge hit from AIG's inability to compensate them for the valid insurance contracts they purchased. Anyone who is outraged that AIG paid banks with the bailout money is misinformed about the entire purpose of the bailout. The government was far less concerned about the existence of AIG than it was about the health of the parties to which AIG potentially owed billions of dollars.


As for outrage about bonuses, oh well! It's hard to be mad at the company when its hands are contractually tied. The government could have imposed limitations on compensation, but that would have required that each contract be modified, an unlikely event considering if I were in line to receive a $3 million dollar bonus there's ZERO F'in chance I'm modifying my contract, especially when the government is coming to the rescue. People are dillusional if they think the government wasn't aware of these contracts when the bailouts occurred. The problem is that noone in their right mind would forego that much money, especially when the bailout was absolutely necessary. The bonus recipients are in an enviable position [not from a PR standpoint] because the bailout was so necessary that almost nothing could prevent it from occurring, even the egregious bonuses they are to receive for running the company, and potentially the US economy, into the ground. Bailing out AIG with bonuses in place was more important than struggling to modify those bonus packages. That's the unfortunate reality.

quote:

Originally posted by jerZ07002 As for outrage about bonuses, oh well! It's hard to be mad at the company when its hands are contractually tied. The government could have imposed limitations on compensation, but that would have required that each contract be modified, an unlikely event considering if I were in line to receive a $3 million dollar bonus there's ZERO F'in chance I'm modifying my contract, especially when the government is coming to the rescue. People are dillusional if they think the government wasn't aware of these contracts when the bailouts occurred. The problem is that noone in their right mind would forego that much money, especially when the bailout was absolutely necessary. The bonus recipients are in an enviable position [not from a PR standpoint] because the bailout was so necessary that almost nothing could prevent it from occurring, even the egregious bonuses they are to receive for running the company, and potentially the US economy, into the ground. Bailing out AIG with bonuses in place was more important than struggling to modify those bonus packages. That's the unfortunate reality.

Exactly. The outrageous outrage is so rediculous. Congress handed them that money with no strings. Why isn't Obama going batshit crazy over the $90 billion in TARP funds that went from AIG to European banks and Goldman Sachs instead of these bonuses that amount to 1/1000th of the TARP money?



God! I'm sick of this shit of forcing banks to take money, with no strings attached, then demonizing them for what they do with it. Then government plays the "white knight" card with the whole "We're coming for you... this is outrageous... we're going to go get the public's money back!" But that's what happens when you ram shit through at light speed because everything is a "crisis".

We're from the government...we're here to help.


methinks Obama and Geithner are going to find a way to make the bonuses disappear. At least they're gonna try.

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Originally posted by Shakka We're from the government...we're here to help. methinks Obama and Geithner are going to find a way to make the bonuses disappear. At least they're gonna try.

right on cue----> http://www.foxnews.com/politics/200...uses-dodd-says/

quote:

Originally posted by jerZ07002 the entire point of bailing out AIG was so that AIG would be able to compensate the counterparties so that the banks (which purchased insurance [credit default swaps] from AIG) wouldn't take a huge hit from AIG's inability to compensate them for the valid insurance contracts they purchased. Anyone who is outraged that AIG paid banks with the bailout money is misinformed about the entire purpose of the bailout. The government was far less concerned about the existence of AIG than it was about the health of the parties to which AIG potentially owed billions of dollars. As for outrage about bonuses, oh well! It's hard to be mad at the company when its hands are contractually tied. The government could have imposed limitations on compensation, but that would have required that each contract be modified, an unlikely event considering if I were in line to receive a $3 million dollar bonus there's ZERO F'in chance I'm modifying my contract, especially when the government is coming to the rescue. People are dillusional if they think the government wasn't aware of these contracts when the bailouts occurred. The problem is that noone in their right mind would forego that much money, especially when the bailout was absolutely necessary. The bonus recipients are in an enviable position [not from a PR standpoint] because the bailout was so necessary that almost nothing could prevent it from occurring, even the egregious bonuses they are to receive for running the company, and potentially the US economy, into the ground. Bailing out AIG with bonuses in place was more important than struggling to modify those bonus packages. That's the unfortunate reality.

If one was surprised about who the counterparties were and roughly how much, that person obviously hasn't been paying attention enough attention to this AIG situation to comment on it. Unfortunately, that seems to be the bulk of people commenting on it.

I kind of feel bad for CEO Ed Liddy. He's going to have to go through another round as a punching bag on Wednesday, even though he's not responsible for any of this mess. But most people don't even understand that he took that role after the first AIG bailout.

quote:

Originally posted by The17sss right on cue----> http://www.foxnews.com/politics/200...uses-dodd-says/

How are they going to tax them if the bonuses were earned in London? Shouldn't the UK be taxing them?

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Originally posted by Groundhog Boy How are they going to tax them if the bonuses were earned in London? Shouldn't the UK be taxing them?

I agree with you man... it's not possible really. It looks like a ploy by Obama to show "he's gonna get tough on this corporate corruption and come to the rescue on behalf of the middle class as the greedy Wall Street CEO's abuse their taxpayer money". Smoke and mirrors. Those contracts were based on those employees achieving certain criteria, which they met. Now, after a shitpot of money is given to AIG with no strings, they get blasted for using some of it to uphold contractual agreements.

The whole thing is a grandiose distraction from the real problem of massive government excess, spending, and waste. They get to act as the savior as though they are innocent bystanders in all of this mess.

I'm outraged that they're so outraged.

...and the well has runneth dry. way to Hopeychangy go, you morons

quote:

Originally posted by Q5echo ...and the well has runneth dry. way to Hopeychangy go, you morons

Apparently Obama is to blame for AIG's executive compensation...

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Originally posted by Krypton Apparently Obama is to blame for AIG's executive compensation...

well, he and Gietner could have renegotiated terms on more bailout but i don't think people realistically expected that however thats not my point.

here. ill let someone else explain.

He said many different things. What exactly is your point?

Sorkin makes a couple of interesting points. Almost makes the bonuses seem like hush-money.

quote:

March 17, 2009 Dealbook The Case for Paying Out Bonuses at A.I.G. By ANDREW ROSS SORKIN Do we really have to foot the bill for those bonuses at the American International Group? It sure does sting. A staggering $165 million � for employees of a company that nearly took down the financial system. And heck, we, the taxpayers, own nearly 80 percent of A.I.G. It doesn�t seem fair. So here is a sobering thought: Maybe we have to swallow hard and pay up, partly for our own good. I can hear the howls already, so let me explain. Everyone from President Obama down seems outraged by this. The president suggested on Monday that we just tear up those bonus contracts. He told the Treasury secretary, Timothy F. Geithner, to use every legal means to recoup taxpayers� money. Hard to argue there. �This isn�t just a matter of dollars and cents,� he said. �It�s about our fundamental values.� On that last issue, lawyers, Wall Street types and compensation consultants agree with the president. But from their point of view, the �fundamental value� in question here is the sanctity of contracts. That may strike many people as a bit of convenient legalese, but maybe there is something to it. If you think this economy is a mess now, imagine what it would look like if the business community started to worry that the government would start abrogating contracts left and right. As much as we might want to void those A.I.G. pay contracts, Pearl Meyer, a compensation consultant at Steven Hall & Partners, says it would put American business on a worse slippery slope than it already is. Business agreements of other companies that have taken taxpayer money might fall into question. Even companies that have not turned to Washington might seize the opportunity to break inconvenient contracts. If government officials were to break the contracts, they would be �breaking a bond,� Ms. Meyer says. �They are raising a whole new question about the trust and commitment organizations have to their employees.� (The auto industry unions are facing a similar issue � but the big difference is that there is a negotiation; no one is unilaterally tearing up contracts.) But what about the commitment to taxpayers? Here is the second, perhaps more sobering thought: A.I.G. built this bomb, and it may be the only outfit that really knows how to defuse it. A.I.G. employees concocted complex derivatives that then wormed their way through the global financial system. If they leave � the buzz on Wall Street is that some have, and more are ready to � they might simply turn around and trade against A.I.G.�s book. Why not? They know how bad it is. They built it. So as unpalatable as it seems, taxpayers need to keep some of these brainiacs in their seats, if only to prevent them from turning against the company. In the end, we may actually be better off if they can figure out how to unwind these tricky investments. Not that any of this takes the bite out of paying these bonuses. For better or worse � in this case, worse � someone at A.I.G. decided this company needed to sign bonus agreements last year to keep people before the full extent of its problems became clear. Now we can debate why A.I.G. felt it necessary to guarantee seven executives at least $3 million apiece when the economy was clearly on shaky ground. Perhaps we will find out these contracts were a bit of sleight of hand to enrich executives who knew this financial Titanic had hit the iceberg. But another possible explanation is that A.I.G. knew it needed to keep its people. That is the explanation offered by Edward M. Liddy, who was installed as A.I.G.�s chief executive when the government effectively nationalized the company last fall. (He is being paid $1 a year.) �We cannot attract and retain the best and brightest talent to lead and staff� the company �if employees believe that their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury,� he said. There�s some truth to what Mr. Liddy is saying. Would you want to work at A.I.G.? Sure, maybe for $3 million. But not if you could go somewhere else for even more � or even much less. �The jobs are terrible,� said Robert M. Sedgwick, an executive compensation lawyer at Morrison Cohen who represents a number of employees of banks that have taken government money. �You have to read about yourself in the paper every day. These people are leaving as soon as they can.� Let them leave, you say. Where would they go, given the troubles in the financial industry? But the fact is, the real moneymakers in finance always have a place to go. You can bet that someone would scoop up the talent from A.I.G. and, quite possibly, put it to work � against taxpayers� interests. �The word on the street is that A.I.G. employees are being heavily recruited,� Ms. Meyer says. Of course, if taxpayers had not bailed out A.I.G., these contracts would not be worth anything. Andrew M. Cuomo, the attorney general of New York, made the point on Monday, when he subpoenaed A.I.G. for the names of the people who received the bonuses. If A.I.G. had spiraled into bankruptcy, its employees would have had to get in line with other unsecured creditors. Mr. Cuomo wants to know who A.I.G.�s lucky employees are, and how they have been doing at their jobs. So here is a suggestion for him. Get the list, and give those big earners at A.I.G. a not-so-subtle nudge: Perhaps they will �volunteer� to give some of their bonuses back or watch their names hit the newspapers. But in the meantime, despite how offensive and painful it might be, let�s honor the contracts.

quote:

Originally posted by Groundhog Boy How are they going to tax them if the bonuses were earned in London? Shouldn't the UK be taxing them?

if the traders were in the US for a specific period, they would be subject to US tax (about 183 days). Also, if the traders were in the US at all, the income earned in the US on those days could be taxed. The more likely approach would be to tax AIG on the payments by not allowing deductions. But that really wouldn't work since AIG has about 100 billion in net operating loss carryovers. I think that proposal is coming from a senator who doesn't really know that much about taxes (i didn't read the article so I don't know who made the proposal).


Just throwing out an idea: Maybe the government could impose a transfer tax on funds leaving the US (i see problems with crafting this sort of tax, but perhaps it's possible). If the contracts are with a subsidiary of AIG (and not guaranteed by the parent), perhaps the government could simply block the transfer to the sub (leaving the traders with a claim against the sub).

I see the most likely scenarios as (i) the government does nothing, or (ii) the government withholds under the pretense of an interpretation of some US law, which forces the british traders to negotiate lower bonus payments or come to court in the US.

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Originally posted by Lebezniatnikov I'm outraged that they're so outraged.

They are not outraged, Obama's Political capital gets eroded if he cant stop this bonus payment, he sees it like AIG CEO is showing him middle finger and wants to potrayit to world like that, but the fact remains that AIG is bound by contractual agreement to disperse the bonus to performing employees. Unless they amend the contract and re-write it again there is nothing that the CEO can do. Obama/media is making a scapegoat out of CEO.

quote:

Originally posted by jerZ07002 if the traders were in the US for a specific period, they would be subject to US tax (about 183 days). Also, if the traders were in the US at all, the income earned in the US on those days could be taxed. The more likely approach would be to tax AIG on the payments by not allowing deductions. But that really wouldn't work since AIG has about 100 billion in net operating loss carryovers.

And if we taxed AIG, we'd just be taxing ourselves.

GOP Senator Grassley On AIG Execs: "Resign, or go commit suicide."

So tactful.

quote:

Originally posted by Lebezniatnikov GOP Senator Grassley On AIG Execs: "Resign, or go commit suicide." So tactful.

Really?

quote:

Originally posted by Lebezniatnikov GOP Senator Grassley On AIG Execs: "Resign, or go commit suicide." So tactful.

I've never been one to advocate PC, but to me that comment also seemed pretty offensive to Japanese people.

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