Lawmakers, Regulators, Taxpayers Unbelievably Pissed At AIG

There’s no shortage of outrage directed at AIG today as the fallout from the bailed-out insurer’s announcement that they intend to use $165 million in taxpayer money to pay bonuses to the very executives that ruined the company continues.

From ABC News:

“It’s ridiculous,” U.S. Rep. Elijah Cummings, D-Md., told “GMA,” adding that he doesn’t buy the notion that the government doesn’t have enough control over taxpayer dollars to stop bonuses like these.

Sadly, most everyone else seems to be in agreement that the government has no power to stop AIG from going ahead with the bonuses — despite the fact that we are now its single largest shareholder. Fed Chairman Ben Bernanke told CBS’ 60 Minutes that of all this meltdown nonsense it’s the AIG bailout that makes him the angriest — and ABC News says that the chairman was so livid after hearing about the bonuses that he slammed the phone down.

“Let me just first say that of all the events and all of the things we’ve done in the last 18 months, the single one that makes me the angriest, that gives me the most angst, is the intervention with AIG. Here was a company that made all kinds of unconscionable bets. Then, when those bets went wrong, we had a situation where the failure of that company would have brought down the financial system,” Bernanke said.

“You say it makes you angry?” Pelley asked.

“It makes me angry. I slammed the phone more than a few times on discussing AIG. I understand why the American people are angry. It’s absolutely unfair that taxpayer dollars are going to prop up a company that made these terrible bets, that was operating out of the sight of regulators, but which we have no choice but the stabilize, or else risk enormous impact, not just in the financial system, but on the whole U.S. economy,” Bernanke explained.

Ben Bernanke’s Greatest Challenge [CBS]
From Outrage to the Future: Learning From the AIG Bonuses [ABCNews]
(Photo:ChristophrHiestr)

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  1. pecan 3.14159265 says:

    Can the top AIG execs go to prison already? I mean, if there’s any room at Gitmo…

  2. private1111 says:

    Wow this is incredible. Im surprised that these execs aren’t hung up by thier toenails and beaten for what they have done to the country.

  3. lastingsmilledge says:

    i didn’t expect this kind of outrage after united lost 4-1 to the scousers over the weekend.

  4. lalaland13 says:

    I like what Talking Points Memo said, how Treasury expressed concern about this and AIG basically told them to “blow it out their ass.” That pretty much sums it up. I’m almost ready to just let AIG fail. Can we do that? No, probably not. Sigh.

    • cabjf says:

      @lalaland13: Can we break up their assets and sell them off to competitors though? There has to be some solution. At the very least the largest shareholder should be able to bring about a vote to remove the current leadership.

      I’m of the opinion that instead of propping up failing monstrosities that are “too big to fail”, we should have been setting up a situation where smaller competitors could have taken their place. Split up their assets and create a system where smaller banks can team up and take over these accounts and activities that are too large for any one of them to handle alone.

      • HFC says:

        @cabjf: I was getting ready to write, pretty much, the same thing you did. Break these giant companies up.

      • SynMonger says:

        @cabjf: I believe we tried that before with AT&T. After a few decades they’ve nearly finished re-consolidating into that monolith of destruction that was Bell back in the 80’s

        • Inglix_the_Mad says:

          @SynMonger: Which is why you take a hammer out every so often and shatter them. Note to Feds: Next time you break up a phone company, divorce them from the cables and forbid any common carrier (a provider that sells TV, Phone, Internet, et al) from owning them in whole or part.

        • Wireless Joe says:

          @SynMonger:

          While large, I don’t think you can’t compare the current AT&T (landline service in 13 states, one of at least four national wireless networks) to the 50-state monopoly that was broken up.

  5. LegoMan322 says:

    I am not surprised because they are going to continue to get away with this. They should be hung…and tried…then hung again, but no one has the balls to do it.

  6. rockstarjoe says:

    It’s such a nasty situation. AIG basically has us by the balls. They went nutty and made bad bets, and now that their bets are being called they turn around and inform us that if they fail that the entire economy fails. So what other option do we have but to pay them. And then they say, well, we legally have to pay these people their bonuses or they will quit and sue us, and then we will fail, and then the economy will fail. Again, the government is powerless to stop AIG. They are basically blackmailing us but we can’t say no or the economy will collapse. They should have never been allowed to get so big (“too big to fail”).

    • usa_gatekeeper says:

      @rockstarjoe: Your comment got me to thinking … perhaps we should restructure our federal monopoly laws to make them more useful for this day and age.

      Companies are indeed being allowed to become “too big to fail”, by one means or another (questionable mergers, issuance of toxic paper without mergers, etc).

      Under a revised definition of anti-monopoly measures, the government could begin making companies who become, “too big to fail”, break up into smaller independent and competing units … just like they (WE) did with Standard Oil, etc.

    • mac-phisto says:

      @rockstarjoe: i get what you’re trying to say, but no one ever has the us gov’t “by the balls”. what other option do we have? i can think of a few:
      -investigations
      -indictments
      -audits

      where’s j. edgar when you need him?

      • rockstarjoe says:

        @mac-phisto: I hear you, I am just trying to sort through the argument for sustaining the status quo at AIG. Would AIG as a business survive investigations, indictments, and audits? Or would this cause them to fail, bringing about the complete economic catastrophy that we have been warned about? I’m just saying that as much as I want to see their executives frog-marched out of there and into a courtroom, I think it would be counter-productive to economic recovery. I don’t like it, but it seems like we aren’t going to get the satisfaction of seeing justice carried out on these crooks.

      • theblackdog says:

        @mac-phisto: Busy trying on your grandma’s negligee?

  7. Darrone says:

    At the end of the day, why are we even surprised this is happening? Did the government really think that a bunch of banking executives were going to suddenly put the best interests of the company/government before themselves?

  8. thesadtomato says:

    Well as long as Bernanke was really angry and threw a fit, then I guess I can feel better about all this. I guess it makes it all ok. Thanks, Ben Bernanke.

    • working class Zer0 says:

      @thesadtomato: Yea that comment really did it for me. I hope he said a lot of naughty words too.

    • Evil_Otto would rather pay taxes than make someone else rich says:

      @thesadtomato: Hey, at least he gives a damn about it.

    • Eliamias says:

      @thesadtomato: The way I see it, Bernanke’s anger is the first step. We’ve got the ‘I’m mad as hell’ part of down pat. Now to just sit and wait for ‘and I’m not going to take this any more’ part to kick in. Oh, how I await the day.

  9. usa_gatekeeper says:

    They always “blame the system” so no one (or no one group) can be identified for punishment. No way of recovering ill-gotten money.

    Says the gov’t, “We’ll do better on this next time”. These days you have to be a Madoff or Stanford to get any sort of punishment.

  10. 12-Inch Idongivafuck Sandwich says:

    So what really happens if we let the company fail?

  11. OmniZero says:

    Greed is the worst of the so-called “Seven Deadly Sins”. Greed ruins people’s lives and also breeds the other deadly sins.

    I hate executives and CEOs. I hate Wall Street.

  12. FooSchnickens - Full of SCAR says:

    Somehow the mental image of Bernanke with a pouty face just gives me a hellacious case of the chuckles.

  13. dwhuntley says:

    Glad to see that Bernanke solution to the problem is to get mad! That’ll do a lot of good. He’s one of the reasons we are in this mess. What an idiot.

  14. Subsound says:

    AIG the company seems to need saving, but not these assholes who seem to keep making worse and worse decisions. Saving the company doesn’t mean you have to save them from anything, just put them in a room with the shareholders and keep the cameras out.

  15. mmmsoap says:

    I think part of the problem is the word “bonuses” being used here. IANAL, but my understanding is that AIG is maintaining that they are responsible for these bonuses, due to contracts signed in 2008, before the bailout(s). If this is true, then they’re right, and it would be entirely inappropriate for the government to come in and void the contracts. According to the report I heard on NPR this morning, Lawrence Summers was talking about how they were working to minimize these “bonuses” as much as possible, since they couldn’t force AIG to forgo them altogether.

    That being said, on what planet are “bonuses” a right of the employee? Isn’t that actually part of their salary? The term bonus implies that it’s pay above-and-beyond base salary, further implying it’s for excellent performance. If it is part of the salary, earned regardless of performance, then just call it such.

    • mac-phisto says:

      @mmmsoap: you know what? tough shit. i don’t care if it’s a contract or not. remember when united bankrupted its pension fund? all those employees were working with a future promise of benefits also & look at where they are now – retiring with 30% of what they were promised. then, united exited bankruptcy a year later & awarded its execs millions of dollars in bonuses & stock. book definition cash grab – punish the workers; award the execs.

      simply put, this bullshit needs to stop. AIG is no longer playing with their money. they’re playing with my money. i haven’t gotten a bonus in 4 years – in fact, i’m taking a paycut as we speak. “but we’ll lose the financial masterminds…” good. lose ‘em. we’ll find new ones. better ones even.

      this mentality that people are due something – even in failure – when did this become the norm? for years, regular workers at AIG & other insurers have been given the screwjob in compensation & retirement benefits; now that it’s hitting the big boys, we have to finance their lavishness? bullcocky.

      you want them to stay at AIG? here’s how you accomplish it: put them all – each & every one of them – under federal investigation for fraud, money laundering & racketeering – see if they can get a job anywhere else then.

      • mmmsoap says:

        @mac-phisto: In no way do I disagree with you premise. However, I can’t say that the situation would be better if the government was allowed to come in to void a contract between two parties. What would be the point of having laws if it’s okay to violate and/or change them at will?

        This is very similar to the furor over rapists and murderers getting released from prison over a technicality. Yes, it sucks. Yes, no one likes it. But it’s still not okay to disregard the law just because someone deserves it. When we do that, what’s to stop the government from disregarding the law because you’re black, or poor, or gay?

        • dragonfire81 says:

          @Eyebrows McGee: I was always under the impression that a “Bonus” was something unplanned, unexpected and entirely at the discretion of the employer and hence the concept of contract with a REQUIRED Bonus is confusing.

          If you are signing a piece of paper that says you WILL get $XXXX each year for your bonus regardless of performance, market factors or anything else (which is that the AIG stories make it seem was the case), then it’s not a bonus, it’s just an extension of pay.

          Even if the contracts included bonus provisions, how could they possibly have been met when the company posted the BIGGEST LOSS IN CORPORATE HISTORY just recently?

          • Eyebrows McGee (now with double the baby!) says:

            @dragonfire81: ” I was always under the impression that a “Bonus” was something unplanned, unexpected and entirely at the discretion of the employer and hence the concept of contract with a REQUIRED Bonus is confusing.”

            That’s a recipe for getting sued, if the owner/whomever gets to play “compensation favorites” at his discretion.

            A bonus schedule at a lawfirm typically says “if you bill 2,000 hours and earn in excess of $300,000 for the firm, we pay you a bonus of $X. If you bill 2,100 hours and earn in excess of $350,000 for the firm, we pay you a bonus of $Y.” (I’m making up those numbers full stop.) And so forth. They’re very specific about whether pro bono hours count, if your average hourly billing has to hit a certain number, how many hours you can write down, etc. The minimum will generally be 1800 hours (or whatever) to stay employed; the bonus IS for going above and beyond, but the structured system prevents lawsuits and gives clear guidelines to employees. Other companies do things in a similar fashion — you get a bonus for going X far above this metric or that one.

            But a “required” or “contractual” bonus =/= “bonus regardless of performance, market factors, etc.” I don’t know what AIG’s issue is, since I haven’t seen the contract, but if their bonus structure DOESN’T take into account market factors, etc., it’s the shittiest-written employment contract in history, as I noted.

        • mac-phisto says:

          @mmmsoap: well, criminal & contract law are different. this wouldn’t be the first time the government swooped in & voided a contract, or changed the terms of it. consider the air traffic controller strike of 1981: workers were told to return to work within 48 hours or lose their job. not only were almost 10,000 workers were fired on the spot 2 days later by reagan (despite existing employment contracts), but their union was decertified (despite a bargaining contract).

          the government has, on more than one occasion, stepped in & had their way with injunctions, strike freezes, lockouts, etc. in employment contracts when they felt it was within the country’s interest.

          • mmmsoap says:

            @mac-phisto: I’m not sure how your example is analogous here. Granted, I don’t know a ton about the 1981 strike so my info may be bad, but my understanding is that (similar to police and firefighter strikes that are a matter of public safety) the government’s position was that striking was illegal for the air traffic controllers. As in, the government swooped in and — rather than changing terms of a contract — said that the contract or strike was not legal in the first place. That’s different than changing laws after the fact because we don’t like decisions the CEOs are making. At least, I’m not sure we can make a case that the contracted bonuses aren’t legal because no one put a “don’t cause another Great Depression” clause in the fine print.

            Yes, it sucks that AIG wrote moronic bonus schedules. I’ll be over the moon if the various AGs can figure out a way to sue and/or stop this from happening, either with AIG or other bailed out firms. However, if they’re not violating a law currently on the books, it would be entirely inappropriate to change the contract retroactively.

            • mac-phisto says:

              @mmmsoap: ok, i see your point, but they’re not playing with company money anymore, so don’t “the rules” kind of fly out the window? what’s the normal etiquette here? which cash infusion comes with the bookkeeper that begins to stop payment on these checks?

              that was kind of my point with the 1981 strike. pretty much any way you look at it, these employees don’t really work for AIG anymore. they work for us now. i doubt very seriously that even the best among them can generate $145 billion in profits over the next 10 years to pay us back, so i think it’s safe to say that we are AIG. therefore i think we have every right to say, “look, assholes, here’s your choice. return all our money right now, or don’t pay the bonuses. hell, pay the bonuses if you want to, out of your own pocket, but not ours. there you go, you have until 5pm tomorrow to make a decision…let us know.”

              & if AIG’s answer is “piss off” like it’s been for the past 8 months, we should have our whole team of regulators down there this weekend taking inventory for tuesday’s announcement that AIG is now FEDAIG.

              i don’t think we have to sit here & take it. that’s all i’m saying. we always have the option to just let them go, or take control of the entire operation. why aren’t we holding that over their heads?

    • Eyebrows McGee (now with double the baby!) says:

      @mmmsoap: “That being said, on what planet are “bonuses” a right of the employee?”

      Yeah, I get the contractually-obligated part, but what kind of shitty-ass employment contract doesn’t have some kind of clause where the company gets to NOT pay you a bonus when you’re an executive in a division that, oh, destroys the American economy or helps the company lose $61 billion in a single quarter?

      My husband’s contract has a bonus structure clearly laid out … along with the 8 zillion conditions in which the company doesn’t have to pay them, which includes something like, “company in serious financial distress.” (Which I know could be used to weasel out of ever paying them, but presumably you could phrase it out to be pretty specific.)

      • mmmsoap says:

        @Eyebrows McGee (on Twitter: LPetelle): Oh, I totally agree here. As far as I’m concerned, I’d like to see some of these execs brought up on charges a la Enron. This seems like an all-around shitty way to run a business if you don’t fire, or at least reprimand, people for poor performance.

  16. sapere_aude says:

    OMG. Bernanke is angry and slamming phones. Good for him! Right. How about he stops pandering and actually does something about it.

  17. chris_l says:

    I’m not sure if I understand the situation, so correct me if I’m wrong.

    Basically, AIG’s biggest problem is that they sold insurance for companies that everyone thought was fail-proof that obviously weren’t, so people want to cash in on that insurance. Since AIG owes hundreds of billions, if not trillions, on insurance policies that people want to cash out since these companies failed, if AIG goes under all the money that these companies spent on this fake insurance is basically up in smoke and the money they were hoping to cash out based on these failures never comes, correct?

    So how is this any different than let’s say, my car insurance not covering me because of an act of God? I’ve paid probably about 10k in car insurance and I haven’t cashed in one penny of it. Let’s say a flood hit my area and my car was swept away, but since the entire city is decimated, my insurance company can’t afford to pay out and I’m fucked. Kind of what happens in FL on a routine basis. Can’t the government just enact some sort of law that says “if you bought AIG fake insurance, sorry but AIG is out of business now, but you can write off every penny you spent on that insurance on your taxes as a loss?” Or perhaps even better, make it a 1:1 write-off, so that if you spend $1,000,000 on fake insurance and owe $2,000,000 in taxes, you now just owe $1,000,000 instead of just the tax rate on what you paid?

    I just think it’s absurd that we need to keep floating AIG on basically apocalypse insurance. Imagine if I provided alien invasion insurance and I say “if every man, woman and child gives me $10, I’ll insure your assets from alien destruction”. Well, if an alien invasion hits, it’s safe to say the destruction would be in the tens of trillions, so rather than saying “we need to make sure chris_l alien insurance can cover losses that are outright impossible to cover”, why don’t we just zero it out?

    • Corporate-Shill says:

      @chris_l:

      Great idea

    • bohemian says:

      @chris_l: Or we step in and just pay the claim directly to the injured party that bought the policy. It would be far cheaper than letting AIG waste 70% of it on bonuses and spa trips.

    • Eyebrows McGee (now with double the baby!) says:

      @chris_l: “AIG’s biggest problem is that they sold insurance for companies”

      Not quite. My understanding is AIG insures the financial products of various corporations for those corporations. It’s not “I want to cash in because Citibank failed” … it’s Citibank saying, “You insured our CDOs, they failed, now we get to partially recover our loses through insurance.”

      It’s not exactly like homeowner’s insurance where they’re insuring an actual thing; they’re insuring value and giving investors in Citibank more comfort with risk levels, because the risk of the investment is partially offset by insurance.

      If AIG failed, it’s possible it could pull most of the banking system down with it. There may not be such a thing as a BANK that’s too big to fail, but I don’t think we’re eager to risk the whole SYSTEM failing at once.

    • mmmsoap says:

      @chris_l:

      So how is this any different than let’s say, my car insurance not covering me because of an act of God?

      It’s different, because you have a clause in your policy that says that they’re not liable for acts of God. Apparently there’s no clause in AIGs responsibility that says they’re not responsible for everyone cashing in at once.

  18. KyleOrton says:

    I feel bad for the waiters and waitresses working the lunch spots frequented by AIG employees. Such terrible dry mouth.

    If Nat. Enquirer or one of those crap magazines wants to make a name for itself, it needs to stop harassing octomom and Jennifer Aniston and get INSANELY intrusive in the lives of some of these executives. Remember what the 2000 election did for Jon Stewart? This could be as good.

    • Eyebrows McGee (now with double the baby!) says:

      @KyleOrton: I guess you need to read more tabloids!

      U.S. television shows like ”Extra” and ”Inside Edition,” along with celebrity Web sites like TMZ, are eagerly expanding their coverage of starlets and Hollywood breakups to include billion-dollar business scandals and even the economic collapse. [...]

      The tabloid media, of course, have always peered into the excesses of the rich and famous with a mix of puritanical disapproval and voyeurism. But these same outlets are now recording troubling uses of U.S. taxpayer money at country clubs and glamorous retreats. In so doing, they are explicitly tapping into a fierce populist anger at corporate America and even pressuring Congress to hold companies accountable.

      [www.iht.com]

  19. tc4b says:

    Here’s my honest and, probably, naive question for our legislators: How exactly do banks become ‘too big to fail,’ and how can we prevent that from happening in the first place?

    • Eyebrows McGee (now with double the baby!) says:

      @tc4b: Not a banking person, but restoring old limits on how big banks could get — branch laws that limit them to only having branches in individual states, f’ex — and restoring old limits on how many services they could offer (only banking, only investment, etc.).

      The problem is that we’re all used to these huge financial services corporations that can not only serve us all across the US but all around the world, offering one-stop shopping for most/all our financial needs. And there were good reasons for (at least some of) the deregulation of banking that allowed banks to grow.

      I suppose one option (musing out loud) would be to let banks set up multistate networks but require each state to be a separate corporation, like the Blue Cross/Blue Shield networks. You could bank at Bank of America Missouri when your home bank was Bank of America California, but if Bank of America Missouri failed, it wouldn’t take Bank of America California down with it. Seems like high administrative costs, though.

  20. Eyebrows McGee (now with double the baby!) says:

    It is a bill of attainder if Congress passes a law saying no companies receiving bailout funds can pay bonuses (or bonuses to types of executives X, Y, and Z, or just that AIG can’t pay bonuses)? ‘Cause if that’s the new law, I don’t think they can be sued for breach of contract ….

  21. Canino says:

    “It’s ridiculous,” U.S. Rep. Elijah Cummings, D-Md., told “GMA,” adding that he doesn’t buy the notion that the government doesn’t have enough control over taxpayer dollars to stop bonuses like these.

    No, what’s ridiculous Mr. Cummings (D-MA) is that there was a bailout in the first place.

  22. YOXIM says:

    The problem with AIG, from what I understand, is that it owes a lot of money to a lot of people. If we let AIG fail, and they declare bankruptcy, then all those people are going to be shit out of luck, because AIG won’t have to pay them back.

    That in turn means a lot more business failing, and a lot more people losing jobs. More job loss means more people applying for unemployment assistance. All of this things are a huge drag on an already shaky economy.

    However, what they’re doing now is basically fraud. They are defrauding the government of hundreds of millions of dollars. The biggest problem with the whole bonus situation is that the people giving out the bonuses are also the people receiving them. Everybody in that bunch pretty much wrote their own contract, and then they signed it. That’s why they are so “powerless” to stop this from happening. They wanna get paid.

  23. darkryd says:

    Proof that there’s such a thing as “Too-Big Business”.

  24. Matt Sherlock says:

    I’ve heard that certain people who are due these bonuses have turned them down. Couldn’t the portion of the government that’s acting as the majority shareholder just fire those that opt to take the bonus? It’s money we’d be paying out anyway, but at least we weed out those with the “mine, mine, mine” attitude that’s more than likely responsible for this mess as well as sending a message to other institutions how we feel about said “bonuses”.

  25. chris_l says:

    @yoxim:

    But what companies sustain their existence based on what is fundamentally a Las Vegas-style bet? Are there honestly manufacturing companies in the midwest that would be closed tomorrow if their bet that Bear Stearns is going to fail wasn’t paid out? Are there mitigating circumstances, like how some insurance doesn’t cover an act of God?

  26. coan_net says:

    I understand that employees have contracts that need to be followed.

    But enough is enough.

    The employees with those contracts need to either (1) rewrite their contract, or (2) fire them. (Their new contract can include bonuses once (if) the company is back on it’s feet & all debts are repaid. There were enough people laid off that there are plenty of “smart” people who will work for AIG without bonuses in their contracts.

  27. Rhayader says:

    The problem here is not a lack of governmental control over corporate spending. The problem is that the government got their grubby little hands on this in the first place.

  28. chris_l says:

    I don’t buy the contracts argument one bit. Almost every contract has a mitigating circumstances clause in it somewhere. I can’t see what is more of a mitigating circumstance than a financial holocaust.

  29. Rhayader says:

    In other news, I won’t be clicking through to Consumerist again until I see a post in my RSS feed saying the “reply” problem with the commenting system is fixed.

  30. TheMonkII says:

    As a Canadian looking across the border I must profess, I feel for my American neighbors. You folks are being dragged further and further through the gutter and, from our point of view, it doesn’t look to be improving nearly fast enough. Sure, a 5 day rally is great, but c’mon how does it compare to month after month of slides?

    I’ve watched pretty closely Bernake’s stance on AIG. The fact of the matter is, the man did not want to bail out AIG, its documented and readily accessible information, but alas what other options were available to him? Let the company go down the pipes, taking down countless other institutions along the way? I’m sure we all recall the market reaction to Bear Sterns. So, I suppose the man must be credited for choosing the lesser of the two evils. Yes, he saved the market (ok, but didn’t put the nail in the coffin), but he also empowered a ruthless, ungrateful, beast that is AIG.

    At this point, I belive the government must act and act quickly, if for no other reason than to assure taxpayers that this bailout doesn’t come in the form of a handout, but rather as part of a stimulas package that is designed to strengthen the economy. Not weaken it by supporting the same fools that put your economy in the mess that its in today…

    Just my two cents :)

  31. chucklebuck says:

    Can’t the government just loan them $165 million less? Make these arsemonkeys think a little bit before they decide to take that which they don’t deserve?

    The contracts may prevent the company from paying out the bonuses, but they don’t prevent people from refusing to take them. That’s what I’m looking for as a taxpayer, AIG. Stand up and show me some guts.

  32. chrisgeleven says:

    I still don’t understand how you can get a bonus if the company is doing bad and/or if you did a bad job.

    No bonus should EVER be contractually obligated to an employee. They have to earn it and the company has to have enough financial room to pay them without jeopardizing the company’s health.

    Bonuses are exactly that, bonuses. They are nice to have when you get them and few things outside of a raise makes employee morale jump through the roof, but do not expect them and count them as your regular salary until they are in your bank account.

    Whoever wrote that contract at AIG to award bonuses to any employee without regards to company or employee performance should be shot.

  33. chucklebuck says:

    @chucklebuck: Prevent the company from NOT paying out the bonuses, that is

  34. T Axel Jones says:

    Which is worse, the company that gives out the bonuses on taxpayer’s money, or the government that gave them the money in the first place?

  35. oneliketadow says:

    It’s simple. Publish the name, address, phone numbers, and location of their kids schools for anyone who still wants their bonus payment. Those who choose to give up the bonus will not have their names and info published.

  36. ARP says:

    Rhayader: Care to elaborate? If you read other posts, you’ll see that unfortunately, it’s true, AIG is a “can’t fail” institution. If they go under, they can’t pay out claims and all the other policies they write will get downgraded. That means that all the banks and other financial institutions have riskier investments. This means that they have to hold on to more money to get/maintain proper capitalization. This means they stop lending. This means the economy grinds to a halt. There are some suggestions of a “structured fail” or “nationalization” as options, and they should be explored. However, simply throwing out some mantra that Beck (Glen Beck- just Beck would be more amusing), Limbaugh, or Hannity throws out doesn’t explain your reasoning.

  37. MPB_WY says:

    Contact Edward M. Liddy, Chairman and Chief Executive Officer, American International Group, Inc.: boardofdirectors@aig.com

  38. rellog321 says:

    Since these “bonuses” were essentially guaranteed legally, how about going after individual execs that accept these bonuses for gross negligence for their actions prior to the bailout. The utter incompetence is completely obvious….

  39. Corporate-Shill says:

    Fark them.

    Name the Names!

  40. bcash says:

    The other option is to nationalize, even though most find that a dirty word. But come on something needs to be done to stop the rampant corruption and greed in corporate America. So lets nationalize then proceed to break the businesses into small pieces. We would never be in the situation if corporations were not allowed to monopolize their industries. And repeat the whole process with Citi and BofA.

  41. Rhayader says:

    @ARP: I think there are more fundamental issues at hand than economic prosperity. Governmental interference in private business is anti-capitalistic. Simple as that. I think that temporarily avoiding a shit-storm is not justification enough to pervert our basic principles. In other words, forget about the fluctuations of the damn stock market and focus on what our government should and should not be doing.

    Just for the record, I hate the “pundits” you mentioned. I am not a moralist neo-con jerkoff. I am just a libertarian free marketer.

    • ARP says:

      @Rhayader: Yay, reply worked! But we don’t operate in a perfect capitalist economy. The only nations that do are third world countries. In my view capitalism is like communism, perfect in theory, bad in practice.

      BOT- I agree that we should not be slaves to “fluctuations” in the market. However, my understanding is that allowing AIG would not cause a fluctuation, but a collapse. Most economists agree that we need to support them (or offer something in the alternative) lest the markets collapse. Those that are yelling “let them fail” are doing so out of emotion or principle in a vacuum. Both are valid things to have, but it may make the problems much worse. Personally, I’d rather pay claims directly and get rid of AIG as the middleman until they can get recapitalized and get their sh*t together, but politics and the boogeyman of socialism will stifle true debate.

  42. darkmstr says:

    I’m thinking they should just tax those bonuses at 100%.

    Also, since the Us Gov’t is the majority investor in AIG now, where are the seats on the board? In a public company, couldn’t the majority shareholder block those bonuses? We should have been prepared to walk in and take control from day one, instead of just cutting them checks.

  43. bohemian says:

    No. What should be happening is that the govt. is stepping in to cover these payouts on AIG policies and paying it directly to the bank or note holder who bought the policy. We have been giving AIG money to make good on their policies but they are using it for everything but. How the hell do we have 80% stake in this company but can’t do anything. Fark this, set up something with the treasury to deal with policy losses only and start selling off AIG in pieces today.

    A list of these people insisting on keeping their bonuses needs to be leaked to the public.

  44. jp7570 says:

    Fortune magazine has written about AIG for years, long before this economic meltdown. One of AIG’s problems was their CEO – Hank Greenberg – just simply would not retire. I am not familiar with his background and if might have been one of AIG’s founders, but his advancing age was of concern to shareholders and board members alike. Hank refused to put a transition plan in place to make sure there would be a seemless hand-over of leadership in the event of his retirement, death, or illness.

    The fact that AIG could not even get this simple business basic down because of its leader’s arrogance should give you an insight into the company.

    And another rule of thumv – be wary of any company whose name is so vague you can’t tell what it is they actually do. American International Group? Is that a bunch of US tourists visiting Europe?

  45. Red_Eye says:

    like I said from the beginning let the bastards fall or we will support them forever. The new AIG richboy welfare system is in full operation now.

  46. Borax-Johnson says:

    Where the Hell was the government in all of this? It stretched believability to think that our elected representatives would simply throw bags of money at AIG without conditions.

    The last time my company borrowed money there were covenants attached to the note. They spell out the do’s and the dont’s. If the screwballs in DC simply gave them the money with no covenants then they forfeit the right to whine.

  47. Anonymous says:

    For financial Companies, these ‘Bonuses’ are usually part of a compensation package based on performance, and are guaranteed by a contract.

    A typical ‘Wall Street’ compensation package might be: You and I sign an employment contract that guarantees me a base pay of X, Plus a Bonus of Y.

    Y is many times based on a percentage of the profits of an employee’s unit or activity. If an employee generates 5 million in trading profits, he may be due 10% of that as a bonus of 500,000.

    Firms can have hundreds of profit centers or activities, and its profits overall are the sum of all the profit centers. Some centers generate losses and some profits.

    Even when a company like AIG has suffered a massive loss, say on mortgage investments, it will still have some segments that generated large profits (albeit those profits got overwhelmed on a company-wide basis).

    The employees that generated those profits are still due those ‘Bonuses’, and are guaranteed them by contract.

    To take them away would be, in effect, stealing that employee’s wages after they negotiated them, put in the work, and performed well.

    You want people who are generating profits for you to get their bonuses, even when you lost money overall. Otherwise, the profit generators just leave you for someone who will pay them for their results.

    There are also other reasons that there could be large bonuses in loss years. Some segments of your business may have fees that are only collected once a year, so employees in that segment only get 40% of their total pay as salary over the year, and then get the other 60% as a bonus at the end of the year when the fee is collected. That pattern still continues even in loss years. Should those people be denied 60% of their pay if their segment turned a profit? How about if their segment only lost 10%? Do they still deserve to lose 60% of their pay because it gets paid as a bonus?

    Bonuses could also have been promised to people that were hired to help clean up the mess. Again, you want these people paid, despite the losses, because they are the ones you hired to get things back on track.

    The real truth is that not all bonuses paid at financial companies are evil. Most are probably legitimate.

    You’ll never hear politicians like Barney Frank admit that though, they’ll just bang the desk, quote the total bonus expense, and then froth at the mouth for the TV cameras. Admitting that not all bonuses are evil doesn’t help them generate ‘outrage’ at Wall Street. It doesn’t help them distract voters from the fact that they were instrumental in pushing poor lending standards in the name of ‘affordable housing’ for the last decade, and did a large part of getting us in this mess in the first place.

  48. Skaperen says:

    Here we go again:

    1. Company that took bailout money pays out bonuses.

    2. Everyone gets mad at company.

    3. Government rattles swords about either taking over to prevent this or not paying bailouts to them anymore.

    4. Wall street investors are afraid the company might be nationalized or go bankrupt.

    5. Company’s stock tanks even further than it did before, dragging the whole market down with it.

    6. Rush Limbaugh has a hissy fit.

    7. There is no confidence and the economy gets worse.

  49. hibrassmann says:

    Pay them the executive bonuses to satisfy the contracts … then TAX them at 100% of the value of the bonuses until every dime of the the TARP funds are repaid.
    Re-regulate and empower the SEC to crawl up their collective arses with a microscope until all of the funds are repaid.

  50. Snowblind says:

    *shrug*

    Congress gave them the money without attaching strings. They had the opportunity, but instead they just threw 700 Billion at the banks without proper controls.

  51. SWBLOOPERS says:

    Can we just get a list of all the executives that accept their bonus and publish it somewhere? Say, on the front page of every newspaper in the country?

  52. FuryOfFirestorm says:

    Paraphrasing the Joker: THIS ECONOMY NEEDS AN ENEMA!

  53. Chong Soh says:

    Ive said this a million times..

    i dont really blame AIG at all.. this believe it or not, is a scheme by the government to keep this vicious cycle going

    instead of getting pissed off at AIG.. everyone here should be blaming the government..

    we told the govt to let all these companies fail.. they didnt listen .. they took our money .. and conducted business as usual.. and obama and the gov’t put on all this show for everyone to view saying bla bla bla im pissed off that you took tax payer money and gave it out as bonuses…the govt should be put to blame.. not for not putting restrictions on the loan but for giving it to them in the first place..

    the govt forced some banks to take money .. now the govt can regulate what employees make.. no one cares about this point now.. but what happens when your company was FORCED to take a bail out by the govt and now they turn around and said no more bonuses for you either.. see a pattern here people ?

    its their fault.. we never should have given them the money to begin with.. the economy hasnt gotten better.. in fact its gotten worse.. dont let the govt instill fear into you .. you lose choices when the govt takes something over..

    everyone here needs to blame the govt for giving them the money .. not aig for taking and spending it..

  54. Rhayader says:

    @ARP: Damn you, no reply love for me.

    Yeah I see your point; thousands of innocent people were inadvertently tied up into the AIG mess, and letting it all go would harm them.

    There’s a certain part of me though that thinks maybe we need a collapse. Things will never change if there are no consequences for what boils down to bad business decisions. The laws of cause and effect, harsh though they may be, need to run their course.

    Whatever though, I have no real deep-seated resentment to this bailout (I save that for my hatred of the drug war). I just find it a little creepy that it is suddenly the prerogative of the federal government to legislate executive pay.

  55. axiomatic says:

    AIG is obviously running without a “pay for performance” clause in their contractual bonus contracts.

    It’s completely irresponsible to even allow things like this to occur. If the clause was in place there would have been (little to) no way to pay bonuses to worker in a failing business unit.

    I say LET IT FAIL.

    Bernanke is just posturing here so people don;t continue to hunt for his head as well.

    100% fail.

  56. waltcoleman says:

    Yet another example of why this bailout is a joke. Let em collapse…its called Darwinism…those that are fit will survive, those that are weak will die.

  57. aftercancer says:

    So let me see if I understand this. Contracts between regular employees, unions, airlines, air traffic controllers, none of them is worth the paper that they are written on but AIG contracts are somehow bulletproof? I call bullshit!

  58. howie_in_az says:

    Wait a minute… AIG is saying that they ‘need’ to give out these bonuses so they don’t lose the top talent.

    Where is the top talent going to go in this economy?

  59. Saboth says:

    Just let em fail. Prop up all the other banks.

  60. sifr says:

    I’ve yet to see anything in this bailout fiasco that fixes this problem: If we’re discovering companies that are “too big to fail”, then we need to have a remedy in place that’ll ensure the next time this happens (and face it, there will be a next time) that there aren’t any companies that are so big they’ll bring down our entire economy if they go under.

  61. JollyJumjuck says:

    The good news about all this is that the government will be hiring more IRS auditors to make sure small businesses and the middle class will be paying their fair share of income tax.

  62. RStui says:

    This is just another example of why contracting and contracts are such an important part of business. I am a contract manager. I would never make a contract with someone wherein their “bonus” was not dependent on their performance or revocable due to circumstances.

    Evidently, AIG was so excited to get Wall Street Weenies on their payroll that they let these two key elements go, and are now saddled with some outrageous (and deeply embarrassing) contracts.

    I don’t know what they should do with this situation. Voiding the contracts doesn’t seem like a good idea, just because it sets a scary precedence. Investigating the recipients seems like it would be a lot of work for little payoff.

    This is very specifically one of the reasons it was so stupid and foolish to push the bailout so fanatically; I hope Congress learned it’s lesson.

  63. Ghede says:

    How much further do they have to go before we get an old-fashioned pitch-fork mob at their head offices?

  64. Whiskey Tango Foxtrot says:

    Makes me wonder – if these bonuses are to retain their “best and brightest,” the very ones who got them into the cesspool they’re in, just who ARE the real morons in their eyes?

  65. Paladin_11 says:

    A paraphrase of Barney Frank on the “Today” show this morning: The government owns 85% of AIG. Yes, these people may be entitled to their bonus. But I think they should have to choose between living off their bonuses or losing their jobs. I think we should just fire them.

    You know what? He’s right. We own their asses. We should turf the greedy bastards out.

  66. kwsventures says:

    If I had a legal contract that said I was going to get a bonus, then AIG owes me the money. Now, if Obama and congress want to void my contract, I will see their butts in court. We can put the trial on Court TV because Obama can’t go a flipping day without getting his mug on TV to lecture the nation. Enough. Go away. Lay low for a few weeks, ok.