Bailout Money to Pay Executive Bonuses?
I admit it! I don’t get it! I don’t understand the whole financial industry.
Seriously. I don’t understand a business contract being written that guarantees huge bonuses every year, even IF the company loses so much money that it needs the government to bail it out financially, on the backs of the taxpayers for 2 or more generations to come!!!
How do these people sleep at night? How do they look themselves in the mirror?
Insurance giant paying out $165 million in bonuses
By MARTIN CRUTSINGER, AP Economics Writer Martin Crutsinger, Ap Economics Writer – 38 mins ago
WASHINGTON – American International Group is giving its executives tens of millions of dollars in new bonuses even though it received a taxpayer bailout of more than $170 billion dollars.
AIG is paying out the executive bonuses to meet a 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. 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.
What company pays huge bonuses after suffering a $61.7 BILLION loss? Better yet, WHAT legal eagle writes a contract guaranteeing said bonus no matter how poor the business decisions made were? And what company in their right mind would even agree to this? Is it just the financial industry that is this convoluted? AIG so far has already received $170 BILLION of taxpayers’ money!!!
Can you imagine telling your bank that you need a loan to keep you afloat, and then spending it lavishly on a vacation in some super expensive resort for a month? Can you imagine telling your boss that you don’t care IF they are about to lose their business you still demand your yearly raise and bonus?
This official, who spoke on condition of anonymity because of the sensitivity of the issue, said that Geithner had called AIG Chairman Edward Liddy on Wednesday to demand that Liddy renegotiate AIG’s current bonus structure.
Geithner termed the current bonus structure unacceptable in view of the billions of dollars of taxpayer support the company is receiving, this official said.
In a letter to Geithner dated Saturday, Liddy informed Treasury that outside lawyers had informed the company that AIG had contractual obligations to make the bonus payments and could face lawsuits if it did not do so.
It’s lawyers like these that make all lawyers look bad. I wonder how they managed to get AIG to guarantee these bonuses no matter if business was about to fold.
Liddy said the company had entered into the bonus agreements in early 2008 before AIG got into severe financial straits and was forced to obtain a government bailout last fall.
The large bulk of the payments at issue cover AIG Financial Products, the unit of the company that sold credit default swaps, the risky contracts that caused massive losses for the insurer.
A white paper prepared by the company says that AIG is contractually obligated to pay a total of about $165 million of previously awarded “retention pay” to employees in this unit by Sunday, March 15. The document says that another $55 million in retention pay has already been distributed to about 400 AIG Financial Products employees.
Just to add insult to injury these bonuses are going to the same people who actually manufactured this disaster? They are being rewarded for bankrupting the company? I’m sorry, the logic here escapes me. I’m just a simple taxpayer who works her butt off just to meet basic living expenses. I live within my means. I take responsibility for my choices, good and bad. AND if I make the wrong decisions, I am the one who pays for it, there is NO bailout for me.
But he also told Geithner that he felt it could be harmful to the company if the government continued to press for reductions in executive compensation.
“We cannot attract and retain the best and brightest talent to lead and staff the AIG businesses, which are now being operated principally on behalf of the American taxpayers — if employees believe their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury,” Liddy said.
OK, seriously, WHAT planet are these people from? The only way to attract and retain the best and brightest is guaranteeing them all the money they want even if they bring the company to the brink of disaster? WHAT other company does that? More insulting is that they are offended that the government wants to restrict their bonuses after feeding it all that taxpayer money?
Personally, considering the mess these people put AIG in, if they are best and the brightest then AIG might want to re-think its hiring practices also.
I’m about to join the millions of already “laid off” unemployed taxpayers, so excuse me if I feel NO PITY for these greedy brats! All of us, our children, grandchildren and great-children are going to be paying off this money and they want OUR sympathy and understanding? I don’t think so!
Just for the record, I feel this way about any and all hugely obscene bonuses, especially for executives in companies that are in trouble and laying off it’s lower-level employees. It is absolutely disgusting!!!
You can read the FULL STORY here, I just can’t wrap my brain around the arrogance and audacity of AIG and the rest of the Wall Street crowd.
Someone explain to me WHY our economy, our very lives basically, are dependent upon and ruled by these cretins? AND WHY ARE THEY BEING REWARDED FOR POOR SHODDY WORK?
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WHAT IS GOING ON? 
My husband was told the other day that there will be no cost of living raises or yearly raises this year. It’s either that, or some employees will have to be let go. So everyone at the company is saying they would much rather have a job at their current salary, than get a payraise and then be laid off or let go. Too bad the executives at AIG don’t feel that way. They should have to worry about living paycheck to paycheck and losing their jobs if the company isn’t making enough money, but since it’s the banking business, they have a whole ‘nother set of rules that don’t even come close to the reality the rest of us have to deal with on a daily basis.
vesta44 said this on March 14, 2009 at 8:53 pm |
This is sick. Why in the world are we helping these companies that keep sending millions to people who do not know how to run a company? They cry yet get paid millions on the “average joes” taxes. Furthermore, I fear this is just the tip of the iceberg. Look what Enterprise rent-a-car did to get bailout funds:
http://www.butasforme.com/2009/02/25/alert-enterprise-rent-a-car-may-have-fired-employees-as-fake-evidence-when-lobbing-for-bailout-money/
Jax said this on March 15, 2009 at 9:26 am |
Thie is really a shameful situation! Where is the moral courage of the CEO and the Board of AIG to do what is right? If they wish to pay bonuses, please return the bailout money. It’s utterly ridiculous and shameful.
Chuck Bolton
http://chuckbolton.wordpress.com/
chuckbolton said this on March 15, 2009 at 6:02 pm |
‘Personally, considering the mess these people put AIG in, if they are best and the brightest then AIG might want to re-think its hiring practices also.’
I couldn’t agree with you more! The whole thing really is sickening.
Linda said this on March 16, 2009 at 4:08 am |
Last fall my wife was promoted to a never before existing position in her company. She became a team lead, which basically means she does her normal job, but also sometimes has to do the supervisors job (take calls that request a manager, etc), among a host of other duties. About the same time HP (hewlett-packard) buys out her company. Their raise process doesn’t happen until february of any given year. So she has extra new responsibilities, and all at the same level of pay. Then HP announces pay freezes across the board. Okay, well no big deal. Then in february, they sent out a memo showing across the board paycuts, with different percentages depending on level of employment, which included top HP brass. Well, at least it seemed fair that even the big guys were taking paycuts. Later on my wife finds out, all the paycut money is going into a pay-for-performance pool. Now to me, this sounds logical to a point. The producers should be rewarded. However her business unit is one of the only reasons HP posted profits, and yet they are inelligible for any of this money. Other departments are, including those top brass who took x% paycuts, which will inevitably be rewarded back to them, plus a little extra from the big pot created by ineligible departments.
Nice to know the cut back up top is only temporary before the bonus payouts!
Mike Lovell said this on March 16, 2009 at 7:25 am |
The bonus payout excesses at AIG are just the tip of the iceberg of what is happening with the other Wall Street bailouts including Bank of America. Working productive Americans are bailing out the same crooks that destroyed our economy along with 45% of the wealth in the world and now the American taxpayers and our children will be forced to live a far lower standard of living with reduced prosperity and opportunities due to this but only we pay the price.
Washington has bailed out the banks, Wall Street & their Washington special interests and much of the cost is added to the national debt to by paid by this and future generations while real estate and investments continue to fall. Find out what a growing repudiate the debt movement could mean for treasuries, the dollar, gold and the stock market and how this is a better alternative than Washington’s plans to monetize the debt in future years and tax and destroy our remaining wealth by depreciating the dollar.
The Campaign to Cancel the Washington National Debt By 12/21/2012 Constitutional Amendment is starting now in the U.S. See: http://www.facebook.com/group.php?gid=67594690498&ref=ts
utah1234 said this on March 16, 2009 at 9:17 am |
I just wrote about this today (even after I said I didn’t want to write another AIG blog). Of course I get back to who gave them the money to burn in the first place (oh wait, that was the taxpayers).
You just can’t dole out money without some sort of plan. GRRRRRR
Fred said this on March 17, 2009 at 7:05 am |
Oh, AIG saga continues. We are less blessed, therefore we do not get a bonus.
A radical view on bonus – http://simplilife.wordpress.com/2009/03/17/pound-of-flesh/
SimplyLife said this on March 17, 2009 at 9:36 pm |
I like what you said “Personally, considering the mess these people put AIG in, if they are best and the brightest then AIG might want to re-think its hiring practices also.” I agree. A department of people bankrupt the entire company and AIG wants to retain them? AIG said something to the effect that these same people are the ones who understand the complicated transactions and therefore are needed. What are they all Einsteins and nobody else in America who has a finance degree can understand the transactions. If the folks were so smart they would not have bankrupt their company.
Alisa said this on March 18, 2009 at 1:39 pm |