Bob Cropf

AIG (or is it the US Government?) Paying Bonuses

In 1 on March 15, 2009 at 4:41 AM

The New York Times reports today that AIG is paying $165 million in bonuses to the financial services unit (the origin of of the CDSs, etc. that made some really bad lending by banks affect EVERYONE). This is in addition to the $121 million paid across the rest of the company.

The US government owns 80% of AIG, having given it $170 billion (so far) in bailout money, and Geithner did “pressure” them to cut bonuses for top executives and *gasp* tie the rest to performance. But they are going ahead with it because they are “contractually obligated”…

Just as Jon Stewart pointed out on Thursday, most of the people at AIG are hardworking, honest people who should not be held morally responsible for the bad decision making of those at the top. But there are plenty of people whose only connection with the entire mess is their company can’t get its regular line of credit from lending institutions that are not only not getting their bonuses, they are having health insurance, employer contributions to retirement, pay, and even their jobs cut… all things their company was “contractually obligated” to pay until they found themselves unable to pay their bills.

  1. I was just reading that article and now saw your post. I’m going to write a letter to Sen McCaskill and vote that the shareholders (which are now you, me and every other taxpayer in the country) let this go to a 12 person jury to make the decision if necessary. Keep in mind the 12 person jury members are also stockholders–many of whom lost serious money or jobs.

  2. Letter to Sen ___________ for your use as necessary…

    I noticed that AIG is planning on paying out bonuses because the company is legally obligated and risked law suits if bonuses were not paid. As a taxpayer and now stockholder in AIG please put my vote down to let the “bonus babies” sue us. I would however recommend a 12 person jury be requested since they are stockholders as well who I hope will see the ridiculous nature of their claim under this situation.

  3. The last I heard Treasury was looking into ways to cut the bonuses. I liked Barney Frank’s comment that while we might be legally obligated to pay their bonuses, we’re not legally obligated to keep them in their jobs. I don’t understand the bonus structure at these banking firms. Every place that gave out bonuses I’m familiar with, did so on the basis of performance. I don’t see how they could make the claim that they did their job so well they deserve million dollar bonuses.

  4. I heard a radio program calling out the AIG board… interesting who’s on it (#3):
    * Edward M. Liddy – Chairman of the Board of Directors and Chief Executive Officer, American International Group
    * Stephen F. Bollenback – Former Co-Chairman and CEO, Hilton Hotels Corporation
    * Martin S. Feldstein – Professor of Economics, Harvard University
    * George L. Miles – President and Chief Executive Officer, WQED Multimedia
    * Morris W. Offit – Chairman, Offit Capital Advisors LLC
    * Michael H. Sutton – Consultant
    * Fred H. Langhammer – Chairman, Global Affairs, and former CEO of The Estee Lauder Companies, Inc.
    * Virginia M. Rometty – Senior Vice President, Global Business Services, IBM Corporation
    * James F. Orr, III – Chairman of the Board of Trustees, The Rockefeller Foundation
    * Edmund S.W. Tse – Senior Vice Chairman, Life Insurance, American International Group
    * Suzanne Nora Johnson

  5. Checks went out last Friday. Pls don’t shoot the messenger. It is a very sad state of affairs to be sure.

  6. All is not said and done. I think the biggest problems are:

    (1) The crisis in confidence this promotes — how are we supposed to believe that this is going to work out for the best when we “little people” are taking our lumps and the very people who cause the problem are getting millions of dollars in bonuses. At this point $164m is chump change but it has much greater meaning than that. Calomiris wants us all to quite whining about it, how very Phil Gramm of him, and realize we must pay these bonuses for the good of the system – what intellectual dishonesty!

    (2) This is indicative of MUCH larger problems with the AIG bailout. Namely that they paid $12.9b at 100 cents on the dollar (the biggest single payout) to Goldman Sachs which was supposedly not very entwined with AIG, had limited losses, and was quickly returning to financial stability. Given that Paulson and Kashakirki came from GS and Geithner was in on the planning of the first bailout last fall… this is looking VERY much like an insider job. The point of the bailout AIG was so they could pay their obligations. But, look at who is winning and at whose expense…

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