AIG Spends Millions in "Bonuses"

[Professor S]

We haven't talked about the economy in a while, but I think the latest news about AIG spending millions in bailout money on employee retention bonuses warrants it. This situation has shown our goverment (republicans and dems) to be hipocritical, our news organizations to be lazy and/or corrupt and our populace to be simple minded and spiteful.

I have no issues with the bonuses. For the following reasons:

1) AIG is contractually obligated to pay them. If they don't pay them, they will be sued and even MORE bailout money will be spent on lawyers and court fees and they'll end up paying out the money anyway. Part of the problem with propping a company up to keep them out of bankruptcy is that they are still beholden to their existing contracts. If AIG filed for bankruptcy, or was allowed to, this wouldn't have been an issue. But, WE bailed them out so WE have to pay for their contractual obligations.

Do you see any journalists pointing out this obvious fact that takes 3 minutes of Googling to discover? Because reason and honestly is meaningless in front of populism in a crisis.

2) We knew about this is January. Why didn't the government get up in arms about this then? What about the news orgs (frightening how lock step American journalism is with this administration)? I'll tell you: The government still had billions they needed to give to AIG. Now that they're (hopefully) done, the government can now turn on them, yell and scream to high heaven about AIG's irresponsibility, when that irresponsibility never stopped them from giving any money in the first place or the three times after that.

Like I said a few weeks ago: The government wants to give these companies money to survive, many of whom never asked for it and instead were "asked" to take it, and then punish them for taking it and dictate to them what they can do with it. Why would you expect a company to change what they do with money when you don't allow them to fail or at least give them legal options to postpone or forego their obligations.

This all simply seems very calculated. AIG has always been identified as one of the worst run companies of this entire debacle, and yet we continue to feed the beast and then punish it for eating what we feed it! If we're going to throw trillions into toxic investment, we can't shocked and outraged when we get sick from them. If you don't like it, blame those who invested the money, not those who dared to accept the help but were never asked to change nor given the avenues to affect change.

In the end, this entire controversy is populist NONSENSE. I don't care if AIG has to pay out billions in bonuses (a small percentage of the bailout money). What I care about is if this bailout actually works and if companies are allowed to get past the old mistakes, learn from them and then work towards a new, smarter business future. Right now the government, news orgs and populace seem to want to simmer in their own justified anger instead of allowing this process to take place naturally ragrdless of whether or not it leaves a sour taste in our mouths. Medicine rarely tastes good.

[Bond]

I agree. This is just a distraction, and continues the trend of "dumbing down America."

Can Americans understand the financial crisis? No! Can Americans understand paying out bonuses to "undeserving people?" Yes!

[manasecret]

Maybe they should have been fired instead of been given performance bonuses when their company just lost the most money in corporate history? The argument for holding on to great talent doesn't work when that great talent ran the business into the ground.

At what point were the bonuses written into their contract, before or after the news that they might be getting billions of dollars in bailout money?

Were any of the bonuses given to individuals who decided to invest in the derivatives (or whatever) that ruined the company?

I'm not saying that giving out bonuses is a bad idea to those who deserve it even for AIG, but to me there is a huge chance of fraud against me and all others, the taxpayers paying the bonuses, in all of this, and so it definitely warrants investigation.

Keep in mind, I don't have all the information on these contracts, does anyone have that?

[Professor S]

Originally Posted by manasecret

Maybe they should have been fired instead of been given performance bonuses when their company just lost the most money in corporate history? The argument for holding on to great talent doesn't work when that great talent ran the business into the ground.

Even if they fire them they are still obligated to pay thje bonuses. It's in their contracts.

At what point were the bonuses written into their contract, before or after the news that they might be getting billions of dollars in bailout money?

I'm not positive, but knowing the nature of business contracts, before.

Were any of the bonuses given to individuals who decided to invest in the derivatives (or whatever) that ruined the company?

I'm sure there were, but thats irrelevant. A contract is a contract. You can argue whether or not AIG should have offered them to begin with, but thats beside the point. No one is arguing that AIG is a great company.

I'm not saying that giving out bonuses is a bad idea to those who deserve it even for AIG, but to me there is a huge chance of fraud against me and all others, the taxpayers paying the bonuses, in all of this, and so it definitely warrants investigation.

Keep in mind, I don't have all the information on these contracts, does anyone have that?

Agreed, but from what I've read and heard, those contracts are pretty tight and AIG would be legally culpable to pay them. In the end, this is quibbling over small points. We're arguing over millions when TRILLIONS are being thrown around. A Trillion is comprised of a million millions, and we're obsessed over 170 of them. Its' all a distraction.

[BreakABone]

And it seems as all those execs were loyal to the end, as 11 of them left the company after receiving their bonuses.

that AIG paid 73 employees bonuses of more than $1 million each.

Cuomo also wrote that 11 of the employees no longer work for the company.

http://www.cnn.com/2009/POLITICS/03/...ses/index.html

I agree with Prof though, at this point it is just a terrible idea to harp on it, I know the American public wants justice, but I hope this giant flashlight on the business world helps in getting in more regulation to these practices as no one seemed to have an issue with it until they started taking money.

Maybe a fail safe clause so that bonuses aren't paid for under performing members or in environments like this which I hope never happens again.

[Jason1]

Wow, I thought maybe this could finally be an issue everyone agrees on...nope. Giving out bonuses to these people is rediculous, and hopefully Obama will do everything in his power to stop it. (which he has said he will do)

[Fyacin]

Originally Posted by Jason1

Wow, I thought maybe this could finally be an issue everyone agrees on...nope. Giving out bonuses to these people is rediculous, and hopefully Obama will do everything in his power to stop it. (which he has said he will do)

Hehehehe...

[KillerGremlin]

I'm with Fyacin on this. I'm the last person to be a grammar nazi but yeah.

Anyway....

People can be angry at AIG all they want, but it was their elected government that chose to bail everyone out. Obviously Obama and Co want to put that fact behind them...who wants to be remembered as the president of "Change" and "Hope" that screwed everything up by perpetuating the economy problems by bailing out failing companies that never should have received any money at all.

But it's not just the Dems and Obama. I don't want to polarize this....the republicans are mutually responsible.

I gotta agree with Prof S and Bond here....

[Professor S]

Originally Posted by Jason1

Wow, I thought maybe this could finally be an issue everyone agrees on...nope. Giving out bonuses to these people is rediculous, and hopefully Obama will do everything in his power to stop it. (which he has said he will do)

Jason, I agree with your moral outrage on this but in the end it is a tiny issue that is being exploited for political gain. The numbers we're talking about make up .097% of AIG's bailout money.

Whats a bigger issue to me is the government setting the precendant of being able to step in and dictate what people can and can't be paid after the fact by enacting retroactive taxes on a select individuals. The bottom line is that compensation is a matter between a company and the employee. Now that the government is part of the company they can have a say, but they can't start destroying contracts that are almost a year old and date well before the government became involved.

So so far the stimulus and bailout spending has achieved the following:

1) The government is dictate who and how businesses can operate on a micro level

2) They have begun to dictate who should be compensated and how much, though their investment and borderline intimidation

3) They're about to destroy 300 years of contract law by setting the precendent that any private contract can be busted up by the government at any time if they see fit. You can say that this is a special case, but when looking at the big picture (.097%), it really isn't. This is a power play, pure and simple.

Is anyone starting to get it yet? The more power the government assumes the less powers are afforded to it's people. Maybe you feel safe that this is only aimed at the rich, but precendents are being set, legal avenues are being constructed and we'll see this start creeping in elsewhere.

When the government "saves", they enslave.

And right now the government is talking about bailing out small businesses... hmm, I wonder how long it will take for our representatives to turn against them after the money is distributed, and start dictating what they can and can't do...

[Jason1]

Honestly Professor, I dont see those 3 things you just listed as bad things. In my opinion, they are all for the better of the country, and the country will be better off because of them. Hopefully the government can actually do all of those things and prevent these huge greedy mega corporations from ever pulling this crap ever again.

And there lies the basic difference of opinion between us.

Also you forgot to mention that the bailout will save or create 3.5 million jobs, promote green jobs, help make america less dependent on foriegn oil, ect.[/

[thatmariolover]

But it's not a payment. It's a BONUS. Hey, you did a good job, bonus!

You don't give out bonuses like that when you're company is doing so poorly.

[Fyacin]

Originally Posted by Jason1

Honestly Professor, I dont see those 3 things you just listed as bad things. In my opinion, they are all for the better of the country, and the country will be better off because of them. Hopefully the government can actually do all of those things and prevent these huge greedy mega corporations from ever pulling this crap ever again.

And there lies the basic difference of opinion between us.

Also you forgot to mention that the bailout will save or create 3.5 million jobs, promote green jobs, help make america less dependent on foriegn oil, ect.[/

Right, because the government is sooo good at running buisinesses. Why don't we go ask russia how that worked?

[Bond]

Originally Posted by thatmariolover

But it's not a payment. It's a BONUS. Hey, you did a good job, bonus!

You don't give out bonuses like that when you're company is doing so poorly.

To be fair, bonuses often equate to salaries in the financial services industry.

Point certainly taken though.

[Professor S]

Originally Posted by thatmariolover

But it's not a payment. It's a BONUS. Hey, you did a good job, bonus!

You don't give out bonuses like that when you're company is doing so poorly.

They weren't "given out", AIG was contractually obligated to pay them or else face lawsuits and end up paying them anyway. They are bonuses in name only.

[Bond]

Could someone please explain how Barney Frank is the Chairman of the House Financial Services Committee? Please!