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Obama Administration Makes $30B AIG Infusion Contingent On Bonus Repayment

By Big Tent Democrat, Section Economy
Posted on Mon Mar 16, 2009 at 03:25:52 PM EST
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The WSJ reports:

Monday afternoon, a White House official said the Treasury Department will use a planned $30 billion infusion into AIG to compel the company to repay the bonuses promised to employees of its financial-products group, which is responsible for selling the exotic financial instruments that brought the company to near-collapse. The infusion, announced March 2, won't be finalized until the company and the Treasury work up repayment options, the official said.

(Emphasis supplied.) Devil is in the details here (a lot of potential for Peter paying Paul in this I think as the employees themselves won't be foregoing the bonuses but rather AIG itself will have to "repay" the government for the bonuses paid), but it looks like it is worth exploring.

Speaking for me only

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    Obama Administration Makes $30B AIG Infusion Contingent On Bonus Repayment | 90 comments (90 topical)

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    This doesn't make any sense (5.00 / 3) (#1)
    by andgarden on Mon Mar 16, 2009 at 03:27:51 PM EST
    Unless Uncle Sam is requiring them to NOT pay the bonuses, what we have here is kabuki: we're asking them to "repay" with our own money.

    It's like one of those strange things you often hear on the Senate floor "I object to my own request."

    It doesn't seem to make sense, (none / 0) (#2)
    by sarcastic unnamed one on Mon Mar 16, 2009 at 03:34:17 PM EST
    maybe Obama wants AIG to repay the gvt the 165 million?

    Let's see, $165M is 1/0.0008th of the ~ $210B the gvt will have loaned them.

    Ooh, that's gotta hurt.

    Parent

    Is the $165 million (none / 0) (#8)
    by jbindc on Mon Mar 16, 2009 at 03:42:47 PM EST
    a new number?  

    I read it was $450 million

    Parent

    Seems to change every day. (none / 0) (#14)
    by sarcastic unnamed one on Mon Mar 16, 2009 at 03:47:04 PM EST
    Leading to ever more goodwill.

    Parent
    Someone Has To Pay (none / 0) (#4)
    by squeaky on Mon Mar 16, 2009 at 03:36:36 PM EST
    There is a lynch mob out there. Kabuki, peter pay paul, or however you frame it. The mob has to be assuaged.

    Parent
    I would hope that treating the mob like idiots (5.00 / 1) (#6)
    by andgarden on Mon Mar 16, 2009 at 03:38:46 PM EST
    won't work.

    If the bonuses are paid, they're paid.

    Parent

    Yes, But (none / 0) (#9)
    by squeaky on Mon Mar 16, 2009 at 03:43:51 PM EST
    The rage is less about bonuses being paid to workers, and more about US tax dollars being used to pay them, iow out of our pockets. The rage is against AIG more than the workers receiving the bonuses.

    If the company is forced to pay the US taxpayers back, the mob rage is mitigated, imo.  

    Parent

    Um, whuuut? (5.00 / 1) (#12)
    by andgarden on Mon Mar 16, 2009 at 03:46:30 PM EST
    Every dime that AIG now pays out comes straight from the U.S. Treasury.

    Parent
    Forced to Repay (none / 0) (#15)
    by squeaky on Mon Mar 16, 2009 at 03:48:30 PM EST
    Are the significant words here.

    Parent
    Not really (none / 0) (#16)
    by andgarden on Mon Mar 16, 2009 at 03:51:21 PM EST
    Uncle Sam: Here's $30B

    AIG: Thank you owner

    Uncle Sam: Now pay me back the money you spent on bonuses

    Parent

    "Why"? "Because I sd. so." (5.00 / 1) (#18)
    by oculus on Mon Mar 16, 2009 at 03:52:42 PM EST


    Parent
    They are going to (5.00 / 1) (#20)
    by Maryb2004 on Mon Mar 16, 2009 at 03:53:58 PM EST
    demand a worthless promissory note.  Not worth the paper put in the laser printer to print it out.

    Parent
    Wrong (none / 0) (#19)
    by NealB on Mon Mar 16, 2009 at 03:53:32 PM EST


    Parent
    Not Unlikely (none / 0) (#47)
    by squeaky on Mon Mar 16, 2009 at 04:40:34 PM EST
    I am a bit outta touch with the lynch mob. Personally I really dislike Insurance cos, the workers less so. This particular co has deep roots with GOP right wingers. We have been scammed and my worry is that many hard core GOPers want the economy to totally implode under Obama, as digby puts it,

    Something doesn't track --- unless the AIG guys really do want to make it impossible for the government to fix the financial system. And thats certainly possible. They seem to be on a mission to do just that.


    Parent
    Time to force their hand,... (none / 0) (#88)
    by NealB on Mon Mar 16, 2009 at 09:39:09 PM EST
    ...I think. Then we can start indicting and convicting; seizing assets and putting people in jail. More work for lawyers, less work for thieves. Good times.

    Parent
    Mob (5.00 / 1) (#7)
    by Abdul Abulbul Amir on Mon Mar 16, 2009 at 03:39:52 PM EST

    After getting the mob fired up, now BHO has to calm it down.  Good politics?

    Parent
    Yes (none / 0) (#11)
    by squeaky on Mon Mar 16, 2009 at 03:45:25 PM EST
    Except it was your pals at BushCo that got us fired up. Fired up enough to throw them out.

    Parent
    Looking to Pakistan, for example. (none / 0) (#5)
    by oculus on Mon Mar 16, 2009 at 03:37:32 PM EST


    Parent
    Looking To Pakistan? (none / 0) (#13)
    by squeaky on Mon Mar 16, 2009 at 03:46:50 PM EST
    Or is it Swimming to Cambodia?

    Parent
    Lost me there. (none / 0) (#21)
    by oculus on Mon Mar 16, 2009 at 03:54:44 PM EST


    Parent
    You Lost Me First (none / 0) (#22)
    by squeaky on Mon Mar 16, 2009 at 03:55:58 PM EST


    Parent
    Pakistani government (none / 0) (#25)
    by oculus on Mon Mar 16, 2009 at 03:58:23 PM EST
    responded to pressure exerted by demonstrators.  Government agreed to reinstate the Chief Justice.  

    Parent
    Just Saw That (none / 0) (#28)
    by squeaky on Mon Mar 16, 2009 at 04:03:39 PM EST
    Very good news. Still do not quite get the analogy. Chaudhry will more than likely bring down the President who is seriously corrupt.

    Zardari is believed to fear that Chaudhry could reopen corruption cases against him and overturn an amnesty from Musharraf that allowed Zardari to return from exile in 2007.



    Parent
    Weaker than weak tea. (5.00 / 2) (#3)
    by DaveOinSF on Mon Mar 16, 2009 at 03:35:40 PM EST
    So Obama's solution is essentially to give AIG $30Billion, less $150million or so.  A $29.850B bailout.  Take that!

    $200B so far, er, 199.850B... (none / 0) (#10)
    by sarcastic unnamed one on Mon Mar 16, 2009 at 03:45:14 PM EST


    Parent
    This solution (5.00 / 1) (#17)
    by Maryb2004 on Mon Mar 16, 2009 at 03:52:11 PM EST
    makes no sense.  

    Are these payouts really "bonuses"? (5.00 / 1) (#27)
    by oculus on Mon Mar 16, 2009 at 04:03:04 PM EST
    Isn't awarding of a bonus a discretionary act of management?  This sounds more like a commission or profit-sharing.  

    Psst - AIG is not profitable (5.00 / 1) (#33)
    by inclusiveheart on Mon Mar 16, 2009 at 04:16:44 PM EST
    at the moment - that's why we are giving them all that money.

    The whole bonus structure on Wall Street probably has to be regulated given the fact that these financial institutions seem to think they can pay bonuses even when there are no profits which is sort of a rip off to stock holders imo.

    Parent

    That much I figured out already! (none / 0) (#37)
    by oculus on Mon Mar 16, 2009 at 04:29:42 PM EST


    Parent
    "bonus" is largely a misnomer (none / 0) (#39)
    by gyrfalcon on Mon Mar 16, 2009 at 04:33:24 PM EST
    for most below upper management. It's actually more like deferred compensation.


    Parent
    Yes, although the way many bonuses (5.00 / 1) (#57)
    by inclusiveheart on Mon Mar 16, 2009 at 05:23:43 PM EST
    are structured there are metrics that dictate the size based on performance at least in part.  Some of these bonuses - like those promised to CEOs would often be better described as deferred compensation.  In any case, the whole thing is out of wack.  I remember a time when if the company was not profitable then there were no bonuses paid out.  I believe that pay-for-performance is a good model, but I think the financial world has forgotten all about the performance part - they got too fat - thought that the party would never end and no one really thought twice about what might happen if they promised people millions of dollars that might be difficult to pay out if the markets started to tank.

    Parent
    I believe I read that (5.00 / 1) (#71)
    by Democratic Cat on Mon Mar 16, 2009 at 06:43:55 PM EST
    These "bonuses" consist of a promise that the employee would be paid at least 75% of their 2007 total compensation. So it's pegged more to performance in a previous, flush year.  It's not a crazy concept, except that AIG was busy building a house of cards in 2007.

    Parent
    What is crazy is that the people (5.00 / 3) (#83)
    by inclusiveheart on Mon Mar 16, 2009 at 07:23:17 PM EST
    in the financial products group were not fired months ago.

    Parent
    lol (none / 0) (#58)
    by squeaky on Mon Mar 16, 2009 at 05:26:54 PM EST
    I remember a time when if the company was not profitable then there were no bonuses paid out.

    Except this is an insurance company. They always have huge profits.

    Parent

    Okay - back to my original comment (none / 0) (#60)
    by inclusiveheart on Mon Mar 16, 2009 at 05:32:38 PM EST
    in this thread: AIG is not profitable.  That is why we are giving them money.

    Parent
    Yes (5.00 / 2) (#64)
    by squeaky on Mon Mar 16, 2009 at 05:52:03 PM EST
    They were run by criminals who got a wink and nod from BushCo.

    Parent
    yes it is a misnomer (5.00 / 1) (#67)
    by DFLer on Mon Mar 16, 2009 at 06:14:41 PM EST
    the "n" in bonus should really be a "g"

    Parent
    Not all bonuses (none / 0) (#29)
    by Maryb2004 on Mon Mar 16, 2009 at 04:03:43 PM EST
    are discretionary.  Many are contractual.

    Parent
    Yep - terrible planning. (none / 0) (#85)
    by inclusiveheart on Mon Mar 16, 2009 at 07:25:48 PM EST
    No one thought the market would ever go down so they wrote these contracts assuming they would never be a problem.

    Parent
    No company I know of (none / 0) (#61)
    by Amiss on Mon Mar 16, 2009 at 05:41:19 PM EST
    pays bonuses or commissions to people that "lost money " for the company. And if there are NO profits and they are essentially bankrupt, there certainly is no "profit" for any "profit-sharing".

    Essentially, at least to me, the American taxpayer is keeping the European economy afloat by keeping AIG from bankruptcy and the whole deal with AIG and its subsidiaries is utter bullsh*t.
    The Europeans are sitting on their collective arses while the USA bails them out.

    Parent

    Not that I am approving or happy (none / 0) (#86)
    by inclusiveheart on Mon Mar 16, 2009 at 07:32:04 PM EST
    about this situation, but I don't think that we are bailing out Europe as much as trying like hell to keep the rest of the world from deciding that our markets are too risky to invest in - nothing like having banks all over the world go under as a result of your country's total lack of oversight and regulation.  It is almost like the refusal to nationalize and the insistence that these companies operate no strings attached is a desperate effort to make the rest of the world think that we are still a viable and operable market - when I think if you really analyze what is going on we are actually anything but operable or viable without 80% government investment.  It is a charade.

    Parent
    Wanna laugh?.... (5.00 / 1) (#55)
    by kdog on Mon Mar 16, 2009 at 05:06:52 PM EST
    Unfortunately I can't find a picture online, but on the covers of both the NY Newsday amd NY Daily News today there was a NY Lottery scratch-off game advert titled "Pick your Bailout"...I thought it really said it all.  The only shot the working stiff has at a bailout is a scratch-off game with odds that no legit black-market bookie could ever lay with a straight face, while AIG cons the govt. for their contractual bonuses...err, make that co-conspires with our government to get the bonuses "owed" by a company that by all rights should be in the process of being liquidated.

    Then they have the nerve to try and placate us with some fuzzy math contingency bullsh*t...you have to laugh.

    Time To Raise More Hell (5.00 / 1) (#59)
    by john horse on Mon Mar 16, 2009 at 05:26:59 PM EST
    Is there a class conflict in this country, or what?  The rich get golden parachutes.  The working class gets the shaft.  AIG employees get bonuses.  Factory workers get unemployment slips.
    The interest of the ruling class is not the same as ours.

    All I can say about AIG is what Jon Stewart said about the MSNBC economic pronosticators "F*CK YOU"

    There's a conflict allright... (none / 0) (#63)
    by kdog on Mon Mar 16, 2009 at 05:49:34 PM EST
    but the working class decided long before the current streak of shameless market-rigging that if ya can't beat 'em, hope you're lucky enough to find yourself in a position to join 'em one day.

    Parent
    Make AIGFP Employees Pay It Back (5.00 / 2) (#68)
    by kaleidescope on Mon Mar 16, 2009 at 06:16:19 PM EST
    Why couldn't Congress pass a law that imposes a 100% income tax on all 2008 and 2009 bonuses paid to employees of companies that received TARP funds?

    Sounds Good To Me... (none / 0) (#69)
    by santarita on Mon Mar 16, 2009 at 06:25:51 PM EST
    hopefully the employees are US taxpayers.

    Parent
    Sandy Levison and Carol Maloney (none / 0) (#70)
    by andgarden on Mon Mar 16, 2009 at 06:38:28 PM EST
    have suggested this.

    Parent
    That makes me queasy (none / 0) (#73)
    by Democratic Cat on Mon Mar 16, 2009 at 06:49:11 PM EST
    I don't think that the people should generally have taken the money, but this idea still makes me queasy. How about the secretary earning $35,000 a year who gets a $500 Christmas bonus at the end of the year?  Or the lucky person who structured her employment contract as a very high hourly rate rather than salary plus bonus -- that person wouldn't pay anything back.

    Parent
    I think any such decently written bill (none / 0) (#78)
    by andgarden on Mon Mar 16, 2009 at 07:01:26 PM EST
    should spare the secretary. As for the hourly rate person, well, I don't think you can fix that problem.

    Parent
    Why Not Just Say.. (5.00 / 1) (#80)
    by santarita on Mon Mar 16, 2009 at 07:10:05 PM EST
    the the tax rate applies to anyone who had an adjusted gross income in excess of a certain $ amount.  Still doesn't get money from non taxpayer employees.

    Parent
    Yup, something like that (none / 0) (#82)
    by andgarden on Mon Mar 16, 2009 at 07:23:09 PM EST


    Parent
    The retroactive nature still bothers me (5.00 / 1) (#87)
    by Democratic Cat on Mon Mar 16, 2009 at 08:30:00 PM EST
    I guess it would depend on just how it's written. To do it properly, you'd have to have some measure of who is deserving and who not, and I think that's very difficut to do fairly.

    In point of fact, compensation reform should have been a pre-condition of getting TARP funds, just as Congress leaned on the auto unions and said everyone has to share the pain.

    I can't help thinking that, although $165 million is a lot of money, it feels like a distraction. If the money could be recovered, they'd say, see what a good job we did protecting the American taxpayer.  But we wouldn't be protected unless they impose significant restrictions and regulations to prevent the kind of shenanigans in which AIG was involved. That's the more important thing.

    Parent

    Carolyn (none / 0) (#81)
    by Steve M on Mon Mar 16, 2009 at 07:12:21 PM EST
    That's a little surprising, actually, since she's generally a reliable servant of the financial industry.

    Parent
    AIG is headquartered (5.00 / 1) (#84)
    by andgarden on Mon Mar 16, 2009 at 07:24:25 PM EST
    either in her district or Nadler's. So you're right.

    I guess you could say that these bonuses offend even an UES Democrat.

    Parent

    Why not just renegotiate? (5.00 / 1) (#77)
    by fuzzyone on Mon Mar 16, 2009 at 07:01:04 PM EST
    Contracts can be renegotiated, just ask any union worker these days, they are getting renegotiated into oblivion.  GM said that its workers had to renegotiate in order to get a bailout.  So instead of this paying back the bonuses nonsense just tell them that they have to renegotiate these contracts or they don't get anymore money.

    AIG stock rose today (5.00 / 1) (#91)
    by Amiss on Mon Mar 16, 2009 at 10:49:37 PM EST
    by 66%.

    So is this supposed to satisfy us (none / 0) (#23)
    by lilburro on Mon Mar 16, 2009 at 03:56:34 PM EST
    because one day in the future, AIG will be back on its feet, and they will then repay the bonuses promised, along with all the money we lent them?

    When is this day, exactly?

    So...AIG just gets shorted the amount (none / 0) (#24)
    by Anne on Mon Mar 16, 2009 at 03:57:06 PM EST
    of the bonuses in its next taxpayer-funded cash infusion, but the people who created this mess, who diddled around with complex financial transactions that put the company and the financial system at great risk of going south, are still going to get the money they were promised.  Splendid.

    I think my favorite part of this whole bonus mess is the "retention" aspect.  We have to pay these creative geniuses wheelbarrows full of cash so they won't leave and go somewhere else, as if this: "Oh, I see from your resume that you were with AIG...I'm sorry, I don't think we have a place for you here.  In fact, pardon me while I run out of the room to the hazmat center to make sure I can't carry any of what you have to my currently healthy company" isn't what any HR/hiring committee honcho would be saying to former AIG employees.

    Is it really possible that only the geniuses who made this mess can unwind it?  I'm willing to admit that what I don't know about the complexities of this would fill the ocean; it just makes no sense to me that AIG - via the US Government - has to pay the people who made the mess to clean up the mess.

    And, the bonuses are coming from the very (none / 0) (#36)
    by Inspector Gadget on Mon Mar 16, 2009 at 04:25:37 PM EST
    the people who created this mess, who diddled around with complex financial transactions that put the company and the financial system at great risk of going south, are still going to get the money they were promised

    people they put out of homes, jobs, retirement. I want my gov't to do better at protecting the people.


    Parent

    Me too. I've just given up expecting it years ago. (none / 0) (#54)
    by sarcastic unnamed one on Mon Mar 16, 2009 at 05:03:38 PM EST


    Parent
    I'll settle... (3.50 / 2) (#56)
    by kdog on Mon Mar 16, 2009 at 05:17:25 PM EST
    for a government not actively trying to f*ck us at this point, forget protection.

    Parent
    Unfortunately (none / 0) (#38)
    by gyrfalcon on Mon Mar 16, 2009 at 04:31:10 PM EST
    I think so, at least some of them.

    Part of the problem, as I understand it, is that much of this stuff was so complicated that senior management couldn't understand it and simply turned a blind eye to whatever risks it might entail because it was bringing in so much money.

    Remember what Buffett said the other day about how long (years) it took to unwind this stuff and get rid of it from a company Berkshire Hathaway had acquired?

    Also, the people who created the mess didn't set out to create a mess that would bring the economy down.  The danger I see is that in trying to unwind this stuff while doing the least damage to the company, they might get altogether too cute again and we'd end up in an even worse unforeseen tangle somewhere down the road.

    But it also seems to me that you don't ask the handyman down the street to take on the task of defusing a nuclear bomb.

    I guess I'd like to see these guys somehow transferred to the government payroll before they get to work on the unwinding so at least their obligation would be to the taxpayers and not the company.  In fact, that to me would be the strongest argument yet for government takeover or nationalization.

    Parent

    That would get rid of (none / 0) (#42)
    by oculus on Mon Mar 16, 2009 at 04:35:33 PM EST
    future bonus obligations.  Oh wait, University of California does award bonuses (discretionary).  

    Parent
    Right over my head (none / 0) (#65)
    by gyrfalcon on Mon Mar 16, 2009 at 05:59:09 PM EST
    University of California has what to do with this now?  I'm totally missing the connection...

    Parent
    Public entity employees, such (none / 0) (#66)
    by oculus on Mon Mar 16, 2009 at 06:01:06 PM EST
    as it would suggested above U.S. should make AIG employees, don't get bonuses.  Except I've heard UC system does give bonuses.  Just a bit of trivia.  Disregard.

    Parent
    According to your WSJ link (none / 0) (#26)
    by Maryb2004 on Mon Mar 16, 2009 at 04:02:51 PM EST
    the bonuses were paid on Friday.  So there is no question of any employee foregoing them.  And there is no question of AIG breaching the contracts at this point and not paying them.  They are paid.  Unless the WSJ is wrong.

    AIG has informed the attorney general's office that the bonus payments were made on Friday, this person said.

    I would be willing to bet (5.00 / 1) (#62)
    by Amiss on Mon Mar 16, 2009 at 05:44:57 PM EST
    that every one of the so-called bonuses were done by electronic transfer, which can be voided. It is done everyday.

    Parent
    Hmm, so best (none / 0) (#30)
    by andgarden on Mon Mar 16, 2009 at 04:05:36 PM EST
    to shut up about this. It's over.

    Parent
    The bonuses may be paid (none / 0) (#32)
    by Maryb2004 on Mon Mar 16, 2009 at 04:15:25 PM EST
    but this isn't over.  By a long shot.  


    Parent
    I hope this causes AIG to be seized (5.00 / 3) (#34)
    by andgarden on Mon Mar 16, 2009 at 04:16:55 PM EST
    along with the banks.

    I want these companies spending our tax money to be 100% under the thumb of voters.

    Parent

    Yes! (none / 0) (#40)
    by bocajeff on Mon Mar 16, 2009 at 04:33:55 PM EST
    Because Congress has always been perfect protecting our money!!!!

    Parent
    If Congress misappropriates (5.00 / 3) (#43)
    by andgarden on Mon Mar 16, 2009 at 04:35:43 PM EST
    it can be held accountable.

    I think this captures one of the fundamental differences between Democrats and Republicans.

    Parent

    How may Congress be held (none / 0) (#44)
    by oculus on Mon Mar 16, 2009 at 04:37:51 PM EST
    accountable--other than the need to stand for re-elections, that is.

    Parent
    That's exactly it (5.00 / 2) (#45)
    by andgarden on Mon Mar 16, 2009 at 04:38:54 PM EST
    You do something we don't like, we fire you.

    Parent
    Are they sweating yet? (none / 0) (#48)
    by oculus on Mon Mar 16, 2009 at 04:40:34 PM EST


    Parent
    Yes (5.00 / 1) (#49)
    by andgarden on Mon Mar 16, 2009 at 04:41:56 PM EST


    Parent
    BTW, (5.00 / 1) (#41)
    by andgarden on Mon Mar 16, 2009 at 04:34:44 PM EST
    Sandy Levinson has a suggestion:

    ongress could pass an act literally in the next week stating that a) no contracts between banks or other financial entities receiving any federal bailout money and their employees relating to bonuses be implemented; and b) that all bonuses received by employees of banks and other financial entities receiving any federal bailout money since, say, Dec. 1, 2008 (this would apply to Merrill Lynch just fine) at the rate of 100%. If a state did the former, there would be a Contract Clause problem. But the Contract Clause prohibiting the "impairment" of contracts applies, textually, only to state governments, not to the national government.



    Parent
    Hearing no dissent, says Levinson, (5.00 / 1) (#46)
    by oculus on Mon Mar 16, 2009 at 04:39:19 PM EST
    . . .

    Parent
    Carol Maloney (5.00 / 2) (#50)
    by andgarden on Mon Mar 16, 2009 at 04:56:47 PM EST
    thinks it's a good idea.

    Parent
    Quite A Picture (none / 0) (#52)
    by squeaky on Mon Mar 16, 2009 at 05:00:50 PM EST
    Great idea, she means business.

    Parent
    aparently (none / 0) (#53)
    by CST on Mon Mar 16, 2009 at 05:01:33 PM EST
    She may not be the only one.

    warning - The Atlantic

    Parent

    Like I said in the last post That's what you get (none / 0) (#35)
    by Saul on Mon Mar 16, 2009 at 04:20:02 PM EST
     
    when there are no conditions to the bailout money. You have to make a laundry list of everything you don't want to happen and make them sign it. Then and only then can you give out anymore bail out money.
    When do we get transparency for the whole program? (none / 0) (#51)
    by lambert on Mon Mar 16, 2009 at 04:57:24 PM EST
    In the scale of the whole bailout program, the AIG bonuses are, as Yves points out, a rounding error.

    It looks to me like these bonuses (none / 0) (#72)
    by Green26 on Mon Mar 16, 2009 at 06:44:34 PM EST
    were given to employees that AIG wanted to keep around to run the company and clean up the mess, not to employees that caused the mess.

    Most of this amount was for retention bonuses, i.e. to retain the employees. If the employee works for so long, he/she gets the bonus.

    Don't some of you want the US to protect its $170 billion investment? Isn't it in the US' best interest to retain good employees to run the company and to oversee and monitor these fairly complicated transactions and instruments?

    Jeez, talk about cutting off your nose to spite your face.

    lol (5.00 / 1) (#74)
    by squeaky on Mon Mar 16, 2009 at 06:50:19 PM EST
    typical BushCo comment. Reads the same as the comments by GOP concern trolls all of a sudden worrying about Obama's spending and the deficit and all the poor children and grandchildren that will be paying for it.

    Parent
    Acutally, these obligations predate the bailout (5.00 / 2) (#75)
    by fuzzyone on Mon Mar 16, 2009 at 06:59:10 PM EST
    So they are likely going to the very people who caused this mess.

    Parent
    I'd Feel Better About Retaining... (5.00 / 1) (#79)
    by santarita on Mon Mar 16, 2009 at 07:07:38 PM EST
    the employees who know the business if I had more confidence that they were under competent supervision and their supervisors had the best interests of the taxpayers in mind.

    It sounds like Geithner was surprised by the retention agreements.  Shouldn't he have been a little more hands on?  Shouldn't the fact of the retention agreements been discovered when the USG did its due diligence?  In problem loan workouts, one of the commandments is "No surprizes".  Overall I think the options with AIG are limited and Geithner is doing what he can.  But he needs to protect the taxpayers a little bit more.

    Parent

    No thanks (none / 0) (#76)
    by MyLeftMind on Mon Mar 16, 2009 at 06:59:32 PM EST
    There are plenty of qualified people looking for work.  If AIG employees want to give up their good jobs, so be it.

    to oversee and monitor these fairly complicated transactions and instruments?

    These "fairly complicated transactions and instruments" aren't going to suddenly become valuable just because the taxpayers are footing the bill to "monitor" them.  

    If we truly want to recoup the costs of our investments, we'd forget about bailing out AIG and the banks and just bail out homeowners.  If that helps the big companies, fine.  With this much money, we could buy every single at risk mortgage for owner occupied homes across the country.  

    Instead, we're getting suckered.  Again.

    Parent

    WSWS: The AIG bonuses furor: the class issues (none / 0) (#90)
    by Andreas on Mon Mar 16, 2009 at 10:01:47 PM EST
    The WSWS writes:

    The obvious question is: where precisely are these "best and brightest" going to go if they fail to get their hundreds of millions in bonuses? The market for this type of financial parasitism has collapsed, dragging down with it the livelihoods of millions upon millions of working people. Rather than getting bonuses, those in charge of the financial manipulations carried out by AIG and its partners should be on the receiving end of criminal investigations.

    In the end, the Obama administration came around to Liddy's position that the bonuses must be paid. This was made clear Sunday by Lawrence Summers, the chairman of the White House National Economic Council, in a televised interview on ABC's "This Week." ...

    "We are a country of law," he proclaimed. "These are contracts. The government cannot just abrogate contracts."

    The government cannot abrogate contracts? ...

    There were no pious statements from Washington about a "nation of law" and the sanctity of the contract as the government backed a vicious assault aimed at driving autoworkers back to the conditions of the 1930s. Rather, these workers were vilified amid the universal demand--seconded by the United Auto Workers union--that they agree to rip up their contracts and be quick about it.

    This is the real content of the Obama administration's economic policy. What is sacred is not law or contracts, but rather the principle that the wealth, power and privileges of the top one percent of American society cannot be touched, no matter how deep the economic crisis.

    The AIG bonuses furor: the class issues
    Bill Van Auken, 16 March 2009

    call the bluff? (none / 0) (#92)
    by diogenes on Tue Mar 17, 2009 at 02:47:24 PM EST
    Presumably if AIG doesn't get the federal 30 billion then they have to go bankrupt.  The whole reason why we poured all these billions in in the first place was to prevent that.

    Obama Administration Makes $30B AIG Infusion Contingent On Bonus Repayment | 90 comments (90 topical)

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