http://news.yahoo.com/s/ap/20090315/ap_on_bi_ge/aig_bonuses
AIG is paying out $165 million in bonuses despite a $61.7 BILLION loss for the 4th quarter of 2008.
They have determined the government has no authority to block the bonuses.
They should be walking the unemployment line, not collecting bonuses.
I’ve been doing my job properly. My bonus is a 20% reduction in work and pay.
Ralph
From Jim Hoagland and the Washington Post:
"The trail of money starts with the $173 billion that the Treasury has spent to bail out AIG. An undetermined but huge chunk of that seems to have been channeled straight into European and other foreign banks to keep them afloat, with no end in sight to that process, and no explanation to Americans. On Friday the Wall Street Journal identified Frankfurt-based Deutsche Bank as one major recipient of the redirected Treasury payments. There are many others, as well as Wall Street firms led by Goldman Sachs.
The international dimension of the Great Meltdown has been clear since then-Treasury Secretary Henry Paulson let it be known that an urgent telephone call from French Finance Minister Christine Lagarde helped force his decision not to let AIG follow Lehman Brothers into bankruptcy in September. Lagarde reportedly warned that AIG’s collapse would endanger the world banking system, beginning with the French banks that had bought the toxic credit-default swaps AIG peddled through its hyperactive London marketing arm.
This much is known from AIG’s own pre-bailout quarterly reporting, as pointed out by Henny Sender in the Financial Times on March 7: Of the $446 billion in credit insurance that AIG sold, $307 billion of these securities were bought by European banks.
Why? The best guess I hear is that the banks were not buying insurance at all – they seem never to have diligently asked if AIG could pay off, which it manifestly could not. They were in effect buying a piece of the firm’s AAA rating, which enabled the Europeans to inflate artificially their required credit reserves and lend out ever more of their capital for bigger profits – until the crash came. Or as financial blogger John Carney has put it, the customers were in on the scam."
The customers were in on the scam. And we the US taxpayers bailed out the foreign customers. As well as Goldman Sachs, where we have culled half our treasury department from. Including former head Paulsen, as well as the man currently in charge of handing out the TARP funds.
Ralph
I read about this crap and think the whole system should crash. Screw everyone. Let the top exec’s fight it out like the rest of us. Let the system crash. Let all that money they are playing with become absolutely worthless. Let all these idiots commit suicide because their little empires have crumbled. Let it happen!
I guess nobody learned any lessons from the great depression eh?
How many people do you honestly know that can live a life where they fix their own cars. Do work to their own home. Shop for and cook their own meals. And take care of their own children! We’ve created this mess by allowing our society to grow into this retched creature. This could be a good thing though. Level the playing field and start over…
Jon.
Jon Foster said:
How many people do you honestly know that can live a life where they fix their own cars. Do work to their own home. Shop for and cook their own meals. And take care of their own children!Jon.
Victor Smith said:
SURVIVAL OF THE FITTEST!
(http://www.lscdata.com/users/lastmanout/_forumfiles/ScroogeMcDuck.JPG)
Ralph Berg said:The saving the crooks part is what's killing me. You know how you get that feeling in your stomach that something just isn't right? Ya, I've had that for a while now...
I think most of us here can and do. But you are right. We are probably in the minority. As for letting it crash.........I would agree. But we already "saved" the biggest crooks. Ralph
Jon.
The bonuses need to be paid to maintain the ‘best of the best’ in executive positions in AIG. Well, if these are the best, then thank the almighty, that we had the best in charge, or else who knows what mayhem would have occurred late last year. At least we had competent well paid executives steering the economic course to minimise the economic damage. We should all, in unison, praise these people for a job, well done. No one, not even people paid millions of dollars less, could have stuffed it up so much. We should reward them handsomely for their total incompetence.
In case some believe that I am serious, then I do assure you that I am being sarcastic.
How do we know they were incompetent? Could it have been worse? The culprit here, as I see it, is Congress for passing and POTUS for signing the authorization to send tax-payer’s hard earned dollars to ANY business, as a loan or as payment on partial ownership.
What form of government is it that owns the means of production for the country?
The executives running AIG weren’t incompetent.
They were and are criminals by every definition of the word. The “company” was run and continues to be run as a criminal enterprise.
I’ll explain without all the crap that our government puts out while dishing money:
AIG was selling and continues to sell insurance.
(Yes, they have lots of names and explanations for the way they were doing it, but it still boils down to selling insurance.)
AIG took in billions of dollars for the ‘policies’ they wrote.
AIG spent that money, with no thought to having to pay in the event of a loss the should have been covered by the insurance they sold.
Insurance is a unique product. You don’t get, or even see the ‘product’ until there is a loss that is covered. In times past, there have been many instances of insurance companies doing exactly what AIG has and continues to do: Take the money, with no intention of ever having to pay off for claims. That’s why virtually every government entity has strict laws and oversight on insurance companies.
If I started an insurance company and simply spent the money I took in rather than creating funding for casualty losses I had insured, I would be charged and put in jail.
Instead, AIG and the criminals that are employed there get billions of dollars from the U.S. treasury to help cover the fact that they stole money from the entities they were supposed to insure. Part of the government’s mantra is that we must make certain AIG can remain in business and attractive to future customers so they will have more entities to rob.
The latest straw is that the criminals who run and work for AIG want to reward themselves for doing such a great job.
IMHO, this is one of the most egregious attacks ever on the capitalist system.
Happy RRing,
Jerry
Harry Reid says he is tryiing to find a way to tax the bonuses:
"CNN reported that Senate Majority Leader Harry Reid announced on the Senate floor Tuesday that the tax-writing Senate Finance Committee will pursue a legislative fix in such a way that the “recipients of those bonuses will not be able to keep all their money – and that’s an understatement.”
What’s more, Senate Finance Committee Chairman Max Baucus (D-Mont.), will follow up on an idea from Senate Banking Committee Chairman Chris Dodd (D-Conn.) and propose a special tax on AIG within the next 24 hours."
Sounds reasonable to me. The company is costing us billions. Maybe we can get the guy who took a 4.6 million dollar “retention bonus,” and then left the company, to pay back a couple mill to fix the mess he created.
IMHO either the Obama admin. or the Bush admin did a terrible job on this. I’m not sure who’s fault it is but the time to prevent the payment of bonuses was before awarding the bailout money.
Also it looks as if AIG as a whole was well run and legitimate–is was the smaller shop, “AIG Financial Products,” headquartered in London, that caused most of the problems
mike omalley said:
Harry Reid says he is tryiing to find a way to tax the bonuses:"CNN reported that Senate Majority Leader Harry Reid announced on the Senate floor Tuesday that the tax-writing Senate Finance Committee will pursue a legislative fix in such a way that the “recipients of those bonuses will not be able to keep all their money – and that’s an understatement.”
What’s more, Senate Finance Committee Chairman Max Baucus (D-Mont.), will follow up on an idea from Senate Banking Committee Chairman Chris Dodd (D-Conn.) and propose a special tax on AIG within the next 24 hours."
Sounds reasonable to me. The company is costing us billions. Maybe we can get the guy who took a 4.6 million dollar “retention bonus,” and then left the company, to pay back a couple mill to fix the mess he created.
IMHO either the Obama admin. or the Bush admin did a terrible job on this. I’m not sure who’s fault it is but the time to prevent the payment of bonuses was before awarding the bailout money.
Do they really pass out hundreds of millions of tax free dollars as bonuses to the criminals who run and work at AIG?
This sudden ‘get tough policy’ be collecting a tax on what should have already been taxed is just more government horse manure.
How about the guy with the multi-million dollar retention bonus being charged with fraud, doing 12 months in federal prison and paying a fine of say 150% of his ill-gotten gains?
That kind of treatment is the only way to stop one of the largest insurance frauds the world has ever seen. The criminals at AIG appear to still be fully in charge. They just have the support of the government along with lots more money to steal now.
And I sincerely believe that every administration that has participated by allowing and now supporting this fleecing of the U.S. and world economy is culpable.
Happy RRing,
Jerry
A report on a news bulletin said that it was executives in the London branch of the company that received the money. So taxpayers’ money is being sent to another country to reward the management for failing. I am aware that several hundred million of bailout funds went to European companies to prop them up.
A little anecdote.
A new employee is placed in his office and given the job of investing currency on the fluctuating money market. At the end of the day he has cost the company $10 million dollars in poor investments. Cap in hand he goes to the boss’s office to tender his resignation. The boss refuses to accept it. The employee inquires as to why the boss will not fire him. The boss replies, “How can I fire you, it just cost me $10 million dollars to train you.”
Why all the venom towards AIG and the execs that had valid contracts with bonus packages. The individual execs MAY have preformed their jobs admirably at IT, marketing, personnel, etc.
This honestly sounds like redirection by the folks that gave away our money, and are now blaming the ones that got yhe money for spending it as they see fit.
mike omalley said:So I start a foreign division of my otherwise "well run and legitimate" Navarro Engineering Company to operate, let's say, a Ponzi scheme. I'll name it Navarro Financial Products.
Also it looks as if AIG as a whole was well run and legitimate--it was the smaller shop, "AIG Financial Products," headquartered in London, that caused most of the problems
The folks I hire there aren’t very successful at operating the Ponzi scheme, and soon report huge loses, way more than my “well run and legitimate” engineering company can afford. The guys operating this division are even suspected of committing criminal acts, with the parent company’s complicity.
In the world I used to believe in, my “well run and legitimate” engineering company would be bankrupted and, based on the operation of the criminal enterprise, every one in the chain of command, including the boss, would be facing the possibility of criminal charges. That’s the way both capitalism and criminal law was designed to operate. Failure is not rewarded and criminal behavior is actually punished.
In the current situation, my bankrupt, but “well run and legitimate” engineering company is rewarded with billions of U.S. treasury dollars, with absolutely no limitations on what the money is to be used for. I can now continue to finance the guys operating my foreign criminal enterprise under the guise of needing to attract new customers to the Ponzi scheme.
Rather than being dismissed and facing criminal charges, the “400 employees” of the ‘Ponzi division’ continue their employment and are given performance and retention bonuses “ranging from $1,000 to $6.5 million” each. (Employee numbers and bonus quotes are taken from an article in today’s San Francisco Chronicle.)
Further, this bonus money isn’t tied to either performance nor retention, so the guy who got the $6.5 million can simply take the money and walk away. It is just a gift. Great reward for operating a criminal enterprise.
Oh, oh: Only after an expression of outrage from his constituents, Harry Reid wants to “tax” the money he and the other politicians freely passed out. That way he can be seen as doing something while just getting his share of the loot taken from the U.S. treasury.
Sounds like a great way to treat a “well run and legtimate” business.
Happy RRing,
Jerry
Jerry, you sound surprised. 
Steve Featherkile said:More like disillusioned and severely disappointed.
Jerry, you sound surprised. :P
Happy RRing,
Jerry
A common bonus incentive scheme is called ‘profit sharing’ to reward employees for their efforts. When investments go wrong, how about ‘loss sharing’ schemes. They would be an incentive to make the employee think twice before engaging in risky adventures. The problem to date is that the executives were highly rewarded when risky schemes made huge profits and expected a slice of the pie. Well the pie on the menu is now humble pie, but no one wants to eat a slice of it.
Remember several years ago when employees of several international investment banks made erroneous highly risky investments and then tried to cover their tracks by even more risky investments to attempt to recoup the money. These men were jailed for committing a crime. How is the situation any different now or is it simply the economy is so collapsed that the losses are mere collateral damage? In a healthy economy I am sure that the actions of AIG in accepting ‘insurance policies’ that they did not intend paying on, would be considered fraudulent.
I can understand the argument that we need to honor contracts, but if AIG had declared bankruptcy, which they would have done if we had not given them 200 billion, then these guys would be getting nothing at all. We were well within our rights to insist on breaking those contracts as a condition of the bailout. We do it all the time—mostly to unions, as with GM recently.
But Geithner–and I think it’s him, though it’s a little unclear–either didn’t look at the deal or looked and saw nothing wrong. It’s an astonishing example of how Obama’s Treasury team, like Bush’s, is run by insiders who think their bizarre world of staggering bonuses is the normal world.
Wall Street insiders seem to assume that if you are making a 4 million dollar bonus, you [i]must[/] deserve it, otherwise “the market” wouldn’t be paying it to you. It’s a central premise of free market logic–everybody really deserves the salary they are making, because the market is never wrong. And if they really deserve it, it must be because they are uniquely talented and special–they get 4 million dollar bonuses because no one else can do what they do.
And what’s really amazing is how that assumption survives the spectacular, in your face, unavoidable evidence of their dishonesty and incompetance. These are “the only guys” who can fix the mess because they were the only guys smart enough to make it.
Sounds like nonsense to me–are you telling me that the business schools aren’t full of eager, bright young guys who could go in and “unwind” the AIGFP mess for less money?
The whole thing is a disgrace
