A.I.G. planning huge bonuses after $170 billion bailout

[875000]

http://www.iht.com/articles/2009/03/15/business/15aig.php?page=1

WASHINGTON: The American International Group, which has received more than $170 billion in taxpayer bailout money from the Treasury and Federal Reserve, plans to pay about $165 million in bonuses by Sunday to executives in the same business unit that brought the company to the brink of collapse last year.

Word of the bonuses last week stirred such deep consternation inside the Obama administration that Treasury Secretary Timothy Geithner told the firm they were unacceptable and demanded they be renegotiated, a senior administration official said. But the bonuses will go forward because lawyers said the firm was contractually obligated to pay them.

The payments to AIG's financial products unit are in addition to $121 million in previously scheduled bonuses for the company's senior executives and 6,400 employees across the sprawling corporation. Geithner last week pressured AIG to cut the $9.6 million going to the top 50 executives in half and tie the rest to performance.

The payment of so much money at a company at the heart of the financial collapse that sent the broader economy into a tailspin almost certainly will fuel a popular backlash against the government's efforts to prop up Wall Street. Past bonuses already have prompted President Barack Obama and Congress to impose tough rules on corporate executive compensation at firms bailed out with taxpayer money.

AIG, nearly 80 percent of which is now owned by the government, defended its bonuses, arguing that they were promised last year before the crisis and cannot be legally canceled. In a letter to Geithner, Edward Liddy, the government-appointed chairman of AIG, said at least some bonuses were needed to keep the most skilled executives.

"We cannot attract and retain the best and the brightest talent to lead and staff the AIG businesses — which are now being operated principally on behalf of American taxpayers — if employees believe their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury," he wrote Geithner on Saturday.

Still, Liddy seemed stung by his talk with Geithner, calling their conversation last Wednesday "a difficult one for me" and noting that he receives no bonus himself. "Needless to say, in the current circumstances," Liddy wrote, "I do not like these arrangements and find it distasteful and difficult to recommend to you that we must proceed with them."

An AIG spokeswoman said Saturday that the company had no comment beyond the letter. The bonuses were first reported by The Washington Post.

The senior government official, who was not authorized to speak on the record, said the administration was outraged. "It is unacceptable for Wall Street firms receiving government assistance to hand out million-dollar bonuses, while hard-working Americans bear the burden of this economic crisis," the official said.

Of all the financial institutions that have been propped up by taxpayer dollars, none has received more money than AIG and none has infuriated lawmakers more with practices that policy makers have called reckless.

The bonuses will be paid to executives at AIG's financial products division, the unit that wrote trillions of dollars' worth of credit-default swaps that protected investors from defaults on bonds backed in many cases by subprime mortgages.

The bonus plan covers 400 employees, and the bonuses range from as little as $1,000 to as much as $6.5 million. Seven executives at the financial products unit were entitled to receive more than $3 million in bonuses.

Liddy, whom Federal Reserve and Treasury officials recruited after AIG faltered last September and received its first round of bailout money, said the bonuses and "retention pay" had been agreed to in early 2008 and were for the most part legally required.

The company told the Treasury that there were two categories of bonus payments, with the first to be given to senior executives. The administration official said Geithner had told AIG to revise them to protect taxpayer dollars and tie future payments to performance.

The second group of bonuses covers some 2008 retention payments from contracts entered into before government involvement in AIG Indeed, in his letter to Geithner, Liddy wrote that he had shown the details of the $450 million bonus pool to outside lawyers and been told that AIG had no choice but to follow through with the payment schedule.

The administration official said the Treasury Department did its own legal analysis and concluded that those contracts could not be broken. The official noted that even a provision recently pushed through Congress by Senator Christopher J. Dodd, a Connecticut Democrat, had an exemption for such bonus agreements already in place.

But the official said the administration will force AIG to eventually repay the cost of the bonuses to the taxpayers as part of the agreement with the firm, which is being restructured.

AIG did cut other bonuses, Liddy explained, but those were part of the compensation for people who dealt in other parts of the company and had no direct involvement with the derivatives.

Liddy wrote that AIG hoped to reduce its retention bonuses for 2009 by 30 percent. He said the top 25 executives at the financial products division had also agreed to reduce their salary for the rest of 2009 to $1.

Ever since it was bailed out by the government last fall, AIG has been defending itself against accusations that it was richly compensating people who caused one of the biggest financial crises in American history.

AIG's main business is insurance, but the financial products unit sold hundreds of billions of dollars' worth of derivatives, the notorious credit-default swaps that nearly toppled the entire company last fall.

AIG had set up a special bonus pool for the financial products unit early in 2008, before the company's near collapse, when problems stemming from the mortgage crisis were becoming clear and there were concerns that some of the best-informed derivatives specialists might leave. It locked in a total amount, $450 million, for the financial products unit and prepared to pay it in a series of installments, to encourage people to stay.

Only part of the payments had been made by last fall, when AIG nearly collapsed. In documents provided to the Treasury, AIG said it was required to pay about $165 million in bonuses on or before Sunday. That is in addition to $55 million in December.

Under a deal reached last week, AIG agreed that the top 50 executives would get half of the $9.6 million they were supposed to get by March 15. The second half of their bonuses would be paid out in two installments in July and in September. To get those payments, Treasury officials said, AIG would have to show that it had made progress toward its goal of selling off business units and repaying the government.

The financial products unit is now being painstakingly wound down.

[875000]

http://www.cnn.com/2009/US/03/15/AIG.bonuses/

(CNN) -- White House officials and some members of Congress reacted strongly Sunday to news that insurance giant AIG had intended to pay out $165 million in bonuses and compensation. The company has received at least $170 billion in federal bailout money.

Under pressure from the Treasury, AIG scaled back the bonus plans and pledged to reduce 2009 bonuses -- or "retention payments" -- by at least 30 percent. That did little to temper outrage at the initial plan, however.

"There are a lot of terrible things that have happened in the last 18 months, but what's happened at AIG is the most outrageous," Lawrence Summers, head of the National Economic Council, told ABC's "This Week."

"What that company did, the way it was not regulated, the way no one was watching, what's proved necessary, it is outrageous."

And on "Fox News Sunday," White House economic adviser Austan Goolsbee said Treasury Secretary Timothy Geithner was "really upset by the news."

"He stepped in and berated them, got them to reduce the bonuses following every legal means he has to do this," Goolsbee said.

In a letter to Geithner, obtained Saturday by CNN, AIG Chairman and CEO Edward Liddy said his company was taking steps to limit compensation in AIG Financial Products -- the British-based unit responsible for issuing the risky credit default swaps that have brought the company to the brink of collapse. The default swaps amount to insurance against losses from bad loans, which have increased dramatically since the U.S. housing boom peaked.

In the letter to Geithner, Liddy said the unit's 25 highest-paid contract employees will reduce their salaries to $1 this year and all other officers in the unit will reduce their salaries by 10 percent. Other "non-cash compensation" will be reduced or eliminated. But he told Geithner that some bonus payments are binding legal obligations of the company, and "there are serious legal, as well as business consequences for not paying."

Rep. Barney Frank, the chairman of the House Financial Services Committee, told Fox that bailout recipients should have to follow stricter compensation rules, and said Congress should look into whether the bonuses are "legally recoverable."

"We can't just violate legal obligations, I understand that," the Massachusetts Democrat said. "But I do want to find out at what point these legal obligations were incurred. Who said, and at what point, 'We're going to give these bonuses no matter what?' And I do think it's inappropriate for those people to stay in power at that company."

Frank said that if banks complain that the Obama administration has made things too tough, "They can give the money back. We made that easy."

Goolsbee said AIG was following "a policy that's really not sensible, is obviously going to ignite the ire of millions of people."

"We've done exactly what we can do to prevent this kind of thing from happening again," Goolsbee said. Summers told ABC that the administration was taking "every legal step possible to limit those bonuses."

Sen. Bob Corker, R-Tennessee, told "Fox News Sunday" he believes it's important to know whether the bonuses are actually commission payments for products sold by brokers, saying he would withhold judgment until that is clarified.

However, "I do think that these entities that are receiving government money, our money, I do think they have to play by a different set of rules," Corker said. Hopefully, those different rules will discourage companies from accepting bailout funds, he said.

Liddy, however, makes clear in the letter that he took steps to limit his employees' compensation with trepidation. He said the company will have trouble attracting and retaining "the best and the brightest ... if employees believe that their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury."

AIG lost a record $62 billion in the fourth quarter of 2008. It has more than 74 million insurance policies issued in 130 countries around the world.

[Daniel]

How are bonuses contractually mandated?

Curious.

[Clove]

AIG needs to be re-named OMG.

[Kitsun]

How the hell is the bonus tied to performance and the company still went under? Someone bungled the metrics and guage for that one.

[ElanthianSiren]

How are bonuses contractually mandated?

Curious.

:yeahthat:

It seems to defy the purpose of a bonus to me, which is like saying, "Damn you worked hard...here's some extra green."

[EasternBrand]

How are bonuses contractually mandated?

Curious.

Presumably the same way anything is contractually mandated? Don't let the word "bonus" fool you into thinking that it's, oh I don't know, something in addition to what is expected or strictly due (thanks for that definition, Webster). Executives of large companies are typically not at-will employees, and also typically have extensive contractual provisions detailing what their compensation will be across several different scenarios. It's often a way to lure people from successful private companies, where compensation rules may be less restricted, and where fiduciary duties are limited or non-existent. It's a lot more constraining to be an executive in a public company than a private one, as a general rule.

In any event, I wish they would first find out which of these executives it would be cheaper to terminate, and just axe them (presumably there are some). I'm sure there are ways to deal with those who remain, although I don't know the specifics of how TARP applies to AIG, or how these contracts are drafted. There's always a way to deal with these things. But the fact that these people are walking away with taxpayer-funded bonuses after fucking those same people is unbelievably disgusting.

[Gan]

AIG should not getting the money. Its time to part it up and sell it off.

[Stanley Burrell]

I sometimes believe in fighting fire with fire. If a company exec' thinks that signing a loophole in blood entitles them to what is a dressed up way of perpetrating embezzlement, then I think every effort must be made to consciously fuck with any lucrative assets belonging to these C.E.O.s ... using some get-Al-Capone-on-tax-evasion shit.

Fuck me. There are probably so many goddamn loopholes still. What happened to throwing bricks through people's windows and hiring Ratolin as an assassin?

[EasternBrand]

If a company exec' thinks that signing a loophole in blood entitles them to what is a dressed up way of perpetrating embezzlement, then I think every effort must be made to consciously fuck with any lucrative assets belonging to these C.E.O.s

If only those contracts were signed in blood, we'd have no problem!

http://www.iht.com/articles/ap/2009/03/11/america/NA-US-Koreans-Blood-Contract.php

[Stanley Burrell]

If only those contracts were signed in blood, we'd have no problem!

http://www.iht.com/articles/ap/2009/03/11/america/NA-US-Koreans-Blood-Contract.php

I'm starting to think that I like prosecuting attorneys more; or will, when they begin building up in force to drop a few drug possession charges in a court room setting and make every aesthetic effort to go after what is probably the ginormous wall of defense bureaucrats siding with these C.E.O.s, just in case someone gets the notion to question the legalities of these exec's self-promotions.

I wouldn't hire the dude who lost the written-in-blood case as a PA to start dropping paperwork on these guys though, no offense.

[Mabus]

AIG should not getting the money. Its time to part it up and sell it off.
QFT

If a company is "to big to fail" it is time to "Ma Bell" it.

[Rocktar]

QFT

If a company is "to big to fail" it is time to "Ma Bell" it.

Yeah, let's rip it apart, regulate it to death, destroy quality, pay off (subsidize) loads of "competitors" who slipped the cash to the voting congress members and then, stand on it's neck with ridiculous legislation that doesn't apply to direct competitors until the primary difference in cost IS the taxes and regulation, not competition and cost of service then lastly, we will ride them into the ground until they are forced to ship loads of jobs overseas to match what their much less regulated competitors have already done years ahead and THEN, bitch and complain about the lost jobs.

Yeah, that makes sense; let's just make the wheels of our economy turn even slower, mired in useless regulation and overburdening taxation, as we ship the whole car over seas. Great idea.

[875000]

Presumably the same way anything is contractually mandated? Don't let the word "bonus" fool you into thinking that it's, oh I don't know, something in addition to what is expected or strictly due (thanks for that definition, Webster). Executives of large companies are typically not at-will employees, and also typically have extensive contractual provisions detailing what their compensation will be across several different scenarios. It's often a way to lure people from successful private companies, where compensation rules may be less restricted, and where fiduciary duties are limited or non-existent. It's a lot more constraining to be an executive in a public company than a private one, as a general rule.

In any event, I wish they would first find out which of these executives it would be cheaper to terminate, and just axe them (presumably there are some). I'm sure there are ways to deal with those who remain, although I don't know the specifics of how TARP applies to AIG, or how these contracts are drafted. There's always a way to deal with these things. But the fact that these people are walking away with taxpayer-funded bonuses after fucking those same people is unbelievably disgusting.

Maybe I am just too cynical, but I cannot understand how Congress and the Department of the Treasury could fail to anticipate this happening at the time they agreed to the bailouts.

Yes, a great deal was made out of legislative mandates on Executive salary in return for bail-out money. However, I also knew there were enough loopholes to allow for things like this and I very much doubted that accepting TARP funding somehow released companies from its contractual obligations.

I know a number of people in investment banking (not the same business as AIG, but many banks also received bailout money), and not one of them were worried about loosing their bonuses for 2008 and early 2009. They did mention that they doubted the bonuses would be as high later in the year. However, most planned on leaving their company after they got their next bonus and so they could begin working for a company without the compensation restrictions.

I expect the same thing to happen at AIG. Once the bonuses are handed out, top talent is going to leave as well. There is no point in sticking around.

Oh, and before anyone tries to read this as a partisan attack, keep in mind there is plenty of blame to go around besides Reid, Pelosi, and Obama's crew. The AIG bailout started under Bush, and plenty of Republicans supported it as well. Messing around with free markets (in this case, labor markets) tends to lead to externailities like this.

[Mabus]

Yeah, let's rip it apart, regulate it to death, destroy quality, pay off (subsidize) loads of "competitors" who slipped the cash to the voting congress members and then, stand on it's neck with ridiculous legislation that doesn't apply to direct competitors until the primary difference in cost IS the taxes and regulation, not competition and cost of service then lastly, we will ride them into the ground until they are forced to ship loads of jobs overseas to match what their much less regulated competitors have already done years ahead and THEN, bitch and complain about the lost jobs.

Yeah, that makes sense; let's just make the wheels of our economy turn even slower, mired in useless regulation and overburdening taxation, as we ship the whole car over seas. Great idea.
Splitting AIG into various sub-entities and selling them to responsible buyers is a viable solution to their apparent insolvency. There is no added "regulation" in splitting the company. There are many responsible companies that could handle portions of the worthwhile assets and accounts, and at least the shareholders could recoup some investment (admittedly minuscule).

The current solution of pseudo-receivership with pumping billions of tax-payer dollars into (what is seen as) a publicly traded company is certainly not a solution.

If it is "to big to fail" it is to big, in my opinion.

[Ignot]

They may need those bonuses to hire some body guards.

[Rocktar]

Yeah, but spliiting it up into parts and selling them off to stable companies isn't what happened to Ma Bell.

[Gan]

Yea, I think the "Ma-Bell" example was a bad one.

[Kembal]

AIG is being split up, just not fast enough. (AIG Commerical Insurance and the Asian units are being split into a seperate holding company and probably getting rebranded.) The big huge problem at AIG is AIG Financial Products, based in London. It's caused the insolvency of AIG in general.

Also, the bonus amount is higher: It's 1.2 billion across the entire company. And there's the kicker, from the Wall Street Journal:


American International Group Inc. will pay $450 million in bonuses to employees in its financial products unit. That division was at the heart of AIG's collapse last fall, which compelled the U.S. government to provide $173.3 billion in aid to keep it running.

Those fuckers need to be prosecuted for fraud, not paid $450 million in bonuses.

[BriarFox]

http://www.nytimes.com/2009/03/17/us/politics/17obama.html?hp

Obama Tells Treasury Chief to Block A.I.G. Bonuses:


WASHINGTON — President Obama vowed to try to stop the faltering insurance giant American International Group from paying out hundreds of millions of dollars in bonuses to executives, as the administration scrambled to avert a populist backlash against banks and Wall Street that could complicate Mr. Obama’s economic recovery agenda.

“In the last six months, A.I.G. has received substantial sums from the U.S. Treasury,” Mr. Obama said. He added that he had asked Treasury Secretary Timothy Geithner “to use that leverage and pursue every single legal avenue to block these bonuses and make the American taxpayers whole.”

In strongly-worded remarks delivered in the White House East Room before small business owners, Mr. Obama called A.I.G. “a corporation that finds itself in financial distress due to recklessness and greed.”

“Under these circumstances, it’s hard to understand how derivative traders at A.I.G. warranted any bonuses, much less $165 million in extra pay,” Mr. Obama said. “How do they justify this outrage to the taxpayers who are keeping the company afloat?”

[NocturnalRob]

How are bonuses contractually mandated?
UBS does the same thing too.

[Ignot]

http://www.nytimes.com/2009/03/17/us/politics/17obama.html?hp

Obama Tells Treasury Chief to Block A.I.G. Bonuses:

Is he going to do anything about it? Because that would be nice.

[Clove]

Well the simple solution would be- fire all the executives. They might be interested in rehiring under a new contract. I'm always amused by the "retain talent" excuse. Because you know, I'll bet a lot of top-performing companies are really interested in stealing away AIG execs these days.

[Jorddyn]

Well the simple solution would be- fire all the executives. They might be interested in rehiring under a new contract. I'm always amused by the "retain talent" excuse. Because you know, I'll bet a lot of top-performing companies are really interested in stealing away AIG execs these days.


I can't say I'd cry any tears seeing their entire management team fired. However, I'm sure there are golden parachute clauses in all of their contracts.

Plus, while I agree most good companies want nothing to do with AIG execs, most good execs probably want nothing to do with AIG.

[Clove]

Plus, while I agree most good companies want nothing to do with AIG execs, most good execs probably want nothing to do with AIG.Which is why rehiring them shouldn't pose a problem :D

[Jorddyn]

Which is why rehiring them shouldn't pose a problem :D

But I don't want them back!

[Clove]

But I don't want them back!I'll take them back at the low-rent salaries they deserve.

[Jorddyn]

I'll take them back at the low-rent salaries they deserve.

I have a thing against thieves.

[Drunken Durfin]

How does the slogan go?



END CORRUPTION



or at least let me participate in it.

[Gan]

I can't say I'd cry any tears seeing their entire management team fired. However, I'm sure there are golden parachute clauses in all of their contracts.

Plus, while I agree most good companies want nothing to do with AIG execs, most good execs probably want nothing to do with AIG.

Bankruptcy does miraculous things to employment (salary/bonus/parachute) contracts.

You reap what you sow gentlemen. You reap what you sow.

[Parkbandit]

Seriously.. because AIG was an abysmal failure, does that automatically that every single employee of AIG was corrupt and purposely cooking the books?

Don't blame AIG.. blame the short sighted government we support for giving AIG a blank check and now, are asking for details on that money.

Another case of government making matters worse.

[Jorddyn]

Seriously.. because AIG was an abysmal failure, does that automatically that every single employee of AIG was corrupt and purposely cooking the books?


Nope. I don't know that anyone was cooking the books, per se. I think they were making horrible and short-sighted decisions that came back to bite them in the ass. And everyone in upper management should be held accountable for that.

[Parkbandit]

Nope. I don't know that anyone was cooking the books, per se. I think they were making horrible and short-sighted decisions that came back to bite them in the ass. And everyone in upper management should be held accountable for that.

That's one hell of a paint roller you decided to paint with.

[Jorddyn]

That's one hell of a paint roller you decided to paint with.

Who in upper management do you believe should NOT be held accountable for the poor decisions of the company?

[Back]

Seriously.. because AIG was an abysmal failure, does that automatically that every single employee of AIG was corrupt and purposely cooking the books?

Don't blame AIG.. blame the short sighted government we support for giving AIG a blank check and now, are asking for details on that money.

Another case of government making matters worse.

I would not blame the file clerk for the fall of AIG and I seriously doubt he is getting any kind of severance.

Nah, don’t blame AIG executives for spending your tax money on their bonuses given out by the previous administration.

[Stanley Burrell]

Seriously.. because AIG was an abysmal failure, does that automatically that every single employee of AIG was corrupt and purposely cooking the books?

Don't blame AIG.. blame the short sighted government we support for giving AIG a blank check and now, are asking for details on that money.

Another case of government making matters worse.

Upper management would have sat on their hands; with their thumbs playing around somewhere, ready to commit highway robbery whether or not they received bailout funds a couple days ago or a century from now. Still though, this is pretty frickin' stark.

[Parkbandit]

Who in upper management do you believe should NOT be held accountable for the poor decisions of the company?

Since I don't have any idea what the positions are in AIG's upper management, I'll guess one off the top of my head: Director of Human Resources?

[Parkbandit]

I would not blame the file clerk for the fall of AIG and I seriously doubt he is getting any kind of severance.

Nah, don’t blame AIG executives for spending your tax money on their bonuses given out by the previous administration.


Who here claimed that only Obama is to blame in this mess?

[875000]

Nah, don’t blame AIG executives for spending your tax money on their bonuses given out by the previous administration.

Is your head really stuck that far up your ass?


http://money.cnn.com/2009/03/02/news/companies/aig/index.htm


By David Ellis, CNNMoney.com staff writer

Last Updated: March 3, 2009: 8:31 AM ET

NEW YORK (CNNMoney.com) -- The U.S. government, saying it needed to prevent broad damage to the financial system, announced Monday that it was again restructuring the bailout of American International Group after the battered insurer reported a staggering $62 billion quarterly loss.

Overwhelmed by ongoing deterioration in the credit markets and charges related to its restructuring, AIG's losses overwhelmed the firm during the fourth quarter. Its $61.7 billion loss was the largest ever reported by an American company.

AIG's loss for the full year was even more dramatic -- $99 billion. In 2007, the company reported a profit of $9.3 billion.

The government said it was overhauling its bailout to help the besieged firm unwind in an orderly way.

"Given the systemic risk AIG continues to pose and the fragility of markets today, the potential cost to the economy and the taxpayer of government inaction would be extremely high," the Treasury Department and Federal Reserve said.

AIG , which does business in more than 130 countries and has approximately 116,000 employees, oversees roughly 74 million insurance policies.

Edward Liddy, AIG's chairman and CEO, said that Monday's actions were necessary to tame fears that the insurer's customers and business relationships are at risk.

"We need to keep some confidence in the system," he said in an interview with CNN. "What the Fed is doing through AIG is taking every step possible to keep confidence in the financial system."

The new rescue plan would help AIG conserve much-needed capital by, among other things, lowering the interest rate it pays on its government loans.

The revamped rescue plan -- now totaling $162.5 billion -- commits another $30 billion to AIG. The payment will come from the second half of the $700 billion rescue package enacted last fall.

But some industry analysts are already wondering whether that will be enough to insulate AIG going forward.

"I would expect to see the $30 billion used and then it is a question mark," said Donald Light, senior analyst at the Boston-based financial research and consulting firm Celent. "I think everyone is being pretty careful to say what is going to happen over time."

At the same time, Treasury will exchange $40 billion in preferred shares it already holds for shares that more closely resemble common stock. The change could spare AIG from having to pay a large dividend to the Treasury.

The new bailout terms will help prevent further declines in the credit rating agencies' assessments of AIG. Shortly after the government's announcement, Standard and Poor's affirmed AIG's A-/A-1 credit rating.

Asset sale difficulties
The government first got entangled in AIG in September with an $85 billion emergency loan.Regulators feared that the collapse of the firmwould have had disastrous consequences for the financial system.

Since then, the government has pushed the New York-based insurer to sell pieces of its business to repay its loan commitments. But a tough economic environment combined with a weakened appetite among potential buyers has hampered those efforts.

"AIG is executing one of the most extensive corporate restructuring programs in history at a time when the global economy and capital markets are in turmoil," said Liddy, who was appointed to lead the firm this fall after the Federal Reserve arranged financing for the insurance giant.

So far, the company has managed to shed just a few divisions including Hartford Steam Boiler Inspection, as well as its stake in the Brazilian bank Unibanco.

Both AIG executives and government officials indicated that Monday's agreement, which marks the third revision to the government's rescue efforts, would help AIG separate its different business units into distinct property and casualty insurance businesses.

One noteworthy revision to the government's rescue plan centered on the terms of a $60 billion credit facility that was created by the Federal Reserve Bank of New York.

That line of credit will be reduced to no less than $25 billion in exchange for giving the New York Fed a stake in two life insurance subsidiaries owned by AIG. At the same time, regulators said they would relax some of the terms of AIG's repayment by lowering the initially agreed to interest rate.

Government officials said that they expected the more lenient lending terms to save the company anywhere between $900 million and $1 billion annually in interest payments.

At the same time, the New York Fed said it was ready to provide up to $8.5 billion in credit to certain life insurance divisions owned by AIG. Money generated from life insurance policies are expected to be used to repay those loans, Treasury said.

The government's efforts to prop up AIG yet again comes just days after regulators moved to shore up Citigroup (C, Fortune 500). On Friday, the Treasury converted part of its preferred shares in the beleaguered bank, giving it control over as much as 36% of the firm's common stock, a shift that is designed to improve the embattled bank's capital base, which in turn will hopefully allow it to increase its lending.

More tough times?
One of AIG's biggest troubles, both this quarter and over the past year, has been the firm's exposure to credit default swaps -- essentially insurance contracts -- on collateralized debt obligations, or CDOs. The value of the CDOs plummeted in 2008, and AIG was forced to post more collateral to back up the swaps. The company also took sizeable writedowns on its subprime mortgage-backed securities holdings, which fell in value as the housing crisis wore on.

The company's financial products division, which housed those products, was among the hardest hit this quarter, reporting a $17.6 billion loss.

Some analysts have estimated that AIG could be in line for as much as $100 billion more in government aid at some point, putting the exposure of the American taxpayer to the insurer in the neighborhood of a quarter of a trillion dollars.

Liddy, the AIG CEO, declined to address the question of whether further intervention would be needed. Instead, he pointed out that his firm intended to reimburse taxpayers, and that its plan to transfer two life insurance subsidiaries to the New York Fed would help reduce its obligation to the American public.

"In the United States of America when you owe people money, you pay them back," he said.

[Back]

Is your head really stuck that far up your ass?

No. Despite what people think I have excellent recall. And I don’t need to use vulgarities like you seem to need to.

I am, however, angry enough about all this to use vulgarities off-line. Not at you, however. Unless you just robbed my family and friends of their retirement funds...

There is a line in the sand.

[Daniel]

That's one hell of a paint roller you decided to paint with.

Says the guy who just painted the entire government.

[875000]

No. Despite what people think I have excellent recall. And I don’t need to use vulgarities like you seem to need to.

I am, however, angry enough about all this to use vulgarities off-line. Not at you, however. Unless you just robbed my family and friends of their retirement funds...

There is a line in the sand.

No, you just need to use vulgarities to express yourself in the comments section after getting called out on your lack of a so called "excellent recall."

Just do us all a favor. Take that "Every Rose Has its Thorns" CD you listen to whenever you get all nostalgic over your failed relationship with Beth, break it in half, and then slash your wrists with the jagged pieces of plastic. Be sure to cut deep enough to sever the tendons -- we wouldn't want you picking up a phone and calling for help. And then just die.

If you have any doubts at the last second you did the right thing, just remember: we are all laughing at you.

[Ignot]

Whoa...

[Gan]

No, you just need to use vulgarities to express yourself in the comments section after getting called out on your lack of a so called "excellent recall."

Just do us all a favor. Take that "Every Rose Has its Thorns" CD you listen to whenever you get all nostalgic over your failed relationship with Beth, break it in half, and then slash your wrists with the jagged pieces of plastic. Be sure to cut deep enough to sever the tendons -- we wouldn't want you picking up a phone and calling for help. And then just die.

If you have any doubts at the last second you did the right thing, just remember: we are all laughing at you.

:rofl:

[diethx]

:rofl:

x1000000

[Parkbandit]

Says the guy who just painted the entire government.


lol.. that's true.

[Parkbandit]

No, you just need to use vulgarities to express yourself in the comments section after getting called out on your lack of a so called "excellent recall."

Just do us all a favor. Take that "Every Rose Has its Thorns" CD you listen to whenever you get all nostalgic over your failed relationship with Beth, break it in half, and then slash your wrists with the jagged pieces of plastic. Be sure to cut deep enough to sever the tendons -- we wouldn't want you picking up a phone and calling for help. And then just die.

If you have any doubts at the last second you did the right thing, just remember: we are all laughing at you.

Repped for awesomeness.

[ViridianAsp]

:yeahthat:

It seems to defy the purpose of a bonus to me, which is like saying, "Damn you worked hard...here's some extra green."

Well, you know they did work hard...worked so hard in fact, they made it possible to dig an almost inescapable hole...

Then the Government came in to save the day!

Good job guys! Here's 5 million to spend on whatever.

[radamanthys]

Wow, gotta love a bipartisan group cuntpunt.

[Clove]

I like the idea of a 95% tax on bonuses and raises to executives of companies that received bailout money. It's in your contract? Go ahead and take it...

[Parkbandit]

Good luck passing a new tax law like that on something that has already taken place.

It's amazing how many people are upset with AIG and no one seems to be angry at our own government for creating this problem in the first place. Just another lesson that throwing money on a fire rarely ever puts the fire out.. it only makes it bigger.

[CrystalTears]

Good luck passing a new tax law like that on something that has already taken place.

It's amazing how many people are upset with AIG and no one seems to be angry at our own government for creating this problem in the first place. Just another lesson that throwing money on a fire rarely ever puts the fire out.. it only makes it bigger.
What makes you think people aren't upset with the government for continuing to give AIG bailout money?

That said, it doesn't take away the fact that AIG has learned nothing from this experience and haven't changed one iota regarding their ethics, principles, or greed.

[Jorddyn]

Since I don't have any idea what the positions are in AIG's upper management, I'll guess one off the top of my head: Director of Human Resources?

I'll give you that one.

HR reports up through Legal in my company, so no one there would really be upper management - just thought down the line of offices: CEO, CFO, COO, VP - Legal, VP - Sales Marketing R&D, and VP - Food Safety (which I'm guessing AIG doesn't have).

[Daniel]

Good luck passing a new tax law like that on something that has already taken place.

It's amazing how many people are upset with AIG and no one seems to be angry at our own government for creating this problem in the first place. Just another lesson that throwing money on a fire rarely ever puts the fire out.. it only makes it bigger.

I don't think anyone is exonerating the government for just handing out cash and expecting it to work out for the best, but let's be clear here. There's been an ideology that has persisted that says business is "self-regulating". Hopefully, this is the nail the coffin that should have buried that illusion a long time ago.

The difference between the two is that you now have a government (with people from both sides of the aisle) standing up to say..hold the fuck on... whereas the company itself is hiding behind some filmsy "Well, I have to justification" in order to propogate the same bullshit that led to this in the first place "we need to retain top talent".

[Clove]

Good luck passing a new tax law like that on something that has already taken place.

It's amazing how many people are upset with AIG and no one seems to be angry at our own government for creating this problem in the first place. Just another lesson that throwing money on a fire rarely ever puts the fire out.. it only makes it bigger.I don't know what you're basing your perception on. I'm pretty pissed off at both, AIG is the most recent insult to injury so people yell the loudest about it. Besides that, the government has already given out the money, being mad about it is all well and good but it's still done; I think people tend to get more worked up over the most-current obscenity (as if there's a chance we can stop it if we're pissed off enough).

[Clove]

I don't think anyone is exonerating the government for just handing out cash and expecting it to work out for the best, but let's be clear here. There's been an ideology that has persisted that says business is "self-regulating". Hopefully, this is the nail the coffin that should have buried that illusion a long time ago.I don't know about that. Self-regulation works when there's any possibility of consequences. Bailing-out these businesses smacks of something worse than regulating/not regulating. It's cultivating the worst possible business decisions for the worst possible reasons.

[Daniel]

I don't know about that. Self-regulation works when there's any possibility of consequences. Bailing-out these businesses smacks of something worse than regulating/not regulating. It's cultivating the worst possible business decisions for the worst possible reasons.

Of course you wouldn't know about that. You have a skewed outlook on life that tells you that everything business will work itself out in the end. That's great when everything is going well and people are raking in the dough.

However, It hits a pretty thick brick wall when that means thousands of people are out of work and struggling. I'm sure it's easy to say that the economy should just be allowed to work itself, but I'm also pretty sure you have a job and don't have any responsibility for anybody besides you and your family.

[thefarmer]

If AIG is saying they can't legally get out of paying the bonuses, how would the government stop them (legally)?

[Mabus]

What gets me is that we, the taxpayers, are now 80% shareholders, yet the people we entrust (our government) act like they did not have a clue that these bonuses were in the employee contracts.

Who the hell is watching out for our $170+billion dollars we have been forced to invest?

[Clove]

Of course you wouldn't know about that. You have a skewed outlook on life that tells you that everything business will work itself out in the end. That's great when everything is going well and people are raking in the dough.

However, It hits a pretty thick brick wall when that means thousands of people are out of work and struggling. I'm sure it's easy to say that the economy should just be allowed to work itself, but I'm also pretty sure you have a job and don't have any responsibility for anybody besides you and your family.And you think adding trillions to the national debt in a fruitless attempt to bail-out corporations that failed is going to help? I'll bet you live in a pleasant world.

Delaying the inevitable only changes the timing.

And part of what encouraged businesses like AIG and others to be so ridiculously greedy and reckless (in my opinion) is policies in recent years of the Government swooping in and "rescuing" corporations that are "too big to fail". We did worse than not regulate; we paid for bad business.

[Parkbandit]

I don't think anyone is exonerating the government for just handing out cash and expecting it to work out for the best, but let's be clear here. There's been an ideology that has persisted that says business is "self-regulating". Hopefully, this is the nail the coffin that should have buried that illusion a long time ago.

The difference between the two is that you now have a government (with people from both sides of the aisle) standing up to say..hold the fuck on... whereas the company itself is hiding behind some filmsy "Well, I have to justification" in order to propogate the same bullshit that led to this in the first place "we need to retain top talent".

There is always a balance that must be maintained... Too much government is just as bad as absolutely no government regulations.

Had the government simply let AIG fail an go through bankruptcy protection, much of this bullshit would never have happened since contracts and agreements would be available to be changed.

[Gan]

What gets me is that we, the taxpayers, are now 80% shareholders, yet the people we entrust (our government) act like they did not have a clue that these bonuses were in the employee contracts.

Who the hell is watching out for our $170+billion dollars we have been forced to invest?

Why Congress of course. Don't you feel safe(r)?

[Keller]

And you think adding trillions to the national debt in a fruitless attempt to bail-out corporations that failed is going to help? I'll bet you live in a pleasant world.

Delaying the inevitable only changes the timing.

And part of what encouraged businesses like AIG and others to be so ridiculously greedy and reckless (in my opinion) is policies in recent years of the Government swooping in and "rescuing" corporations that are "too big to fail". We did worse than not regulate; we paid for bad business.

http://en.wikipedia.org/wiki/Greenspan_put

Also, there was a good podcast recently on Inflation that talked about the Greenspan Put: http://www.econtalk.org/archives/2009/02/meltzer_on_infl.html

[Daniel]

And you think adding trillions to the national debt in a fruitless attempt to bail-out corporations that failed is going to help? I'll bet you live in a pleasant world.

Delaying the inevitable only changes the timing.

And part of what encouraged businesses like AIG and others to be so ridiculously greedy and reckless (in my opinion) is policies in recent years of the Government swooping in and "rescuing" corporations that are "too big to fail". We did worse than not regulate; we paid for bad business.

You miss my point entirely. Let me make it simple for you.

1. It's unreasonable to assume that these banks and insitutions wouldn't have been greedy with or without government influence.
2. It's fallacious to assume that any responsive government entity would ever let a massive corporation fail if it meant significant hardships for a large porportion of the population. You can argue about whether or not this is the right thing to do all you want.

However, the reality is that the government will never let that happen. It's easy for people with secure jobs and no responsibility outside of their narrow viewset to pontificate on what is best for others, it is another thing to assume responsibility for those other individuals and to sit idly by while they suffer.

The problem is not that the government is bailing these corporations out, the problem is that the government let them get to a point where they had to be.

[CrystalTears]

Yeah because letting the large failing corporation go on working and taking the taxpayers' money is much better.

I think the wrong person has the narrow point of view here.

[Clove]

You miss my point entirely. Let me make it simple for you...
However, the reality is that the government will never let that happen. It's easy for people with secure jobs and no responsibility outside of their narrow viewset to pontificate on what is best for others...Almost as easy as it is to make fallicious assumptions. I work for a software company that caters to the auto industry. We had our first layoffs in corporation history this year. Fuck you, my current job is in as much peril as anyone elses.

Decisions based on reckless greed of this nature have been encouraged by our willingness to spare the corporations that make them of the brunt of the consequences when they fail.

[Clove]

http://en.wikipedia.org/wiki/Greenspan_put

Also, there was a good podcast recently on Inflation that talked about the Greenspan Put: http://www.econtalk.org/archives/2009/02/meltzer_on_infl.htmlHush Keller, there's no guarantee AIG (and others) wouldn't have made such cataclysmic choices anyway...

[ViridianAsp]

The problem is not that the government is bailing these corporations out, the problem is that the government let them get to a point where they had to be.


Right...see right here, do you honestly think these companies weren't trying to push for the means to this end? Saying, OH IT'S THE GOVERNMENT'S FAULT, and laying all the blame at their doorstep is stupid.

These companies knew what they were doing, they helped make the problem. And now on top of it all, when they got what they wanted they come to mommy government crying, "Oh save us!". I am pissed that we are helping them instead of really trying to help the consumers.

But that's just my opinion, after all, I'm in one of the job fields getting smacked around pretty hard by this whole crapfest these idiots have caused.

[Daniel]

Yeah because letting the large failing corporation go on working and taking the taxpayers' money is much better.

I think the wrong person has the narrow point of view here.

Is that what I said?

I'm all about liquidating the assets of corporations like AIG or shifting their divisions to other entities that will run them responsibly.

[Daniel]

Decisions based on reckless greed of this nature have been encouraged by our willingness to spare the corporations that make them of the brunt of the consequences when they fail.

Our willingness to "spare the corporations" has more to do with the human impact of these decisions. I'm far from advocating that we prop these corporations up and keep them running as is. I'm more about gutting them completely and sending an example that if you ever try some shit like this again you'll regret it profusely.

[Daniel]

Right...see right here, do you honestly think these companies weren't trying to push for the means to this end? Saying, OH IT'S THE GOVERNMENT'S FAULT, and laying all the blame at their doorstep is stupid.

These companies knew what they were doing, they helped make the problem. And now on top of it all, when they got what they wanted they come to mommy government crying, "Oh save us!". I am pissed that we are helping them instead of really trying to help the consumers.

But that's just my opinion, after all, I'm in one of the job fields getting smacked around pretty hard by this whole crapfest these idiots have caused.

No I agree. Which is why I can't believe that there are some Govenors saying that they shouldn't accept more unemployment benefits. That shit baffles me.

[Clove]

Our willingness to "spare the corporations" has more to do with the human impact of these decisions. I'm far from advocating that we prop these corporations up and keep them running as is. I'm more about gutting them completely and sending an example that if you ever try some shit like this again you'll regret it profusely.Let me know when you see us doing that. So far all I see is encouragement for bigger and bigger failures as we "cushion the American people from the results" by throwing money down black holes.

[Mabus]

I like the idea of a 95% tax on bonuses and raises to executives of companies that received bailout money. It's in your contract? Go ahead and take it...

Senate panel chief eyes taxes in AIG bonus row - Reuters (http://www.reuters.com/article/politicsNews/idUSTRE52G42Q20090317)

[Back]

No, you just need to use vulgarities to express yourself in the comments section after getting called out on your lack of a so called "excellent recall."

I just reviewed the entire thread to see what caused your disproportionately rabid response to my comments and just now caught the line at the bottom of one of your usually long, and sober, posts that mentions your understanding that both administrations are culpable in this mess.

I would apologize to you for assuming you had a one-sided opinion but my comment that set you into an unchararistic frenzy was not even directed at you... I don’t know what caused your little meltdown but it was very undude, dude.

[Parkbandit]

I just reviewed the entire thread to see what caused your disproportionately rabid response to my comments and just now caught the line at the bottom of one of your usually long, and sober, posts that mentions your understanding that both administrations are culpable in this mess.

I would apologize to you for assuming you had a one-sided opinion but my comment that set you into an unchararistic frenzy was not even directed at you... I don’t know what caused your little meltdown but it was very undude, dude.

Let it go. You should post more in political threads.. being the self proclaimed PC Pundit and all.

I never grow tired of the hilarity that ensues.

[Mabus]

Which is why I can't believe that there are some Govenors saying that they shouldn't accept more unemployment benefits. That shit baffles me.
Many states are worried that once the temporary federal money runs out they will be in a worse financial position then they were previously, if they take the money and raise (and/or prolong) benefits. The way the current law is written leads some to believe they will not be able to revert to a previous benefit rate once the federal money runs out.

In a case such as that they would become more dependent on the federal till. If no further federal money comes the states will have to either cut benefits (which may be illegal if they accept the funds) or raise state taxation to make up the difference.

[Back]

Let it go. You should post more in political threads.. being the self proclaimed PC Pundit and all.

I never grow tired of the hilarity that ensues.

heh. Your response to the comment, which was directed at you, was one of the most calm, and reasonable, reactions you’ve made to any of my posts. So I was startled by 875000’s reaction. They are not known for flying off the handle. I would expect that from you.

And again with this whole pundit thing? How many times do I need to emphasize that I think anyone on the PC who comments in a political thread is a PC Pundit?

I made icons for both sides.

http://www.zendada.com/images/pundit.jpg

http://www.zendada.com/images/pundit2.jpg

PS. And as for “letting it go”... I let it go a looooooong time ago. 5 years ago by my account.

[The Q]

What you mortals can't understand is that AIG is doing the RIGHT action by handing out such bonuses.

AIG is a financial firm. Which means it's assets reside solely in the talents of it's people. Much like how a manufacturer asset's might be it's robotic assembly plants and the equipment within it. Well the entirety of AIG's assets are it's people literally.

If these assets walk out the door and go to say Goldman Sachs or JP morgan then it's bye bye AIG and along with it most of the financial economy. AIG is NO Lehman. No it's like 10 times Lehman brothers.

Short answer is if you want to really start a depression let AIG die.

[Gan]

What you mortals can't understand is that AIG is doing the RIGHT action by handing out such bonuses.

AIG is a financial firm. Which means it's assets reside solely in the talents of it's people. Much like how a manufacturer asset's might be it's robotic assembly plants and the equipment within it. Well the entirety of AIG's assets are it's people literally.

If these assets walk out the door and go to say Goldman Sachs or JP morgan then it's bye bye AIG and along with it most of the financial economy. AIG is NO Lehman. No it's like 10 times Lehman brothers.

Short answer is if you want to really start a depression let AIG die.

Yes, because AIG 'assets' did such a bang up job with AIG that EVERYONE wants to hire them...

Are you for real?

[Gan]

PS. And as for “letting it go”... I let it go a looooooong time ago. 5 years ago by my account.

Which account was that exactly?

[Ignot]

I always find it funny when new people show up and immediately go for the political threads.:thinking:

[Back]

Which account was that exactly?

I really can’t keep up with all of you trolls. I don’t read every post in every thread. The only reason I responded to 875000’s post is because someone PM’ed me about it and it struck me as very uncharacteristic for 875000.

I’ve said it before and I will say it again. Using something I did not bring to this forum, not to mention using someone else’s name who is no longer here, to deride me in some way is unequivocally and absolutely pathetic.

But, this thread is not about me.

Fuck AIG.

[Gan]

woooosh!


:lol:

[Keller]

Yes, because AIG 'assets' did such a bang up job with AIG that EVERYONE wants to hire them...

Are you for real?

I bet, in a normal hiring market, most of those "assets" would be coveted.

After Arthur Anderson imploded post-Enron, all of their "assets" found soft landings.

AIG was insuring assets that NO ONE knew the value of. The entire industry was wrong. Regardless of how many employees worked on insuring new financial products, most of them were cogs in a system and not primarily culpable.

I'd bet most of them are highly talented and capable individuals.

[Keller]

Short answer is if you want to really start a depression let AIG die.

I would say the same for any major financial firm, but that is especially true with AIG. They are, unfortunately, the tie that binds a lot of risk swaps together.

[Gan]

I bet, in a normal hiring market, most of those "assets" would be coveted.

After Arthur Anderson imploded post-Enron, all of their "assets" found soft landings.

AIG was insuring assets that NO ONE knew the value of. The entire industry was wrong. Regardless of how many employees worked on insuring new financial products, most of them were cogs in a system and not primarily culpable.

I'd bet most of them are highly talented and capable individuals.


I disagree with you on "all" the AA assets finding soft landings. I knew of many AA accountants upto and including partner level (in the Houston area) who were out for quite a while (thanks to having family members and friends who were AA once upon a time)... not to mention the glut it threw the accountant market into when all those guys started trying to find other jobs. Same with the Enron traders when it collapsed. Thats all the news reported on down here, from documentaries to constant updates on 'life after Enron'.

With regards to the risk swaps that AIG is responsible for, thus making them irreplaceable. Are you trying to say there are no other entities in the market who could not step up and pick up those assets upon parting up AIG?

[Back]

woooosh!


:lol:

Exactly. That was just as funny as your defense of AIG.

[Mabus]

Not a big fan of Ms. Dowd, but wow...

No Boiled Carrots - Maureen Dowd, NYT (http://www.nytimes.com/2009/03/18/opinion/18dowd.html)

It starts with:

Barack Obama even needs a teleprompter to get mad.

On St. Patrick’s Day, the president spoke a bit of Gaelic, dyed the White House fountains green and talked about his distant relatives in the tiny Irish town of Moneygall, aptly named since money and gall are the two topics now consuming him.
And to get to the point about "retaining" the people that got the bonuses:

As Andrew Cuomo pointed out on Tuesday, 11 of the A.I.G. executives who received retention bonuses of $1 million or more — including one who received $4.6 million — were not even retained. They’re no longer working at A.I.G. Bonuses were paid to 52 people who have left the company.

At first, on the nutty bonuses, Team Obama thought it could get away with the same absurd argument used to justify the nearly $8 billion in unnecessary earmarks it allowed Congress to jam into this year’s overdue spending bill: It was written last year; we’re just signing off on it; we’ll do better in the future.
Incredible.

Worth the read.

[Parkbandit]

What you mortals can't understand is that AIG is doing the RIGHT action by handing out such bonuses.

AIG is a financial firm. Which means it's assets reside solely in the talents of it's people. Much like how a manufacturer asset's might be it's robotic assembly plants and the equipment within it. Well the entirety of AIG's assets are it's people literally.

If these assets walk out the door and go to say Goldman Sachs or JP morgan then it's bye bye AIG and along with it most of the financial economy. AIG is NO Lehman. No it's like 10 times Lehman brothers.

Short answer is if you want to really start a depression let AIG die.

Didn't I hear that 11 people who received the "retention" bonuses already left AIG?

[Mabus]

Didn't I hear that 11 people who received the "retention" bonuses already left AIG?
52 that received bonuses had already left.

The 11 that you might be referring to are 11 people that received $1,000,000 (or more) in bonuses that have already left.

[Clove]

I'd bet most of them are highly talented and capable individuals.That may be the reality and if people and businesses were always rational it might stand. Regardless of what might be the reality AIG is now a scapegoat and I imagine association with them will carry a stigma for a long time to come. All other things being equal, I'm betting the resume with AIG on it will certainly be the weaker because of it.

[Gan]

Exactly. That was just as funny as your defense of AIG.

Please show me where I've defended AIG.


Now put the crack pipe down.

[Clove]

Anyone else recording the AIG CEO's meeting with the House Finance Committee? I'm making pizza tonight and watching it, I'm expecting a lot of dramatic grandstanding...

[Beguiler]

Hmm. No, but I'll expect the Cliff Notes on it in the morning, mmkay? :smilegrin:

[Parkbandit]

Anyone else recording the AIG CEO's meeting with the House Finance Committee? I'm making pizza tonight and watching it, I'm expecting a lot of dramatic grandstanding...

Really? I expect a lot to do about nothing. Liddy is a government appointed Democrat who will somehow blame Bush for all AIG's current problems.

All of this outrage pointed towards AIG for a measly 165 million dollars is nothing but a smokescreen by Obama's crones to divert where the real outrage should be.. the latest government budget that was signed. 165 million is the change that is between the cushions compared to that behemoth.

Look at it this way.. either the Obama Administration just found out about these bonuses, making them completely negligent.. or it's something they had planned to take the heat off themselves for passing the spending spree budget.

In the grand SCHEME of things, 165 million is FAR, FAR, FAR less than the 8% INCREASE in government spending Obama got during a recession... yet there is almost no outcry to that.

[CrystalTears]

In the grand SCHEME of things, 165 million is FAR, FAR, FAR less than the 8% INCREASE in government spending Obama got during a recession... yet there is almost no outcry to that.Sure 165 million is nothing compared to what they got, but THAT'S NOT THE POINT HERE.

And you keep saying that there's no outcry regarding the government, but I have no idea where you're standing as I hear it all the time.

[Clove]

Really? I expect a lot to do about nothing. Liddy is a government appointed Democrat who will somehow blame Bush for all AIG's current problems.Did I say Congress was going to DO anything? I said there would be a lot of dramatic grandstanding. Translation: Entertainment.

[Gan]

Now I'm hearing that recipients of the million $ bonuses in AIG were not even employed with AIG at the time of receipt...

So much for the "asset" retention theory!

[Clove]

Maybe I'll name my next ferret "Bailout"- not sure that would be fair to the weasel though... :thinking:

[Parkbandit]

Sure 165 million is nothing compared to what they got, but THAT'S NOT THE POINT HERE.

And you keep saying that there's no outcry regarding the government, but I have no idea where you're standing as I hear it all the time.

It's not getting anywhere NEAR the coverage that this AIG scandal is getting.

And am I the only person in this country that has a problem with Congress targetting a group of people and imposing a 95% "excise" tax upon only because they want to?

I have no idea what type of contract these employees were under, but I can guarantee that if you didn't get a bonus you met the requirements for, you would certainly be up in arms about it. I know I sure would be.

If the people who received this bonus did so by cooking tube books, then go after them legally... Don't just start shredding contracts because it makes you look like a complete moron for doling out BILLION to them in the first place.

[Keller]

Don't just start shredding contracts.

Imposing an excise tax does nothing to impare their rights under their contracts.

Also, only states are restricted from interferring with private contracts. I'm not sure whether that applies to the federal government.

[Keller]

I disagree with you on "all" the AA assets finding soft landings. I knew of many AA accountants upto and including partner level (in the Houston area) who were out for quite a while (thanks to having family members and friends who were AA once upon a time)... not to mention the glut it threw the accountant market into when all those guys started trying to find other jobs. Same with the Enron traders when it collapsed. Thats all the news reported on down here, from documentaries to constant updates on 'life after Enron'.

With regards to the risk swaps that AIG is responsible for, thus making them irreplaceable. Are you trying to say there are no other entities in the market who could not step up and pick up those assets upon parting up AIG?

Accountants are hardly people. :) I should have said that from my conversations with former AA employees, they found soft landings. In many cases, entire groups were absorbed.

What do you mean by pick up? Buy? Fulfill the obligation of? Also, is AIG split up pro-rata? Or are asset groups split? If you just pool all of the bad assets in a private company, there are no good assets for the creditors to receive in a bankruptcy, so the value of those insurance contracts would be nil.

[Keller]

That may be the reality and if people and businesses were always rational it might stand. Regardless of what might be the reality AIG is now a scapegoat and I imagine association with them will carry a stigma for a long time to come. All other things being equal, I'm betting the resume with AIG on it will certainly be the weaker because of it.

I'll buy that. And I guess if that's what people meant in this thread, I'll concede.

I just don't like the idea being floated that the cogs at AIG are somehow less talented because they insured bad assets.

[Apotheosis]

Bill of Attainder (http://en.wikipedia.org/wiki/Bill_of_attainder)

Congress's hands are tied on this one... meanwhile this incident makes the Democrats look bad.

[Clove]

It's not getting anywhere NEAR the coverage that this AIG scandal is getting.

And am I the only person in this country that has a problem with Congress targetting a group of people and imposing a 95% "excise" tax upon only because they want to?

I have no idea what type of contract these employees were under, but I can guarantee that if you didn't get a bonus you met the requirements for, you would certainly be up in arms about it. I know I sure would be.

If the people who received this bonus did so by cooking tube books, then go after them legally... Don't just start shredding contracts because it makes you look like a complete moron for doling out BILLION to them in the first place.Why are they entitled? Look PB my corporation caters to the auto industry and even though our profits are up year over year we missed budget and our board imposed some tough mandates in order to reduce expenses as much as possible so we can survive the tough economy presently and ahead. One of those mandates was no bonuses and no raises this year... now I've already pointed out that profits were greater in 2008 than they were in 2007. I got a bonus and a raise in 2008. I don't know about you but I think I fucking deserve a bonus AND a raise- but I'd rather work for a prudently run corporation that's taking appropriate action to meet challenging times, because that's one element to job security.

So what am I saying here? The management at my corporation is in a bad situation and took action that included a company-wide pull-back in compensation. AIG is in a bad situation, takes public money and then holds their hands open and says "we have to give these individuals more money than the average American makes in 10 years (but thanks for your bailout)." and the employees are saying "I have to take this bonus... I deserve it! Thanks taxpayer". Sorry. AIG is hell-bent on building a public image of "fuck all of you."

[Parkbandit]

Imposing an excise tax does nothing to impare their rights under their contracts.

Also, only states are restricted from interferring with private contracts. I'm not sure whether that applies to the federal government.

I would disagree. If my government suddenly decided to tax me at 95% that they previously didn't do because they felt like it, I would most certainly feel as though they are simply seizing the money I gained in a lawful manner.

What is an excise tax anyway? Just a tax the government can impose to whatever they want to?

[Clove]

It's not getting anywhere NEAR the coverage that this AIG scandal is getting.

And am I the only person in this country that has a problem with Congress targetting a group of people and imposing a 95% "excise" tax upon only because they want to?

I have no idea what type of contract these employees were under, but I can guarantee that if you didn't get a bonus you met the requirements for, you would certainly be up in arms about it. I know I sure would be.

If the people who received this bonus did so by cooking tube books, then go after them legally... Don't just start shredding contracts because it makes you look like a complete moron for doling out BILLION to them in the first place.Why are they entitled? If they had contracts with AIG and AIG had it's own funds to pay them with fine. But they didn't, they took public money instead. Look PB my corporation caters to the auto industry and even though our profits are up year over year we missed budget and our board imposed some tough mandates in order to reduce expenses as much as possible so we can survive the tough economy presently and ahead. One of those mandates was no bonuses and no raises this year... now I've already pointed out that profits were greater in 2008 than they were in 2007 and I got extra compensation for 2007 profits... but there won't be any for 2008 (possibly not 2009 either). I don't know about you but I think I fucking deserve a bonus AND a raise- but I'd rather work for a prudently run corporation that's taking appropriate action to meet challenging times (utilizing its own resources instead of the taxpayers'), because a well-run company is a secure company to work for. But maybe our corporation can apply for bailout funds so there will be enough cash to pay us bonuses and raises? I mean we performed, we're entitled.

So what am I saying here? The management at my corporation is in a bad situation and took action that included a company-wide pull-back in compensation. AIG is in a bad situation, takes public money and then holds their hands open and says "we have to give these individuals more money than the average American makes in 10 years (but thanks for your bailout)." and the employees are saying "I have to take this bonus... I deserve it! Thanks taxpayer". Sorry. AIG is hell-bent on building a public image of "fuck all of you."

Legally AIG can do it, despite public and government outrage. Instead of acting like they are 80% owned by us they are essentially saying "you don't like what we're doing- make us stop." Congress sounds willing to meet that challenge by taxing them if it comes to it.

[Apotheosis]

what most people fail to recognize in their blind anger... and believe me, I'm pissed about this, too.....

Our elected officials did NOTHING to prohibit this situation to begin with....

going after the bonuses they were paid now, at best is an excise tax... at worst is an illegal seizure of property without due process..

[Kembal]

It's not getting anywhere NEAR the coverage that this AIG scandal is getting.

And am I the only person in this country that has a problem with Congress targetting a group of people and imposing a 95% "excise" tax upon only because they want to?

I have no idea what type of contract these employees were under, but I can guarantee that if you didn't get a bonus you met the requirements for, you would certainly be up in arms about it. I know I sure would be.

If the people who received this bonus did so by cooking tube books, then go after them legally... Don't just start shredding contracts because it makes you look like a complete moron for doling out BILLION to them in the first place.

It's extremely likely that executives at AIG Financial Products committed massive fraud and the bonuses are based on that fraud. However, the criminal indictments for this are going to be months away, and the assets won't be frozen until then.

Taxation is, oddly enough, an appropriate response to the problem to make sure the bonus money gets back to the government.

[Kembal]

Bill of Attainder (http://en.wikipedia.org/wiki/Bill_of_attainder)

Congress's hands are tied on this one... meanwhile this incident makes the Democrats look bad.

Not at all. All Congress has to do is tax all bonuses given to employees or former employees of companies that have recieved federal government assistance under such and such program (AIG's loan came from something other than TARP, I think), unless the bonuses were approved by the current Secretary of the Treasury at the time of payment.

Hell, they could expand it to TARP banks too. And all those banks that really don't need the TARP money will hand it back pronto.

[CrystalTears]

I would disagree. If my government suddenly decided to tax me at 95% that they previously didn't do because they felt like it, I would most certainly feel as though they are simply seizing the money I gained in a lawful manner.

What is an excise tax anyway? Just a tax the government can impose to whatever they want to?I'm sorry, I thought AIG got a bailout from the government because they didn't make their own money.

[Keller]

I would disagree. If my government suddenly decided to tax me at 95% that they previously didn't do because they felt like it, I would most certainly feel as though they are simply seizing the money I gained in a lawful manner.

What is an excise tax anyway? Just a tax the government can impose to whatever they want to?

I agree they are applying a confiscatory rate to your income. But it was your income under the contract. That's why they can tax it.

And for excise taxes: http://en.wikipedia.org/wiki/Excise_tax_in_the_United_States

[Gan]

And now Geitner defends Liddy and the bonus payouts.

Outstanding.

You can thank Sen. Chris Dodd for the loophole that allowed the bonuses to go through without congressional restrictions.

[Clove]

what most people fail to recognize in their blind anger... and believe me, I'm pissed about this, too.....

Our elected officials did NOTHING to prohibit this situation to begin with....

going after the bonuses they were paid now, at best is an excise tax... at worst is an illegal seizure of property without due process..I'm just as pissed at them, but I need them to pee-pee smack AIG. When a company gets sold the purchasing company does a due diligence and (among other things) they go through that company's liabilities (contractual and otherwise) with a fine-toothed comb to find out what they'll be owing to whom. Congress either didn't do their homework concerning these "bonus" contracts and negotiate/take steps to head it off. Or they knew about it and decided to ignore it until it hit the press. Take your pick.

I'm willing to play along with any outrage against AIG Congress can muster for effect (with hopes of buying reelection). If you think I'm voting for Dodd next election though you need a larger dose of Aricept than PB!

[Clove]

And now Geitner defends Liddy and the bonus payouts.

Outstanding.

You can thank Sen. Chris Dodd for the loophole that allowed the bonuses to go through without congressional restrictions.On behalf of all of Connecticut SORRY! (Fuck Dodd).

[Parkbandit]

It's extremely likely that executives at AIG Financial Products committed massive fraud and the bonuses are based on that fraud. However, the criminal indictments for this are going to be months away, and the assets won't be frozen until then.

Taxation is, oddly enough, an appropriate response to the problem to make sure the bonus money gets back to the government.


Then do it the right way.. take the 165 measly million out of the next 30 BILLION dollars we're going to hand over to AIG and put it in a lockbox. Find wrong doing and legally go after those individuals that committed a crime. Imposing an excise tax all willy nilly because you are soo angry at those evil people because you want to isn't the answer I'm looking for from my government.

I realize that people want to chastise these people that got bonuses from AIG, but that is part of their compensation package when they signed up for the job. Just because AIG did some bullshit things as a company doesn't mean every single employee is now automatically dirty and doesn't deserve their employment contract to be honored. I actually hope the US Government taxes them out of their money and some of the honest employees sue them and win.. granting them DOUBLE in a court of law.

All this 'crisis' is over what.. 165 million dollars? Out of what.. 2 TRILLION PLUS DOLLARS THAT WE ARE PISSING AWAY!?

If you still believe that this is the biggest crisis facing this country right now.. and from watching the news for the last 2-3 days, and this is the lead story on every damn network, it must be... do yourself a favor and ask yourself this:

Equate the 2+ Trillion dollars in government bailouts/stimulus/bullshit that we've been tossing around for the past 6 months to 1 million dollars that is in your pocket. How much would you be missing out of that 1 million dollars to equate to the 165 million dollars in this national crisis?

[CrystalTears]

Some of the people who got compensated don't even work there anymore.

Anyway, you seem to be missing the point of the problem with this company acting irresponsibly with bailout money. Other banks and organizations have given back the money when they've asked for stricter policies. Why should this company not only get billions of money for failing, but also reward the executives as well?

[Parkbandit]

Some of the people who got compensated don't even work there anymore.


When I left Marriott to work for Hilton, I was due a bonus and it was paid to me 3 months later.

It's not out of the ordinary for bonuses from previous year to be paid in March... in fact, it's quite typical for big companies.

[CrystalTears]

I guess I don't understand how you're totally okay with executives of a failed company getting bonuses that quite frankly they didn't earn, while you bitch almost daily about regular people who get welfare and use it to buy plasma TVs. What exactly is the difference?

[Clove]

PB... you just don't get it.

[Clove]

I guess I don't understand how you're totally okay with executives of a failed company getting bonuses that quite frankly they didn't earn, while you bitch almost daily about regular people who get welfare and use it to buy plasma TVs. What exactly is the difference?We'll just have welfare recipients sign a contract with the government for their compensation, then it will all be okay. They'll agree not to work for X number of weeks and we'll agree to pay them X amount a month (to buy plasma TV's and spinning rims or whatever the fuck PB is bitching about).

[Apotheosis]

Not at all. All Congress has to do is tax all bonuses given to employees or former employees of companies that have recieved federal government assistance under such and such program (AIG's loan came from something other than TARP, I think), unless the bonuses were approved by the current Secretary of the Treasury at the time of payment.

Hell, they could expand it to TARP banks too. And all those banks that really don't need the TARP money will hand it back pronto.


I would like to see the banks that didn't need the TARP money return it, although there's speculation that they might have been forced to do so: I highly doubt it.

[Allereli]

I realize that people want to chastise these people that got bonuses from AIG, but that is part of their compensation package when they signed up for the job. Just because AIG did some bullshit things as a company doesn't mean every single employee is now automatically dirty and doesn't deserve their employment contract to be honored. I actually hope the US Government taxes them out of their money and some of the honest employees sue them and win.. granting them DOUBLE in a court of law.

so should the UAW sue as well?

[Parkbandit]

I guess I don't understand how you're totally okay with executives of a failed company getting bonuses that quite frankly they didn't earn, while you bitch almost daily about regular people who get welfare and use it to buy plasma TVs. What exactly is the difference?


Where exactly did I state that I'm totally ok with executives of a failed company getting bonuses? And who are you to say that they didn't earn them? Do you know any specific cases, or are you just making this up?

Here's the thing about bonuses.. they are part of your compensation and they have benchmarks you must reach in order to get paid. Let's say you are in HR.. your benchmarks could be based upon employee retention, employee surveys and customer survey results. Did you create the mess that the company is in? Probably not. Did you work hard in 2008 to meet your benchmarks? Maybe.. who knows. But if the benchmarks aren't tied into overall company profits, and you've reached those benchmarks per your employee contract, then why aren't you due them? If that was the case, I would most certainly sue my company for the compensation that I earned and that was due to me.

[Parkbandit]

PB... you just don't get it.

It's obvious you do not as well.

So wait.. how much of that one million dollars are we talking about again?

[Clove]

Where exactly did I state that I'm totally ok with executives of a failed company getting bonuses? And who are you to say that they didn't earn them? Do you know any specific cases, or are you just making this up?

Here's the thing about bonuses.. they are part of your compensation and they have benchmarks you must reach in order to get paid. Let's say you are in HR.. your benchmarks could be based upon employee retention, employee surveys and customer survey results. Did you create the mess that the company is in? Probably not. Did you work hard in 2008 to meet your benchmarks? Maybe.. who knows. But if the benchmarks aren't tied into overall company profits, and you've reached those benchmarks per your employee contract, then why aren't you due them? If that was the case, I would most certainly sue my company for the compensation that I earned and that was due to me.It might be "due you" but AIG only has the ability to pay them BECAUSE WE PUMPED BILLIONS INTO THEM. I think the public has some say on whether they should actually get paid or not.

If we hadn't rescued them NONE OF THOSE BONUSES WOULD HAVE BEEN PAID. I think by virtue of our rescue effort we have some say expenses.
It's obvious you do not as well.

So wait.. how much of that one million dollars are we talking about again?It's less than thousandths of what we've pumped into them. That's not the point at all.

[Parkbandit]

so should the UAW sue as well?


Actually.. GM will have some fantastic grounds to void out all of their employment contracts once the US Government is done with AIG.

[CrystalTears]

Where exactly did I state that I'm totally ok with executives of a failed company getting bonuses?Uh, you've been defending them getting their entitled bonus since this started.

[Clove]

Actually.. GM will have some fantastic grounds to void out all of their employment contracts once the US Government is done with AIG.Not if (as you hope) AIG employees sue and win.

[Parkbandit]

It might be "due you" but AIG only has the ability to pay them BECAUSE WE PUMPED BILLIONS INTO THEM. I think the public has some say on whether they should actually get paid or not.

If we hadn't rescued them NONE OF THOSE BONUSES WOULD HAVE BEEN PAID. I think by virtue of our rescue effort we have some say expenses.


But once again.. that's the Government's fault! Here is the thing.

Had AIG gone through bankruptcy like it should have.. then you are correct.. all employment contracts are void and you redo everything. But we (US Gov't) in our infinite wisdom didn't allow that to happen.. making their contracts still valid.. ESPECIALLY in Connecticut (very pro-employee state)

Like I said.. I hope the Government voids out the contracts and some of the people who earned their bonuses takes them to court and doubles down. Good for them.

[Parkbandit]

Not if (as you hope) AIG employees sue and win.


Very true.

GM should go tits up anyway.. and retool.

[Clove]

But once again.. that's the Government's fault! Here is the thing.

Had AIG gone through bankruptcy like it should have.. then you are correct.. all employment contracts are void and you redo everything. But we (US Gov't) in our infinite wisdom didn't allow that to happen.. making their contracts still valid.. ESPECIALLY in Connecticut (very pro-employee state)

Like I said.. I hope the Government voids out the contracts and some of the people who earned their bonuses takes them to court and doubles down. Good for them.Taxing them won't void their contracts. And we should have let them go bankrupt, but we didn't. Despite that, I don't see where we, the tax-payer or Congress should allow AIG to incur any expense hands-off.

This isn't a bankruptcy, but it isn't a flat sale either and you fucking know it.

[Parkbandit]

Uh, you've been defending them getting their entitled bonus since this started.


I'm for the rule of law.. not some crazy mob mentality of wanting to burn them at the stake like you seem to desire.

If these executives did wrong doing.. and I'm sure some of them did.. then do it the right way and go after them in a legal fashion. Throw the damn book at them, they deserve it.

I just don't believe that our government, after fucking this entire bailout process from the very beginning, should be enforcing any excise tax on people because they are embarrassed by their own lack of due diligence.

[Parkbandit]

Taxing them won't void their contracts. And we should have let them go bankrupt, but we didn't. Despite that, I don't see where we, the tax-payer or Congress should allow AIG to incur any expense hands-off.

This isn't a bankruptcy, but it isn't a flat sale either and you fucking know it.


So here's where we differ: You believe the government can/should impose any type of tax they see fit to impose and against who they see fit to impose, whenever they see fit to impose. I believe that if the government believes there is wrong doing on the part of some of the AIG executives, then they need to use the available legal channels to do it through.

We're about to hand them over another what.. 30 BILLION DOLLARS? If you believe that AIG isn't due the 165 million, take it out of that fun and give them "only" $29,835,000,000 and call it a wash.

[Clove]

I just don't believe that our government, after fucking this entire bailout process from the very beginning, should be enforcing any excise tax on people because they are embarrassed by their own lack of due diligence.I fucking do. I didn't have any say in this bailout and I'm taking compensation cuts because my company wasn't deemed "essential enough to the economy" and didn't get bailout cash, we just made appropriate decisions and cut expenses instead. Anyone at AIG who isn't currently looking for a job has the "mob" to thank for it- and they can deal with that "mob" for any adjustments to their compensation as a result. If they aren't happy with the "mob's" decision- they can go look for a job at a company that isn't taking billions in bailout money (and enjoy that compensation free of "mob" imput).

[Clove]

So here's where we differ: You believe the government can/should impose any type of tax they see fit to impose and against who they see fit to impose, whenever they see fit to impose.No PB, Congress DOES have that power, they just have to answer to the voter at election time for it. If a tax against AIG over these compensation packages ends up happening, I strongly suspect your opinion will be in the minority.

When the government buys 80% of your company and you have a standoff with them over an issue- expect taxation as Congress' final "fuck-you". AIG is fighting City Hall and they'll get the expected results.

[Parkbandit]

No PB, Congress DOES have that power, they just have to answer to the voter at election time for it. If a tax against AIG over these compensation packages ends up happening, I strongly suspect your opinion will be in the minority.

When the government buys 80% of your company and you have a standoff with them over an issue- expect taxation as the Congress' final "fuck-you". AIG is fighting City Hall and they'll get the expected results.

I disagree.. but I won't change your mind and you won't change mine. Hopefully, the law we live under will be upheld. We shall see.

[kookiegod]

Changing the 2008/2009 tax code to account for TARP funds and bonuses is perfectly legal and in the purview of Congress.

~Paul

[Clove]

I disagree.. but I won't change your mind and you won't change mine. Hopefully, the law we live under will be upheld. We shall see.


Changing the 2008/2009 tax code to account for TARP funds and bonuses is perfectly legal and in the purview of Congress.

~PaulRight. Not illegal, just unpalatable to some.

[kookiegod]

Oh well.

The smartest thing these AIG people could do is donate the bonuses to either 1) charity, or 2) refuse them utterly.

The government needs to put in covenant into TARP and other bailout funds that all discrentionary and contractual bonuses are suspended until the taxpayers have been paid back in full, then its up to the company to fund bonuses with income from their own operations.

~Paul

[Keller]

I realize that people want to chastise these people that got bonuses from AIG, but that is part of their compensation package when they signed up for the job. Just because AIG did some bullshit things as a company doesn't mean every single employee is now automatically dirty and doesn't deserve their employment contract to be honored.

I agree with almost all of what you said, except that you think their employment contract wont be honored.

Are you arguing that:

(1) AIG has a compensation contract with employees.
(2) The Federal Government owns a majority of AIG.
(3) The Federal Government is taxing the wages of the employees through excise.
(4) Therefore, de facto, the Federal Government is not honoring their contract?

That is an interesting argument. It makes sense from a policy perspective, but it would never hold up in a court of law. The fact is that the contracts are being honored, but the government is taxing the proceeds of the contract.

[radamanthys]

Here's the inherent issue:

The government bailed out AIG without considering what their expenses were.

Some consider the situation like giving welfare to an ax-murderer (Uses the welfare money to buy the ax); It's not the government's fault- the ax-murderer is a sociopath.

Others see it for what it really is: the government attempting to overstep its boundries. The magna carta was historic because it dictated that a government could not overstep its own laws. This thought was part of our nation's foundation. The bonuses given to the execs at AIG are legally sound. Whether or not these execs are guilty of fraud is for a criminal court to decide upon evidence and charges being brought forth.

In this case, the government handed over a blank check. It is 100% their fault for not considering the political ramifications of AIG's spending of that check.

That's why people put money into educational trusts for kids. You can't dictate how a person will spend money, once given.

There's a law, and even the government has to follow it. And this one is not silly, either. Though, I see how some who have a vested interest in the elimination of private property could find this decision tasteful.

Put it this way: would you liberals have wanted president Bush to enact to these corporations a permanent ban on "Green" spending? How about if a closet racist comes into office and enacts executive legislation to disallow any companies that receive public funding to pay minorities?

I understand and commiserate with the putridity of AIG's business practices. We've known them to be corrupt for many years. And, I repudiate this action as corrupt and immoral. Please, do not confuse this with a defense of AIG.

Don't forget: Obama's policies will continue on. Any power given to this administration will carry over to further administrations. Who knows when the religious right will reorganize and elect a 'super-bush'? Imagine a neo-con with a more focused direction and better organizational skills. I somehow doubt that all the fervent supporters of our current administration would find this idea tasteful.

The simple fact: The government is far too powerful and dangerous an entity to be given this sort of latitude.

[Parkbandit]

I agree with almost all of what you said, except that you think their employment contract wont be honored.

Are you arguing that:

(1) AIG has a compensation contract with employees.
(2) The Federal Government owns a majority of AIG.
(3) The Federal Government is taxing the wages of the employees through excise.
(4) Therefore, de facto, the Federal Government is not honoring their contract?

That is an interesting argument. It makes sense from a policy perspective, but it would never hold up in a court of law. The fact is that the contracts are being honored, but the government is taxing the proceeds of the contract.

The problem I have is the US Government imposing a 95% tax on something they disagree is right; to punish everyone instead of using the legal system to punish the individual or individuals truly responsible.

I concede the point that it is "legal" in the sense that the Government makes the laws.. doesn't mean I have to like it and doesn't mean that the Court system will not take issue with it.

[Parkbandit]

WASHINGTON (AP) -- For the first time since last fall's election, Democrats and the Obama administration are backpedaling furiously on an issue easily understood by financially strapped taxpayers: $165 million in bonuses paid out at bailed-out AIG.

Republicans, struggling to regain their political footing, are content to let Democrats try to dig their way out of this mess on their own.

Professing shock at the bonus payments, Democrats have embarked on a hurry-up effort to impose what amounts to confiscatory taxes on the bonuses, a maneuver that almost surely will be tested in the courts.

Treasury Secretary Timothy Geithner won a strong vote of confidence Wednesday from President Barack Obama, whose administration has been struggling with the controversy since the weekend.

But the mood is less charitable among congressional Democrats. And Republicans have made Geithner their top target, not surprising given Obama's continued high approval ratings.

"It's shocking that they would -- the administration would come to us now and act surprised about these contracts," said Sen. Mitch McConnell, R-Ky., the Senate GOP leader. "This administration could have and should have ... prevented this from happening. They had a lot of leverage two weeks ago."

That would be when the Treasury Department decided to make an additional $30 billion available to American International Group Inc., the huge insurance conglomerate deemed too big to fail by two administrations.

Which goes to the crux of the Democrats' current political problem.

Gone are the days when they could merely bludgeon the Bush administration and promise to seek bipartisan solutions to the nation's economic problems.

Now, in control of the White House and Congress, they are struggling to come up with an explanation for what no one in either party seems moved to defend.

Senate Majority Leader Harry Reid, D-Nev., said AIG stands as a symbol of "greed and perhaps corruption."

Sen. Max Baucus, D-Mont., scoffed at AIG's claim that the money represents retention pay. "There are enough bright people in this country that would do the job for an honest salary, and enough honest taxpayers demanding that we put an end to this stuff. You can bet I'll make sure justice is served," he said.

But the bonus payments occurred on the Democrats' watch, and for Republicans, AIG seems politically providential.

Their overwhelming opposition to last month's stimulus bill appeared to be gaining little traction as Democrats showcase every shovelful of dirt that is turned -- all in the name of economic recovery.

Criticism that Obama and Democrats are embarking on a new era of tax-and-spend is undercut by the lack of a budget alternative from Republicans -- the party that presided over a historic run-up in the federal debt earlier this decade when it controlled both the White House and Congress.

Less than 100 days into the Obama administration, polls have brought little good news to Republicans.

While a recent Pew survey found some slippage in Obama's support, it also registered only 28 percent approval for the job being done by GOP congressional leaders, the lowest in nearly 14 years. And a separate survey by CNN and Opinion Research Corp. put support for the president's handling of the economy at nearly 60 percent.

Against this backdrop, White House press secretary Robert Gibbs sought to explain AIG.

He told reporters that Geithner "last week engaged with the CEO of AIG to communicate what we thought were outrageous and unacceptable bonuses," and "received a commitment to lessen some of the bonuses for senior executives."

Asked directly if Obama is satisfied that he found out about the bonuses in a timely fashion, Gibbs said: "Yes, the president is satisfied."

The president "has complete confidence" in his Treasury secretary, Gibbs added, although Geithner's early tenure has been anything but smooth. The Cabinet official's introduction of a new plan to bail out the financial industry was widely panned, and his confirmation was held up earlier when it was disclosed he had paid $34,000 in back taxes.

Obama himself has been vocal on the need to do everything possible to recoup the money paid out in bonuses, and so far, no Democrats in Congress have tried to hold him to account.

But the Treasury Department isn't immune, even from Democrats.

"I'm outraged by this," said Baucus in a statement. "At one point the Treasury was in a position to stop these bonuses. Those were the terms of TARP, terms that I helped draft."

But talk of legislation only leads to more uncomfortable questions for Democrats.

Sen. Olympia Snowe, R-Maine, and Ron Wyden, D-Ore., won passage of a provision earlier this year that they said would have prevented the type of payments now at the center of a storm.

It was dropped without explanation in the final compromise on the economic stimulus measure, replaced by a less restrictive set of conditions backed by Sen. Christopher Dodd, D-Conn., and accepted by the White House.

"The president goes out and says this is not acceptable and then some backroom deal gets cut to let these things get paid out anyway," said Wyden.

http://finance.yahoo.com/news/Analysis-White-House-Dems-apf-14677357.html

[Daniel]

When I left Marriott to work for Hilton, I was due a bonus and it was paid to me 3 months later.

It's not out of the ordinary for bonuses from previous year to be paid in March... in fact, it's quite typical for big companies.

That kinda shoots a hole into the whole "We need to retain top talent" bullshit.

You guys had your run of excess PB. It's coming to an end. Get used to it.

[Gan]

Oh well.

The smartest thing these AIG people could do is donate the bonuses to either 1) charity, or 2) refuse them utterly.

The government needs to put in covenant into TARP and other bailout funds that all discrentionary and contractual bonuses are suspended until the taxpayers have been paid back in full, then its up to the company to fund bonuses with income from their own operations.

~Paul



Sen. Christopher Dodd (D-Conn.): Billed by Gawker.com as "the senator from AIG," Dodd inserted language into the stimulus package that allowed for the AIG bonuses, weakening an earlier provision by Sen. Olympia Snowe (R-Maine) and Sen. Ron Wyden (D-Ore) that limited bailout recipients' ability to dole out bonuses. His provision included this line: "There is an exception for contractually obligated bonuses agreed on before Feb. 11, 2009."

Dodd's spokeswoman told dcexaminer.com that the senator was "completely unaware" of the AIG bonuses at the time his amendment was added to the $787 billion stimulus bill.

Those Who Knew About Dodd's Provision: Apparently, no one. According to dcexaminer.com:
Sen. Ben Nelson (D-Neb.): "That's the first I've heard of it."
Rep. John Fleming (R-La.): "That's one little line item I never got to read."
The White House said Tuesday for the first time that Treasury Secretary Timothy Geithner found out about the bonuses a week ago Tuesday; he informed the White House last Thursday.

http://news.yahoo.com/s/ynews/ynews_bs262?sec=topStories&pos=2&asset=TBD&ccode=TBD

[Keller]

The problem I have is the US Government imposing a 95% tax on something they disagree is right; to punish everyone instead of using the legal system to punish the individual or individuals truly responsible.

I concede the point that it is "legal" in the sense that the Government makes the laws.. doesn't mean I have to like it and doesn't mean that the Court system will not take issue with it.

I totally agree. I think it's a bullshit way to get the money. I have no legal grounds for saying what I'm about to say other than gut instinct, but I bet that, if it is passed, the tax is found to be an unconstitutional taking.

[radamanthys]

That kinda shoots a hole into the whole "We need to retain top talent" bullshit.

You guys had your run of excess PB. It's coming to an end. Get used to it.

Who is "you guys" this time?

White people, Republicans, older people or hotel managers?

Because I totally blame the hotel people for our excesses...

[Parkbandit]

That kinda shoots a hole into the whole "We need to retain top talent" bullshit.

You guys had your run of excess PB. It's coming to an end. Get used to it.


Wait.. so once again you fall back to the "OBAMA WON THE ELECTION, JUST STFU AND ACCEPT IT" reasoning?

Seriously?

And granted, Bush did have a run of excess.. but let's be honest, he looks like a complete amature next to Obama's super hyped up Tax and Spend efforts.

[Clove]

...how a previously venerable company that was an icon in the industry... succumbed to this greed and figured out how to package smoke and sell it on the marketplace for billions of dollars without any supervision...

Gary Ackerman at the House Subcommittee hearing on bailout bonusesBest quote ever.

[Apotheosis]

I'm for the rule of law.. not some crazy mob mentality of wanting to burn them at the stake like you seem to desire.

If these executives did wrong doing.. and I'm sure some of them did.. then do it the right way and go after them in a legal fashion. Throw the damn book at them, they deserve it.

I just don't believe that our government, after fucking this entire bailout process from the very beginning, should be enforcing any excise tax on people because they are embarrassed by their own lack of due diligence.

And this is where I agree with you..

they shoved the stimulus package down everyone's throat, said "OMG WE NEED TO DO THIS NOW".... without DEBATING SOME OF THE RULES OF THE STIMULUS...

or whatever...

I guess though.... now, according to our commander in chief, the fundamentals of our economy are sound.. so maybe it's time to cut back on some of the stimulus expenditures..

[Mabus]

While the AIG bonuses are infuriating, I am coming to the belief that they are just a method of controlling the news cycle to keep it from examining, and reporting on, bigger issues.

Go, go gadget propaganda control arm!

[Parkbandit]

[/b]

And this is where I agree with you..

they shoved the stimulus package down everyone's throat, said "OMG WE NEED TO DO THIS NOW".... without DEBATING SOME OF THE RULES OF THE STIMULUS...

or whatever...

I guess though.... now, according to our commander in chief, the fundamentals of our economy are sound.. so maybe it's time to cut back on some of the stimulus expenditures..

:rofl: I heard that as well. Seriously, sometimes I think Obama's administration is full of brilliant people.. then they do something like this and make me do a 180. Didn't Obama himself make fun of McCain for saying that the fundamentals of the economy are strong? What changed besides the DJIA losing another 5000 points and unemployment rising 4% to make him believe that NOW the fundamentals are strong?

[Daniel]

Who is "you guys" this time?

White people, Republicans, older people or hotel managers?

Because I totally blame the hotel people for our excesses...

Greedy fucks in business? I'm sure there's some black democrats in that mix.

[Daniel]

Wait.. so once again you fall back to the "OBAMA WON THE ELECTION, JUST STFU AND ACCEPT IT" reasoning?


No, this wasn't a Bush vs Obama thing. It was a more so "unfettered business, who gives a shit if we ruin the world economy" thing.

[radamanthys]

Greedy fucks in business? I'm sure there's some black democrats in that mix.

They forget that the number 1 ethical responsibility of a corporation is to the shareholders. Not their own pockets. Pepper in some morality somewhere.

And I'm sure, as well. It's a 'human' thing.

[Daniel]

They forget that the number 1 ethical responsibility of a corporation is to the shareholders. Not their own pockets. Pepper in some morality somewhere.

And I'm sure, as well. It's a 'human' thing.

Yea, because AIG is sure doing the right thing by its shareholders right now.

Stop being a tool.

[Parkbandit]

No, this wasn't a Bush vs Obama thing. It was a more so "unfettered business, who gives a shit if we ruin the world economy" thing.

Here was your post I was responding to:


That kinda shoots a hole into the whole "We need to retain top talent" bullshit.

You guys had your run of excess PB. It's coming to an end. Get used to it.


So now I'm in the group of people who didn't "give a shit if we ruin the world economy"? How'd you pull that link off?

[Daniel]

Here was your post I was responding to:




So now I'm in the group of people who didn't "give a shit if we ruin the world economy"? How'd you pull that link off?

Because you're sitting here trying to defend executives who oversaw a failed business model that directly led to the economic collapse. That would be like me sitting here trying to defend the executives of freddie and fannie.

[Parkbandit]

Because you're sitting here trying to defend executives who oversaw a failed business model that directly led to the economic collapse. That would be like me sitting here trying to defend the executives of freddie and fannie.


Remember, I don't blame you.. I blame our school system that simply just passed you along. Here's a post you obviously missed.. as well as the points I was making. I've taken the liberty of bolding out the important parts:


I'm for the rule of law.. not some crazy mob mentality of wanting to burn them at the stake like you seem to desire.

If these executives did wrong doing.. and I'm sure some of them did.. then do it the right way and go after them in a legal fashion. Throw the damn book at them, they deserve it.

I just don't believe that our government, after fucking this entire bailout process from the very beginning, should be enforcing any excise tax on people because they are embarrassed by their own lack of due diligence.

[Daniel]

Remember, I don't blame you.. I blame our school system that simply just passed you along. Here's a post you obviously missed.. as well as the points I was making. I've taken the liberty of bolding out the important parts:

[/b]

Yea. I'm sorry. I missed that idiocy. What exactly does the rule of law have to do with congress passing a tax because people "lawfully" awarded themselves big ass bonuses for shit they probably didn't deserve in the first place.

Congress makes the laws. So I don't see your problem.

[Clove]

I just don't believe that our government, after fucking this entire bailout process from the very beginning, should be enforcing any excise tax on people because they are embarrassed by their own lack of due diligence.I've said from the very beginning that there hasn't been enough due diligence, however what you suggest is just a childish sort of stubborness.

You should have thought of that before!!!1!!11! You didn't handle this correctly!!1!! So tough! Live with it.

No. We're allowed to demand corrections.

I repeat, anyone at AIG who isn't comfortable with their compensation being subject to the whim of the mob is welcome to go find a job at a company that isn't owned by the mob. I assure you, compensation isn't nearly as generous out here.

[Gan]

While the AIG bonuses are infuriating, I am coming to the belief that they are just a method of controlling the news cycle to keep it from examining, and reporting on, bigger issues.

Go, go gadget propaganda control arm!

Bigger issues like what?

[Gan]

http://forum.gsplayers.com/images/reputation/reputation_neg.gifA.I.G. planning huge... (http://forum.gsplayers.com/showthread.php?p=908240#post908240)03-18-2009 11:26 PM Not confirmed - Back


Dodd Blames Obama Administration for Change to Bonus Amendment

By Ryan J. Donmoyer

March 19 (Bloomberg) -- Senate Banking Committee Chairman Christopher Dodd said the Obama administration asked him to insert a provision in last month’s $787 billion economic- stimulus legislation that had the effect of authorizing American International Group Inc.’s bonuses.

Dodd, a Connecticut Democrat, said yesterday he agreed to modify restrictions on executive pay at companies receiving taxpayer assistance to exempt bonuses already agreed upon in contracts. He said he did so without realizing the change would benefit AIG, whose recent $165 million payment to employees has sparked a public furor.

Dodd said he had wanted to limit executive compensation at companies that got money from the government’s financial-rescue fund. AIG has received $173 billion in bailout money. His provision was changed as the stimulus legislation was negotiated between the House and Senate.

“I did not want to make any changes to my original Senate-passed amendment” to the stimulus bill, “but I did so at the request of administration officials, who gave us no indication that this was in any way related to AIG,” Dodd said in a statement released last night. “Let me be clear -- I was completely unaware of these AIG bonuses until I learned of them last week.” He didn’t name the administration officials who made the request.

No Insistence
An administration official said last night that representatives of President Barack Obama didn’t insist on the change, though they did contend that the language in Dodd’s amendment could be legally challenged because it would apply retroactively to bonus agreements. The official spoke on the condition of anonymity.

That provision in the stimulus bill may undercut complaints by congressional Democrats about the AIG bonuses because most of them voted for the legislation. No Republicans in the House and only three in the Senate supported the stimulus measure.

The new law, approved by Congress Feb. 13 and signed into law by Obama the next week, effectively authorized bonus arrangements at companies receiving taxpayer bailouts as long as they were in place before Feb. 11. The AIG bonuses qualified under that provision.

Obama and many lawmakers who voted for the legislation, such as Senator Charles Schumer, a New York Democrat, and Senate Finance Committee Chairman Max Baucus, a Montana Democrat, are demanding AIG employees surrender their bonuses.

Schumer Letter
Schumer yesterday sent a letter to AIG Chief Executive Officer Edward Liddy warning him to return bonuses or face confiscatory taxes on them. The letter was signed by Senate Majority leader Harry Reid, a Nevada Democrat, and seven other senators.

Brian Fallon, a spokesman for Schumer, said the senator “supported a provision on the Senate floor that would have prevented these types of bonuses, but he was not on the conference committee that negotiated the final language.”

A House vote is planned for today on a bill to impose a 90 percent tax on executive bonuses paid by AIG and other companies getting more than $5 billion in federal bailout funds.

“I expect it to pass in overwhelmingly bipartisan fashion,” House Majority Leader Steny Hoyer, a Maryland Democrat, told reporters yesterday in Washington.

Republican Attacks
Republicans seized on the provision in the stimulus bill to paint Democrats as hypocrites.

“The fact is that the bill the president signed, which protected the AIG bonuses and others, was written behind closed doors by Democratic leaders of the House and Senate,” Iowa Senator Charles Grassley said in a statement.

Dodd said the provision was written to give the Treasury Department enough discretion to reclaim bonuses as necessary.

“Fortunately, we wrote this amendment in a way that allows the Treasury Department to go back and review these bonus contracts and seek to recover the money for taxpayers,” he said.

Treasury Secretary Timothy Geithner told lawmakers in a letter this week that department lawyers believe it would be “legally difficult” to prevent AIG from paying bonuses.

Other Democrats who voted for the stimulus bill have ramped up criticism of AIG’s bonuses, including Massachusetts Representative Barney Frank, the chairman of the House Financial Services Committee, who told reporters, “I think the time has come to exercise our ownership rights.”

To contact the reporter on this story: Ryan J. Donmoyer in Washington at rdonmoyer@bloomberg.net (rdonmoyer@bloomberg.net)

http://www.bloomberg.com/apps/news?pid=washingtonstory&sid=aT_tMXRy2vDs

[Parkbandit]

Yea. I'm sorry. I missed that idiocy. What exactly does the rule of law have to do with congress passing a tax because people "lawfully" awarded themselves big ass bonuses for shit they probably didn't deserve in the first place.

Congress makes the laws. So I don't see your problem.


Yes, yes.. because everyone that received a bonus MUST have awarded it to themselves.

That's not how it works pal.

[CrystalTears]

That they were able to draw up a contract basically "rewarding" employees despite performance just screams bullshit to me. There's no incentive to work towards a profitable goal if you're going to get millions of dollars regardless.

[Parkbandit]

I've said from the very beginning that there hasn't been enough due diligence, however what you suggest is just a childish sort of stubborness.

You should have thought of that before!!!1!!11! You didn't handle this correctly!!1!! So tough! Live with it.

No. We're allowed to demand corrections.

I repeat, anyone at AIG who isn't comfortable with their compensation being subject to the whim of the mob is welcome to go find a job at a company that isn't owned by the mob. I assure you, compensation isn't nearly as generous out here.

You are allowed to demand corrections, but like many experts have already stated.. the excise tax will most certainly be challenged in the court of law and probably overturned.

Your suggestion that the mob is the rule of law isn't only childish, it's not based upon facts.

[Parkbandit]

That they were able to draw up a contract basically "rewarding" employees despite performance just screams bullshit to me. There's no incentive to work towards a profitable goal if you're going to get millions of dollars regardless.


I actually agree.. but there are many members of AIG who's job has very little impact on the bottom line of the company, yet serve a very important function. If AIG were my company, the first benchmark would be that the company must return a profit before any bonuses are given. That obviously isn't the case here... but the employees aren't to blame for Corporate policy. Compensation would be the responsibility of the CFO, CEO and Board to determine. Obviously, they decided that overall profit wasn't a benchmark in some compensation packages.

[radamanthys]

Yea. I'm sorry. I missed that idiocy. What exactly does the rule of law have to do with congress passing a tax because people "lawfully" awarded themselves big ass bonuses for shit they probably didn't deserve in the first place.

Congress makes the laws. So I don't see your problem.

http://forum.gsplayers.com/showpost.php?p=908332&postcount=142

Daniel. Take a deep breath and try to see something other than "OMG WHITE REPUBLOICAN BUSINESS BAD. DANIEL SMASH!!!!111

The ramifications of actions taken today are pretty major, and need to be thought through. Unmitigated revenge may not be the correct answer. Fear leads to anger, anger leads to hate, hate leads to suffering, and all that.

[CrystalTears]

I actually agree.. but there are many members of AIG who's job has very little impact on the bottom line of the company, yet serve a very important function.Out of the 73 executives who were awarded at least a million dollars, whose job didn't affect the downfall of AIG?

[Parkbandit]

Out of the 73 executives who were awarded at least a million dollars, whose job didn't affect the downfall of AIG?

Without knowing their titles and roles in the company, it would be mere speculation at this point, would it not?

Think about your company and the people who work there. Are there individuals who's primary job isn't the financial part of the company's bottom line?

[Gan]

Out of the 73 executives who were awarded at least a million dollars, whose job didn't affect the downfall of AIG?

Exactly :yes:


And why were some of them prompted to bail early in 2008 and yet still receive their bonus?

[CrystalTears]

Without knowing their titles and roles in the company, it would be mere speculation at this point, would it not?Exactly, but you were going in the other direction that some of them had nothing to do with it.. just innocent bystanders... which I wasn't in agreement with.


Think about your company and the people who work there. Are there individuals who's primary job isn't the financial part of the company's bottom line?
All the executives here could make or break this company. I don't see it any differently. Then again, people here wouldn't agree to getting a bonus knowing that we had to be bailed out.

[Gan]

Without knowing their titles and roles in the company, it would be mere speculation at this point, would it not?

Think about your company and the people who work there. Are there individuals who's primary job isn't the financial part of the company's bottom line?

I cant think of any company slack-jaws who work the front line positions that would qualify for such a bonus. Especially in light of the fact that the average bonus payout for AIG was 19k per.

Those recipients of the million dollar bonuses were definately in a position to dictate the direction of the company. Those guys were the 'assets'. And some of those guys were the ones who bailed early, like rats from a sinking ship.

[Parkbandit]

Exactly, but you were going in the other direction that some of them had nothing to do with it.. just innocent bystanders... which I wasn't in agreement with.

And you decided, with almost no information at all, that all 73 people are guilty. I'm still living in a country that holds "Innocent until proven guilty" as a standard, am I not? Since I have no information to go on, I can only assume that SOME of them MIGHT be innocent... which is better than what you are doing imo.



All the executives here could make or break this company. I don't see it any differently. Then again, people here wouldn't agree to getting a bonus knowing that we had to be bailed out.

How many people are in your company? AIG has/had 115,000.

[Clove]

You are allowed to demand corrections, but like many experts have already stated.. the excise tax will most certainly be challenged in the court of law and probably overturned.

Your suggestion that the mob is the rule of law isn't only childish, it's not based upon facts.You can keep calling it an excise tax if you like but I don't think that word means what you think it means. You can also call the tax-payers of the United States a mob, but I think you're missing the sarcasm when I use it.

It undoubtedly will get challenged but if it's properly written it won't get overturned. There is nothing preventing an income tax on lump compensation over a certain amount from companies receiving an x amount of bailout funding. They can even allow exemptions. As long as the law doesn't target individuals there isn't anything unconstitutional about it. When you sign a contract for compensation your aren't guaranteed anything concerning future taxation.

Taxation is such an arbitrary variable expense that we have a separate line on financials called EBITDA "Earnings Before Interest Taxes Depreciation and Amortization", which is what is really used to determine a corporations' performance, largely because while you may have been unprofitable on the bottom line if it was due to taxes, depreciation etc. these were forces beyond your control.

Your sympathy for contractual bonuses for the wealthy and incompentant (yes Keller incompetent, people far less intelligent than these realized a huge real estate bubble was forming) is not only childish- it's the worst sort of welfare. Had AIG been able to pay these contracts with their own assets, more power to them, but they were not and I won't endorse handouts to wealthy failures.

[Parkbandit]

I cant think of any company slack-jaws who work the front line positions that would qualify for such a bonus. Especially in light of the fact that the average bonus payout for AIG was 19k per.

Those recipients of the million dollar bonuses were definately in a position to dictate the direction of the company. Those guys were the 'assets'. And some of those guys were the ones who bailed early, like rats from a sinking ship.

If you were an honest employee of a company that was going through the bailout AIG is going through.. and you had an opportunity to land a job with another company.. are you saying you would stick around AIG instead? Are you also saying that you would simply give your bonus back to AIG?

[Parkbandit]

You can keep calling it an excise tax if you like but I don't think that word means what you think it means. You can also call the tax-payers of the United States a mob, but I think you're missing the sarcasm when I use it.

It undoubtedly will get challenged but if it's properly written it won't get overturned. There is nothing preventing an income tax on lump compensation over a certain amount from companies receiving an x amount of bailout funding. They can even allow exemptions. As long as the law doesn't target individuals there isn't anything unconstitutional about it. When you sign a contract for compensation your aren't guaranteed anything concerning future taxation.

Taxation is such an arbitrary variable expense that we have a separate line on financials called EBITDA "Earnings Before Interest Taxes Depreciation and Amortization", which is what is really used to determine a corporations' performance, largely because while you may have been unprofitable on the bottom line if it was due to taxes, depreciation etc. these were forces beyond your control.

Your sympathy for contractual bonuses for the wealthy and incompentant (yes Keller incompetent, people far less intelligent than these realized a huge real estate bubble was forming) is not only childish- it's the worst sort of welfare. Had AIG been able to pay these contracts with their own assets, more power to them, but they were not and I won't endorse handouts to wealthy failures.


You keep throwing around the word "childish", yet it is you who is taking such offense to an opinion.

[Gan]

And you decided, with almost no information at all, that all 73 people are guilty. I'm still living in a country that holds "Innocent until proven guilty" as a standard, am I not? Since I have no information to go on, I can only assume that SOME of them MIGHT be innocent... which is better than what you are doing imo.

I see your point and I concede that I'm not comfortable with the idea of creating an AIG-Tax to recoup the money paid out, especially without review of each case. And now its going to cost even more money trying to recoup the loss.

That being said, I'm pissed as hell that the bonuses were ever allowed to be handed out to begin with.

We have long tenure and experienced congressional people who should not have let this ever pass out of comittee. And supposedly we have all this 'experience' in the white house who should not have approved this for signature much less be signed.

In my opinion, this level of corruption or incompetence is the same as what led AIG to even agree to a bonus structure and business path that brought us here in the first place.

Whomever is responsible needs to be held accountable.

[Parkbandit]

I see your point and I concede that I'm not comfortable with the idea of creating an AIG-Tax to recoup the money paid out, especially without review of each case. And now its going to cost even more money trying to recoup the loss.

That being said, I'm pissed as hell that the bonuses were ever allowed to be handed out to begin with.

We have long tenure and experienced congressional people who should not have let this ever pass out of comittee. And supposedly we have all this 'experience' in the white house who should not have approved this for signature much less be signed.

In my opinion, this level of corruption or incompetence is the same as what led AIG to even agree to a bonus structure and business path that brought us here in the first place.

Whomever is responsible needs to be held accountable.

I 100% agree. Let's hold EVERYONE who is responsible for this fuck up accountable. Throw the book at the guilty people... just don't throw out baby with the bath water.

[Gan]

If you were an honest employee of a company that was going through the bailout AIG is going through.. and you had an opportunity to land a job with another company.. are you saying you would stick around AIG instead? Are you also saying that you would simply give your bonus back to AIG?

If I were an honest employee who left AIG, then I would have no expectation that I would receive a bonus post-termination with said employer - especially with the knowledge that the money was taxpayer bailout money.

Yes, as many employees of AIG are now doing, I would return it or refuse to accept it. That money belongs to the tax payers and should have never been treated with such irresponsibility.

[Clove]

You keep throwing around the word "childish", yet it is you who is taking such offense to an opinion.Offensive opinions offend.

[CrystalTears]

And you decided, with almost no information at all, that all 73 people are guilty. I'm still living in a country that holds "Innocent until proven guilty" as a standard, am I not? Since I have no information to go on, I can only assume that SOME of them MIGHT be innocent... which is better than what you are doing imo.And see, I look at it differently, that everyone works for the same entity, and their individual success is based on the success of the company. I'm sorry that I can't understand how 73 executives had NOTHING to do with the failure of the company in some way, shape or form. I won't say that they performed illegal activities, but they had something to do with its demise. What would cause any of them to "deserve" a bonus?

How many people are in your company? AIG has/had 115,000.I don't see how that has anything to do with it. Responsible executives/employees are just that, whether there are 10 or 100 executives.

[radamanthys]

How do you know that one or two execs weren't part of the whole mess? Maybe they only stayed on to attempt to change the company for the better.

We can't let our thirst for revenge overstep our rational judgment of the situation. Innocent until proven guilty.

Someone will be proven guilty, no doubt. But We can't shit on our own values to do so. It would make us no better than they.

[CrystalTears]

How do you know that one or two execs weren't part of the whole mess? Maybe they only stayed on to attempt to change the company for the better.

We can't let our thirst for revenge overstep our rational judgment of the situation. Innocent until proven guilty.

Someone will be proven guilty, no doubt. But We can't shit on our own values to do so. It would make us no better than they.
This isn't me saying that all 73 executives need to be prosecuted. This is me saying that the COMPANY shouldn't have awarded ANYONE with bonuses with money that WAS NOT EARNED.

I think it's tremendous hypocrisy to complain about regular people using their welfare to buy whatever the fuck they want with government handouts, but hey, it's okay for executives to do it. Living with our money, you play by our rules.

[Daniel]

http://forum.gsplayers.com/showpost.php?p=908332&postcount=142

Daniel. Take a deep breath and try to see something other than "OMG WHITE REPUBLOICAN BUSINESS BAD. DANIEL SMASH!!!!111

The ramifications of actions taken today are pretty major, and need to be thought through. Unmitigated revenge may not be the correct answer. Fear leads to anger, anger leads to hate, hate leads to suffering, and all that.

You really need to pull your head out of your ass. This has absolutely nothing to do with "White, Republicans" even if they were the major propogators of this fallacious economic model.

The bottom line is that a failing company should not be giving bonuses. If the company itself can't show the dilligence to screen who and who shouldn't get them, why should we?

If you really think these multi millionaires are "suffering" because they don't get another free check for a 1 million bucks then you're straight delusional.

[radamanthys]

You really need to pull your head out of your ass. This has absolutely nothing to do with "White, Republicans" even if they were the major propogators of this fallacious economic model.

The bottom line is that a failing company should not be giving bonuses. If the company itself can't show the dilligence to screen who and who shouldn't get them, why should we?

If you really think these multi millionaires are "suffering" because they don't get another free check for a 1 million bucks then you're straight delusional.

Funny, I've always thought the same thing about you.

I'm not defending the bonuses, and have actively repudiated them throughout this thread. As well, I'm not defending the other decisions made by AIG. Since you can't get over the idea that since "He's not screaming to kill the AIG execs, he must be wrong", then you're the one with the proverbial 'rectal-cranial inversion syndrome.

You people are out for blood.

The criminal courts will decide who is to blame for the fraud. Upon that, the fraudulently obtained funds can be removed. Anyone remember the fifth amendment to the constitution? "No person shall be ... deprived of ... property, without due process of law ...."

Any other decision is reckless, stupid, and gives too much power to the powers that be. Powers that deny us rights of property. Powers that shit on the constitution and the bill of rights.

Unless you think soviet communism worked. Then I suggest counseling.

[Ignot]

Whoa...

Neg Rep A.I.G. planning huge... 03-19-2009 07:40 AM .

Whoa...

[Parkbandit]

And see, I look at it differently, that everyone works for the same entity, and their individual success is based on the success of the company. I'm sorry that I can't understand how 73 executives had NOTHING to do with the failure of the company in some way, shape or form. I won't say that they performed illegal activities, but they had something to do with its demise. What would cause any of them to "deserve" a bonus?

I think you've already proven you see it differently than I do. I expect the law to be upheld and the guilty be proven through the process.. you want to proclaim all guilty without having any details of what is actually happening in AIG.


I don't see how that has anything to do with it. Responsible executives/employees are just that, whether there are 10 or 100 executives.

In very large companies, like AIG, there are MANY more managers, MANY more roles, MANY more individuals with focused responsibilities. It's very possible that some of those evil 74 people might have absolutely nothing to do with the financial side of the company.

[CrystalTears]

Why do you continue to think I'm out to vilify the individual employees when my contention is with THE COMPANY AS A WHOLE? Sure they could refuse the bonus, but they shouldn't have been offered it in the first place.

If my company failed, I see no reason why anyone should get a bonus, no matter how small and important any of those individuals within it deserve it. As a collective unit, the business failed and I don't see why anyone should be rewarded for that.

[Parkbandit]

Why do you continue to think I'm out to vilify the individual employees when my contention is with THE COMPANY AS A WHOLE? Sure they could refuse the bonus, but they shouldn't have been offered it in the first place.

If my company failed, I see no reason why anyone should get a bonus, no matter how small and important any of those individuals within it deserve it. As a collective unit, the business failed and I don't see why anyone should be rewarded for that.

I don't disagree.. which I've repeatedly stated. Had I owned AIG, the FIRST BENCHMARK for ANYONE to make ANY bonus would be profit. Don't make money, don't get a bonus. Period.

Unfortunately, the compensation structure wasn't put in place like that.. so now we have to live with it. We pushed through bailout after bailout because it was so desperately needed NOW NOW NOW that in our own haste to throw money all over the place, the Government fucked up. Now they want to seize these citizen's property instead of going through the proper legal channels already established and in place. THAT is what I have been against and it has never been about the merits of whether Peggy Sue in HR deserves her bonus or not.

[CrystalTears]

I don't see why we all should bend over and take it just because the bonus bracket of the contract was overlooked.

[Clove]

I don't see why we all should bend over and take it just because the bonus bracket of the contract was overlooked.Because PB thinks "that'll teach 'em" and suddenly the Fed won't use emergency powers anymore. Like I said, there is nothing wrong with correcting errors.

[radamanthys]

Because we'd be bending over further given the alternative.

[Gan]

I don't see why we all should bend over and take it just because the bonus bracket of the contract was overlooked.

That's our bonus courtesy of our congressional and executive leaders. Thought you knew...

The reacharound was deleted in committee.

[CrystalTears]

Because we'd be bending over further given the alternative.
Which alternative?

[radamanthys]

Throwing rule of law, due process, and personal property out the window?

[CrystalTears]

Throwing rule of law, due process, and personal property out the window?
Who is suggesting to not follow the law? Taxing bonuses from bailout money is not illegal.

[Clove]

Throwing rule of law,We legislate in this country, nobody is talking about "throwing out the rule of law" you and PB sound like hysterical little girls every time you use this phrase
due process,Nobody is under trial so I fail to see what your "due process" concern is
and personal property out the window?AIG is public property.

[radamanthys]

No, what I'm saying is that you can't just take away something that belongs to someone else because a mob determines that they're not worthy of it. There has to be a trial. People have to be found guilty.

PB is right, innocent until proven guilty. You shouldn't take everyone's bonus, as they were contractually entitled to (and made life choices based upon) just because their bosses or co-workers fucked up.

[CrystalTears]

No, what I'm saying is that you can't just take away something that belongs to someone else because a mob determines that they're not worthy of it. There has to be a trial. People have to be found guilty.

PB is right, innocent until proven guilty. You shouldn't take everyone's bonus, as they were contractually entitled to (and made life choices based upon) just because their bosses or co-workers fucked up.
Who's taking it away? It's being considered a taxable item. No one is guaranteed to keep all of their bonus money. Ever.

Made life choices based on their bonuses? You aren't really expecting me to feel sorry for these people, are you?

[Jorddyn]

Just the accountant in me coming out, but how much money do you suppose is going to be spent on accounting for taxing these bonuses if it comes to be, and they only apply a higher tax to bonuses of companies receiving bailout money (or only AIG specifically)?

Off the top of my head:
1. Redesign W-2 to add field for this "bonus-with-extra-tax".
2. Redesign tax form, adding lines.
3. Changes to tax filing software.
4. Changes to e-filing software.
5. Changes to payroll software.

I have no reasonable estimate for what any of these costs would be, but it doesn't seem cheap.

[Clove]

No, what I'm saying is that you can't just take away something that belongs to someone else because a mob determines that they're not worthy of it. There has to be a trial. People have to be found guilty.

PB is right, innocent until proven guilty. You shouldn't take everyone's bonus, as they were contractually entitled to (and made life choices based upon) just because their bosses or co-workers fucked up.It isn't a question of guilt or innocence it's a question of unentitled income. This department failed all of AIG. IF your coworkers RUN THE COMPANY OUT OF BUSINESS YOU DON'T GET A PAYCHECK ANYMORE. The Fed used emergency power to keep AIG operating as opposed to bankruptcy. AIG does NOT have the resources to pay these bonuses because of its failure. Public money was given AIG and THE PUBLIC OUGHT TO DECIDE WHO MERITS A BONUS.

[radamanthys]

The bonuses were already given, though. It's not a matter of choosing who gets and who doesn't. It's a matter of the government arbitrarily removing a person's property without due process of law.

Not everyone is guilty, here. Does the IT guy have anything to do with it? Maybe, just maybe, he worked his ass off 18 hours a day to earn his chance at a bonus.

This requires a court of law. Not a court of public opinion.


edit: I don't think that they should have given bonuses. I think it's as disgusting as the next guy. But they've been given, and now we should take care of the issue the correct way, instead of the "angry, mob revenge driven" way.

[Clove]

The bonuses were already given, though. It's not a matter of choosing who gets and who doesn't. It's a matter of the government arbitrarily removing a person's property without due process of law.

Not everyone is guilty, here. Does the IT guy have anything to do with it? Maybe, just maybe, he worked his ass off 18 hours a day to earn his chance at a bonus.

This requires a court of law. Not a court of public opinion.And maybe, just maybe it doesn't fucking matter if you worked your ass off when the entire company fails. Your compensation dries up. Taxation doesn't require a court of law it requires Congressional legislation, there is your due process; they have representation. It happens every year. I don't suppose you were paying attention to my discussion of EBITDA but American businesses RECOGNIZE the arbritrary nature of income taxes which is why we don't include them in performance metrics.

[CrystalTears]

Not everyone is guilty, here. Does the IT guy have anything to do with it? Maybe, just maybe, he worked his ass off 18 hours a day to earn his chance at a bonus.That IT guy should be thankful he still has a job and getting a regular paycheck for helping run the servers in a failed business that had to get bailed out. Besides, that IT guy is not the one in question here since he did not get a million dollars in bonus money.

[Parkbandit]

I don't see why we all should bend over and take it just because the bonus bracket of the contract was overlooked.

You need to put things into perspective imo. 165 million compared to the 2+ TRILLION DOLLARS is like a penny missing from a million dollars. We're spending the same amount on U.S. Fish and Wildlife Service maintenance and construction on wildlife refuges and fish hatcheries and for habitat restoration according to the "stimulus" bill.

If you feel being bent over from a lousy 165 million dollars.. I can't imagine what you must feel like about 2 trillion.

[CrystalTears]

You need to put things into perspective imo. 165 million compared to the 2+ TRILLION DOLLARS is like a penny missing from a million dollars. We're spending the same amount on U.S. Fish and Wildlife Service maintenance and construction on wildlife refuges and fish hatcheries and for habitat restoration according to the "stimulus" bill.

If you feel being bent over from a lousy 165 million dollars.. I can't imagine what you must feel like about 2 trillion.Yes, let's put this into perspective. The entire country is going through a recession, and thousands of businesses are either saying goodbye to business or cutting corners in every facet to keep afloat without a bailout.

Then we have dickhead AIG, who failed, had to get bailed out and are still handing out millions as though they hit the lottery. It's not about the amount, it's the principle of the thing. I really don't give a rat's ass if they gave every worker in AIG $100 and a case of beer as a bonus. A BONUS WAS NOT DESERVED SINCE THEY DIDN'T EARN ANY OF IT! And I don't want to see this kind of greed continue when we bail people out... a principle I'm already against.

But since you keep bringing that up, I'm going to assume that you still are missing the point behind the outrage.

[Keller]

You need to put things into perspective imo. 165 million compared to the 2+ TRILLION DOLLARS is like a penny missing from a million dollars. We're spending the same amount on U.S. Fish and Wildlife Service maintenance and construction on wildlife refuges and fish hatcheries and for habitat restoration according to the "stimulus" bill.

If you feel being bent over from a lousy 165 million dollars.. I can't imagine what you must feel like about 2 trillion.

It's actually more like a penny missing from $10.

Or maybe $1,000 missing from $1,000,000.

[Parkbandit]

And maybe, just maybe it doesn't fucking matter if you worked your ass off when the entire company fails. Your compensation dries up. Taxation doesn't require a court of law it requires Congressional legislation, there is your due process; they have representation. It happens every year. I don't suppose you were paying attention to my discussion of EBITDA but American businesses RECOGNIZE the arbritrary nature of income taxes which is why we don't include them in performance metrics.

It does happen every year.. hell, it happens every day. A business goes out of business and has to go through the channels to liquidate or shelter the assets to be reformed.

That didn't happen in this case though.. instead we threw money on them as fast as we could print it... then cried foul when something "suddenly" popped up out of the blue we knew was going to happen weeks prior.

But hey.. grab a pitchfork. Betty Sue needs to be strung up because her employment contract had a bonus in it that she earned! LET'S LIGHT THAT BITCH UP!

[Parkbandit]

Yes, let's put this into perspective. The entire country is going through a recession, and thousands of businesses are either saying goodbye to business or cutting corners in every facet to keep afloat without a bailout.

Then we have dickhead AIG, who failed, had to get bailed out and are still handing out millions as though they hit the lottery. It's not about the amount, it's the principle of the thing. I really don't give a rat's ass if they gave every worker in AIG $100 and a case of beer as a bonus. A BONUS WAS NOT DESERVED SINCE THEY DIDN'T EARN ANY OF IT! And I don't want to see this kind of greed continue when we bail people out... a principle I'm already against.

But since you keep bringing that up, I'm going to assume that you still are missing the point behind the outrage.


I get the outrage, it's the suspension of law that I'm having difficulty with. Obviously, you don't have that moral issue to worry about though.

:shrug:

[Clove]

It does happen every year.. hell, it happens every day. A business goes out of business and has to go through the channels to liquidate or shelter the assets to be reformed.

That didn't happen in this case though.. instead we threw money on them as fast as we could print it... then cried foul when something "suddenly" popped up out of the blue we knew was going to happen weeks prior.

Or let's tax them. I'm talking about tax legislation and you're talking about bankruptcy law. Nice apples to oranges comparison.
[QUOTE=Parkbandit;908829]But hey.. grab a pitchfork. Betty Sue needs to be strung up because her employment contract had a bonus in it that she earned! LET'S LIGHT THAT BITCH UP!"Betty Sue" didn't earn it, her company failed. It hasn't the assets to pay poor executive level "Betty Sue".

[Clove]

I get the outrage, it's the suspension of law that I'm having difficulty with. Obviously, you don't have that moral issue to worry about though.

:shrug:For the last fucking time, legislating taxes is NOT suspension of law.

[Parkbandit]

For the last fucking time, legislating taxes is NOT suspension of law.


I take issue with our government selectively taxing individuals like they propose. I do hope the employees in question sue the shit out of us.. and win.

THEN the rule of law will finally be just.

[Clove]

I take issue with our government selectively taxing individuals like they propose. I do hope the employees in question sue the shit out of us.. and win.

THEN the rule of law will finally be just.Your definition of "just" is warped. Once again this is the typical "You didn't do things MY way so you should suffer for it" mentality you have a penchant for; it's cute when Rush Limburgh does it, but in your case it just seems ignorant. The whole point behind the outrage is that it ISN'T just for the executives of a failed unit of a failed company to receive large bonuses as compensation. If they introduce tax legislation they won't be taxing individuals, that would be illegal, they'll be taxing a class and my suspicion is that class will be "employees of companies that received bailout funds".

[Parkbandit]

Your definition of "just" is warped. Once again this is the typical "You didn't do things MY way so you should suffer for it" mentality you have a penchant for; it's cute when Rush Limburgh does it, but in your case it just seems ignorant. The whole point behind the outrage is that it ISN'T just for the executives of a failed unit of a failed company to receive large bonuses as compensation. If they introduce tax legislation they won't be taxing individuals, that would be illegal, they'll be taxing a class and my suspicion is that class will be "employees of companies that received bailout funds".

That's just being childish.. because I'm so offended I can't respond to it.

-Clove

[Clove]

That's just being childish.. because I'm so offended I can't respond to it.

-CloveThat's fair, you haven't had a response to any of it. When tax legislation is suggested you discuss bankruptcy vs. bailout. You spin "bonus snatching" as ripping off the poor "Betty Sue" who "earned every penny of it" (even though you admit that the compensation structure isn't just) despite that poor Betty Sue ran her company into the ground. Sometimes when your opinion is in the minority, it's not because you're a prophet or progressive; it's because you're wrong.

[Parkbandit]

That's fair, you haven't had a response to any of it. When tax legislation is suggested you discuss bankruptcy vs. bailout. You spin "bonus snatching" as ripping off the poor "Betty Sue" who "earned every penny of it" (even though you admit that the compensation structure isn't just) despite that poor Betty Sue ran her company into the ground. Sometimes when your opinion is in the minority, it's not because you're a prophet or progressive; it's because you're wrong.

I think I've stated my case ad nauseum. I won't change your mind and you won't change mine. So why don't we simply part ways before you get anymore upset.

Loook at this topic.. 217 posts so far.. all about 165 million dollars. No one is even talking about the 1 TRILLION dollars the Fed announced they are printing up yesterday.

Obama is a genius. A real magician.

[Jorddyn]

But since you keep bringing that up, I'm going to assume that you still are missing the point behind the outrage.

Why do you hate rich people?

[Clove]

Unless you want to abolish the Fed by statute there isn't anything to say about it. They have houses to burn down too.

[Parkbandit]

This isn't me saying that all 73 executives need to be prosecuted. This is me saying that the COMPANY shouldn't have awarded ANYONE with bonuses with money that WAS NOT EARNED.

I think it's tremendous hypocrisy to complain about regular people using their welfare to buy whatever the fuck they want with government handouts, but hey, it's okay for executives to do it. Living with our money, you play by our rules.

Using your analogy... AIG would be the parents on welfare and the employees would be the kids whos parents are on welfare.

You are blaming the kids for the mess their parents got into and now you desire to punish them.

[Clove]

Using your analogy... AIG would be the parents on welfare and the employees would be the kids whos parents are on welfare.

You are blaming the kids for the mess their parents got into and now you desire to punish them.Just stop. The employees in this unit are the kids that ran up 200 dollar phone bills and stole their parents cash and wrecked their parents car and are the reason the family is on welfare.

[CrystalTears]

Using your analogy... AIG would be the parents on welfare and the employees would be the kids whos parents are on welfare.

You are blaming the kids for the mess their parents got into and now you desire to punish them.Yeah. Mommy should never have gotten you an Xbox 360 when the money was supposed to be used to keep a roof over your head and food in your stomach. Go back to playing in traffic.

Don't want to be told what to do with your money? Don't ask for government help. And I'm of the opinion that the same should hold true for welfare people. If you're going to live off the government, you have to use the money our way or get heavily taxed, seeing as how you obviously don't really need it.

[Parkbandit]

Yeah. Mommy should never have gotten you an Xbox 360 when the money was supposed to be used to keep a roof over your head and food in your stomach. Go back to playing in traffic.

Don't want to be told what to do with your money? Don't ask for government help. And I'm of the opinion that the same should hold true for welfare people. If you're going to live off the government, you have to use the money our way or get heavily taxed, seeing as how you obviously don't really need it.


What did these poor kids on welfare ever do to you?

Heartless bitch. :P

[Clove]

http://www.ritholtz.com/blog/wp-content/uploads/2008/11/corporate-welfare.gif Think of the children!

[Suppa Hobbit Mage]

I know if my company was part of the retarded bailout, and my bonus got yanked because they accepted the bailout, I'd be PIIIIIIIISSSED. I'd probably be more pissed about this though.

http://charts.investopedia.com/Chart.aspx?Code=aig&Type=2&Cycle=DAY1&Size=430*350&Layout=Default;HisDate&IND=VOL&Start=20080318&End=20090318&Scale=2

[Clove]

I know if my company was part of the retarded bailout, and my bonus got yanked because they accepted the bailout, I'd be PIIIIIIIISSSED. I'd probably be more pissed about this though.

http://charts.investopedia.com/Chart.aspx?Code=aig&Type=2&Cycle=DAY1&Size=430*350&Layout=Default;HisDate&IND=VOL&Start=20080318&End=20090318&Scale=2I'd be pissed too if my company failed that hard.

[Parkbandit]

I know if my company was part of the retarded bailout, and my bonus got yanked because they accepted the bailout, I'd be PIIIIIIIISSSED. I'd probably be more pissed about this though.

http://charts.investopedia.com/Chart.aspx?Code=aig&Type=2&Cycle=DAY1&Size=430*350&Layout=Default;HisDate&IND=VOL&Start=20080318&End=20090318&Scale=2


But if your company was bailed out, you were the reason because YOU ran it into the ground.

[Clove]

But if your company was bailed out, you were the reason because YOU ran it into the ground.It doesn't matter if you were the reason or not, though the bonuses in question are for executives in the unit that most certainly DID run AIG into the ground. When your company fails nobody gets bonuses. You poor, poor executive children, Mommy's sorry she can't pay you your 6 million dollar bonus... you earned it and she's very proud of you.

[Suppa Hobbit Mage]

I guess my point is, if I saw the stock price of the company I worked for dive like that in a year, I'd have been out a long time ago. I personally don't think bailout money should be used for anyone's bonus. The company should have said no bonus this year, we suck. I'm outraged about that. What company gives ANY bonus when they would be bankrupt and have no company coffers to pay anything at all were it not for a bailout?

That's just shitty management on top of shitty management.

[Parkbandit]

It doesn't matter if you were the reason or not, though the bonuses in question are for executives in the unit that most certainly DID run AIG into the ground. When your company fails nobody gets bonuses. You poor, poor executive children, Mommy's sorry she can't pay you your 6 million dollar bonus... you earned it and she's very proud of you.


You are so childish.

[Parkbandit]

Dodd Blames Obama Administration for Change to Bonus Amendment

By Ryan J. Donmoyer

March 19 (Bloomberg) -- Senate Banking Committee Chairman Christopher Dodd said the Obama administration asked him to insert a provision in last month’s $787 billion economic- stimulus legislation that had the effect of authorizing American International Group Inc.’s bonuses.

Dodd, a Connecticut Democrat, said yesterday he agreed to modify restrictions on executive pay at companies receiving taxpayer assistance to exempt bonuses already agreed upon in contracts. He said he did so without realizing the change would benefit AIG, whose recent $165 million payment to employees has sparked a public furor.

Dodd said he had wanted to limit executive compensation at companies that got money from the government’s financial-rescue fund. AIG has received $173 billion in bailout money. His provision was changed as the stimulus legislation was negotiated between the House and Senate.

“I did not want to make any changes to my original Senate-passed amendment” to the stimulus bill, “but I did so at the request of administration officials, who gave us no indication that this was in any way related to AIG,” Dodd said in a statement released last night. “Let me be clear -- I was completely unaware of these AIG bonuses until I learned of them last week.” He didn’t name the administration officials who made the request.

No Insistence
An administration official said last night that representatives of President Barack Obama didn’t insist on the change, though they did contend that the language in Dodd’s amendment could be legally challenged because it would apply retroactively to bonus agreements. The official spoke on the condition of anonymity.

That provision in the stimulus bill may undercut complaints by congressional Democrats about the AIG bonuses because most of them voted for the legislation. No Republicans in the House and only three in the Senate supported the stimulus measure.

The new law, approved by Congress Feb. 13 and signed into law by Obama the next week, effectively authorized bonus arrangements at companies receiving taxpayer bailouts as long as they were in place before Feb. 11. The AIG bonuses qualified under that provision.

Obama and many lawmakers who voted for the legislation, such as Senator Charles Schumer, a New York Democrat, and Senate Finance Committee Chairman Max Baucus, a Montana Democrat, are demanding AIG employees surrender their bonuses.

Schumer Letter
Schumer yesterday sent a letter to AIG Chief Executive Officer Edward Liddy warning him to return bonuses or face confiscatory taxes on them. The letter was signed by Senate Majority leader Harry Reid, a Nevada Democrat, and seven other senators.

Brian Fallon, a spokesman for Schumer, said the senator “supported a provision on the Senate floor that would have prevented these types of bonuses, but he was not on the conference committee that negotiated the final language.”

A House vote is planned for today on a bill to impose a 90 percent tax on executive bonuses paid by AIG and other companies getting more than $5 billion in federal bailout funds.

“I expect it to pass in overwhelmingly bipartisan fashion,” House Majority Leader Steny Hoyer, a Maryland Democrat, told reporters yesterday in Washington.

Republican Attacks
Republicans seized on the provision in the stimulus bill to paint Democrats as hypocrites.

“The fact is that the bill the president signed, which protected the AIG bonuses and others, was written behind closed doors by Democratic leaders of the House and Senate,” Iowa Senator Charles Grassley said in a statement.

Dodd said the provision was written to give the Treasury Department enough discretion to reclaim bonuses as necessary.

“Fortunately, we wrote this amendment in a way that allows the Treasury Department to go back and review these bonus contracts and seek to recover the money for taxpayers,” he said.

Treasury Secretary Timothy Geithner told lawmakers in a letter this week that department lawyers believe it would be “legally difficult” to prevent AIG from paying bonuses.

Other Democrats who voted for the stimulus bill have ramped up criticism of AIG’s bonuses, including Massachusetts Representative Barney Frank, the chairman of the House Financial Services Committee, who told reporters, “I think the time has come to exercise our ownership rights.”

To contact the reporter on this story: Ryan J. Donmoyer in Washington at rdonmoyer@bloomberg.net (rdonmoyer@bloomberg.net)

http://www.bloomberg.com/apps/news?pid=washingtonstory&sid=aT_tMXRy2vDs


I do wonder who the #1 recipient of political money from AIG would have been last year.........

Maybe it's just a coincidence that it was Chris Dodd.

[Parkbandit]

It's actually more like a penny missing from $10.

Or maybe $1,000 missing from $1,000,000.

Ah.. we're both wrong.

If I gave you a million dollars, it would be like you were missing $82.50.

If I gave you a thousand dollars, it would be like you were missing almost 9 cents.

iPhone doesn't handle big numbers too well. :(

[Keller]

If anyone wants to read what tax experts have to say about the AIG bonus-tax: http://taxprof.typepad.com/taxprof_blog/2009/03/the-90-aig-tax-is-lousy-tax-policy.html

[Clove]

"The courts are very reluctant to strike down tax legislation," said Edward McCaffery, a tax expert at the USC Gould School of Law. "I think a tax this high and this targeted raises some difficult questions, but at the end of the day, I would bet a constitutional challenge would not work."Experts are divided, however as predicted...

The tax legislation that the House passed Thursday did not name names. And it was broadened beyond AIG.

The 90% tax rate applies to people who will earn more than $250,000 in adjusted gross income in 2009 and who get bonuses from a company that received more than $5 billion in bailout money. Included are employees of Fannie Mae and Freddie Mac.

Since the tax-rate change would apply only to income in 2009, it cannot be attacked in court as a retroactive tax.

Also from the Tax Blog

http://taxprof.typepad.com/taxprof_blog/2009/03/larry-tribe-.html

[Parkbandit]

The AIG bonuses are an outrage. But the bigger scandal is that a grandstanding Congress wants to use the tax law to punish the companies that paid them and the employees that got them.

If Congress wants to limit bonuses for employees of bailed-out companies, it should just do it. But using the Internal Revenue Code is a truly terrible idea. And dipping into the Code to win political points is worse. Long ago, people were rightly outraged when Richard Nixon tried to turn the IRS into a weapon to punish his enemies. This gotcha tax is another variation on the theme, and nearly as inexcusable. Imagine, for instance, if a GOP Congress retroactively barred people from deducting charitable gifts to Planned Parenthood. Or Democrats imposed a 50 percent surtax on companies that that do security work in Iraq.



[A] 100% "tax" on a specific group of individuals with respect to items paid before enactment of the "tax" certainly makes me uneasy. (Scare quotes because - though I am no constitutional law expert - the narrowly targeted 100% rate seems to put it on the wrong side of the amorphous line between a tax and a Fifth Amendment taking.)

Frankly, it doesn't bother me in the slightest if the 100% tax applies just this one time to just these people. They would appear to deserve it many times over. But one can never be sure that one isn't creating a precedent with legs. Might the device someday be used against someone else who just happens to be unpopular?

I'd actually like to make an example of these guys - as the French would say, "pour encourager les autres," as well as for general public morale. But I'd prefer a better way of doing it, such as investigating them for looting and fraud, which might have been amply justified even without the bonuses.



For those who think that a 100% excise tax is unprecedented, check out what happens when a tax-exempt organization or qualified retirement plan engages in a prohibited transaction and fails to take corrective action. Yes, there is imposed a 100% tax. Though the tax has the quality of being punitive, it has an even stronger characteristic of being a deterrent. The downside to imposing a 100% tax on the AIG bonuses is that it would not serve as a deterrent. We are paying the price for decades of ineffective controls on inappropriate executive compensation and decades of weak enforcement of what restrictions are in place. There also is a risk that the tax could be challenged on the grounds it is an impermissible taking and confiscatory. ...

It's too late for deterrent taxation. It soon may be too late, period.



Using the tax code as a weapon to exact revenge on a select few, no matter how badly they've behaved, is a horrible idea. Slapping heavy taxes on the bonuses and on the company that issued them may satisfy enraged taxpayers who see incompetent executives being rewarded for failure, but it sets a bad precedent.

It may also violate the constitutional ban against ex post facto laws. More to the point, lawmakers are treating a symptom of the economic crisis and overlooking the root causes of the problem -- unbridled corporate greed and the failure of the regulatory system. There are better ways to channel taxpayers' anger and fix the immediate problem.



Outraged US legislators are pushing through punitive taxes on bonuses not just at AIG but at all recipients of government funds. The hot-headed and unfairly retroactive changes could hurt investor confidence, undermine President Barack Obama’s credibility and damage the still valuable US finance sector. ...

The bonus tax idea is bad for a range of reasons that senators should consider calmly, even if the House didn't do so.




E]nough with the tax code. It's got plenty of pages already. And the administration of a special tax on just certain taxpayers would be an administrative and costly endeavor. Haven't we wasted enough on these guys already? I say just void the bonuses.


6 against, 0 for.

Not quite as 'divided' as you lead us to believe.

[CrystalTears]

Sure because that one page has all the tax experts ever, despite the one Clove found.

[Clove]

You don't read or count very well.

From Tax Blog as well:

Larry Tribe: 90% AIG Tax Is Constitutional
Laurence Tribe (Harvard) argues in the Atlantic and Wall Street Journal Law Blog that the proposed 90% tax on the bonuses paid out by AIG would pass constitutional muster under the Bills of Attainder and Ex Post Facto clauses Article I, Section 9; the Contract Clause of the Article I, Section 10; the Due Process Clause of the Fifth Amendment; and the Takings Clause of the Fifth Amendment.


There is a jurisprudence concerning tax retroactivity which involves a multipart test rather than a flat-out ban on retroactive laws. The long and short of it is that very few retroactive provisions have been held unconstitutional unless they imposed an entirely new tax (I believe there was one case in which a new estate tax, imposed for prior years, was so held). If I were looking for a constitutional objection to this proposal, I would probably look somewhere else

We actually already have a tax that, with modification, would work in this situation. Under 4958, if a disqualified person receives excess compensation from a nonprofit, he is subject to a 200% excise tax if he does not correct by repaying the nonprofit. (The tax is 25% if he does correct.) A similar tax could be imposed on executives of companies receiving TARP money.

Including the one I already dug up from USC that's 6-4 so yes, more divided than you would have us believe.

[Parkbandit]

Sure because that one page has all the tax experts ever, despite the one Clove found.

I was referring to the link Keller provided. I've never stated that it included all the tax experts ever.

Sorry I hurt your feelings.

[Clove]

I was referring to the link Keller provided. I've never stated that it included all the tax experts ever.

Sorry I hurt your feelings.Yes and completely ignored my sources in your rebuttal. I'm sorry but that was an asshole statement.

[Parkbandit]

You don't read or count very well.

From Tax Blog as well:

Including the one I already dug up from USC that's 6-4 so yes, more divided than you would have us believe.

More experts disagree with you and agree with me.

But hey.. you claimed that the Stock Market was a great buy back in October.. so what do I know.

[CrystalTears]

I was referring to the link Keller provided. I've never stated that it included all the tax experts ever.

Sorry I hurt your feelings.
There's really no need to be condescending just because we hold differing opinions on what should be done about AIG. I don't know of any really good solution since the gov't dropped the ball, but don't try the wall of text by quoting a few people in order to state that tax experts aren't divided on the decision.

[Clove]

More experts disagree with you and agree with me.

But hey.. you claimed that the Stock Market was a great buy back in October.. so what do I know.I'm sure you have a survey to support that statement. Experts are divided, for which I have support. Stock market is still a great buy as long as you aren't cashing out soon- but you know of course if someone is ever wrong they will never be right. Good reasoning.

[Keller]

You guys are arguing different things.

Whether a tax is constitutional or not does not make it good tax policy.

I know McCaffery relatively well (we're not buddies, but we had a very cordial student/prof relationship) and I'm fairly certain he'd say it was bad tax policy.

Don't know the first thing about Tribe, but is he even a tax prof? If not, doesn't that only further the point that you two are arguing around each other? Pick an argument. Either tax policy or constitutionality.

[Keller]

And to: http://forum.gsplayers.com/images/reputation/reputation_neg.gifA.I.G. planning huge... (http://forum.gsplayers.com/showthread.php?p=909201#post909201)03-20-2009 10:43 AMKeller you bad, bad source bias listing man...


Sorry for getting involved. I'll not do that anymore.

[Clove]

You guys are arguing different things.

Whether a tax is constitutional or not does not make it good tax policy.

I know McCaffery relatively well (we're not buddies, but we had a very cordial student/prof relationship) and I'm fairly certain he'd say it was bad tax policy.

Don't know the first thing about Tribe, but is he even a tax prof? If not, doesn't that only further the point that you two are arguing around each other? Pick an argument. Either tax policy or constitutionality.Whether or not it's bad policy is a matter of opinion. PB has continually argued that this is violating "the rule of law" and that's debatable. Furthermore when the tax-code already has punitative provisions against classes it makes even criticising HR 1586 as bad policy.

Um, so an individual has to be a professor to be an expert? He's cited as a tax expert at the Gould School of Law.

[Parkbandit]

Stock market is still a great buy as long as you aren't cashing out soon- but you know of course if someone is ever wrong they will never be right. Good reasoning.


If you're in the last 10 year stretch before retirement and your 401k is in stocks... they shouldn't be. Otherwise- BUY!

Dated 10/6/08.. the same day you went back and forth with me on how it was a great time to buy stocks.. and I was stating that it wasn't anywhere close to the bottom yet and that buying stocks is stupid.

Since 10/6/08, the DJIA dropped another 3,000 points.

[Keller]

Whether or not it's bad policy is a matter of opinion. PB has continually argued that this is violating "the rule of law" and that's debatable. Furthermore when the tax-code already has punitative provisions against classes it makes even criticising HR 1586 as bad policy.

Um, so an individual has to be a professor to be an expert? He's cited as a tax expert at the Gould School of Law.

Whether or not it is constitutional is also a matter of opinion.

PB has also argued that it's bad/wrong policy.

What I posted, and PB quoted, were commentators saying it was bad tax policy. What you are arguing is that it is constitutional. It's not the same argument.

And I think McCaffery is absolutely an expert. And you don't have to be a professor to be an expert, although professors are going to be the people taking the time to write public comments like this because practitioners don't have the time to think about it and articulate their views unless they are getting paid for it.

[Clove]

Dated 10/6/08.. the same day you went back and forth with me on how it was a great time to buy stocks.. and I was stating that it wasn't anywhere close to the bottom yet and that buying stocks is stupid.

Since 10/6/08, the DJIA dropped another 3,000 points.Which of course has no bearing in the scope of this discussion- thanks for sharing though.

[Parkbandit]

Whether or not it's bad policy is a matter of opinion. PB has continually argued that this is violating "the rule of law" and that's debatable. Furthermore when the tax-code already has punitative provisions against classes it makes even criticising HR 1586 as bad policy.

Um, so an individual has to be a professor to be an expert? He's cited as a tax expert at the Gould School of Law.

By "continually argued", you mean:


The problem I have is the US Government imposing a 95% tax on something they disagree is right; to punish everyone instead of using the legal system to punish the individual or individuals truly responsible.

I concede the point that it is "legal" in the sense that the Government makes the laws.. doesn't mean I have to like it and doesn't mean that the Court system will not take issue with it.