Sunday, March 15, 2009

AIG Exec = Greatest Gig Evar?!?

You've just spent the past year ethering your company stock from an all-time high of $100/share to less than the price of a pack of Bubblicious. You needed the gubb'ment to come in and bail you out of your fiscal irresponsibility. Your corporate image is already reeling from that stupid post-bailout retreat where you were busted spending tens of thousands on happy endings massages and assorted caucasian craziness.

So what do you do to celebrate this year of misfortune? Why, pat yourselves on the back and hand out $165M in bonuses of course!
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 F. 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 A.I.G.’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. Mr. Geithner last week pressured A.I.G. 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 Obama and Congress to impose tough rules on corporate executive compensation at firms bailed out with taxpayer money.

A.I.G., 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 Mr. Geithner, Edward M. Liddy, the government-appointed chairman of A.I.G., said at least some bonuses were needed to keep the most skilled executives.
If this story weren't so freakin' trifling, it might be a bit funny. Are these folks just completely devoid of self-awareness, or do they simply not give a f*ck, because they know the gubb'ment can't do anything about it? Seriously, whose a$$ is Timothy Geithner going to kick?

They say they are contractually obligated to pay these bonuses, but I call bullsh*t. If AIG had folded last year, these guys wouldn't have collected a red cent. Instead, we gave them the first bailout, these guys clearly realized who was really runnin' thangs. That sense of entitlement is clearly what's at play here. Hat tip to you "less gubb'ment" disciples, you just might have been right on this one. Too bad a GOP President gave these guys their first lifeline. I guess that sorta undermines your whole point.

Now, the Obama administration is caught in a Catch 22. If AIG succeeds, some will say it was in spite of these guys incompetence and claim the gubb'ment didn't need to help them anyway. If they collapse, many will say the money was wasted on a lost cause. You really can't win with these a-holes at the helm.

But we're stuck now, shareholders in a rudderless ship that's filling with more water by the moment.

Too bad we can't take away these d-bags' life preservers.

Question: Does the gubb'ment have any right to deny these AIG execs their contractually obligated bonuses, although they clearly have done nothing of value to the company? Could Timothy Geithner bust a grape, or is he indeed scared of his own shadow? Does Barack Obama need to "check a b*tch", Wayne Brady-style, or are AIG execs clearly not scurred of The Beige One?

A.I.G. Planning Huge Bonuses After $170 Billion Bailout [NYTimes]

21 AverageComments™:

Monie said...

AveBro,

I may be a total cynic for thinking this but I truly believe that what the government says publicly to AIG and what it says privately are two different things.

These guys at AIG aren't this clueless, no one could be. The government and AIG discussed this and AIG was told to go ahead with the bonuses but that the Obama admin would have to come out publicly against it.

I am absolutely positive this is the case. This bailout from its inception with the Bush admin is the largest theft in history and its being done in broad daylight.

Of course because we have the worst journalists in the free world we won't know the details of the theft for several years just as we are just beginning to get tiny bits of info about the Bush admin’s lies running up to the American war in Iraq.

Zen said...

What I understand from today's Sunday-morning news shows is that the government is paying AIG the bailout money in installments. So why can't the US government withold upcoming installments unless AIG shows some common sense? Contracts? Really?

One talking head said that the bonuses range from a few thousand dollars to 6 million dollars. A 6 million dollar bonus in this economy?

I agree with Monie that there was some back-room dealmaking. But it's sad that the AIG mgmt couldn't convince their own people that for their own good (for PR, their own survival, staving off public rage, etc.) they should ALL waive their bonuses this year.

Jim Ellis, an Af-Am managing editor at Business Week said it best: the US government forgot that Wall Street doesn't do what's best for the country, they do what's best for Wall Street.

Kirby said...

This shit right here makes no sense. I said it when this bailout shit first started and I'll say it again: the government needs to let this companies fail. No way you can sit there and tell me that these bastards didn't see this shit coming and could have avoided this.

I think Monie hit it on the head when she said some backdoor shit is going on; how else could you explain this behavior.

Not only do they not fear President Obama but it looks as if they are daring him to do something publicly, I say publicly because it seems as if privately they've already told him go fuck yourself we.eatin'.
Forget Wayne Brady President Obama needs to pull a Rick James and give them some unity across the forehead.

TD1016 said...

Even we hard times come people who are like this always think they are above everything and no one can tell them ish and this is why they could care less about what Obama has to say. If Obama is being dared, I'm hoping he's putting on his "You don't want this" suit on and quote's the State Property line,"Ya either get down or ya lay down and if ya lay down, y'r gonna stay down."

adinasi said...

More proof positive why the gubb'ment needs to keep their fingers out of this cookie jar, because we end up pulling nothing but scorpions. Because the political class (elected officials, lobbyists, etc.) have made truly strange bedfellows with the financial class that spawned this financial disease, the American people are getting infected. Let bad businesses fail, and better ones will take their place. As individuals we know we grow from failure, and without failure you cannot have innovation and growth.

'Stop, drop, shut 'em down-open up shop...'

The dawg-man himself DMX hit a pretty fine free-market metaphor.

PunditMom said...

Like you said at my place, the government breaks lots of other contracts when it wants to. AIG is just using this as an excuse to keep us from learning something even worse. :(

Lady M said...

Um... what happened to the bailout, anyway? Where did all that money go? Instead of giving out these bonuses AIG should be using the money to fix themselves.

I just don't know what to think, but there's definitely something shady going on.

I'm not even sure that I completely understand the enormity of this problem, but I'm trying to learn.

Lady M said...

I was talking about the enormity of the economic crisis, by the way.

VOD said...

How sickening.

Chris N. said...

My impression was always that bonuses were a form of profit sharing. So with no profit to share (and no, "borrowing" money from the government doesn't count as profit,) the question of bonuses should be moot (and not to mention mute, too.)

Pro said...

AIG = Allowing Irreversible Greed.
AIG = All in Greed.
AIG = Arn't I Greedy.
AIG = A$#holes, in general.

This is sick. Why in the world are we helping these companies that keep sending millions to people who do not know how to run a company? They cry yet get paid millions on the "average joes" taxes. Furthermore, I fear this is just the tip of the iceberg. Look what Enterprise rent-a-car did to get bailout funds:

http://www.butasforme.com/2009/02/25/alert-enterprise-rent-a-car-may-have-fired-employees-as-fake-evidence-when-lobbing-for-bailout-money/

Not to make excuses for these people, but the bailouts are making crooks out of everyone that touches the money.

Life Insurance Canada said...

It's crazy - but I guess it's legal. These guys know very well what are they doing! the biggest problem is not hidden in those $170 millions - it's the loss of reputation, which has value of billions in insurance industry, which represent the biggest harm they are doing to the company and country. As a Toronto life insurance broker I am lucky Canadian subsidy of AIG was sold, but I am afraid my colleagues have hard times, dealing with AIG clients...
Best wishes
Lorne

AverageBro.com said...

Interesting article for anyone who wants to know what AIG did with the money.

http://www.washingtonpost.com/wp-dyn/content/article/2009/03/15/AR2009031501909.html

spool32 said...

Contracts are what they are... my question is: why didn't the govt. demand a renegotiation before they gave AIG the bailout? Seems like the regulators should have known about a $170mil unshakable commitment prior to forking over a few billion.

Second question:
Back when we were discussing earmarks, $170 million was chump change. Not worth bothering over. Irrelevant in the scheme of things. What's your problem now, eh? Can someone explain to me why this isn't pure populist class warfare?
I am calling out all the "earmarks are no biggie" people... show me why earmarks for the PMA Group clients totaling more than $300 billion in exchange for $1.8 million in campaign contributions is no big deal, but $170 million in contracted bonuses is a disgraceful travesty and a waste of taxpayer money.
I call bullshit!

AverageBro.com said...

Interestingly, Chris Dodd is the guy who agreed to allow compensation contracts agreed to by Feb 2008 to be honored by the companies taking bailout money.

For the life of me, I can't find the link to where I read this just yesterday, but Dodd was a guy instrumental in having this language inserted. If you can find something to this effect, please drop the link. Spool, you have some homework to do.

So, it appears AIG is well within their right to pay the bonuses. It's pretty damn tacky, but it's apparently very legal, and this is why the Feds and AIG itself are scared of being sued to breach of contract.

Just lovely.

AverageBro.com said...

Ah hah! Found it!

"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."

http://www.nytimes.com/2009/03/15/business/15AIG.html?hp

Dodd should be tarred, feathered, and kicked out of office!!!

spool32 said...

Oh my oh my. I smell another Republican in the 2010 Senate... Dodd is as dirty as it gets.

AverageBro.com said...

The plot thickens... Obama just laid his pimp hand down.

"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."

http://www.nytimes.com/2009/03/17/us/politics/17obama.html?_r=1&hp

We'll see how this turns out, but my guess is AIG and Geithner will come to some happy medium that makes both parties look less slimy.

spool32 said...

I support this, but it still leaves me to wonder:

Between Democrats in Congress and business executives, which one is Obama more willing to slap around? Why care about this $170mil but scoff at fixing $billions in earmarks because it's such a small % of the total?

Renata said...

Okay I see it I see it. AIG's new adverts should be: Pimpin ain't easy but we do it well.

I agree with Monie and company I think that there is the public I am with you message and then there is the real deal. I don't know what to think about any of this anymore.If it is not Bank of America then it is Northern Trust or AIG. Hmm is it time for another revolution yet?

Oh and LOL at Pro I like the last one.

Wave said...

"The Bigger They Are (The Harder They Fall)" The true problem with AIG is that it should have been never allowed to become this big in first place. When they fail they create such a ripple in the economic pond that they automatically create a mandated government safety net. Why are you handing out bonuses to incompetent executives who mismanage the corporation is anyone's guess. I hate to say but maybe we need to throw the baby out with the bath water and let the natural selection of economics take place. Yes there will be consequences for doing so but all of this bailout safety net seems to be turning a taxpayer funded gravy train for Wall street.

Post a Comment

Note: Only a member of this blog may post a comment.