American International Group (Symbol-AIG)

[Dennis]

That sounds better than the union gravy train

[Shakespeare]

Bonfire of the Trivialities

That's $165 million in bonus money handed out to AIG debt manipulators who may be the only ones who know how to defuse the bomb they themselves built. Now, in the scheme of things, $165 million is a rounding error.

[Bylo Selhi]

Then again, AIG didn't pay anyone such "bonuses" in the good old days (a mere 5 years ago.) Former AIG head denies he started bonuses

Former AIG chief executive officer Hank Greenberg said the company under his leadership never had the kind of retention bonus system that has subjected it to withering criticism.

"When I was there, nobody had a contract with the company, including me," Greenberg said in a nationally broadcast interview Friday. "If you didn't do the job, you didn't deserve to be there. We had a bonus plan based on performance.''...

In his CBS appearance Friday, Greenberg was asked directly if he would have paid out the retention bonuses had he still been at the helm of the company. "Absolutely not," he told the interviewer.

Maybe we should blame this all on Eliot Spitzer. Surely allowing Greenberg to cook the books would have ultimately been cheaper for all concerned

Martin Sullivan, a native of England who had worked with AIG for 37 years, replaced Greenberg as CEO in March 2005, when Greenberg was forced out amid accusations from then-New York State Attorney General Eliot Spitzer of fraudulent accounting.

Added: Always blame it all on the previous guy.

To prevent undue risk exposure in the meantime, AIG has made a set of retention payments to employees based on a compensation system that prior management put in place. As has been reported, payments were made to employees in the financial products unit. Make no mistake, had I been chief executive at the time, I would never have approved the retention contracts that were put in place more than a year ago. It was distasteful to have to make these payments. But we concluded that the risks to the company, and therefore the financial system and the economy, were unacceptably high.

[Chuck]

Absolutely they should not get these bonuses. It is a drop in the bucket overall, but all the whining that these employees need to get their bonuses to save the company is crap.

If they are so capable of company saving behavior, they should have got busy long before needing billions of bail out dollars.

I can't believe some of you still buy into this "it will get worse if we don't pay them" song and dance.

[adrian2]

Maybe we should blame this all on Eliot Spitzer. Surely allowing Greenberg to cook the books would have ultimately been cheaper for all concerned

Martin Sullivan, a native of England who had worked with AIG for 37 years, replaced Greenberg as CEO in March 2005, when Greenberg was forced out amid accusations from then-New York State Attorney General Eliot Spitzer of fraudulent accounting.

Spitzer accused Greenberg in media interviews of fraudulent accounting and he backed off before going to court; it was just mud throwing hoping some will stick. Greenberg sued back for defamation.

You can guess whose side I'm on between Spitzer and Greenberg.

[Bylo Selhi]

Meanwhile back at the ranch...



[Click to see letter in full.]

[adrian2]

Good that Manchester United soccer players with the AIG logo on their jerseys are across the pond.

Were I an AIG employee, I would take the above letter seriously.

[Mike Schimek]

http://www.cnn.com/2009/CRIME/03/20/aig.states/index.html

Connecticut, 19 other states launch AIG investigations

Twenty state attorneys general announced investigations Friday into the $165 million bonuses paid by insurance giant AIG last week, with Connecticut's top lawyer issuing subpoenas to CEO Edward Liddy and 11 other executives.

What a dog and pony show. Every want to be politician is hopping on the bandwagon to try to "look good" in front of an enraged public by bashing AIG.

Results = AIG is now 110% assured to fail and die. There is no way they will be able to rebuild an operation that will return to health and be able to start paying off some debt. I can't see any management or executive personelle with any degree of competence wanting to work for them when working for them means being scorned by the public, hunted by politicians and potentially getting your paycheck bonus taxed 90%.

It's disgusting to see what is going on, and disappointing and to see how average people don't understand it.

165 million? Yeah, the politicians might get the 165 million back. But it will cost them 170 billion. There's the government... hard at work for taxpayers, working their magic. Not that the financial equation matters much to them, it's not their money, their only objective is to look good in front of the public and get votes, no matter the damage caused as a result of their actions.

"I'm from the government, and I'm here to help"

P.S. I don't think the tax fiasco bill will pass, but I do think that everyone and anyone left at AIG that has any degree of competence will tarmpling their way to the exit as fast as they can. I doubt anyone wants to spend countless days in courtrooms being lamblasted by politicians trying to make them into scapegoats to gain votes.

I wonder how popular all these politicians would be if they said something like this; we're going to get that 165 million back, but in the process we're going to destroy the company as a result, ensuring the loss of 170 billion. Vote for me.

[Peculiar_Investor]

A thought struck me this morning about how to resolve this whole bonus thing.

Has it occurred to anyone, how about paying the bonus in AIG shares? A modest hold period could be required to prevent a quick flip into cash. No taxpayer money would be involved, and it would definitely provide an incentive to making sure the company survives, thus meeting the government's objectives.

[adrian2]

Has it occurred to anyone, how about paying the bonus in AIG shares? A modest hold period could be required to prevent a quick flip into cash. No taxpayer money would be involved, and it would definitely provide an incentive to making sure the company survives, thus meeting the government's objectives.

At what price- AIG stock has tripled in the past week or so.

Anyway, it's about honouring a contract to those employees without making retroactive taxation changes which some argue are unconstitutional.
See also A Presidential Wake-Up Call - The AIG mess should be a warning to Obama that even popular presidents can squander good will.

Who would have thought 55 days into this administration we would be asking the question, what did he know and when did he know it? Word that a provision in the stimulus bill gave the green light for AIG to hand out bonuses using taxpayer money sent the media bloodhounds hot on the trail of whoever is the culprit. For a time, it looked like Senate Banking chairman Chris Dodd would take the fall, but after 24 hours of twisting in the wind, Dodd said the change that exempted past agreements to pay bonuses was made at the request of the administration.

President Obama likes to remind voters that he inherited a mess, and that's true, but this one is of his own making. And until he comes up with a satisfactory explanation of who did what when, and why, his credibility will suffer. Forty-eight hours ago, I didn't think Treasury Secretary Tim Geithner was in trouble, but if the transaction with Dodd turns out to have Geithner's fingerprints on it, his job could be in jeopardy. The deadly chain of events may have started innocently enough, with Treasury Department lawyers raising questions about the government retroactively curtailing private-sector contracts, but did Dodd, who authored the restrictive language, capitulate to some Treasury flunky, or did someone more senior lean on him?

[lystgl]

What a dog and pony show. Every want to be politician is hopping on the bandwagon to try to "look good" in front of an enraged public by bashing AIG.

.

Change we can believe in!
The inmates are now in charge of the asylum. No leader, no order, no brains

[Bylo Selhi]

Meanwhile Nero fiddles (taxes) then sues Rome...

A.I.G. Sues U.S. for Return of $306 Million in Tax Payments

While the American International Group comes under fire from Congress over executive bonuses, it is quietly fighting the federal government for the return of $306 million in tax payments, some related to deals that were conducted through offshore tax havens...

A.I.G. is effectively suing its majority owner, the government, which has an 80 percent stake and has poured nearly $200 billion into the insurer in a bid to avert its collapse and avoid troubling the global financial markets. The company is in effect asking for even more money, in the form of tax refunds. The suit also suggests that A.I.G. is spending taxpayer money to pursue its case, something it is legally entitled to do...

[carnet]

[url=http://www.bloomberg.com/apps/news?pid=20601039&sid=atlHxXH7FweQ&refer=home]
Mass Hysteria Over AIG Obscures Simple Truths[/url]

Last September the U.S. government began to dole out the first of $173 billion.....But when AIG itself pays out $165 million in bonuses -- money it is contractually obliged to pay -- the entire political system goes insane. President Barack Obama says he’s going to find a way to abrogate the contracts and take the money back. A U.S. senator says that AIG employees should kill themselves.

[Shakespeare]

Retroactive laws are generally considered unconstitutional.

And for excellent reasons.

[lilbit]

Maybe I'm way off the mark here, but my response to these financial innovators who are sinking the ship is this: "If you do a good job of unwinding these undesireable instruments, we will give you a reduced sentence when you go before the courts."
BONUSES????? These guys are CRIMINALS!!!! The world financial system has been in tatters, due to their unbridled greed!!!!!

[Mike Schimek]

Maybe I'm way off the mark here, but my response to these financial innovators who are sinking the ship is this: "If you do a good job of unwinding these undesireable instruments, we will give you a reduced sentence when you go before the courts."
BONUSES????? These guys are CRIMINALS!!!! The world financial system has been in tatters, due to their unbridled greed!!!!!

That sounds like a widespread, general accusation that everyone and anyone that worked at AIG is to blame.

Do you have a list of the people that received bonus money, along with an extensive analysis and list of which people at that firm were responsible for its problems?

Presumably you'd have to cross check those lists against each other. Have you considered at all that perhaps a lot of the people receiving those bonuses might not have been responsible for what happened?

If you had 5 kids and 1 threw a rock at a car, would you get pissed off at all 5 and punish them all?
* For my part, I'd try to find out which one did it, and why, and leave the others alone.
* If I was one of the kids who didn't throw a rock and my parents we're screaming at me at the top of the lungs for something I didn't have any hand in, I'd head to the police station and ask to be adopted by new parents.


Also, if the company had a contractual agreement to pay those moneys, I believe that the U.S. government should not seek to interfere with those contracts, no matter how guilty SOME of those people might or might not be.


What a mess this whole thing turned out to be.

[Bylo Selhi]

[url=http://www.bloomberg.com/apps/news?pid=20601039&sid=atlHxXH7FweQ&refer=home]
Mass Hysteria...[/url]

A U.S. senator says that AIG employees should kill themselves.

As usual, the media got it wrong. Republican Sen. Grassley represents Iowa, not Mass. His outburst was hysterical, hyperbolic and histrionic

[lystgl]

The Democrats are leaderless and useless. They'll have done more damage to the US, it's economy and stature in the first 100 days than GW did in eight years. Punitive taxation specifically targeting a group of people of all things! These Congressmen should be impeached never mind whether these AIG bastards get a thing or not. If a retroactive tax targeting a group or company is deemed legal, the rest of the world will avoid the US like the plague. Rule of law, rights of individuals - gone, all gone taken away by the likes of Pelosi, Reid, Dodd, Frank, four dumber / dishonest people you could not find if you scoured the world. And Obama, not even voting his ubiquitous "present" in this mess. AWOL

[blonde]

The Democrats are leaderless and useless. They'll have done more damage to the US, it's economy and stature in the first 100 days than GW did in eight years. Punitive taxation specifically targeting a group of people of all things! These Congressmen should be impeached never mind whether these AIG bastards get a thing or not. If a retroactive tax targeting a group or company is deemed legal, the rest of the world will avoid the US like the plague. Rule of law, rights of individuals - gone, all gone taken away by the likes of Pelosi, Reid, Dodd, Frank, four dumber / dishonest people you could not find if you scoured the world. And Obama, not even voting his ubiquitous "present" in this mess. AWOL

Not only are the democrats leaderless, but the Whole World is leaderless. The wannabees have worked the System from 'with-in' and now the consequence/s is not a pretty picture. There are multi wannabees where 'ems come from. Socialism moves [s]forward[/s] at the pace of the slowest mover. In the meantime, ALL the pundits are in 'Reaction Mode' and the taxpayer LUVS-IT.

It wud be worthwhile to allow 0-44 to dig his own hole. His current policies will have a Mega negative impact moving forward...so be it. OTOH, what did the Reps, with B-43, do to counteract the policies set by c-42? In the meantime...adjust and adapt. Study the System and make the most with the least.

as an aside...Study the System in Canada...Pay for NON-Performance is Vogue.

[Dennis]

So Mike....is corporate exec capitalism less evil than union capitalism?

[lilbit]

Okay Mike, I may have sounded a little over the top, but you catch my drift. Perhaps the employees who took the bonuses and ran might be a starting point for investigation!

[Mike Schimek]

So Mike....is corporate exec capitalism less evil than union capitalism?

Not sure I get you; there's nothing capitalist about unions; they are just groups of people that get together to exploit others. When companies are being exploited by them, they can't get rid of them, even if they could find better people to work harder for less money elsewhere. If a bunch of corp execs don't do the job the shareholders want them to be doing, they get fired.

There's a big difference between the two. Companies with incompetent union workers are stuck with them until the companies die off. Companies with incompetent management can fire the management and hire new folks.

[Mike Schimek]

Okay Mike, I may have sounded a little over the top, but you catch my drift. Perhaps the employees who took the bonuses and ran might be a starting point for investigation!

Dunno. IMO if they had an agreement with those employees to pay them "x" based on some criteria, the agreement should be honored. We don't know the details of those contracts, and I'll bet all these politicians frothing at the mouth don't either, they are just goading on the frenzied masses.

What if someone's bonus is based on attaining "x" sales target of products (the salesman), but it isn't their job to monitor risk (that's another department; say "risk control"). The company's agreement with the salesman is to pay him what is owed for his performance. Perhaps the person in "risk control" isn't getting a bonus (and is probably out of a job), if his bonus is attached to his results, which would make sense to me.

What if all these headlines read "AIG pays out 165 million in bonuses this year instead of 2 billion because 1835 million in bonuses going to risk managers were canceled because they lost money, and because they did not perform, according to their contracts they therefore are not entitled to bonuses." I don't think we'd see all the hulabaloo were seeing. Something along these lines is possibly what the case is.


What freaks me out somewhat is how all these politicians are so eager to find a way around a legally binding contract; like they view a contract or law as a minor inconvenience.

[Bylo Selhi]

What freaks me out somewhat is how all these politicians are so eager to find a way around a legally binding contract; like they view a contract or law as a minor inconvenience.

This is one of those situations where optics trumps law. Giving the fat cat financiers who created the mess huge bonuses is about as popular politically as giving free health care to prison inmates, especially in the US where most of the non-prison population has to pay for their heathcare at least in part out of pocket. Actually it's about as popular politically as providing free medical care, up to and including heart transplants, to inmates on death row. (And I suspect many people would more readily pay for the latter than they'd pay the AIG guys.)

[Dennis]

they are just groups of people that get together to exploit others.

Sounds just like a board of directors to me

If a bunch of corp execs don't do the job the shareholders want them to be doing, they get fired.

Wrong, they get bonuses