WASHINGTON â€” 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.
Austan Goolsbee, staff director of the presidentâ€™s Economic Recovery Advisory Board, on Sunday detailed Mr. Geithnerâ€™s reaction.
â€œHe stepped in and berated them, got them to reduce the bonuses following every legal means he has to do this,â€
To quote a favourite journalist and author from the 70s:
Money is a good thing to have in these twisted times. Even Richard Nixon is hungry for it. Only a few days before the Derby he said, “If I had any money I’d invest it in the stock market.” And the market, meanwhile, continued its grim slide. -Hunter S. Thompson
In these tough times the average citizen has taken huge hits to investments and retired people have seen their RRSP’s loosing up to half their value because of decisions of these executives and others like them. Now we see that they will be paid bonuses with government bail out money. Bonuses for failure! I wish I was still working!
My god people! Government of the United States come to your senses! If these bonuses are legally binding to A.I.G and have to be paid out then pull back the bailout money that they received and then let them pay it out on their own… It would be an excellent warning to the other banks and corporations who still think that it is ‘Business as usual’ as far their internal systems work.
If this isn’t resolved to the satisfaction of the average American citizen Mr. Obama’s new government is going to have a rough ride.
Words the US government won’t use, #24: “Nationalized.”
Technically, AIG belongs to the US government now. It’s no longer a bailout. The company has been nationalized. That’s a hard word for Merkins to say.
It’s a shitty situation, but the bonuses are in legally binding contracts. The way you change these legally binding contracts is to pass a law breaking them. When Jean Chretien was asked how he could get out of the Pearson Airport privatization deal after contracts were signed, he said something like “I write on a peace of paper that the contract is null and void. Parliament passes it. The Queen signs it. The contract is void.” So they have to do the equivalent of that in the US. Otherwise, a contract is a contract.
I certainly don’t accept AIG’s position that they need to pay these bonuses to attract talent. If the bonuses and high salaries are what attracted those responsible for the failure of the company, then it may be a good idea to get cheaper, less “talented” people instead.
That’s exactly what I’m wondering: ishouldn’t bonuses for high profile executives be connected to performance? If so, why is a company needing bailout money giving out bonuses?
I know the right wing htmfers will hate this but if you ask me, all these 7 figures plus salaries executives are all crooks like Madoff!
Well, here’s the other side of it: these people were hired (before nationalization of the company). They were “enticed” and “recruited” by offering them bonuses at the end of the fiscal year. ie: “come work for us, and we’ll pay you $x.xx in March 2009” For some of the employees, it’s $1000, for others, $20,000. And for some, $3.5 million.
Now you can’t really turn around and just break those contracts, because then the government would have to hire lawyers and they would still lose and have to pay out the bonuses.
Unless, of course, they passed a law making the contracts void.
The US government, and the politicians, really want to separate themselves from this issue, but they shouldn’t be let off the hook. The fact is that the company is public property, it belongs to Merkin taxpayers, and the current executives were appointed by the same politicians that are now complaining about the bonuses.
So do the right thing and pass a law to void them. Why aren’t they doing that? For the same reason they can’t come to admin that the American government has nationalized banks and financial companies. It’s the American definition of a corrupt and anti-free market nation – one that arbitrarily nationalizes private corporations, and gasp doesn’t protect contracts and property laws. Basically, the US has turned into what they’ve been complaining about in other countries for generations.
It’s not like they’re meaningless union contracts or something. These are contracts with real people. You just don’t demand they forego bonuses, roll back wages. You don’t have gov’t ministers stating they haven’t given up enough.
I believe that these excuses for human beings should do time for this kind of shit, robbing the American people like that and rubbing it in the Government’s face. They should all be ashame of themselves for being so low of the food chain. I do hope that President Obama should cancel this payout or demand that it is all given back. It is like the way the Liberals have been doing so much behind teh backs of BC citizens and doing everything to intrud on trials which they are close to, or their bullshit with the railroad deals they made. They should be held accountable for their play in the raid on their offices in Victoria. Shame is all you can say but remember them come may.
Ah, if breaking contracts were as easy as necks… but it isn’t and the latter is immoral. Just wrong.
Instead, Americans should pay these Giants of Industry in a public ceremony on top of the Empire State Building where they are “downsized” off the ledge with real golden parachutes. That way all Americans can see how their money is spent.
If the sucker survives he or she keeps the loot. If not, they are a cost-cutting measure that was regrettably unavoidable.
The point is we all win. And that is what is most important.
Maybe they should start a new reality show: Who wants to win a bonus?
High profile executives compete to get the biggest bonus while making poor business decisions and then laughing all the way to tax havens.
Ronald Regan screwed the air traffic controllers in the U.S with the stroke of a pen and didn’t bat an ey$e,Obama has the power to cancel these bonuses, he should use it(If he doesn’t my worst suspicions will come to be real)
So what if the lawyers cost the gov. money they would only do it once.
When the CEOs of mega corps get huge bonuses and the corps workers get little more than min. wage (if that state actually has a min. wage law), somehthing is drastically wrong.
Look at any of the anti Walmart sites to see the point made more eloquently than I could ever hope to!
Sure, I am in agreement with that for executives and decision-makers.
But what about the network engineer, receptionist, HR guy, etc? They may have been enticed to the company with the promise of $1000 or $2000 at the end of March 2008. What did they do wrong? The average bonus here is $20k or so. Sure there are a bunch getting $1million or more, but there are employees that counted on the bonus as part of a salary.
Again, in my opinion, this is just political grandstanding. The politicians who are outraged on TV don’t want to admit that the taxpayers own the company, and they are the bosses. They want to play the us-versus-them card instead.
Good point MiG. Simply put: that us-versus-me when it comes to corporations is nothing more than left-leaning rhetoric that doesn’t add up to much; akin to “you either with us or against us” rhetoric from right-leaning policy wonks heading in to the war in Iraq.
And if the the government does own said bank then it should be putting the boot straps to obliged bonuses for the foreseeable future. It simply cannot afford such a luxury. It is poor business when you are that much in the whole.
It also could lead to a (hopefully) vibrant discussion in the corporate world on the merits of obliged bonuses versus merit-based bonuses. How should you reward good work and what is defined as good work?
[quote]We (the taxpayers) own AIG. We should fire the top 20 managers immediately as an example to the rest. They should be replaced with people who have never been employed by AIG; it would be bad to promote the next tier of AIG employees up to the top because that would effectively be a reward for their demonstrated incompetence in 2008.
Is it risky to replace the top management of a company? We voters do it every 4-8 years for the U.S. government, a vastly more complex operation than AIG.[/quote]