Here's why the AIG bonuses don't bother me.

[bestseller92]

Because we NEVER SHOULD HAVE GIVEN AIG BILLIONS TO BEGIN WITH!!!

They say we had to bail out AIG because they are "too big to fail". Bulls**t. The world won't end and the economy won't tank just because one lumbering, poorly mananged company goes belly up. Other, better managed companies will rush in to fill the void. It's the theory of natural selection applied to the business world.

"Bailing out" bad companies is simply delaying the inevitable, rewarding failure and malfeasance, and wasting taxpayer dollars.

You throw money down a rat hole, don't be surprised if the rat runs off with it.

[green1]

The government won't learn it's lesson, but I HOPE the people will in time for the 2010 elections.

[LIBuffettFan]

It's interesting, I heard last night that Dodd actually added an addendum to the TARP package that stated that the banks could honor all bonus agreements arranged prior to February. Oh did I forget to mention that AIG was a huge contributor to his campaign. The bonues that were awarded this week were all agreed upon last year before the rescue. Also is appears that all of those shocked politicians and Geitner knew all about theses bonuses close to a month ago and did't say a word about it. There are just too many political and agenda games being played with our money.

[spendingmoney]

These bonuses were written into the contracts of the employees so maybe the government should have realized that before they gave them $180 billion. It pretty minor when you consider $170 million in bonuses is only one one-thousandth of the bailout money they've gave them.

[lminor26]

and what's sad is now they have tainted the whole plan, whether it was any good or not. Let's just say some deserving company could benefit from a little help to keep it afloat and save some jobs--now I will forever be skeptical!

[phjrsaunt]

These bonuses were written into the contracts of the employees so maybe the government should have realized that before they gave them $180 billion. It pretty minor when you consider $170 million in bonuses is only one one-thousandth of the bailout money they've gave them.

Agreed. But $170 million could go a long way toward something PRODUCTIVE, at least more productive than supplementing an executive's paycheck.

[LIPH]

I wonder what other unexpected consequences are going to pop up with other companies?

[dean_siu]

I bet there are many hookers and strippers getting a piece of this bailout money! (think DC can send me any lap dance funds for my Vegas trip in May?)

[flyboy55]

I am bothered by the AIG bonuses, but not surprised. The fact that a company like AIG signed contracts that allow such massive incentive payouts for such poor performance (and they are not unique in corporate America) should tell us something about how broken our system of so-called 'free market capitalism' has become.

The folks who engineered the various bailouts last year, and continue to follow this path, are the ones who have the most to lose if the financial system collapses - namely, those who occupy the very highest rungs of the socioeconomic ladder. They are the same folks who claim to want lower taxes and smaller government. Their hypocrisy becomes apparent when it is their own lifestyles and pocketbooks which are threatened. Then taxpayer bailouts become an 'economic necessity'.

But I think there is another reason the financial elites support the bailouts. They understand that a truly Darwinian 'thinning of the herd', which would impact their own economic security directly (AIG style performance bonuses which reward failure notwithstanding), would also impact just about everyone else below them on the socioeconomic ladder. With people losing homes, losing jobs, losing retirement savings, losing net worth, etc. there is the danger that people would also lose their faith in the American Dream, that they would begin to see that the economic system, as currently constituted, isn't working for them. When you get enough people who see things that way, you get a revolution, or at least a radical restructuring of the political and socioeconomic system.

There are many examples throughout history where the elites of the day neglected to keep the 'plebs' (you and me) happy and contented, and paid the price for their failures in bloody revolution.

[RinglingRingling]

a recent series from the Washington Post on the topic:

part one
http://www.washingtonpost.com/wp-dyn/co ... 01916.html

part two
http://www.washingtonpost.com/wp-dyn/co ... 02670.html

part three
http://www.washingtonpost.com/wp-dyn/co ... 03431.html

[msu#1]

or congress could have grilled them like the Auto execs!!!! They hammered the auto industry which actually represents millions of jobs still in the U.S. unlike the banks. Why................because Aig has tons of boys in the lobby

[RinglingRingling]

or congress could have grilled them like the Auto execs!!!! They hammered the auto industry which actually represents millions of jobs still in the U.S. unlike the banks. Why................because Aig has tons of boys in the lobby

that would be nice.. but it is so much easier to hammer on a group of guys who, with OT, might see $60k/year actually making a tangible product. Guys with $1mil bonues on top of 6 figure salaries for taking their company into the dirt on speculative deals... they've suffered enough

[LIBuffettFan]

I love the fact that Barney Frank (D-Mass) says the government assert their "ownershiip rights" basically saying they should run AIG. The government is having a rough time running the government, how in gods name are they going to run AIG. They just need to excercise a little oversight and be sure they cross there "T's" and dot their "i's" before they go off signing legislation into effect. I heard alot of these items they are passing, no one has actually read all the way through because of the sheer size. they said we should expect a number of surprises as these items become active. This is only the beginning.

[Lightning Bolt]

There are many examples throughout history where the elites of the day neglected to keep the 'plebs' (you and me) happy and contented, and paid the price for their failures in bloody revolution.

I'm thinking of the Russian Revolution of 1917, ...although nowadays I highly doubt the masses would mobilize far enough past their X-Boxes

[The Lost Manatee]

Let me ask a few questions here, who is getting the bonuses? Do you know what their jobs were and are? Do you if they actually were responsible for the issues at hand? Or were they in charge of some of the companies and divisions that actually made money for AIG? And if they were involved in making a profit for their division and they achieved the stated goal, don't you think that they should get their bonus that their contract specified?

I trust everyone realizes that AIG is a huge holding company that has a variety of divisions and companies within it, of which, many made money.

Frankly, I don't have a problem with bonuses being paid to those who are valuable and have done a good job for the companies and helped to make money. I will admit that I think the compensation plans should be reexamined for the entire economy. When you have CEOs making 500 times what their employees are making, there's a problem. When you have CEOs getting huge bonuses as their companies crash and burn, there's a problem. Part of the problem is that over the last 30 years the regulations on how the Board of Directors are made up and how stockholders can make their voices heard have changed allowing for the "good ol' boy" networks to kick in and to greatly reduce the ability of stockholders to object and to sue. This has allowed the BoD to be packed with buddies who look out for each others interests and not necessarily the stockholders or the company's interest. In addition, the massive growth of mutual funds have created a situation where a large block of the stock is held by funds who generally don't vote. A little reform here would go a long way to restoring accountability in the board room.

Part of the problem with AIG is that they got into the business of issuing cheap insurance policies, guaranteeing the value of questionable assets. Not only in this country but around the world. At the time that they did this they were AAA rated and they maintained suitable reserves, then their ratings dropped and they had to increase their reserves to match each rating drop. At the same time, due to certain accounting practices in this country, the assets that they were insuring were being reduced in value, even though no one actually had lost a penny because no one had sold those assets at a lower price. This regulation that makes banks, etc., recalculate their assets at whatever today's value is, even if the bank isn't trying to move the asset is causing the bottom to fall out of the market. It creates a viscous cycle of downward pricing. If the assets remained at their appraised value or only had to be recalculated once a quarter, it would do a lot to break the cycle. If we allow AIG to fail or even default on these policies the impact will be massive and worldwide.

It is clear to me that what the government should be doing is taking steps to spin off the profitable divisions and companies and thus concentrate the toxic assets into one company which can be dealt with over time and without destroying all of the divisions of AIG.

So if the folks getting bonuses aren't the ones responsible for the mess (many of whom have already moved on, such as the former CEO) and if they are the ones who either are making money or helped to stem the flow of losses, don't you think it would be a good idea to pay them what they were promised in order to keep them there making money?

Just something to think about.

[wiscoleeds]

There are many examples throughout history where the elites of the day neglected to keep the 'plebs' (you and me) happy and contented, and paid the price for their failures in bloody revolution.

Can you please define, with specifics, your definitions of "elites" and "plebs"...I'd like to know where I fit in?

Cheers
Wiscoleeds

[SharkOnLand]

Let me ask a few questions here, who is getting the bonuses? Do you know what their jobs were and are? Do you if they actually were responsible for the issues at hand? Or were they in charge of some of the companies and divisions that actually made money for AIG?

From what I've seen on the news, at least some of the bonuses were to be paid out to people in the divisions that brought AIG down.

Where do I get that kind of job? Make a multi-billion corporation fail, get a bonus! Hell, I could probably make them fail quicker, having no experience in corporate management... Wonder if I could get a bigger bonus for making them fail quicker?

[SMLCHNG]

And to add something I heard yesterday.. some of the people receiving bonuses are no longer with the company..

[green1]

I am bothered by the AIG bonuses, but not surprised. The fact that a company like AIG signed contracts that allow such massive incentive payouts for such poor performance (and they are not unique in corporate America) should tell us something about how broken our system of so-called 'free market capitalism' has become.

This base line premise is entirely wrong. Free Market Capitalism ruled that AIG should go out of business. As such these bonuses would never have been paid as the company would have bene gone. It was only when the government stepped in with the bailout did the laws of free-market capitalism get out of whack in this instance.

[LIPH]

I don't have a problem with the bonuses, no matter what part of the company the people worked in, because they were due these bonuses under the terms of legally binding contracts which I can only assume were negotiated in good faith by both parties. For Barack Obama, NY Attorney General Andrew Coumo or anyone else to start grandstanding about getting the money back is a joke. If we're going to start allowing politicians to override legally binding contracts because they don't like the terms of the contracts, what happens to the rule of law in this country? We might as well throw the Constitution out the window. Oh wait, the left has spent the last 8 years telling anyone who would listen that George Bush had already done that. Never mind.