AIG uses bailout money to pay employees.

[DaemonSeid]

....and they work in the same division that got them in this mess



Jan. 27 (Bloomberg) -- American International Group Inc., the insurer saved from collapse by government money after losses on credit-default swaps, offered about $450 million in retention pay to employees of the unit that sold the derivatives, according to two people familiar with the situation.

About 400 workers at the financial products unit may get the money in two installments, said the people, who declined to be named because details of the payments were confidential. The business was responsible for about $34 billion in writedowns since 2007 as the market value of swaps AIG sold to banks plunged amid the subprime mortgage market collapse.

The payments bring to more than $1 billion the amount AIG has committed to keep its employees from leaving. The New York- based insurer in September took a federal bailout to avoid bankruptcy and is selling subsidiaries to repay the government. AIG said the program was disclosed before the government rescue, which is now valued at $150 billion.

“I was extremely disappointed -- but not surprised -- to learn that AIG will be awarding bonuses to the very division that drove the company into the ground,” said Representative Elijah Cummings, a member of the House Committee on Oversight and Government Reform, in an e-mail. AIG shouldn’t be awarding “millions of unmerited dollars to employees while at the same time begging the U.S. government for financial life support.”

http://www.bloomberg.com/apps/news?p...d=avGnUgGMu1q4

[PeppyGPhiB]

Insurance giant AIG to pay $165 million in bonuses

WASHINGTON —
American International Group is giving its executives tens of millions of dollars in new bonuses even though it received a taxpayer bailout of more than $170 billion dollars.

AIG is paying out the executive bonuses to meet a Sunday deadline, but the troubled insurance giant has agreed to administration requests to restrain future payments.

The Treasury Department determined that the government did not have the legal authority to block the current payments by the company. AIG declared earlier this month that it had suffered a loss of $61.7 billion for the fourth quarter of last year, the largest corporate loss in history.
Treasury Secretary Timothy Geithner has asked that the company scale back future bonus payments where legally possible, an administration official said Saturday.

This official, who spoke on condition of anonymity because of the sensitivity of the issue, said that Geithner had called AIG Chairman Edward Liddy on Wednesday to demand that Liddy renegotiate AIG's current bonus structure.

Geithner termed the current bonus structure unacceptable in view of the billions of dollars of taxpayer support the company is receiving, this official said.

In a letter to Geithner dated Saturday, Liddy informed Treasury that outside lawyers had informed the company that AIG had contractual obligations to make the bonus payments and could face lawsuits if it did not do so.

More at http://seattletimes.nwsource.com/htm...igbonuses.html

[Munchkin03]

Nothing about this could ever surprise me at this point, so I'm not even going to feign outrage.

[KSig RC]

I mean . . . let's bottle our outrage a touch, because that's kind of what the money was for. It's our own damn fault.

[KSigkid]

Originally Posted by KSig RC

I mean . . . let's bottle our outrage a touch, because that's kind of what the money was for. It's our own damn fault.

This drives that home: http://news.yahoo.com/s/politico/200...politico/30833

Dodd is in real trouble in CT the next election cycle; this will only add to that potential issue.

[UGAalum94]

I think the Freddie and Fannie bonuses are even funnier, in a hysterical sign of total incompetence in governance kind of way.

http://finance.yahoo.com/news/Fannie...-14679491.html

[Thetagirl218]

I think the idea of bonuses being paid with taxpayer dollars is completely wrong! However, I am wary of the bills being proposed to simply "tax" individuals who get the bonuses so it all goes back to the government....If you don't hand them out in the first place you wouldn't have to worry about all this!!

[AKA_Monet]

I just have to ask for general knowledge, are folks angry because these executives took $100K in retention bonuses, or rather are we made because we ourselves did not get a $100K retention bonus for doing nothing?

I could write some crap and says it works for as much money these fools are paying out.

[KSig RC]

The thing is, these "bonuses" are usually a guaranteed part of compensation in firms like these - usually with a "bonus minimum" with the ability to go above that due to earnings.

This isn't a "reward" - even if the guys sucked, this is how it works in that field.

[AKA_Monet]

Originally Posted by KSig RC

The thing is, these "bonuses" are usually a guaranteed part of compensation in firms like these - usually with a "bonus minimum" with the ability to go above that due to earnings.

This isn't a "reward" - even if the guys sucked, this is how it works in that field.

Just wondering, how does one negotiate a contract like that? I mean seriously, I could use a bonus like that right now.

[Coramoor]

Wait....there are people bitching about 165 million dollars paid in bonuses when somewhere in the range of 65 billion dollars of AIG's bailout money when overseas?

Yeah, that makes sense. Who signed off on the bailout with these clauses included? BO's current Sec. of Treasury, the guy that can't remember to pay his taxes.

[Kevin]

Originally Posted by KSig RC

The thing is, these "bonuses" are usually a guaranteed part of compensation in firms like these - usually with a "bonus minimum" with the ability to go above that due to earnings.

This isn't a "reward" - even if the guys sucked, this is how it works in that field.

Yep.

And as far as Congress trying to require these guys to give their bonuses back, they can't do that because they can't impair the obligations of contract.

As far as trying to tax it at 90%, it's arguable they can't do that either. IMHO, that sort of confiscatory, punitive taxing policy amounts to nothing more than a taking. Heck... in places like NY where the state income tax is >10%, many executives would actually have to pay more in taxes than they were obligated to receive!

This is utterly ridiculous. It's grandstanding at its worst.

[Coramoor]

Originally Posted by Kevin

Yep.

And as far as Congress trying to require these guys to give their bonuses back, they can't do that because they can't impair the obligations of contract.

As far as trying to tax it at 90%, it's arguable they can't do that either. IMHO, that sort of confiscatory, punitive taxing policy amounts to nothing more than a taking. Heck... in places like NY where the state income tax is >10%, many executives would actually have to pay more in taxes than they were obligated to receive!

This is utterly ridiculous. It's grandstanding at its worst.

Yep, especially when you look at the names of the congressmen that received contributions from AIG...

It's sickening.

[ASTalumna06]

Originally Posted by KSig RC

The thing is, these "bonuses" are usually a guaranteed part of compensation in firms like these - usually with a "bonus minimum" with the ability to go above that due to earnings.

This isn't a "reward" - even if the guys sucked, this is how it works in that field.

Originally Posted by Kevin

Yep.

And as far as Congress trying to require these guys to give their bonuses back, they can't do that because they can't impair the obligations of contract.

As far as trying to tax it at 90%, it's arguable they can't do that either. IMHO, that sort of confiscatory, punitive taxing policy amounts to nothing more than a taking. Heck... in places like NY where the state income tax is >10%, many executives would actually have to pay more in taxes than they were obligated to receive!

This is utterly ridiculous. It's grandstanding at its worst.

Exactly. Obama has said that he will look into the legal ramifications behind distributing these bonuses. But there are none. As long as these employees were under a contract that deemed these bonuses as a required form of payment/salary, they are entitled to them. Whether or not the company was run into the ground doesn't matter. The government, out of desperation, handed them a check without stipulations. They can't now say, "Oh, wait a minute.. we didn't say you could spend the money on THAT.."

Don't get me wrong... it's frastrating as hell. But such is life.

[UGAalum94]

Originally Posted by KSig RC

The thing is, these "bonuses" are usually a guaranteed part of compensation in firms like these - usually with a "bonus minimum" with the ability to go above that due to earnings.

This isn't a "reward" - even if the guys sucked, this is how it works in that field.

I apologize for not knowing how the bonus structure worked.

It still doesn't seem unreasonable that someone with knowledge of how things worked in the field couldn't have attached stipulations to their receiving the money.

Maybe the companies could have renegotiated contracts with their employees. Surely the employees couldn't have expected the contracts to be honored in bankruptcy, and we're we lead to believe that was what was looming for them if they didn't get the money, right?

Maybe you are right and the employees could have sued for breach of contract, but it seems kind of unlikely under the circumstances.

ETA: who expects to keep drawing the same salary when the company is on the verge of going under?