AIG doen't cease to amaze me

[The_Pac_Mule]

NY atty gen Cuomo: AIG paid $1M-plus bonuses to 73 employees, including 11no longer with firm


ALBANY, N.Y. (AP) -- Troubled insurance giant American International Group paid bonuses of $1 million or more to 73 employees, including 11 who no longer work for the company, New York Attorney General Andrew Cuomo said Tuesday.

Cuomo subpoenaed information from AIG on Monday to determine whether the payments made over the past weekend constitute fraud under state law. Contracts written last March guaranteed employees 100 percent of their 2007 bonus amounts for 2008, "despite obvious signs that 2008 performance would be disastrous in comparison to the year before," Cuomo said.

President Barack Obama and Washington lawmakers have blasted AIG for paying more than $160 million in bonuses to employees of its Financial Products division, the unit primarily responsible for the meltdown that led to a federal bailout of the company, while the company has received billions in taxpayer bailout funds.

Cuomo said AIG mailed the retention bonus checks Friday.

In a letter Tuesday to Rep. Barney Frank, chairman of the House Committee on Financial Services, Cuomo outlined the bonus and contract information and asked the panel to take up the issue at a hearing scheduled for Wednesday.

"AIG also claims that retention of individuals at Financial Products was vital to unwinding the subsidiary's business," Cuomo wrote. But AIG has been unwilling to provide their names, despite his subpoena for the list, making it impossible to test that claim, Cuomo said. He said his office will do "everything necessary" to get the information.

The company and some federal regulators have said it was obligated by contract to make the payments. Cuomo said the bonuses might have been fraudulent if AIG officials knew the company couldn't afford them.

Cuomo said that despite their contracts, Financial Products employees agreed to take 2009 salaries of $1 in exchange for receiving their retention bonus packages. He said the fact AIG could negotiate the terms of the payments "flies in the face of AIG's assertion" that it had no choice but to make the contractual bonus payments.

"You could argue if the taxpayers didn't bail out AIG, those contracts wouldn't be worth the paper it's printed on," he said Monday.

There was no immediate AIG comment following Cuomo's disclosure Tuesday of the bonus amounts.

According to the attorney general's office, the top individual bonus was more than $6.4 million, and the top seven received more than $4 million each.

Yahoo! Personal Finance


What the hell

 

[deep]

Sen Grassley, is that you?

"From my standpoint, it's irresponsible for corporations to give bonuses at this time when they're sucking the tit of the taxpayer," Grassley explained.

"I don’t know whether the ($165 million in bonuses) is an issue as much as just the chutzpah of the people running AIG," Grassley said. "The attitude of these corporate executives and bank executives, and most of them are in New York, that somehow they’re not responsible for their company going into the tank ... I suggest, you know, obviously maybe they ought to be removed, but I would suggest that the first thing that would make me feel a little bit better towards them [is] if they would follow the Japanese example and come before the American people and take that deep bow and say I’m sorry and then either do one of two things: resign or go commit suicide."

 

[anitram]

Seppuku requires honour and shame, something that these people are most likely lacking.

 

[financeguy]

Seppuku requires honour and shame, something that these people are most likely lacking.

Given that there have been real, actual people working in financial services actually committing suicide as a result of the economic and financial collapse, the comments made by Grassley are unacceptable. Pursue them through the courts, by all means, provided it is senior people that are pursued and not patsies.

 

[anitram]

Well Grassley is obviously being inappropriate, and it's likely because he calculated that the populist support he'll get for his statement is greater than the backlash.

Given the mood of the country towards those in the financial services business, he's probably made a correct calculation, regardless of how tasteless it may be.

 

[financeguy]

Well Grassley is obviously being inappropriate, and it's likely because he calculated that the populist support he'll get for his statement is greater than the backlash.

Given the mood of the country towards those in the financial services business, he's probably made a correct calculation, regardless of how tasteless it may be.

Agreed.

 

[financeguy]

There is a very good debate on the democraticunderground forum about this issue.

WTF? Populist rage is great and all but we really cannot levy a special tax on AIG bonuses - Democratic Underground

Extract here:

Egnever (1000+ posts) Tue Mar-17-09 12:35 PM

10. Couldnt agree more.
I find the whole idea of trying to take these bonuses away really creepy.

Hansel (911 posts)

43. Creepy is an apt description.
Edited on Tue Mar-17-09 09:30 PM by Hansel
It's creeping me out how some Democrats and Progressives are adopting a pitchfork mentality now that we have an issue that has pushed our buttons. I thought this knee-jerk response was reserved for shallow minded Republicans and right wingers who don't know how to do penetrative analysis.

I have witnessed hang'em high attitudes about situations where the accusations and speculation being touted on this board were so far off the mark it wasn't funny. Having more personal knowledge about the some of the stories I've seen here, I have found the jacked-up outrage based on massive misinformation and group think to be not only frightening but counter-productive to achieving an economic recovery. Unfortunately even Obama, as smart as he is, took a turn at bat.

There is more to this story than just a few executives getting $10 million bonuses for gutting AIG (which does piss me off to no end). I would like to hear it before getting out the pitchforks. Why? Because my fear is just that day-to-day nose-to-the-grindstone workers are going to be the ones really hurt by this for doing no more than showing up to work and trying to earn a living wage to support their families with. People just like most of us on this board.

Also, the last thing I want to see is a precedence for retroactive punitive laws that Republicans can point to every time they have something in mind to punish us "socialists" with. It sends chills down my spine. These law-makers need to take a very deep breath and count slowly to 10. We live in a land of laws. Let's make sure they continue to mean something.

These are good points, and made by posters on a very left wing forum might I add.

There is a very similar debate going on in the UK regarding the pension awarded to the ex-chief executive of the failed bank Royal Bank of Scotland.

Government ministers have said they might change legislation to claw the pension back, and the tabloid media seem to be camped outside the guy's private home.

Michael Fallon MP Hits Out At City Minister Lord Myners Over Ex-RBS Bosses £700K A Year Pension | Home | Sky News

I hate Fred Goodwin. I mean that sincerely. I believe he is a corporate bully and sociopath, and I despise people like that. BUT, retrospectively changing legislation to take money from people, even if they are corporate bullies, is wrong. Democracies cannot act like that. We do not stoop to that level. We must observe due process.

 

[anitram]

It really depends on the precedents here, but we do retroactively change certain legislation (although not criminal law). I am not sure whether this would contravene bill of attainder in the US because I'm not familiar enough with constitutional law there to know whether it applies to taxation.

In Canada, you could easily slap on a retroactive tax, without a problem at all, and it has been done in the past and upheld by the courts.

Populist rage is seldom productive but in this case I allow for it somewhat because all of these bonuses went to high ups in the FP division. These were not bonuses that went to the profitable insurance divisions of AIG, but to the one that sank the corporation. And I find all the screaming about abrogation of contract to be kind of silly given that the current situation may well be classified as a constructive bankruptcy. What are they going to do if the bonuses had been withheld? Sue? Great, go into chapter 11 and flush the contracts down reorganization's toilet.

I don't think pitchforks are the answer most of the time. In this situation though, having these bonuses is so offensive and unproductive to people out on the streets who are having a really tough time that they will make the overall situation worse and it will make the public that much less open-minded to what needs to be done in the future. The irreparable harm caused here should have been foreseen and the bonuses not handed out. It's a simple cost to benefit analysis that by far leans in one direction.

 

[bigjohn2441]

where's all the outrage over the original bailout? wow, people mad becuase the companies spending .001% of the bailout money on bonuses. whoopie-fuckin-do. IT'S THE 2ND AMERICAN REVOLUTION!!!!!!

im starting to think this whole "pissed off at AIG" thing was manufactured to keep the heat off Congress for their bailouts they passed. AIG will take all the heat by the public, who of course will eat it all up once the media prints all the stories, and in return the government will let them do whatever they want, even though they pretend to be pissed off about the bonuses.

 

[Bluer White]

where's all the outrage over the original bailout? wow, people mad becuase the companies spending .001% of the bailout money on bonuses. whoopie-fuckin-do. IT'S THE 2ND AMERICAN REVOLUTION!!!!!!

im starting to think this whole "pissed off at AIG" thing was manufactured to keep the heat off Congress for their bailouts they passed. AIG will take all the heat by the public, who of course will eat it all up once the media prints all the stories, and in return the government will let them do whatever they want, even though they pretend to be pissed off about the bonuses.

I agree. The bonuses are disgusting, but also about one-tenth of one percent of the bailout AIG received from taxpayers. Penny wise and pound foolish, Congre$$?

They have spent more time grandstanding about bonuses than they spent actually reading the bill they passed explicitely allowing said bonuses. I wonder what else slipped through the cracks.....

 

[Lila64]

.

Dodd facing fresh political firestorm

Sen. Chris Dodd (D-Conn.) looks like he may be facing a fresh political firestorm.

Dodd just admitted on CNN that he inserted a loophole in the stimulus legislation that allowed million-dollar bonuses to insurance giant AIG to go forward – after previously denying any involvement in writing the controversial provision. .

“We wrote the language in the bill, the deal with bonuses, golden parachutes, excessive executive compensation that was adopted unanimously by the United States Senate in the stimulus bill,” Dodd told CNN’s Wolf Blitzer this afternoon.

“But for that language, there would have been no language to deal with this at all.”

Dodd had previously said that he played no role in writing the controversial language, and was not a part of the conference committee that inserted the language in the bill. As late as today, Dodd’s spokeswoman denied the senator’s involvement.

The AIG bonuses have caused a political firestorm, with Republicans and Democrats alike looking to lay blame for who’s responsible, and leading lawmakers looking to revoke the bonuses.

Dodd’s role in the legislation will likely come up as he faces the likelihood of a tough re-election. Former GOP congressman Rob Simmons announced he was running this week, and has already taken issue with Dodd’s stewardship as chairman of the Senate Banking Committee.

 

[Bluer White]

Follow the money....straight to Dodd's campaign coffers over the last few years courtesy of AIG.


(Let's not mention his "Friends of Angelo" sweetheart mortgage deal w/ Countrywide.)

 

[The_Pac_Mule]

I agree. The bonuses are disgusting, but also about one-tenth of one percent of the bailout AIG received from taxpayers.

All this money has to come from someone's pockets

 

[Lila64]

I could use a one tenth of a tenth of a percent right about now.

 

[Bluer White]

Now that AIG employees will be returning their bonuses to the Treasury...

when will we see a bill compelling politicians to return their campaign contributions from AIG, Fannie, Freddie, Citi? Let's send that money to Treasury as well.

Don't hold your breath.

 

[bigjohn2441]

an interesting read:

The Big Takeover : Rolling Stone

wait, this was in rolling stone?!

 

[purpleoscar]

HYPOCRISY ALERT:

washingtonpost.com

Fannie, Freddie Decry Bill to Tax Bonuses
Proposal Could Put Housing Recovery Programs at Risk if Employees Leave

By Zachary A. Goldfarb
Washington Post Staff Writer
Friday, March 20, 2009; A06



Legislation to severely tax bonuses at companies receiving government aid may imperil the Obama administration's housing recovery program by igniting an exodus of employees from Fannie Mae and Freddie Mac, employees at the companies said.

The firms, which own or back half the nation's home loans, are the major players in the administration's efforts to lower mortgage rates and keep struggling borrowers in their homes by modifying distressed mortgages and preventing foreclosures.

Both House and Senate versions of legislation to tax bonuses single out District-based Fannie Mae and McLean-based Freddie Mac by name. The companies, seized by the government last fall, have received about $50 billion in taxpayer assistance.

The legislation was prompted by disclosures that insurance giant American International Group was planning to pay $165 million in bonuses to employees at its most troubled unit despite a massive taxpayer bailout to save the company.

By including Fannie Mae and Freddie Mac in the measure, legislators fueled feelings of fear and betrayal at those two companies, where some employees polished their résumés and began to call headhunters who had tried to recruit them in recent months.

Federal regulators established a retention program at the firms when the government took them over. Under the program instituted by the Federal Housing Finance Agency, employees deemed crucial to the companies' efforts to carry out government housing plans are eligible to receive retention payments, but some may not receive any. A Fannie Mae employee said this sent a message that "said to employees, we want you to stay and help us implement these new initiatives to prevent foreclosures."

The retention program got attention this week after media reports about four of Fannie Mae's top executives receiving $1 million or more in retention payments.

The legislation could affect hundreds of people at the companies, which are among the largest employers in the Washington area. At Fannie Mae and Freddie Mac, where salaries often range from $100,000 and $150,000, retention payments for many people are in the low-to-mid five figures. Many employees lost small fortunes -- in some cases life savings -- when the government seized the firms and wiped out almost all their shares.

Employees put aside work for a time yesterday to attend meetings focused on the potential impact of the legislation, according to several employees at both companies. Workers expressed frustration that they may be penalized for decisions made by derivatives traders at AIG and top executives at banks under some of the legislation being contemplated.

One Fannie Mae employee who is a mother in her 30s said she turned down a job at another firm because of the government's promise and now volunteers her own time to help the housing market. "Several of us were told we had special skills," she said. "We're people who have nothing to do with what brought Fannie down, and now we're getting punished. You can't keep people motivated if you're going to constantly stress them out."

James B. Lockhart III, the head of the Federal Housing Finance Agency, said it had "intensely supervised the compensation practices" at the companies. "We will continue to work with Congress as we try to ensure that Fannie and Freddie fulfill their critical missions."

Others in the Obama administration and Congress were not supportive of Fannie Mae's and Freddie Mac's payments.

Asked about it on CNN last night, Treasury Secretary Timothy F. Geithner said: "This is an enormous problem across the entire financial system. It's just important to recognize that part of what got us into this mess was a set of compensation practices that got completely divorced from reality and bore no resemblance to risk."

Sen. Charles E. Grassley (Iowa), the top Republican on the Senate Finance Committee, sent letters to the chief executives of Fannie Mae and Freddie Mac yesterday asking for details of the retention program and for the names of any employees who will receive $100,000 or more in bonuses in 2009 or 2010.

"Just as with the extravagant bonus pay at AIG, it's important to make sure that taxpayer support isn't enabling unreasonable compensation arrangements that would never have been possible without taxpayer assistance," Grassley said.

 

[adrball]

I've worked for business going through wind down activities and there are some people that it simply can't do without. Retention bonuses over $100'000 should be considered good value if they mean an orderly wind-down.

That said. What I do find strange is that the primary investor (the 'taxpayer') cannot obtain a list of names and amounts. There has to be some scrutiny to ensure fairness for the investor.