Insurance giant AIG to pay $165 million in bonuses

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DaRizzle

DaRizzle

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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.
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LINK

people need to start being shot
 
AIG never should have gotten the first bailout and this is part & parcel of why.
 
shocked. really.

like I said, these companies needed to fail...they eventually will, but we're just rewarding the people in the company.
 
AgentDrazenPetrovic said:
shocked. really.

like I said, these companies needed to fail...they eventually will, but we're just rewarding the people in the company.
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Lehman failing was really devastating and in hindsight a mistake, but the current policies applied to AIG might end up being even worse.

I'd have rather seen some type of controlled bankruptcy with government assistance provided to the parties on the other end of AIG's contract instead of assisting the AIG entity itself.
 
maxiep said:
Why? They were contractually obligated to do so.
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Obviously Im being sarcastic but maybe the people who should be shot are the people who allowed AIG to get all this money without having more say so in their business in the short term
 
I think this was the same group that used the bail-out money to buy up other banks. And who was behind this? People were going around telling congressmen our nation would collapse and there would be martial law if the bill didn't pass. Just a bunch of crooks. Our federal government is mostly being controlled by business interests. Just assholes abusing power under the guise of a "free and open government".
 
A good deal of the AIG bailout money is being used to protect overseas loans made by the company.

Did we sign on for this as taxpayers?
 
PapaG said:
A good deal of the AIG bailout money is being used to protect overseas loans made by the company.

Did we sign on for this as taxpayers?
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Not loans so much as insurance contracts. AIG, like any insurance company, takes money from people today and has to pay it back tomorrow if certain conditions are met.

Unlike most other insurance companies, AIG branched out beyond the conditions being "a house burned down" to "my supposedly AAA rated loan isn't being re-paid".

Draco's Evil Sidekick said:
Lehman failing was really devastating and in hindsight a mistake, but the current policies applied to AIG might end up being even worse.

I'd have rather seen some type of controlled bankruptcy with government assistance provided to the parties on the other end of AIG's contract instead of assisting the AIG entity itself.
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Well, one must keep in mind that the AIG entity itself is now largely owned by the government. There's a pretty big an obvious upside to this, of course.

If you go the bankruptcy route, you can be pretty sure you're going to maximize your payouts. Confidence in all sorts of things collapses, as you note, and the government is left paying the counterparties on 80-100% of AIG's stuff, or abrogating the contracts.

If you buy up AIG and continue to run it, you have to pay out... I dunno... much less. Because, since AIG is still a going concern, and the various insurance holders haven't actually had to "file claims" con their contracts, their payouts are much lower.

Perhaps it will get much worse, but I'd take the fact that they're making noises about "giving back" some of the money as moderately good news. Out of the $800B authorized, they've paid out something like $136B, right? So instead of being on the hook for $800B, which I'd guess represents something close to the full extent of AIG's potential liability, they're only on the hook for a bit under 25% of it. And ultimately, they'll sell back those shares to the public and recoup a fair amount of that, since AIG, aside from the big horrifying CDS side of things, seemed quite profitable.

As far as the bonuses and political theater, I think that was pretty stupid.

Why is there "outrage, blah blah blah". Because Barack Obama got up on the bully pulpit and called it an outrage, despite knowing (I think... I hope he's not a fool) there where very little legally he could do about it. Not that he probably should in the first place, which only compounds the problem, by creating increased political pressure for rash and foolish action.

In short, he made himself look impotent and angry.

Which, you know, is not typically how Presidents (or anyone else) want to make themselves look.
 
$165M seems like a big number.

Compared to $175B, it is less than .1%

I'd be interested in finding out how many people that $165M is divided amongst. If it's 165 people, the bonuses may be entirely reasonable, especially if it's 165 top salespeople.
 
Denny Crane said:
$165M seems like a big number.

Compared to $175B, it is less than .1%

I'd be interested in finding out how many people that $165M is divided amongst. If it's 165 people, the bonuses may be entirely reasonable, especially if it's 165 top salespeople.
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Exactly. What people in government don't understand is that rainmakers and exceptional managers always have options. If you own a company, then skimping on your revenue generating employees is the surest way to hurt your bottom line.

As for how many people it's spread across, I don't care. The head of my old group at First Boston once received a $62MM bonus. He deserved every penny.
 
maxiep said:
As for how many people it's spread across, I don't care. The head of my old group at First Boston once received a $62MM bonus. He deserved every penny.
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I'm guessing your company was successful at the times the head of First Boston was getting that kind of bonus, no? I'm all for executives making huge sums of money, especially when their company is successful.

It seems to be that bonuses should be at least somewhat tied to company and/or personal performance. I know my bonus is directly proportional to company success and personal performance. Obviously AIG hasn't performed well. Should those running the company into the ground be rewarded?
 
What is the purpose of a bailout? Isn't it to allow a company to continue to operate? Plus, I have to laugh at the Obama administration's outrage over this. Um, did they not know about these contractual obligations prior to handing over the money? Seems like an admission in incompetence/ignorance. What the hell, it's only $165 billion!
 
blazerboy30 said:
I'm guessing your company was successful at the times the head of First Boston was getting that kind of bonus, no? I'm all for executives making huge sums of money, especially when their company is successful.
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Our group was successful. At the time, CSFB (now just Credit Suisse) was run as a collection of fiefdoms.

blazerboy30 said:
It seems to be that bonuses should be at least somewhat tied to company and/or personal performance. I know my bonus is directly proportional to company success and personal performance. Obviously AIG hasn't performed well. Should those running the company into the ground be rewarded?
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I would agree to some extent, but we don't know which groups these people run or which functions they performed. If you're good at your job, you're in high demand, which means even in bad times you need to be paid, or you walk. NY in particular is quite transitory. Besides, these bonuses were negotiated before the crash. If I had to guess, it was a standard contract, with a base salary and a minimum bonus to get these folks on board. I doubt they're being paid anything but their minimum bonus.
 
Faux outrage to create yet another private sector bogeyman as Congress spends trillions we don't have on God-knows-what

Amid AIG Furor, Dodd Tries to Undo Bonus Protections He Put In

While the Senate constructed the $787 billion stimulus last month, Dodd unexpectedly added an executive-compensation restriction to the bill. That amendment provides an “exception for contractually obligated bonuses agreed on before Feb. 11, 2009,” which exempts the very AIG bonuses Dodd and others are seeking to tax. The amendment is in the final version and is law.

Separately, Sen. Dodd was AIG’s largest single recipient of campaign donations during the 2008 election cycle with $103,100, according to opensecrets.org.

Dodd’s office did not immediately return a request for comment.

http://www.foxbusiness.com/story/markets/industries/finance/dodd-cracks-aig---time/
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Surprise, surprise...

http://www.opensecrets.org/news/2009/03/before-the-fall-aig-payouts-we.html

Before the Fall, AIG Payouts Went to Washington

Two senators who chair committees charged with overseeing AIG and the insurance industry, Sen. Chris Dodd (D-Conn.) and Sen. Max Baucus (D-Mont.), are among the top recipients of AIG contributions. Baucus chairs the Senate Finance Committee and has collected more money from AIG in his congressional career than from any other company--$91,000. And with more than $280,000, AIG has been the fourth largest contributor to Dodd, who chairs the Senate's banking committee. President Obama and his rival in last year's election
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PapaG said:
What is the purpose of a bailout? Isn't it to allow a company to continue to operate? Plus, I have to laugh at the Obama administration's outrage over this. Um, did they not know about these contractual obligations prior to handing over the money? Seems like an admission in incompetence/ignorance. What the hell, it's only $165 billion!
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Of course, the AIG bailout was initiated, and most of that money was given to them, by the prior administration.

barfo
 
$165 million is an outrage, $8 billion in pet projects that Pres_ent "No Earmarks" Obama signed is "last year's business".

Scary times here, and AIG workers are now getting death threats because of the words of our Pres_ent and his minions in Congress.
 
barfo said:
Of course, the AIG bailout was initiated, and most of that money was given to them, by the prior administration.

barfo
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Chris Dodd wrote much of the legislation, including the portion protecting executive bonuses, and Tim Geithner helped dole out the money from the NY Fed Reserve. Obama voted for TARP, and apparently they didn't realize that Dood protected contractual agreements on bonus pay?

F**king incompetent or deceptive, your choice, and this is just 100% political theater.
 
PapaG said:
F**king incompetent or deceptive, your choice, and this is just 100% political theater.
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That is indeed a good description of your post.

barfo
 
barfo said:
That is indeed a good description of your post.

barfo
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Care to comment on Dodd explicitly protecting these very bonuses in the bail-out legislation?

This is a distraction and just another play from the Alinsky handbook.
 
MARIS61 said:
Defraud and steal from people, commit treason against your country, then get in line behind the rest of these assholes.
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Then buy a seat in Congress and the real money and perks start to materialize.
 
Shouldn't the whole "contractually obligated" argument be moot, since those contracts would have been worth less than the paper they were printed on if taxpayers hadn't bailed the company out?

I understand the argument for attracting and keeping top talent, but I think this company has completely misunderstood the concept of "performance bonuses."

-Pop
 
SodaPopinski said:
Shouldn't the whole "contractually obligated" argument be moot, since those contracts would have been worth less than the paper they were printed on if taxpayers hadn't bailed the company out?

I understand the argument for attracting and keeping top talent, but I think this company has completely misunderstood the concept of "performance bonuses."

-Pop
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See, you used the word "if" there, that's the ringer. You're dealing with a hypothetical.
 
PapaG said:
Care to comment on Dodd explicitly protecting these very bonuses in the bail-out legislation?
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Don't know anything about that. If you want, provide a link and I'll study up on the subject.

barfo
 
SodaPopinski said:
Shouldn't the whole "contractually obligated" argument be moot, since those contracts would have been worth less than the paper they were printed on if taxpayers hadn't bailed the company out?

I understand the argument for attracting and keeping top talent, but I think this company has completely misunderstood the concept of "performance bonuses."

-Pop
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No, because they are explicitly protected retroactively by Dodd's amendment to the stimulus plan that specifically addresses money received from the Fed. Now, had AIG not been bailed out and been forced into bankruptcy, then the terms of the bonus contracts would have been voided as per the contracts. As I said, this is pure political theater. Either that, or the government is on the fast track to nationalizing the private sector, which is even more sobering.
 
barfo said:
Don't know anything about that. If you want, provide a link and I'll study up on the subject.

barfo
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Well, since I posted it already in this thread and you ignored it, I'll just assume you're on a purely partisan mission regarding my posts.
 
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