Cynical Synapse

Mon, 13 Jul 2009

Groundhog Day in July: AIG Bonuses

Filed under: Bailout, Business, Congress, Economy, Government, Politics, Take action — cynicalsynapse @ 8:02 am

AIG Financial Products plans to pay $235 million in bonuses on July 15th. This despite the company being valued at $100 billion while owing the taxpayers $173 billion. Excuse me? There shouldn’t be any such thing as a bonus for a company losing money. I said that last time. Second, AIG is worth less than it owes; bonuses are not warranted. Third, the clowns wanting those bonuses are the same idiots who caused this whole mess in the first place!

Company officials say they need to pay the bonuses to retain the best qualified people. AIG wants the government to run interference so they don’t suffer the same taxpayer backlash as last time. What have they done to warrant that? How many people are unemployed because of the AIG charlatans? Where’s their bonus? And don’t start with the “we have a contract” whining. So did the UAW workers who were forced to give concessions and yet still watch Chrysler and GM descend into bankruptcy. Did I mention I think the auto industry’s woes were preciptated by the greedy alchemists on Wall Street?

The bonuses are, technically, 2008 bonuses. In my mind, that’s the same as Obama singing the Omnibus Spending Bill, claiming it was last year’s business. No matter how you look at it, Obama signed a bill laden with earmarks. Similarly, AIG shouldn’t be paying bonuses when they have no legitimate reason to do so.

According to the Washington Post:

Separately this week, a Citigroup analyst warned that AIG might be worthless to shareholders if or when it ever pays back the billions it owes the U.S. government.

“Our valuation includes a 70 percent chance that the equity at AIG is zero,” Joshua Shanker of Citigroup wrote in a note to investors. He cites the continuing risks posed by the company’s exotic derivative contracts, called credit-default swaps, and its sale of assets at low prices. AIG’s stock plummeted by more than 25 percent yesterday.

We can’t accept this continued perversion of our democracy and diversion of our tax dollars. As posted on the Common People’s Source for News:

AIG’s executives intended from the start to milk as much money as they could out of the taxpayer before they go under. In March I wrote this post about the $170 million dollars in bonuses they were handing out that month from the taxpayer bottomless pit, and I also warned in March, as did others, that another planned extortion was scheduled for this month. Now here we are.

Allowed to get away with this, the banks and all 535 (corrupt) officials in the Capital building will accelerate the next round of abuses. And it’s obvious the White House doesn’t care, so we can lump them in with the hordes of thieves. Therefore, we must accept that those who could do something about it aren’t going to. And sitting on our ass and doing nothing but complain is never going to work, and words of anger, insults and damnation won’t work either. If the latter is all they have to suffer in exchange for millions of free, unearned, pocket-dollars extorted from taxpayers, they are more than willing to accept the humiliation. And that includes the bought-off public officials we elected.

So, let your Senators and Representative know you don’t approve of AIG’s impending bonus payments. As long as AIG owes taxpayers money, they shouldn’t pay anyone any bonuses.

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5 Comments

  1. No me parece justo que yo como muchos tenedores de acciones de AIG tengamos que ver como empleados de la Empresa en este momento difícil toman millones de dólares en bonus. debería dar vergüenza cobrar dichos bonus.
    Cuál es el justificativo para cobrar? ganancias…
    POR FAVOR que actitud egoísta.

    Comment by Manuel — Mon, 13 Jul 2009 @ 10:31 am

    • Manuel, gracias por sus pensamientos. ¡Concuerdo con usted!

      Comment by cynicalsynapse — Mon, 13 Jul 2009 @ 6:15 pm

  2. Here is a rough website translation of Manuel’s comment:

    It seems fair to me as many holders of shares of AIG have to see how employees at this difficult time taking millions of dollars in bonuses. should be embarrassed to charge such bonus.
    What is the justification for charging? profits …
    PLEASE that selfish.

    Comment by cynicalsynapse — Mon, 13 Jul 2009 @ 6:13 pm

  3. Why does it have to be either/or choice on bonuses for bankers? It seems that most of the concerns that have been raised in the financial crisis relate to very large bonuses or having a disproportionate share of bankers’ total comp come in the form of a discretionary, year end bonus. Why not move more to a 50/50 or even 60/40 model of base to bonus, instead of the 20/80 or 10/90 model used with investment bankers and capital markets types previously?

    That is certainly more fair to employees who otherwise get blindsided at year end if the company does poorly. And if the concern is that the total comp numbers were too high, then that can be dealt with too.

    Maybe a system of trailing accountability (enforced via FINRA and SEC as an industry matter) is what’s needed, when highly compensated bankers originate really bad deals, or become complicit in fraud. But some combination of these measures should address the problem, and not simply eliminating bonuses for the vast majority of hard-working, meritorious bankers and other support staff … again, many of whom are not highly compensated.

    http://www.beaconintegration.com/service.htm

    Comment by Alex — Mon, 13 Jul 2009 @ 7:27 pm

    • Some excellent thoughts, Alex. Thanks.

      I think most people’s issue with the AIG bonuses is the sheer size of them, particularly for the top echelons. In a lot of minds, those are the culprits behind the Wall Street meltdown. The other problem is taxpayer money is funding those bonuses. Usually people don’t get bonuses unless the company’s profitable, which it isn’t if it’s dependent on taxpayer support.

      Personally, I’d probably still have problems with the bonuses if AIG was profitable and no taxpayer dollars were involved. I think top executive salaries have become obscene and unsustainable. But, it would be their profit and it’s up to the company what they do with it. At least paying bonuses is profit sharing with those that made the company successful. Only AIG’s not there right now.

      Comment by cynicalsynapse — Mon, 13 Jul 2009 @ 8:16 pm


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