AIG to pay $165 million in bonuses

[puddlemonkey]

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.

 

[calveless wonder]

money for doing nothing

sound familiar?

 

[puddlemonkey]

money for doing nothing

sound familiar?

Sure does, except the tax payers aren't signing off on my paycheck.

 

[ortiz34]

the writer probably "forgot or didn't mention" that it was a entire different entity than the finacial division of AIG

Just like when the insurance company AIG went on vacation and everyone was up in arms not knowing that the insurance company is entirely separate from the financial company.

I am imagining this is more of the same, the writer never mentions it, and it gets teh dumb sheeple like above to bitch about it.

 

[ortiz34]

regardless even if it was the financial aig company, not one of their others

165 million is nothing to thousands and thousands of people.

 

[75th]

the writer probably "forgot or didn't mention" that it was a entire different entity than the finacial division of AIG

Just like when the insurance company AIG went on vacation and everyone was up in arms not knowing that the insurance company is entirely separate from the financial company.

I am imagining this is more of the same, the writer never mentions it, and it gets teh dumb sheeple like above to bitch about it.

Yup.

 

[needtogetarmy]

I hate articles like this. I know a trader at one of the big institutions that works for a team that makes upwards of $100 million a year (collectively they make this much). He says that they have been doing just as well during the meltdown and that they are one of the few profitable units in the division.

Take away their bonuses, which is what they work for, and you destroy their incentive to make money. He says if they fuck with his pay he is leaving for a another firm, and the rest of the unit is going with him. That destroys one of the few profitable units in the corporation, thus the institution loses a shitload of money.

I believe it was Citi when Sandy Weill took over that hammered their proprietary trading unit. They left went out and formed hedge funds.

Americans are stupid.

 

[needtogetarmy]

Just to continue my rant: if professionals like myself and 75th who have worked (or work) actively in this industry are forced to cut they pay because the government tells them too they will leave the firm. Who the fuck wouldn't? Thus, you get a huge exodus of talent from these firms, at a point in time when they need that talent the most. How the hell does this contribute to the long term economic well being of these firms?

Bill the Boss: Mr Smith, you've earned your clients $50 million last year because you managed their money effectively. But, Obama says I cannot give you a bonus so enjoy your $250,000 dollar salary.

Mr. Smith the trader: Fuck you Bill. I am leaving and forming my own firm and I will take home what I deserve.

Bill the Boss: I understand Mr. Smith. I'm coming with you. The janitor can run this place when we leave.

^^ this is happening right now in corporate America. In fact, during the last MBA meeting we had the stats showed that an increasingly large percentage of MBA grads at the top institutions are leaving the US and getting jobs overseas because there are more opportunities available overseas.

Every act has a consequence.

 

[Razorguns]

If a division is making profits - everyone in that division should be getting bonuses. That's how it works in the rest of corporate america. Not just the executives.

An "AIG Division disperses $165M in profits" sounds a lot better. But hell now, once again, suits make the money while the employees get dick.

I'm sure Obama will NOT stand for this! HAHAHAHAHAHAHA. Who am I fucking kidding right? lol.

r

 

[Dial_tone]

the writer probably "forgot or didn't mention" that it was a entire different entity than the finacial division of AIG

Well....

In a letter to Geithner, obtained Saturday by CNN, AIG Chairman and CEO Edward Liddy said his company was taking steps to limit compensation in AIG Financial Products -- the British-based unit responsible for issuing the risky credit default swaps that have brought the company to the brink of collapse. The default swaps amount to insurance against losses from bad loans, which have increased dramatically since the U.S. housing boom peaked.

http://www.cnn.com/2009/US/03/15/AIG.bonuses/index.html

 

[EnderJE]

Well....

AIG's insistence on bonuses raises ire in Washington - CNN.com

Let's make it funny. Have a mob kill three of them and chase 75th like Ned Beatty.

 

[needtogetarmy]

I just read a legal article that stated these bonuses were paid out under contractual obligations. They HAD to pay them, otherwise they would get sued. Funny how the press doesn't paint the full picture.

 

[Dial_tone]

I just read a legal article that stated these bonuses were paid out under contractual obligations. They HAD to pay them, otherwise they would get sued. Funny how the press doesn't paint the full picture.

CNN does...

Obama spared AIG's new CEO, Edward Liddy, from criticism, saying he got the job "after the contracts that led to these bonuses were agreed to last year."

Big bonuses isn't about AIG; it's about Wall street in general paying bonuses based on volume as opposed to profitability. If AIG didn't pay them the best people would just go somewhere that did.

Bonuses should come from profit sharing; no profits - no bonuses.

 

[EnderJE]

For AIG: "The government cannot just abrogate contracts. Every legal step possible to limit those bonuses".
For the Auto Workers UNION: "Concessions with the union are a condition of the $17.4 billion in government loans that the automakers have received so far"

 

[rnch]

don't ya'll worry...Barrack's gona fix all of this. "hope and change" my azzz....

 

[Razorguns]

CNN does...


Big bonuses isn't about AIG; it's about Wall street in general paying bonuses based on volume as opposed to profitability. If AIG didn't pay them the best people would just go somewhere that did.

Bonuses should come from profit sharing; no profits - no bonuses.

Under bankruptcy contracts are useless (bonuses are always connected to performance so that's pure b.s.). That's a copout.

I worked with a company that went bankrupt and got an investment company to lend them a few millions. BONUSES/INCENTIVES/SALARIES WERE FROZEN. Any financials had to be approved by them first.

But I guess when the person paying you is Uncle Sam, you can do whatever the fuck you want with those billions coming in. Party baby party!!

r

 

[75th]

If the bonuses were calculated and paid on performance objectives having been met as described in a binding written contract, then how can the government break those contracts?

I don't know what many people on here do, but in finance your bonus is going to be based on positive production. That's it. No company is in the business of giving bonuses to those who lose money, believe it or not.

And if you think it's the least bit acceptable for the government to step in and alter said contracts in any way, shape, or form then I just don't know what to say to you.

 

[rnch]

Under bankruptcy contracts are useless (bonuses are always connected to performance so that's pure b.s.). That's a copout.

I worked with a company that went bankrupt and got an investment company to lend them a few millions. BONUSES/INCENTIVES/SALARIES WERE FROZEN. Any financials had to be approved by them first....

AIG filed for bankruptsy?

 

[75th]

Also, these bonuses were disclosed in November of 2008 being partially payable in April of 2009. The government knew about this already.

If they somehow didn't, it's just further proof that government sucks at running a business. It's called due dilligence. Next time look into these things before u give them money if they're that important to you.

 

[Dial_tone]

If the bonuses were calculated and paid on performance objectives having been met as described in a binding written contract, then how can the government break those contracts?

Without the Feds stepping AIG will be on the way to bankruptcy paying bonuses like that. If an outside entity, be it private or government, invests in your business I'm pretty sure they expect to have some say in how you operate.

I don't know what many people on here do, but in finance your bonus is going to be based on positive production. That's it. No company is in the business of giving bonuses to those who lose money, believe it or not.

A broker can churn accounts and be profitable to the company...in the short term at least.

 

[75th]

Without the Feds stepping AIG will be on the way to bankruptcy paying bonuses like that. If an outside entity, be it private or government, invests in your business I'm pretty sure they expect to have some say in how you operate.
[\quote]

Indeed, and that's why you figure this stuff out BEFORE the money changes hands. I can't return my jeep to the dealer and expect a refund if after 3 months I decide I want a sunroof.

A broker can churn accounts and be profitable to the company...in the short term at least.

That's illegal, so the broker in question would be fired and therefore any contract would be void.

Besides, I'm sure these guys aren't brokers. If a list of recepients is released, I'm surer well see a list of people who made the company money and excelled in their respective positions.

 

[puddlemonkey]

ALBANY, N.Y. — New York Attorney General Andrew Cuomo said Monday he has issued subpoenas for the names of American International Group employees given millions of dollars in bonuses despite their possible roles in the insurance giant's near-collapse.

Cuomo said his office will investigate whether the $165 million in payments are fraudulent under state law because they were promised when the company knew it wouldn't have the money to cover them. AIG reported this month that it lost $61.7 billion in the fourth quarter of last year, the largest corporate loss in history, and it has benefited from more than $170 billion in a federal rescue.

"When a company pays funds that the company effectively doesn't have, it's akin to a looting of a company," Cuomo said. "You could argue if the taxpayers didn't bail out AIG, those contracts wouldn't be worth the paper it's printed on."

Cuomo made good on a threat he made Monday in a letter to AIG's government-appointed chief executive, Edward Liddy, in which he said he would issue administrative subpoenas after 4 p.m. if he didn't get the employees' names, information about their work at AIG's Financial Products subsidiary and the contracts the company said required paying the bonuses. The Financial Products unit sold credit default swaps, the risky contracts that caused massive losses for the insurer.

"Four o'clock has come and gone. We haven't got the information. We'll be issuing subpoenas immediately," Cuomo told reporters in a conference call after the deadline.

As for the bonuses, Cuomo said, "Our information is the checks were sent out on Friday."