The govt. didn't give AIG any money. They took a risk and bought stock in the company. This is a very dangerous thing for the long haul, but my hope is that AIG buys back that stock (which is the plan) to pay back the taxpayers (at a profit, too). When you buy stock, you have a voice as a shareholder when it comes to voting for officers. Some stock is restricted (without voting rights), which is what I sure hope the govt. owned stock is. The best that can come out of this is that the taxpayers propped up a huge company whose failure would have made the economic situation far worse. The worst that can come out of this is that govt. seizes this precedent and buys controlling interest in many of our largest corporations and votes in officers for political reasons. Like "green is in, let's fire the actually good CEO and put in a guy from Earth First." Or worse - "let's fire the CEO who donated to our political opponents last campaign." The mess is not caused by free markets, but the absence of them. When govt. places rules and regulations on the markets, it has a huge hand in a near failure like AIG. So I see it as unfortunate but necessary that govt. should fix what they broke. And those rules and regulations? I can't think of a case where they're not "closing the gate after the horse has left the barn." They're reaction to some perceived failure, but prevent no future such failures. Sarbannes-Oxley sure didn't prevent this recent meltdown, right? The bottom line is the govt. bought stock in the company, they should let the officers run it. If it means .1% of the cash goes out in bonuses, so be it. Our eye should not be on the envy thing (political purposes), but on how fast AIG can buy back the stock and make us whole again. There was a similar but lesser outcry about auto makers advertising during the superbowl. Wasting the taxpayer's money! Yet, advertising during the superbowl is a reasonable way to advertise, and advertising is a reasonable way to generate car sales. Make sense?
Sorry Barfo, but this just isn't right. The TARP legislation negotiated between the Obama White House and congress specifically did protect those bonuses. TITLE VII--LIMITS ON EXECUTIVE COMPENSATION SEC. 111. (b) (3)(D)(i) A prohibition on such TARP recipient paying or accruing any bonus, retention award, or incentive compensation during the period in which any obligation arising from financial assistance provided under the TARP remains outstanding, [snip] (iii) The prohibition required under clause (i) shall not be construed to prohibit any bonus payment required to be paid pursuant to a written employment contract executed on or before February 11, 2009, as such valid employment contracts are determined by the Secretary or the designee of the Secretary.
Denny, at most it protects them from the TARP legislation. That doesn't add any protection they didn't have already. It's a no-op. The stimulus bill didn't remove protection, but it also did not add any. If you claim otherwise, please explain exactly what rights they *gained* in the stimulus bill that did not exist before the stimulus bill was passed. That says, in English: those bonuses are not affected by this bill. I really don't see how you could read it any other way. barfo
The Bill specifically sought to limit executive compensation, but has a specific protection for these AIG bonuses. You wrote "One last time though: the bill did not protect the bonuses" - but it did protect the bonuses. Not surprising, as the #1 and #2 recipients of AIG campaign cash over the past few years are Dodd and then Sen. Obama. Change! More like, got caught with their hands in the same ol' cookie jar.
No, it did not. Once again, no new protections on those bonuses existed after the stimulus bill was passed vs. what existed before the stimulus bill was passed. It did not protect the bonuses. It simply did not address the bonuses (except to exclude them from the effects of the bill). If it had protected the bonuses, it would have said something like "congress shall not pass laws, and the executive branch shall not issue orders, which have the effect of preventing said bonuses from being paid, or of reclaiming previously paid bonuses". That would be protection. Exclusion is different than protection. Again: If you claim the stimulus bill protected the bonuses, please explain exactly what rights they *gained* in the stimulus bill that did not exist before the stimulus bill was passed. barfo
It said almost exactly that, though. They gained the right to pay the bonuses that were excluded specifically by the bill.
No. They had that right before the bill existed. They already had the right to pay those bonuses. barfo
The bill originally was going to deny that right. Then the Treasury Dept. contacted Dodd and pressed for the exclusion. If not for this interference, they would not have had that right. And they might have been subjected to a number (~75) of lawsuits even. I don't think the exclusion was wrong, nor am I upset about paying the bonuses. AIG has to go about its business, and some of its executives are (and deserve to be) well paid. (CEO makes $7.5M/yr salary, FWIW) If AIG is going to pay us taxpayers back, it's going to need all the top notch executive talent it can keep.
Thanks for that explanation. I still don't think the gov't should buy stock in the tunes of billions and then just let AIG officer's run the business. Who buys a majority share in a company that has failed and then let's them try again. In one year, AIG will becoming back to the gov't trying to get more money so they don't go under . . . while CEOs are living fat because that is the standard in the industry for CEOs. Doesn't sit right with me
12.5% of those who got the bonus money left, but these guys got 20% of the money. In other words, the guys who left got a much higher average bonus than the guys who stayed: roughly $650,000 versus $400,000. Retention bonus, indeed!
If the bill's purpose was to protect bonuses, it did a terrible job. I mean if the intent of part of the bill was to ensure AIG bonuses, they could have made the language much stronger (like what Barfo wrote). I see barfo's side, the bill left the bonuses in place, but gave no additional protections like prohibiting increased tax rates on the bonues.
I know, I just couldn't pass up you accidentally typing "veterinarians" rather than "veterans". Of all the appalling things he has suggested as CIC, this one was the worst. It really shows his disdain for the military.
These people had a contractual right to the bonuses. When I worked for CSFB, I signed a three year deal, with specific salaries and specific minimum bonuses. Generally in the finance industry, at the VP level or above your bonus should be 80-90% of your total compensation. If you received only your minimum-contractually guaranteed bonus, it was a sign that you should leave. And as for those people being happy they have a job, know that regardless of downsizing, good people are always in demand on Wall Street. Of course, if you're interested in second-class employees who are willing to work for peanuts, then you can pay them government wages. AIG is 80% owned by the government; they're not a government agency. They're still a private corporation.
Could 2nd class employess do any worse then this so called cream of the crop. In that industry, I'm 4th class employee, but I think me and my friends could run a company into a ground . . . if we really worked on it. I understand the bonuses were part of the contracts, but without the gov't there would be no bonuses at all. So I think in this situation, fair or not fair on a contractual level, morally and ethically it is fair not to give bonuses . . . and I hope gov't uses whatever resources they have to get the bonuses back.
How do you know that all these people were the ones to enter into these derivative contracts? There's a much better chance that the vast majority of these employees made money for AIG. And yes, 2nd Class employees would have even lost more money. My position has been explained by others, so I won't repeat it. I'll just say we agree to disagree.
I don't know, but I found this. In particular, Cuomo takes aim at AIG's rationale for distributing more than $160 million in retention payments to members of its Financial Products subsidiary, "the unit of AIG that was principally responsible for the firm's meltdown," according to a letter sent by Cuomo to Barney Frank, chairman of the House Committee on Financial Services. Though AIG has stressed that payments were essential to retain individuals at Financial Products vital to unwinding the subsidiary business, Cuomo notes that "numerous individuals who received large 'retention' bonuses are no longer at the firm." **** AIG made more than 73 millionaires in the unit which lost so much money that it brought the firm to its knees, forcing taxpayer bailout. http://www.huffingtonpost.com/2009/03/17/cuomo-reveals-details-of_n_175865.html
Okay. They were part of a group that lost money. That doesn't mean that they lost money. For example, when I was at Goldman, Exenigis (an energy investment group) lost a ton of money, but Whitehall (my group which did RE investments) made money. Should I be responsible for Exenigis' losses because we were both part of the GS Merchant Banking division? Not on your life. I'm glad you noted that many have already left. See, they have better opportunities. You have to fight to keep good employees. I'm interested in your position on Darius Miles' contract. Should Paul Allen have the ability to renegotiate it?
it's_GO_time, IMO, you're posts are looking pretty hypocritical and ignorant. Before the election, you couldn't wait to have Obama in office because you thought he was going to change Washington to be more accountable, more ethical, etc. You were tired of Bush' administration acting like a bully, you thought that Bush was overstepping his powers, and other complaints like this. But now, you're arguing that it is OK for Obama and Congress to change the rules of the game, overstep their power and authority, and basically be unethical. Pretty hypocritical. It is perfectly reasonable for you to be upset about these bonuses, but it is not reasonable for you to support taxation on previously paid wages, or adding wording to agreements AFTER the fact, or violating agreements. Do you also support Obama and this Senate pushing for protectionist measures that violate NAFTA?
If PA negotiated a contract with Miles that included bonuses and later told the gov't that unless the help him, he will declare banckruptcy. Go'vt steps in and bails out the Blazers from going under and later learns Blazers gave Miles a retention bonus . . . yes the gov't should be able to step in and say no. Sorry dairus but we are trying to keep the Blazers a float and prior past practices have proved to fail so we are operating under a new set of rules. Let Darius get his lawyer and see if it stands up in court. A little more info: We have also now obtained the contracts under which AIG decided to make these payments. The contracts shockingly contain a provision that required most individuals' bonuses to be 100% of their 2007 bonuses. Thus, in the Spring of last year, AIG chose to lock in bonuses for 2008 at 2007 levels despite obvious signs that 2008 performance would be disastrous in comparison to the year before. How are non-millionaires not upset with AIG practices. These fat cat CEOs and the like can't get over the fact that times have changed and their exhorbinate salaries they get year after year is over.
If it is hypocritical . . . that's fine. I am not a cookie cutter one size fits all kind of person. I look at individual sitations and give my opinion. I am pro gov't taking control in a sitatuion where a private company comes to the gov't saying help us or we will die. Again, if I had my way, I wouldn't have given a bailout (and probably caused more economic chaos). I wanted Obama because the country needed a change and I believe Obama is a president for the middle class (which had been thinning out under the Bush administration). I dind't like Bush ethics, but didn't saythat is why I want Obama. I did think Bush came across as a international bully and overstepping his power and by the end of his presidency, didn't trust his judgement. I understand the argument that Obama is overstepping his authority but in this case I'm OK with it under the circumstances. Again if that is hypcritacal to you, I get that. But unlike many others here, I don't take a positon just to stay true to a party or line of thought. I really do try to look at individual sitautions and dgive my two cents. And while it is not reasonable to you to tax already "earned" wages or change rules . . . it is reasonable to me, given AIG's conduct. I hope we hit AIG with everything we got. In general, I am pro-free trade and do support NAFTA . . .
