AIG gets taxpayer bailout...BONUS?

[Edwina's Secretary]

One of my issues with the situation is with the use of the word "bonus." If it is a contractual obligation (as has been represented) then it is not a bonus. The phrase "guaranteed bonus" is an oxymoron. It is not a bonus if it is guaranteed. A bonus is something extra - usually based on results or some unknown (at the time the potential bonus is established)outcome.

This imprecise use of the word "bonus" only further confuses the situation.

[joycenalex]

why did T sec paulsons' people in sept 08 not know about the april 08 contracts "requiring" these "bonus" to be paid ? why did the former Treasury sec people fail to do due diligence in learning about ALL of the obligations that the US taxpayers were about to buy, were those members of sec paulsons staff incompetent to do their job ? seems that AIG did commit fraud in failing to reveal ALL of their contracts, and fraud is a reason to not pay those bonuses. if AIG is "too big to fail", when will the dept of justice break up this criminal monopoly? the arrogance of the AIG execs is beyond simple corporatism, they are delusional that there will be no repercussions.

[smokey the elder]

Probably the same reason that the toothless and clueless SEC missed Madoff's scam right under their noses.

Even though the "bonuses" are a small fraction of the bailout, it's the principal of the thing. There is a so-called "clawback" option which almost always has failed in the past, but may work here.

Congress, especially the House, will be extremely resistant to any further bailouts, so the banks, auto industry, etc. had better have their act together to wisely spend/invest what they have been lent so far.

[Puckstop31]

Congress, especially the House, will be extremely resistant to any further bailouts, so the banks, auto industry, etc. had better have their act together to wisely spend/invest what they have been lent so far.

I honestly hope that this would be true... But I don't see it in the cards. Reckon that comes my view that a lot of elected officials, from both sides of the aisle, see this as an opportunity to gain more power.

But I really, really hope that Congress does not try to pass any more bailouts. History, recent (Japan) and not so recent (The first new deal, the German Weimar Republic), shows us that this kind of "stimulus" does almost nothing to revive ailing economies.

[sasvermont]

This entire banking/financial problem sounds like a huge Ponzi scheme to me. For months I heard comments via various Public Radio stories and on the net, about the mortgage companies dealing with only certain appraisers, ones that would give them a figure they want rather than what was true, homes being worth three times what they were worth 20 years ago....... Others complained about the adjustable rate mortgages and how they were going to come back to bite some butts. There were so many people saying the system was set to fail - and it has been failing for quite some time, we just didn't see it come to a head until this past fall season. Was it sooner than that?

I don't think there is any one solution AND we will get through it. We have been in banking trouble before - just less seriously. This is an international problem.

Printing money? No bail outs? Bail outs? I surely hope we learn our lesson from this **&(*&( mess.

As far as Japan and it's problems years ago, well, from what I have read, they didn't put enough money into their system soon enough and long enough, thus taking 10 years to dig out of their recession. The recession (if you will) right now is WORLD wide, not just the USA. We have nothing to compare it to, as far as I know.

As far as AIG goes, well, give them their ())&&&*^& bonuses and then let the Financial Products division fold. Let them find new jobs, listing AIG, FP on their resumes. Good luck with that.

I think the greed factor is/was our worst enemy and in some strange way, we are all guilty of wanting to earn more money on our investments, own bigger homes, drive faster gas guzzling cars, having babies we cannot now afford to educate and in some cases, feed. But we didn't sign up for the scheme part of it and we aren't getting a bonus for participating. We are getting the debt to bail out this mess. I suppose, we share that with the creeps at the top of the scheme chain, as they too, will be asked to pay taxes - maybe!

[moosmom]

I didn't misconstrue ANYTHING. I was saying "Hail Obana" because the song that's played whenever ANY President of the United States walks in the room is "Hail to the Chief".

You were just looking for an argument and you're not getting it.

[Puckstop31]

I didn't misconstrue ANYTHING. I was saying "Hail Obana" because the song that's played whenever ANY President of the United States walks in the room is "Hail to the Chief".

You were just looking for an argument and you're not getting it.

Fair nuff' I reckon. And of course I was looking for an "arguement". (I prefer the word discussion.) Isn't that the entire point of this part of the board?

FWIW, "Hail to the Chief" gives me that same shudder.

[Puckstop31]

As far as Japan and it's problems years ago, well, from what I have read, they didn't put enough money into their system soon enough and long enough, thus taking 10 years to dig out of their recession.

My opinion is that its not about the amount of money put into the system, but how the money is put into the system. Creating money out of thin air and then using it for things that do not create new products and/or services is a bad idea. Because if no new products/services are created with the "stimulus" you get massive inflation after the stimulus money is spent. Because all that "new" money ends up chasing the same amount of products and services. Its basic economics.

Better to let the economy (read: citizens and business) simply keep more of the money they already have via lower tax rates. This allows the economy to have REAL growth. This method is also good for government. Because as new wealth is earned, rather than created, government gets more revenue taxing it at the lower rate. It is a time proven method.

Capitalism is by no means perfect, because you will always have greedy people abusing it. But as situations like Bernie Madoff show, what goes around, comes around.

The recession (if you will) right now is WORLD wide, not just the USA. We have nothing to compare it to, as far as I know.

The depression of the 1930's was a global event. It was made worse by massive government interference. We should have learned from how rapidly the recession/mini depression of 1920 was overcome. Government simply let the market right itself.

I think the greed factor is/was our worst enemy and in some strange way, we are all guilty of wanting to earn more money on our investments, own bigger homes, drive faster gas guzzling cars, having babies we cannot now afford to educate and in some cases, feed. But we didn't sign up for the scheme part of it and we aren't getting a bonus for participating. We are getting the debt to bail out this mess. I suppose, we share that with the creeps at the top of the scheme chain, as they too, will be asked to pay taxes - maybe!

I do not think there is anything wrong with wanting a better life for you and your family. I mean, it IS the promise of this nation. Life, Liberty and the Pursuit of Happiness. We just need to understand that we are NOT promised equal results.

Equal people are not free and free people are never equal.

I know it is difficult for some to understand this. We as a people are caring, compassionate and kind. We do not like to see people suffer. But in a free society, those are the breaks. Of course there needs to be a method to provide for people who are truly in need. But only enough to renew their OWN ability to pursue their OWN happiness. A hand up, rather than a hand out.

[RICHARD]

I vote for Pay-per-view Seppuku!

I'd even buy front row tix for that one!

Of course, it would take a while to saw thru all the fat on them bees turds!

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My satisfaction is knowing that they all had become accustomed to a lifestyle that should end real soon.

11 top level managers left AIG overnight. The list of 'goodies' that they made that were to be purchased with their BONUSES/MERIT RAISES is worth about 2 cents or the price of the paper it's written on.

What people do not understand is that they are all panicking trying to figure out how they are going to pay for the maids, kid's college tuition, town cars, vacations, gardeners and spa treatments.

Good, I hope they all find out what the 10 most popular Top Ramen flavors are.

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That's the scariest part about climbing that corporate ladder. Sometimes the people holding on to the base have had enough and go to lunch.

Hold on, it's a long way down.

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Add and "e" to Bonus and you get the answer to the bailouts.

[momoffuzzyfaces]

One of my issues with the situation is with the use of the word "bonus." If it is a contractual obligation (as has been represented) then it is not a bonus. The phrase "guaranteed bonus" is an oxymoron. It is not a bonus if it is guaranteed. A bonus is something extra - usually based on results or some unknown (at the time the potential bonus is established)outcome.

This imprecise use of the word "bonus" only further confuses the situation.

I agree. AIG knew it was in big trouble long before the rest of us heard about it. Why on earth would they write contracts guarenteeing big bonuses when they knew they were sinking? Can they not spell the word DUMB?

Of course, the Bush administration didn't help anything by giving them the first bailout with no restrictions.