AIG gets taxpayer bailout...BONUS?

[lizbud]

House bill would slap surtax on AIG bonuses
Tue Mar 17, 2009 11:41am EDT
WASHINGTON (Reuters) - A Democratic U.S. congressman said on Tuesday he has introduced a bill that would slap a 60 percent surtax on large bonuses to be paid to executives at bailed-out insurer American International Group Inc (AIG.N: Quote, Profile, Research, Stock Buzz).

Michigan Democratic Rep. Gary Peters introduced the bill and has picked up five co-sponsors. He said in a statement that the bill would "create a 60 percent surtax on bonuses over $10,000 to any company in which the U.S. government has a 79 percent or greater equity stake in the company. Currently, AIG is the only company that meets this threshold."

(Reporting by Kevin Drawbaugh; Editing by Leslie Adler)

This sounds like a great idea. Now, they should just get this moving on
to law. I don't know anyone who isn't PO'd about AIG's demanding endless
outputs of cash.

[Puckstop31]

This sounds like a great idea. Now, they should just get this moving on
to law. I don't know anyone who isn't PO'd about AIG's demanding endless
outputs of cash.

I too think this is a good idea. Not only would it be a vessel where the peoples anger could be tamed, but it would be a wonderful way to convince companies that taking money that is not theirs is a bad way to do business.

But also note that the stimulus bill has language in it that allowed AIG to do what they did. Bonuses were to not be allowed by companies taking the money. But a exception was made, Senator Dodd added it, that did allow bonuses that were contractually obligated to be paid. And as ES mentioned earlier, a contractual bonus is kind of a oxymoron.

I reckon Senator Dodd, who is now verbally frying AIG, learned a little something about hindsight, eh?

[sasvermont]

2nd UPDATE:73 At AIG Received Bonuses Of $1 Million Or More - NY AG

March 17, 2009: 03:44 PM ET


(Adds White House comment, comment from AIG spokesman beginning in ninth paragraph.)

By Chad Bray

Of DOW JONES NEWSWIRES

NEW YORK -(Dow Jones)- New York Attorney General Andrew Cuomo said Tuesday that American International Group Inc. (AIG) granted retention bonuses of $1 million or more to 73 people in its AIG Financial Products subsidiary, including 11 who no longer work at the company.

In a letter to House Financial Services Committee Chairman Barney Frank on Tuesday, Cuomo said the top 10 bonus recipients combined received $42 million, with the top recipient getting more than $6.4 million.

Cuomo has blamed the unit for the insurer's near collapse last year. The attorney general said 11 people who have left the company received retention bonuses of $1 million or more, with one person getting $4.6 million.

"Again, these payments were all made to individuals in the subsidiary whose performance led to crushing losses and the near failure of AIG," Cuomo said in the letter. "Thus, last week, 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. Something is deeply wrong with this outcome."

On Monday, Cuomo subpoenaed AIG seeking details on who received retention bonuses in the financial products unit and copies of the contracts underlying the bonuses. In his letter, Cuomo said AIG has refused to provide the names of those who received bonuses.

Over the weekend, news surfaced that AIG had paid $165 million in retention bonuses to individuals in the financial products unit on Friday.

The $165 million is the latest installment of a retention program that is slated to pay the unit's employees about $450 million. AIG had previously paid out $55 million, and an additional $230 million is pending for 2009.

The bonuses have sparked outrage on Capitol Hill and among taxpayers.

On Tuesday, the White House said it is looking into "all remedies" to recoup the bonuses after President Barack Obama denounced the payouts on Monday.

"This is a corporation that finds itself in financial distress due to recklessness and greed," Obama said Monday. "Under these circumstances, it's hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay."

Frank, D-Mass., told reporters in Washington on Tuesday that the U.S. government, which now controls an 80% equity stake in AIG, should assert its ownership of the insurer in order to block the retention payments. Frank said the government had a better chance of prevailing in court if it acted as an owner, rather than as a regulator intervening in the private sector.

Frank's committee is expected to hold a hearing on the AIG bonuses on Wednesday.

AIG has said it is contractually obligated to pay the bonuses and will make efforts to reduce the retention payments by at least 30% in 2009. The bonuses were negotiated in the first quarter of 2008 when the financial products business was expected to have a "significant ongoing role" at AIG, Chief Executive Edward Liddy said in a letter to Treasury Secretary Timothy Geithner on Saturday.

"We understand the Attorney General's concerns, are in ongoing contact with the Attorney General and will respond appropriately to the subpoena," AIG spokesman Mark Herr said in a statement. "In the meantime, the Financial Products unit continues to work diligently to unwind operations and has made significant progress in doing so."

The insurer has accepted more than $170 billion in U.S. government funding, and government officials have said they may have to pump more money into the insurer if the economy continues to worsen. Earlier this month, it reported a $ 61.7 billion fourth-quarter loss.

In his letter Tuesday, Cuomo said the contracts his office has reviewed contained 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," Cuomo said. "My office has thus begun to closely examine the circumstances under which the plan was created."

Cuomo also said AIG was able to bargain with some of its financial products employees, with those employees taking salaries of $1 in 2009 in exchange for their retention bonus packages.

"The fact that AIG engaged in this negotiation flies in the face of AIG's assertion that it had no choice but to make these lavish multi-million dollar bonus payments," Cuomo said. "It appears that AIG had far more leverage than they now claim."

-By Chad Bray, Dow Jones Newswires; 212-227-2017; [email protected]

(Jessica Holzer and Henry J. Pulizzi contributed to this report.)


(END) Dow Jones Newswires
03-17-09 1544ET
Copyright (c) 2009 Dow Jones & Company, Inc.

[RICHARD]

2nd UPDATE:73 At AIG Received Bonuses Of $1 Million Or More - NY AG

In a letter to House Financial Services Committee Chairman Barney Frank on Tuesday, Cuomo said the top 10 bonus recipients combined received $42 million, with the top recipient getting more than $6.4 million.

Cuomo has blamed the unit for the insurer's near collapse last year. The attorney general said 11 people who have left the company received retention bonuses of $1 million or more, with one person getting $4.6 million.

"Again, these payments were all made to individuals in the subsidiary whose performance led to crushing losses and the near failure of AIG," Cuomo said in the letter. "Thus, last week, 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. Something is deeply wrong with this outcome."

On Monday, Cuomo subpoenaed AIG seeking details on who received retention bonuses in the financial products unit and copies of the contracts underlying the bonuses. In his letter, Cuomo said AIG has refused to provide the names of those who received bonuses.

Over the weekend, news surfaced that AIG had paid $165 million in retention bonuses to individuals in the financial products unit on Friday.

The $165 million is the latest installment of a retention program that is slated to pay the unit's employees about $450 million. AIG had previously paid out $55 million, and an additional $230 million is pending for 2009.

The bonuses have sparked outrage on Capitol Hill and among taxpayers.

On Tuesday, the White House said it is looking into "all remedies" to recoup the bonuses after President Barack Obama denounced the payouts on Monday.

"This is a corporation that finds itself in financial distress due to recklessness and greed," Obama said Monday. "Under these circumstances, it's hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay."

Frank, D-Mass., told reporters in Washington on Tuesday that the U.S. government, which now controls an 80% equity stake in AIG, should assert its ownership of the insurer in order to block the retention payments. Frank said the government had a better chance of prevailing in court if it acted as an owner, rather than as a regulator intervening in the private sector.

Frank's committee is expected to hold a hearing on the AIG bonuses on Wednesday.

Did anyone pay attention before all this happened?

BF's SO was on the board of some high flauting company that had a little to do with our econ problems?

Guard that henhouse!

[momoffuzzyfaces]

Did anyone pay attention before all this happened?

Is anyone paying attention now? If so, why are they going to send these bozos another bailout payment?

I would cut them off to sink or swim in their own juices!!!

[sasvermont]

If you have the time, this article is very informative. I cannot believe it but this was written in 1994.

http://findarticles.com/p/articles/m...26/ai_15818783

This entire mess is making me sick. We've all been "taken" and boy do I feel really stupid. Not that I could have done anything. Hindsight is 20/20!

I need to step away from this situation before I grab a gun and head for Capitol Hill. Just kidding of course, but boy do I feel we are all being taken to the cleaners. Why the hell weren't these "derivatives" being regulated? Was Greenspan in charge then?

[cassiesmom]

Okay, I have another question that shows how little I truly understand this situation. Remember when the phone companies had to be split up because they constituted a monopoly? They were a lot smaller, and then some of them merged with each other, and then there were more mergers and now there are huge companies again (for example: Illinois Bell -> Ameritech -> SBC -> AT&T). Why was that not done with AIG? Why was AIG allowed to continue to operate as one enormous corporation that was recently deemed "too big to fail", instead of being split out into its component businesses? Will the company be divvied up now, I wonder?

Thanks,
Elyse

[smokey the elder]

Part of the conditions of the "bailout" is that AIG sell parts of itself to pay back Uncle Sam (read: us taxpayers.) Unfortunately, with the credit market mired in the Ice Age, and cash flow nonexistent until recently, there was no one in the market for the pieces.

[blue]

THe same congress braying about bonuses, gives themselves a $93,000 increase EACH* in spending money!!!!??

http://www.youtube.com/watch?v=wNRt9R7S8aM

*Edit