WASHINGTON (CNNMoney.com) – Lawmakers outraged about the bailout of American International Group will get another forum Wednesday, when the company's CEO is set to go before a House panel probing the government's involvement in the embattled insurer.
Edward Liddy, the AIG chief executive, is sure to be grilled about $160 million in bonuses paid to senior employees last week.
AIG has received three bailout packages, totaling more than $170 billion, in large part because it had issued risky credit default swaps - a kind of insurance for bad loans made by banks and investment companies.
This is a whole lot about nothing. The bonuses were written into contract, and failure to deliever on the funds would be a void of contract and liable for a pretty little lawsuit on AIG's doorstep. There is no possible way for this bill to interfere with previously agreed upon business contract unless it somehow we wrote the employee contract law.
The only way I could see there being a meeting of the two sides of the arguement is if the bonuses were postponed until following the return of the bailout funds.
This is just another example of how ridiculous our government and these propped up financial institutions 'too big to fail' are!!!
SO WHAT! ANOTHER forum, ANOTHER tongue lashing for these CEO's and they still get billions of our dollars by our elected "leaders"! What a joke!
Its perfectly obvious theyre all in cahoots. Another show to pacify the beaten and broken taxpayers until the next bailout, or should I say bonus bonanza, for the "best and brightest".
Congress is too IGNORANT to know how to manage a financial business. There are too many problem makers (read lawyers) in Congress and not enough problems solvers (read MBA'ers and engineers) in Congress. Until we stop electing mostly lawyers to Congress these types of problems will continue.
Back in October, even I saw the need to put restrictions on the TARP money so that banks would have to lend it. I also knew about the practice of big bonuses in the face of money-loosing performance ... so why didn't Congresss?
We are rewarding INCOMPETENT PERFORMANCE. With the demise of Lehman Brothers, Bear Stearns, Merrill Lynch, Washington Mutual & Wachovia, the employment marketplace is flush with people that have worked in financial services.
We don't need to pay these people bonuses ... FIRE these incompetents and hire the incompetents that used to work at these other firms. Then pay no bonuses unless a "mark to market" mindset shows profits.
When is Congress going to grill Barney Frank, Chris Dodd, and Maxine Waters over the mortgage melt-down disaster that started with their declaring Fanni and Freddy SOUND???!!!
Complex problem, simple solution.
the AIG people say that they are contractually obligated to pay bonuses to top executives. (Something they should have considered before asking for government bailout. They should have 'bailed out' of those bonus contracts)
The solution is that those people who expect to get bonuses, should refuse the bonus. Those executive should just say no. It would be the right thing to do and it would solve this stupid problem.
Of course, we all know that these greedy S.O. Bs. won't do it. But I thought I should put the thought out there
Come on...if AIG had not had the cash that the gov't infused, what would they have done? Would the employees have sued them for remedy?
I understand Andrew's point, as a matter of law, but this "hands are tied" thing is a cop-out by AIG.
The american people have an 80% ownship in AIG and Mr Liddy is telling us what he must do,smebody please make go stand in the corner!!!!
Bring the lawsuit on on Andrew! The bonuses were Toxic as the loans that were insured on the Credit Default Swaps. Congress should write some provisions in the law that "dings" everybody that is complicit – especially the salespeople and their managers.
People are struggling and these clowns are giving out bonuses. But of course the rich won't compromise and say we won't accept any bonuses until the economy turn around. I agree with taxing the heck out of the clowns that make $250K. Especially the ones in the bank. They talk about the Madoff scheme. Banks just as guilty for ripping people off and giving them loans they knew they wouldn't be able to afford.
Since we are paying the bonuses, I want to see the contracts that these failures had. How could anyone write a contract for bonus money when a company has failed? Bonus implies good performance not failure. The American people should demand to see these contracts. I bet we could find a lawyer who could undo those contracts. These AIG employees just think they are gods. We need to bust up that company. I moved my meager little bit of retirement money out of their company.
Congress 401K's are with AIG !!! – wonder why they keep bailing them out?
I understand the whole concept of honoring the contract but perhaps the wise thing would be to refuse the bonuses or postpone them until after the bailout funds are paid back.
Oh – to RJ in CA, the mortgage melt down did not start with Barney Frank, Chris Dodd and Maxine Waters declaring Fanni and Freddi sound. This is a result of no oversight and you can thank the GOP for that!
Since the government owns 80% of AIG it should be run like the most famous government insurance program - the FDIC. I understand that AIG's position is that they are contractually obligated to pay the bonuses, however, if the government had not bailed them out where would they get the money to pay the bonuses. Surely the bankruptcy court would not pay. AIG needs to realize that it has in effect gone through a hybrid bankruptcy process and nonessential expenditures should be frozen until they repay the government.
There is a simple solution. Just let Congress impose a 110% income tax on any bonuses paid to anyone making more than $75,000/year at a company that accepts bailout funds.
Congress knew that the Bonuses were going to be paid. Congress will play it up as a big disappointment, but they knew that all the bailouts were going into the pockets of the crooks that made this mess. The Taxpayer is bailing out the mega rich and the American taxpayer is going to pay for many generations going forward, and the American worker will pay with their jobs.
TAKE BACK the 170 Billion in bailouts and let them fail Congress if you are truly disappointed in the AIG management. Or better yet arrest them for the crimes they clearly have committed.
Does AIG call "commissions" "bonuses"?
I have an idea. Anyone who works for a company that has received taxpayer money to stay afloat, who also receives a bonus, will have it taxed at a rate of 99%.
This is just another example of the free enterprise system repeatedly with its hand out to the government, but never offering to make sacrifices to help alleviate the problems it has caused. It has turned JFK's slogan on its head so that the business community only asks what its country can do for them instead of what they can do to roll up their sleeves and help.
The $160 million in bonuses is a pittance and a subterfuge and Public Relations decoy to hide the BILLIONS of US taxpayer money that AIG has sent and continues to send overseas to its foreign bank customers. This is the part of the story that our government does not want you to hear. And you will never hear our Fed Chairman speak of it.
AIG is a travesty.
This shows are greedy some people are in this country.
There was a solution for the problem. This is a poor management from AIG executives. Despite the contract the rule should be:
Get bonus according to contract and be fired or no bonus but you still have a job.
I can guarantee you all the employees will choose the second option.
So new rule from OBAMA administration:
Keep the bonus and get fired or return bonus and you will still have a job.
The simpliest solution.
Barney Frank calls AIG's decision to pay millions in executive bonuses 'rewarding incompetence'. I call the salaries we pay slobbering Barney, Pelosi, Reid, Treasury Secretary Timothy "Tax Cheat" Geithner, and the rest of the genuiuses in DC the same thing: rewarding incompetence.
These dog and pony shows accomplish nothing. We own the dang company, if we can't stop the bonuses, we can at least sack everyone who accepts one!
Right, and you think Congress and Obama can do anything. Pay off your debts before Obama and his administtration cause a run on the banks. Obama is selling and spending us into a depression.
To fair to AIG many off the people getting this money earn a base of $33K and only get the bonuse if they hit a number. Its not like most of them are getting $2M bonuses. They earn a base and X% if they reach their goal. The reason is looks like so much money is that there are 10 of k of employees getting $50K pay outs. There may be 20 people getting the big big bonuses. That said, most of them are white republicans so who cares if they get the shaft.
Now would you lay it at the doorstep of Henry Paulson or Tim Gaitner that we are stuck with a wayward corporation with BILLIONS in TARP money and still giving bonuses!