Believe me, I’m disturbed that bonuses are being paid to AIG execs.
But, the fact that some AIG execs were awarded (retention) bonuses is causing the public to phone in death threats? is beyond ridiculous. (Why not be calling your Congressmen instead?)
That a public official, Sen. Charles Grassley (R) – Iowa, should suggest that these same execs should offer to commit seppuku? Really. Sir, if you applied that sense of honor to you and your fellow congressmen, we’d be having elections across the country again.
And now, these same clowns are creating a tax aimed specifically at individual people – execs at AIG! What is wrong with this country? If they start down this path, they’ll be a cap across the board – all industries – looking at hmmm $500k tops?
In the end, we, the voters, are the fools. The bonuses were specifically protected in the $787 Stimulus Package, by Sen Chris Dodd (D) – Conn, aka the largest single beneficiary of political contributions from AIG.
Let’s remember a few facts:
- These bonus programs were all in place well before AIG received federal funds and before the current CEO, Edward Liddy, was in charge of the company.
- They are part of legally binding employment contracts between these executives and AIG.
- Roughly 3 years ago, Elliot “John” Spitzer went after Maurice Greenberg, the CEO of AIG for nearly 40 years. Mr. Greenberg stepped down although no charges were ever brought against him.
- Over the next 3 years the company increased the amount of credit default swaps and other derivatives tied to securities and corporate debt. When these financial instruments weakened, the company lost massive amounts of money. In the course of one night last September, AIG’s cash needs went from $20 billion to $80 billion. To meet these financial needs, the whole company was practically wiped out.
- AIG has used much of the $170 billion in government aid to basically refund money to big banks and other “counterparties,” to cash out some of those credit-default swaps and reduce AIG’s massive liabilities. That’s sensible…The problem is that the government has apparently agreed to $105 billion worth of payouts – at the full face value of the securities.
- Treasury Sec’t Geitner has been involved with this since the beginning. He knew about the bonuses before announcing an additional $30billion loan to AIG on March 2, 2009
So, banks like:
- Goldman Sachs,
- Merrill Lynch,
- Societe General &
- Deutsche Bank
- are taking no loss at all on securities that had a market value of half their face value or less when AIG redeemed them in full.
- It’s like house prices falling in your neighborhood by 50 percent, and somebody coming in and buying one house for what it was worth at the market peak a couple years ago. And using a government loan (AKA your tax money) to finance it. Regulators at the Fed, Treasury, and other departments still haven’t explained why the counterparties got all their money back… in a situation where just about everybody is taking a loss – taxpayers and consumers especially – it will be tough to make a case that the world’s richest banks deserve full redemption.
The AIG bailout was necessary because of the impact on many banks and the financial institution as a whole. The company was always sound and employed many people in many businesses around the world. It in no way was/is “too big to fail,” however when you make a decision to bail out a company, purposely protect the bonuses of these specific officials in a huge Stimulus Bill, please do not insult our intelligence by pretending that this is news to you – when you wrote and signed the bill!
Visit Aritcles: http://www.usnews.com/blogs/flowchart/2009/03/17/whats-good-whats-bad-about-the-aig-bailout.html