AIG Bonuses Are Back: Firm Preparing To Pay Out Millions

After its bonus payments ignited a firestorm of criticism earlier this year, American International Group Inc. is asking the federal government to weigh in on the insurer's plan to resume paying millions in promised retention incentives next week, according to media reports.

AIG, once the world's largest insurer, has asked the Obama administration's compensation czar, Kenneth R. Feinberg, to approve the payments in order to head off any public outrage, The Washington Post reported Thursday evening.

While the company isn't required to get the government's blessing because the payments are actually for 2008 employment contracts, the newspaper said executives are reluctant to move forward with installments coming due next week without official approval.

Feinberg has the power to reject pay plans he deems excessive at companies which benefited from large infusions from the government's $700 billion bank bailout fund. Feinberg also has authority to review compensation for the top 100 salaried employees at those firms. AIG is among the companies whose pay practices the government now oversees.

New York-based AIG remains the focus of intense scrutiny, after becoming one in a string of corporate calamities and a touchstone for public fury. The huge volume of credit default swaps -- a form of insurance against bond defaults -- sold by AIG, coupled with rising levels of defaulted mortgage and other debt, threatened the company's existence and prompted the government to step in.

Government aid to AIG totals about $180 billion.

The $450 million in bonuses that AIG allocated in 2008 for employees, including to traders in the financial products unit that brought it to the brink of collapse, fueled public and congressional outrage. The first installment of those payments earlier this year sparked legislation in Congress to slap punishing taxes on big bonuses at AIG and other companies bailed out by taxpayers, though the Senate didn't act on that plan.

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Comments

[regellner]

The whole idea of giving a retention bonus obviusly does not work as they still get one even after driving their company into the ground.

Following is a commentary on AIG and indeed Corporate America's problem:

http://www.examiner.com/x-11326-Liberal-Examiner~y2009m7d10-AIG-bonus-payments-create-selfdestructive-atmosphere


Raymond Gellner – National Liberal Examiner at Examiner.com
http://www.examiner.com/x-11326-Liberal-Examiner
__________­__________­__________­__________­__________­________

[PhilipTaylor]

It is Felony Fraud that G0LDMAN, Wall Street, and A1G committed:

Ask Chef Martha who did next to nothing compared to the $Trillion Scams these Banksters committed yet served years! Still the law today!

Thanks to the Morgan Stanley and A1G evidence yesterday and G0LDMAN today this argument is even more relevant:

Their is MASSIVE Evidence the Scheme used was premeditated and therefore HIGH CR!MES were committed!

This was not WELL EDUCATED MEN (mostly) making mistakes except one - They thought they would get away with it! To assume that Masters and PhD level managers simply made some mistakes is naive and irrational.

TWO SIMPLE CHARGES:

1. Premeditated Manufactured Insider Trading
a. Make a lot of Sure Fail Product knowing it will fail
b. Buy Massive A1G Credit Default Swaps which is Betting the SURE FAIL Products will fail!
Make it to fail and then bet it will fail: "Manufactured Insider Trading" 100% sure BET!

2. Misrepresentation of Hugh Risk "FAKE Rated" products as Safe Low Risk "AAA" and sold to victims all over the world!

Both Cr!mes are Felony Fraud and are well documented! They provide evidence for decade or longer terms in Pr!son!

[ProudNeoCon]

blah.. blah.. blah...

[Carolab]

There is PROOF of insider trading with Goldman Sachs, JP Morgan (Bear Stearns) and hedge fund John Paulson & Company (Lehman's).

The hope is that the new Pecora type commission won't be another whitewash like the 9-1-1- commission and the truth will come out!

[Mauiloa]

I don't believe that HuffPosters are too fond of this story. Unfortunately, we're mostly just peons in the world of high crime finance.

[Bumpkins]

I like the story....it reminds of the trillions paid out in 2008, and the contracts signed before 2009....sorry

[BUTCHER111]

The federal government own 80% of them so all they have to do is say NO!

[abby4ever]

But according to the article, they don't have the power to really say NO...because the bonuses were agreed upon before Feinberg's watch. It's the ble_ssing of the White House that AIG is after, as cover in case the public goes m@d.

Why Feinberg would even hesitate, why he would not tell them, even before they had finished the sentence, that they will get the White House ble_ssing when pi_gs fly, is beyond me.

[Firbolg]

The federal government may own their shares but the lobbyists own the federal government, and they are not going to say "no".

[PaxEterna]

GMS: Greed Mismanagement & Stupidity rule - and have ruined - this once great nation.

[powerlift2201]

Can someone please explain to me how AIG, who was hemorraging money in 2008 can qualify that it owes bonuses? I've said it before and I'll say it again, I want the people who negotiated those employment or bonus contracts. I worked as a director of a company that went out of business. I ddn't get huge bonuses. I had to threaten to contact L&I just to get paid what I was owed - my last week's salary.

[bubbuh]

The "bonuses" are not really bonuses. They are not tied to anything, not even continued employment with AIG. They are payments, There really isn't any other word for them; so, AIG decided to call them bonuses and pretend they were actually for something other than having one's name on a certain list at a certain time.

[monicaangela]

186 comments pending on the main. Laundry day I guess.

[cynthia3217]

In 1999, Congress repealed the Glass/Stegal Act. This allowed businesses (banks, insurance, hedge funds) to create risky credit default swaps and under capitalize them. AIG offered insurance on these products and when they failed could not pay out the “insurance” claims because they were also under capitalized. A Ponzi scheme worse than Madoff. AIG and Goldman Sachs were both playing the system. Now AIG wants bonuses for retaining executives – how stupid do they think the American public is?

There are recent articles in both Rolling Stone and Vanity Fair which are very enlightening regarding these crooks.

http://www.vanityfair.com/politics/features/2009/08/aig200908
http://www.rollingstone.com/politics/story/28816321/the_great_american_bubble_machine

[ProudNeoCon]

Actually Glass/Stegal had nothing to do with AIG. It covered only banks.

[cynthia3217]

Who did AIG insure????

[cynthia3217]

Here you go - http://banking.senate.gov/conf/grmleach.htm

[lastams]

And yet no one, either the Whitehouse or on the Hill, is suggesting re-instating those same laws that
protected the integrity of our banking system for a generation.
Nothing has changed.
Goldman Sachs is playing the same leveraged casino game with oil futures that they played with sub prime mortgages; Only now Americans get to pick up the tab on both ends.
The thing that is really amazing in all this is the administration's attitude that treats our economic disaster like it was some sort of mistake, things just got too complicated.
Oops!
Well over at GS, and AIG, BofA, their "mistakes" have made them all rich,
and continue to make them richer.
We can't have a recovery and continue to inflate this smoke and mirrors economy at the same time.
If we don't stop listening to the same mindset that got us into this, we are all of us in for hard time ahead.

[DosGatos2]

I am troubled that no one--not Congress or Treasury--is seriously thinking about reinstating the Glass-Steagall Act too. Seems to me that is the first step toward fixing what is broken. This administration is being too namby-pamby on addressing the causes of the financial crisis.

If AIG is cleared to pay these bonuses then I say that all the unemployed and underemployed people in their local areas should stand outside the banksters homes day and night. Every day, they should have to look at the faces of the people who they have harmed--and know damned well they harmed!!

The banksters trips to the country club and the Hermes boutique should not be so carefree anymore. Instead, they should be made to appreciate how their actions are viewed, and remember every dollar they spend while people are out of work and losing their homes is really blood money.

Ostracism is a powerful tool.

[Mahi Joe]

Have each of these guys who thinks they deserve a bonus have their a$$es brought before a congressional committee and each explain precisely why they should be given a bonus. Let it be brought to the attention of the public whose tax dollars would be used to pay these incompetent buffoons.

[enoughalready13]

Exactly ... and further, they should take the total bonus amounts and calculate what that would be on a hourly wage basis, and have them explain how what they did - rob, steal, cheat, defraud - commands their premium to the minimum wage.

Or better yet, we should repeal any laws that punish employee pilferage from an employer, because if it is not illegal for the financial community, it should certainly not be illegal for the retail sectors.

[ProudNeoCon]

How about this - all these guys will quit and go home. Who will be dealing with derivative portfolio?

[Ribbitman]

This economic condition we are in really started spring of 2007. By the fall, 60% of home construction companies in California, Nevada, Eastern Idaho (the west) had gone out of business. This is the worst
economic condition in the U.S. since the 1929. It will take 5 years more before we see a real change.
It's that bad. I lost my company, Fall 07. It's going to be real hard.

Our people are programmed to expect that everything will be ok in 60 Min. Just like on T.V. This is real life people. Grow Up.

The president is going to have to try alot of different things to see what will work. Some thing will work, some things won't.

Im a veteran, That makes me a team player, no matter who my leader is. I supported Bush for 4 years,until I realized he was incompetent. I will support Obama 100% for 4 years and then look at
how he handles things. So far I am very pleased, I know it will take alot of time.

Time to get on the team. Stop listening to people who have never been on a team or don't understand
our Team IS America.

TEAM AMERICA !!!

We will come out of this much stronger.

[Rumplestiltskin]

I'm a veteran, too. As a citizen, I'll support elected officials by adhering to current law, or making a statement and accepting consequences. Before I was a reservist, I was a merchant mariner. I've enjoyed time in a lot of other countries, but I always loved coming home.
All that said, I've been a libertarian for most of my life. I believe in team America, but I view any politician with suspicion, and I can't imagine supporting any of them 100%

[Ribbitman]

OK, 98%

[Bumpkins]

Rib...thank you...so well said.

[ProudNeoCon]

Support does not means to follow blindly.

[Rumplestiltskin]

On the p_ope thread I posted "Watch out for albinos". It was blocked. heh, got to love HP.

[monicaangela]

Your comment went to the pending section, it will show up 10 pages back after you have long forgotten about it.

[Boboday555]

I'm just glad we finally have a man in the Oval office with the spine to put the cost of our Wars in the Budget for all to see instead of hiding in "Emergency Funding Measures" like President Cheney did.

Its nice to have an adult at the helm again!

[Rumplestiltskin]

I don't know if doing something obviously correct makes one an "adult". I'd prefer he reduce those costs quickly to zero by removing all our troops from the quagmire of Afghanistan, and speed up troop withdrawal from Iraq.
And get our troops out of S Korea. They should be "grown up" enough to handle their own affairs now.

[ronald1954]

I do not think that Aig should give out Bonuses for failure !anyone who loses the kinda money they lost should not even be in rewards . That company should have been broken up and sold off!.

[Boboday555]

The truth about our current economic crisis is that it was casued by three decades of GOP deregulation.
I just wish republicans and the children who vote republican had the class and maturity to admit it!
But, after the treasonous Cheney/Bush years, we won't hold our breath!

[OldTiredSarge]

They won't, the entirety of Bush's administration was blamed on Clinton. Now, everything that has happened with the economy or in Iraq and Afghanistan is being blamed on Obama.

GOP-We didn't do nothin'. Despite holding the reigns of power for a majority of the last 30 years.

[den1953]

Considering how the market seems to be sputtering and the economy tanking and not blaming either political side for the trouble maybe all the corporations that begged for money from the taxpayer should have been allowed to file for bankruptcy like the car corporations. This idea of Gov controlled business of any kind should end there is no good out come for it no matter how big they were the collapse of AIG would have been better in the long run! If they were to weak to continue then they are to weak to pull out of assistance from the GOV just like when a individual files for bankruptcy has to do they try to rebuild there credit and move on.