Obama fails to halt AIG's $165m bonus payments

[Bhaisahab]

Source: The Independent

Barack Obama's crusade against excessive Wall Street pay has hit an obstacle, with his administration admitting that it could not stop the nationalised insurance giant AIG from paying $165m (£118m) in bonuses.

AIG has received $170bn in government money since being saved from bankruptcy in September. The bulk of the bonuses will go to employees in the very business division that wrecked the company's finances.

Politicians have reacted with fury. Members of the administration took to television studios yesterday to insist that contracts written during the boom times had left their hands tied.

Larry Summers, the president's chief economic adviser, said: "The whole situation at AIG is outrageous. What taxpayers are being forced to do is outrageous." But he added: "We are a country of law. There are contracts. The government cannot just abrogate contracts. Every legal step possible to limit those bonuses is being taken."

Mr Obama, who said paying bonuses was "shameful" while companies were on government life support, has found changing Wall Street culture to be more difficult than anticipated.

Read more: http://www.independent.co.uk/news/world/americas/obama-fails-to-halt-aigs-165m-bonus-payments-1645749.html

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This is daylight robbery. It's so blatant it makes one's blood boil!

[Syrinx]

1. since AIG is too big to fail...

AIG should be busted. At the earliest opportunity.

[vaberella]

3. I think that's what the admin is trying to do.

They're breaking it down one by one as it pays out it's insurance claims.

[Syrinx]

4. I hope you're right

I have a hard time understanding these things. I don't think I'm dumb, but I just don't have the aptitude for this Wall Street stuff.

[vaberella]

2. Totally. At least he's trying but damn. Law can bite you on the ass sometimes. n/t

[No Elephants]

28. We did not put the right conditions on the bailout. Congress let itself get

bullied by Buscho into jumping through whatever hoops Bushco held up, and on Bushco timetable, just like it did with the war resolutions.

[DUlover2909]

5. Ok so, just send in Cheney's murder squad to eliminate them.

That will send a pretty powerful message.

[Cronopio]

6. The administration had the clear opportunity to put restrictions and obligations on the payout ...

... and failed to do so.

I have to wonder whether they understand how impotent and incompetent all of this ips post facto fuming and handwringing about the payouts make them all look. From Geithner to every member of Congress that fought any provision for accountability in the TARP legislation.

"We are a country of law ..."

No, we are a country that chooses to enforce its laws selectively. The FDIC has broken its own laws in keeping the Too-Big-To-Fail 4 pristinely private when it knows that they are insolvent.

"Mr Obama, who said paying bonuses was "shameful" ..."

To them, it's only shameful if they don't get away with it.

[JCMach1]

7. I agree, they should have brought these institutions completely under the bankruptcy law

After the bailout... Then, employees go to the back of the line.

As it stands, the derivatives traders get their bonus and they still will probably leave the company as 'obviously' now there is a different environment...

[AllentownJake]

13. Employees are actually above most stake holders in bankruptcy.

[saigon68]

17. Tell that to the UAL Pilots, Employees and Retirees

That Co should have been put into Chapter 11.

Broken up and the parts with the criminals disbanded; and the criminals frog marched into federal court.

This will hurt the O man for sure

[No Elephants]

30. It did not have to be bankruptcy. We should have looked into compensation and

obligations before the bailout and told them that they could give up the bonuses or watch the company go under.

Moreover, while employee wages are a high priority in bankruptcy, a promise to pay a bonus in the future may not have that same high priority. Not sure. One would have to look at the wording of the agreement. and the date. But, my first suggestion could have been used.

Congress let Hanky Panky Bernanke and Paulson bully it.

[Canuckistanian]

37. Second after secured creditors, actually

Anyone further down the line can appeal to the court for their "order".

[chimpymustgo]

20. I'm sick of the ridiculous excuses and whiny hand-wringing. Bullshit.

[harun]

23. 100% agree.

[No Elephants]

29. AGREE. I just posted something similar upthread, before I read this post.

[closeupready]

31. Yup.

:mad:

[EFerrari]

8. Theater.

[dcindian]

9. It would certainly be hard for him to claim bonuses are the answer to failing schools yet

deny bonuses to a failing company. Either they work or don't you can't have it both ways.

[Bluenorthwest]

26. I hear him talking about firing 'bad teachers'

and rewarding those who can prove 'merit'. AIG is filled with bad employees getting rewarded. And none of them are being canned for the very obvious lack of merit.
In Chicago, they closed the 'bad schools' according to Ed Sec Basketball Guy.

The administration is using tought talk about teachers and students to distract from their weak positions toward the fraudulent Corps. Accountabilty has to be universal. Not just for educators, while crooks steal and are then rewarded with taxpayer money. That is trying to have it both ways. That is using teachers and kids as a human shield of rhetoric. Craven and frankly revolting.

[closeupready]

32. That's exactly right. It's easy to target the vulnerable to be your stool pigeons

because if you piss them off, who cares, they'll still vote for you. Obama's triangulation on this is sickening me.

[acmavm]

10. Bullshit. NO law abiding country rewards criminals. And that is all that

this administration is doing.

'Couldn't stop' AIG my ass. Get the money back.

[remedy1]

12. Um...

Criminals? Have any AIG executives/employees/traders een indicted or convicted of anything?

The fact is that many of the AIG employees that are getting bonuses have contracts and their pay is generally a small salary and a bonus based on dollars generated. The fact that the products that they sold tanked doesn't preclude them from getting the bonus. It sucks, but that's the way it is. They have an enforceable employment contract.

The gov should have dealt with this before they gave AIG one dime.

[fasttense]

18. This is just the BS they are hiding behind.

So where was all the concern about contracts and laws when the Republicons decided NOT to enforce the Sherman anti Trust LAWS? Of course our dancing supremes have participated as much in allowing these firms to get so big, son monolithic, that they will bring down an entire nation.

Seems our gubermint picks and choses which laws they are concerned about. Yesterday it was monopolies getting so big they bring down a nation, today it's enforceable employment contract (you know the kind that Unions have and are regularly ignored) tomorrow it will be who will be our next fascist dictator.

Force those employees to make concessions just like they did the auto workers Unions. In today's economic environment can we afford to give out bonuses to corrupt and failing insurance firms? Seems Republicon Porker/Corker had no problem making auto workers bring their pay down. So why shouldn't these Insurance agents or AIG traders be forced to make concessions?

[GinaMaria]

42. the taxpayer is not obligated to payout these contracts

we didn't have anything to do with the contracts. AIG could borrow the money, liquidate assets, or be taken to court by employees for not paying. Taking our money to pay their obligations is BS. I'd like to take AIG to court. Every taxpayer should.

[TheEuclideanOne]

24. You can't get the money back

You have to stop it before they are given out. What the heck were all of the congressmen doing when they met on capital hill as the world was falling apart? They didn't insure that money would be loaned out and they didn't insure that people who bankrupted the company/nation/globe lost their bonuses.

[TheEuclideanOne]

25. Didn't Bush change slip something in at the 13th hour to make it easier for

CEOs to get their bonuses? I can't remember the details.

[ljm2002]

39. "Clawback"...

...look it up.

From investopedia:

Clawback

1. Previously given monies or benefits that are taken back due to specially arising circumstances.

[izquierdista]

11. Two words, Larry

Force and majure. Put them together and the government can pretty much do what it decides is best to correct an untenable situation.

[izzie]

14. Lets hope that some how laws will be passed to stop this greed

I think first making Corp. a person is wrong. And the way top guys are put into office in these corp. seems to be that the garbage goes to the top not the 'brightest and the best. Those getting votes for friends seem to do the corp. in, as it is like inter-breeding all the bad stuff into one place. You can see how it happens as they keep putting second rate people on their board and they make the rounds and vote for what ever the people want that puts them on the boards in the first place. Ever read those reports they send you to read every year? It is like a birth right. Heck even Bush was on some corp. that made odd movies as I recall. Brought him money each year to vote for what ever they wanted as if Bush knew a thing about making movies or if he knew what the corp. was doing. . It seems to mean the end of a company but it is the power thing all the way. Once you get it you just do not want to give up any of it, so power will do anything, even if it kills the goose they need to have the golden egg.

[AzDar]

15. "Thank God It Passed!"

:puke:

[SammyWinstonJack]

33. No kidding! Where are the cheerleaders now?

:puke: x2

[Belial]

16. Broken Promises.. they keep adding up like executive bonuses

[MannyGoldstein]

19. Very Simple - Declare AIG Insolvent, Feds Take It Over

No bonuses. End of story.

If Summers and Geithner weren't Republicans, that's what they'd do,

[notadmblnd]

21. Then as someone else here suggested, tax them.

[mr1956]

22. Name 'em and shame 'em

Lets see who these executives are and how much taxpayer money they accepted. While AIG may be contractually obligated to pay the bonuses, the taxpayer is not. I would like to know the individuals who are hiding behind this flimsy excuse. I'd like to know the names of these valuable employees who can turn a personal profit while running a company to ground.

[GinaMaria]

43. Thank you! Yes. exactly.

I didn't sign their employee contracts. I had no knowledge of them. The taxpayers are not responsible for this.

[No Elephants]

27. We could not stop the bonuses? Maybe we did not use the right

techniques.

[GinaMaria]

44. We need to take them to court!

Seriously, they are holding us financially accountable for their contracts?! This is out of control. We need to be reimbursed right now!

[Name removed]

34. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Marie26]

35. So halt the bailout

The U.S. government certainly has the power to do *that*.

[ProfessorGAC]

36. I Think That's A Well, Duh!

We should simply tell them, the spigot if off. That's it. If you fail, you fail. Then let's see you justify those bonuses to the shareholders who have taken a beating already.
GAC

[ProfessorGAC]

38. This Is Why We Should Have Gotten Equity

Right here on this forum, i've already discussed my opposition to the bailout, back when it occurred.

But, this could have been easily prevented by giving money in exchange for equity. These sort of bonuses need board approval, and as a majority shareholder, a rep of the gov't could have been on the board and nixed the deal in the boardroom.

The gov't not taking equity was a gigantic mistake.
GAC

[Le Taz Hot]

40. Funny how contracts can't be broken

UNLESS it's the auto industry and union contracts. And Obama couldn't do anything about it? Really? He's that balless??

[GinaMaria]

41. Since when are we the taxpayers obligated to uphold AIG's

or anyone else's contracts? If they wanted to payout based on the contracts they signed, they can get a loan. We should not be held hostage to a contract none of us agreed to.

contracts written during the boom times had left their hands tied

They should worry less about big wigs taking them to court and more about the entire country suing them. Is that possible? Could we sue them for the money?