AIG Bonuses

[ForeverAutumn]

So my original reaction to the AIG bonuses was, like most people, outrage. How can a company in so much financial disarray still pay out bonuses?

Then I thought about the people receiving the bonuses. Many of the bonuses were only $1,000. Probably going to people like me and you, the worker bees who keep the company humming on a daily basis. Why punish them for the bad business practices of the bees running the hive?

Then I thought about the gov't bailout and how, if the gov't had done it's due dillegence they should have known that these bonuses were contractually owing.

A few years ago, I worked for a company that was sold to another company. The buying company, as the purchaser, had to honour all of our company's liabilities...which included contractual employee bonus structures and severance packages. The purchasing company made sure that they were aware of all of these liabilites beforehand. They did their due diligence and there were no surprises.

Even if you are a lendor and not a purchaser, you look at the company's books. You look at their income and expense statements. You know what their assets are and you know what their liabilities are.

I blame the US Gov't for this mess, not AIG. If the gov't had done their job properly this bonus fiasco wouldn't be an issue. Sure, as a tax payer I'd still be pissed off that my tax dollars are being used this way. But what surprises me is the reaction of all of the Congressmen and President Obama himself who didn't know. Why didn't they know?! That's what I'd be really pissed off about.

[Feanor]

So my original reaction to the AIG bonuses was, like most people, outrage. How can a company in so much financial disarray still pay out bonuses?
....

I blame the US Gov't for this mess, not AIG. If the gov't had done their job properly this bonus fiasco wouldn't be an issue. Sure, as a tax payer I'd still be pissed off that my tax dollars are being used this way. But what surprises me is the reaction of all of the Congressmen and President Obama himself who didn't know. Why didn't they know?! That's what I'd be really pissed off about.

No doubt bonues are part of these employees' contract and are based on the fulfilment of technical criteria that were presumably met. These bonuses are part of the legal liability of AIG; if they don't pay, they could (and would) be sued.

Who says the government didn't know? I suspect they did, but in their haste to prevent a collapse of the company, chose to ignore the issue. Now it's convienent to shift all the blame onto AIG.

Do anything now would require a retroactive law to be passed by Congress -- and there would be many interests opposed to that. The real issue is how the bonus contracts could ever have been written as they were in the first place.

[GMichael]

The NY Post claims that the government is going to charge 100% tax on these bonuses.

[JSE]

Not to over simplify but I put it about 80% on the Govt. and 20% on AIG.

I find it hysterical that the likes of Barnie the Clown Frank are up there grandstanding "now" and blasting AIG for paying the bonuses when it was his fellow reps who were/are just as much if not more to blame for this entire mess. Typical Hypocritical Washington Bastards!

And, the current administration new the bonuses were going to be paid well before this last Monday. They are basically trying to cover their asses now saying "oh, we didn't know about them until it was too late". BULLSCHIT :mad5: !

[JSE]

Looks like Fannie is also going to *****'slap us as well.

When can we start arresting these crooks?

http://finance.yahoo.com/news/Fannie-plans-bonuses-of-up-to-apf-14679491.html

"Retention Bonus" Why do we need to retain these people?

[Rich-n-Texas]

I'll wait until this turns into another rediculous debate lead by Resident Liberal before I join in to fan the flames. Meanwhile...


So my original reaction to the AIG bonuses was, like most people, outrage. How can a company in so much financial disarray still pay out bonuses?

Then I thought about the people receiving the bonuses. Many of the bonuses were only $1,000. Probably going to people like me and you, the worker bees who keep the company humming on a daily basis. Why punish them for the bad business practices of the bees running the hive?
$220 million altogether in retention bonuses, most recently, $165 million paid out last Friday.

Retention payments range from $1,000 - $6.5 million.

[ForeverAutumn]

I'll wait until this turns into another rediculous debate lead by Resident Liberal before I join in to fan the flames. Meanwhile...


$220 million altogether in retention bonuses, most recently, $165 million paid out last Friday.

Retention payments range from $1,000 - $6.5 million.

Obviously the $6.5million bonus is grotesque. All the more reason why I'd by upset that this was allowed to happen.

[Mr Peabody]

FA you make a darn good point that the government should have known and they should have done their home work. It's funny how they grilled the auto manufacturers but just freely hand over money to AIG and other banks. Then get embarrassed because they are taking luxury holidays and now paying bonuses. They need to quit acting reactionary and get their act together.

Now, I am not happy at all over all this bail out stuff BUT to tax those bonuses more so than what is already in the code is a gross abuse of power. It's an insane reactionary position. No one even if you like the idea should let this happen. If so, what's next? Look the media can be played look at the whole invasion of Iraq, please let's not go there on this thread, it's just the best example of how media can be used to build a case. If they are allowed to tax that way who knows where those guns will point next. Where's all this fire and brimstone to get money back from Bernie Maydall? Why not seize everything attached to him? I think the outrage thing is just a smoke screen to cover their own stupidity and keep the focus off the egg on their face.

Somebody had better wake up and realize this hot shot tax evader treasury head must have cheated on his college exams or something because he isn't all he was built up to be. No one is a miracle worker and these are tough times but this guy needs a life line to get a clue. Heck based on what Feanor believes we should just put Bernie in as Treasury Secretary, if he's smart enough to create one of the most complex pondsy schemes ever then he should be able to get the economy on it's way. Just funning Feanor. :)

[atomicAdam]

From what I read on HofPo Obama's boys requested the treasury committee pull the no bail out going to bonus out of the bill.

http://www.washingtonpost.com/wp-dyn/content/article/2009/03/18/AR2009031804210.html?hpid=topnews&sid=ST2009031801503

What do we expect when the wealthy guard the wealthy. I saw hang'em all. Private and Gov.

[Feanor]

FA you make a darn good point that the government should have known and they should have done their home work. It's funny how they grilled the auto manufacturers but just freely hand over money to AIG and other banks. Then get embarrassed because they are taking luxury holidays and now paying bonuses. They need to quit acting reactionary and get their act together.
...
Heck based on what Feanor believes we should just put Bernie in as Treasury Secretary, if he's smart enough to create one of the most complex pondsy schemes ever then he should be able to get the economy on it's way. Just funning Feanor. :)

Gosh, I did't realized I was implying anything like that.

I am disappointed though that people here as putting so much emphasis on the failings of the government specifically with regard to the bonuses.

The underlying problem is with the finanicial industry and the money paid to cadre of top financial analysts. For a couple of decades the "best and brightest" have been drawn away for jobs in science, medicine, engineering, and law into this profession. Huge sums, comparable to earnings of top entertainers and sports stars, have been going to these people, so who can entirely blame ambitious youth from entering the field? The problem is that this field degenerated in to game of gambling with other peoples money (-- a point Jon Steward made taking to Jim Cramer recently).

A statistic mentioned recently is that 4000 workers in "TheCity", (London, England's financial district), each earned, (using that word loosely), over £1,000,000 last year.

Well, one way to look at is that you want the best people doing it if they are gambling with you money, and you have to pay accordingly, right?? Or maybe you would prefer that the financial industry gamble a bit less with your money. But that would require regulation by government appointees which would be socialism, right? And we alll know that's bad, right?? So pay up folks.

[ForeverAutumn]

From what I read on HofPo Obama's boys requested the treasury committee pull the no bail out going to bonus out of the bill.

http://www.washingtonpost.com/wp-dyn/content/article/2009/03/18/AR2009031804210.html?hpid=topnews&sid=ST2009031801503

What do we expect when the wealthy guard the wealthy. I saw hang'em all. Private and Gov.

Interesting article, thanks for posting it. I'm not sure, however, what to make of it...some people knew about the bonuses, others didn't. Some people claim that other people were told while those people deny it. He said, She said, blah, blah, blah.

How can the US gov't raise the tax on these bonuses? Don't y'all have a legal system for income tax? Can the gov't just arbitrarily change how these bonuses are taxed? Because that doen't seem like it should be legal to me.

[ForeverAutumn]

"Retention Bonus" Why do we need to retain these people?

That's what I was wondering? In the AIG situation, aren't these bonuses being paid to the department that ran the company into the ground in the first place? Fire the lot of them and hire some competent people.

[Kevio]

That's what I was wondering? In the AIG situation, aren't these bonuses being paid to the department that ran the company into the ground in the first place? Fire the lot of them and hire some competent people.The unit still manages over 1 trillion in assets. The story as told by the CEO is that they were concerned that if ALL these people left or were fired, they'd lose critical instututional knowledge and short-term ability to manage these funds leading to collapse of the division and possible additional loss of 1.4 trillion. It is funny that we see risk management applied to salaries like this; it was weak or absent on the things they were doing with other people's money.

How can the US gov't raise the tax on these bonuses? Don't y'all have a legal system for income tax? Can the gov't just arbitrarily change how these bonuses are taxed? Because that doen't seem like it should be legal to me.The proposal is to put the stiff tax on all bonuses over $10,000 from companies which are more than 79% owned by the government through bailout funds. AIG is the only company that meets that criteria (so far :frown5: )

[ForeverAutumn]

The proposal is to put the stiff tax on all bonuses over $10,000 from companies which are more than 79% owned by the government through bailout funds. AIG is the only company that meets that criteria (so far :frown5: )

And they can do this retroactively?

[Rich-n-Texas]

Some people who no longer even work for the company got bonuses.

A couple of things were pointed out on the news last night. The theory that the US economy would fail if AIG failed was floated by... you guessed it... AIG. Some economists are now shooting holes in that theory. Too late now though. Since the US taxpayer is now 80% owner, if AIG does fail, we're the ones that come out with nothing to show for our (forced) investment into this greed driven corporation. Also, $170 billion later, AIG is still no better off than when it started crying the blues and filling us sheep with false claims.

Now who wants to talk about Fannie & Freddie?

Capitalism: What a GREAT idea!

[Groundbeef]

And they can do this retroactively?

I'm no lawyer. But it wouldn't be "retroactively". Seeing as we are still in 2009, and 2009 taxes are not paid until on/before April 15, 2010. So the tax would be on earnings in 2009. And the bonues were paid in 2009.

Would be different if they were paid in 2008, and now the law was changed to "reach back" and tax those earnings different.

[Groundbeef]

Capitalism: What a GREAT idea!

Capitalism IS a great idea. The trick is for adequate regulation to ensure that the system is working correctly. I don't think that you could argue the great nation of North Korea is doing fantastic. They would be the anti-thesis of capitalism.:shocked:

[GMichael]

Can I get bailed out? I have two dying cars and a baby on the way. If they were to bail us out, I promise to spend the money on American made cars, thus helping them out. I'd also use it to pave our driveway, plant trees and do other landscaping. I would hire local workers, there by helping our economy even more. On the other hand, if I go "out of business" then I wouldn't be able to spend any more money, and thereby worsening the economy.
Where are the forms I need to fill out? No bonuses will be paid out to ex-:devil: employees.

[kexodusc]

I'm really regretting not taking that job with AIG right now :(

[kexodusc]

And they can do this retroactively?
Of course. Canada and the USA have examples of retroactive tax adjustments.

They can suck, and they can be good. Consider the Budget in Canada this year - you will benefit from a retroactive tax cut to Jan 1 2009, though you accrued your tax bill at a higher rate to the date just before the bill was enacted into law.

They're pretty dirty and definitely questionable from a "moral" or "philosphical" perspective because retroactive tax legislation tends to erode the rule of law - and everyone in society does its best to make decisions and behave according to the laws they know to be valid at the time - going back in time and changing them doesn't afford you the opportunity to undo your decisions.

But I guess they're a necessary evil in some cases. And sometimes they're just blatant tax-grab.

[Feanor]

I'm really regretting not taking that job with AIG right now :(
But say, Kex,

You're a financial analyst aren't you? Surely you're on the gravy train too? :hand:

[Rich-n-Texas]

Capitalism IS a great idea. The trick is for adequate regulation to ensure that the system is working correctly. I don't think that you could argue the great nation of North Korea is doing fantastic. They would be the anti-thesis of capitalism.:shocked:
And therein lies the problem. The regulators (congress) are just as greedy and power hungry as the dirty bastard CEO's in this country. Maybe it IS a good idea, but it ain't working from my POV.

[kexodusc]

But say, Kex,

You're a financial analyst aren't you? Surely you're on the gravy train too? :hand:
Psshhhhaaww....I don't work on Wall St. I don't even work on Bay St.

Nah, I got in just after the golden age - 30% of my professional exam consisted of ethics and accounting principles. They removed "smoke and mirrors", "shadow accounting" and "ramblin' & gamblin'" the year before.

Truth be told - the industry is pretty segmented - there's the AIG big wig types you read about who chase the big bucks at all costs - for everyone one of them you aren't hearing about the 3 suicides and 4 mental-breakdowns from this group that lead to people exiting the industry. But you do probably read about the arrests. I don't have the stomach to live that life - no desire. I also couldn't sleep at night making some of the moves these guys do. I suspect most of us couldn't.

Then there's people like me who prefer a work-life balance - I work to live, not live to work...paid on performance but we're happy to make less in a year than these guys steal in a week...if it means more free time, less stress, lower prison terms, etc. I'm not sure where it's at now, but few years back financial analysts were on top of the list for burnouts. No doubt a result of the first group making mistakes or taking risks and then exerting all efforts to escape the situation.

I'd like to think I was brilliant, but I'm pretty mediocre as far as these things go - but here's the real joke - in the long run if I can stay mediocre I'll have performed better for my clients than any of the people who make hundreds of times more than me and cashed in ridiculous bonuses over short periods of time. But nobody wants to pay to build wealth slowly, consistently - we're a get-rich-quick driven society.

[Feanor]

And therein lies the problem. The regulators (congress) are just as greedy and power hungry as the dirty bastard CEO's in this country. Maybe it IS a good idea, but it ain't working from my POV.

Rich, this is the concept "checks & balances" enshired in the Constitution of the good ol' US of A. Gotta love that, eh?

You set one bunch of dirty, greedy, power-hunger bastards to watch the other bunch of dirty, greedy, power-hunger bastards -- and hope that it's better than leaving to just one bunch of bastards in complete control.

[Groundbeef]

And therein lies the problem. The regulators (congress) are just as greedy and power hungry as the dirty bastard CEO's in this country. Maybe it IS a good idea, but it ain't working from my POV.

Well, sour grapes aside, I would encourage you to step out of your windowless basement and take a look outside.

Warts and all, I would argue the top 2/3 of North America (USA, and Canada) have done quite well with capitalism. We are not perfect but the system in place allows us to constantly innovate and grow.

Check out other countries that don't allow the innovations and free market freedoms that we do. I wasn't kidding about North Korea. That system is pretty closed off, and "regulated". Doesn't appear that they are faring to well.

We don't live in a Utopia, nor should we pretend that it is the goal. I think that we as Americans are pretty good at b1tching, and profiting from the system at the same time. When we regulate we are "choking" innovation. However, if we remove constraints we complain that business has "free reign" over our lives in terms of pricing, supply, etc.

I am all for free markets. And I'm not so cynical to think that every gov't agency/employee is a "dirty, greedy, power-hunger bastard". No more than all employees for IT companies are nerdy dorks who can't get laid.:arf:

[GMichael]

Rich, this is the concept "checks & balances" enshired in the Constitution of the good ol' US of A. Gotta love that, eh?

You set one bunch of dirty, greedy, power-hunger bastards to watch the other bunch of dirty, greedy, power-hunger bastards -- and hope that it's better than leaving to just one bunch of bastards in complete control.

That only works if group 1 doesn't make deals with group 2, or group 3 (known as CEO's of dirty, greedy, power-hunger bastards-R-us)

[GMichael]

Well, sour grapes aside, I would encourage you to step out of your windowless basement and take a look outside.

Warts and all, I would argue the top 2/3 of North America (USA, and Canada) have done quite well with capitalism. We are not perfect but the system in place allows us to constantly innovate and grow.

Check out other countries that don't allow the innovations and free market freedoms that we do. I wasn't kidding about North Korea. That system is pretty closed off, and "regulated". Doesn't appear that they are faring to well.

We don't live in a Utopia, nor should we pretend that it is the goal. I think that we as Americans are pretty good at b1tching, and profiting from the system at the same time. When we regulate we are "choking" innovation. However, if we remove constraints we complain that business has "free reign" over our lives in terms of pricing, supply, etc.

I am all for free markets. And I'm not so cynical to think that every gov't agency/employee is a "dirty, greedy, power-hunger bastard". No more than all employees for IT companies are nerdy dorks who can't get laid.:arf:

Low blow right to the kahonas.

[Groundbeef]

Low blow right to the kahonas.

I perfer to think of it as "Game, Set, Match" to Beefy. Again.

[Rich-n-Texas]

Well, sour grapes aside, I would encourage you to step out of your windowless basement and take a look outside.
You'll rarely find a house in Texas with a basement. At least not in North Texas.


Warts and all, I would argue the top 2/3 of North America (USA, and Canada) have done quite well with capitalism. We are not perfect but the system in place allows us to constantly innovate and grow.

Check out other countries that don't allow the innovations and free market freedoms that we do. I wasn't kidding about North Korea. That system is pretty closed off, and "regulated". Doesn't appear that they are faring to well.

We don't live in a Utopia, nor should we pretend that it is the goal. I think that we as Americans are pretty good at b1tching, and profiting from the system at the same time. When we regulate we are "choking" innovation. However, if we remove constraints we complain that business has "free reign" over our lives in terms of pricing, supply, etc.

I am all for free markets. And I'm not so cynical to think that every gov't agency/employee is a "dirty, greedy, power-hunger bastard". No more than all employees for IT companies are nerdy dorks who can't get laid.:arf:
Good thing I'm not in IT. OTOH, "Chuck" doesn't seem to be doing too bad for himself. :p

I don't agree with many of tennets of Capitalism, but I accept it as the most logical alternative to the other forms, of which some have failed.

[Mr Peabody]

GM you and the wife should have had octuplets then your problems would have been solved. Boy, howdy at the exemptions and credits.

[GMichael]

GM you and the wife should have had octuplets then your problems would have been solved. Boy, howdy at the exemptions and credits.
Poor wifey only weighs 100 pounds dripping wet.(up to 105 lbs at 5 months) Where would she fit 8 babies?

[Rich-n-Texas]

Poor wifey only weighs 100 pounds dripping wet.(up to 105 lbs at 5 months) Where would she fit 8 babies?
So in four months it'll be July. I'm gonna start storing BEER for the party right now! :yesnod:

[GMichael]

So in four months it'll be July. I'm gonna start storing BEER for the party right now! :yesnod:
The party will be in PA. Can you pack those beers up and ship them north?
Women will be upstairs with the karaoke. Guys downstairs with the beer, snacks, music & pool table.:14:

Guys wanting to sing are welcome to go up, and gals wanting to drink and play pool are welcome to go down.

[Mr Peabody]

Did you say there would be women going down? What's the address?

Where to put eight babies, ever seen the movie Junior? Really though where would any female hold eight babies. That's a big litter for a dog, not to mention a woman.

[Auricauricle]

Now more than ever, the American public is appreciating the not so subtle incestuousness of political and business relationships. When all is well, folks are happy to let things glide along, with all wheels well lubed and all cylinders pumping. On the other hand, when the mighty engine comes to a grinding halt, folks stand around wondering what in Hades' name happened? Are we that dumb or are we just daydream believers who are so quick to put our blind faith into a system that is bound to falter? Is this, then, the Grand Delusion?

The AIG disaster was bourne, in part, out of greed but also out of a willful ignorance that thought that such an industry, if left unregulated or unmonitored, would operate with only "the good" in mind. Well, folks get greedy, or they get sloppy, and when that happens, we all suffer. If the industry is pharmaceutical, people die or are seriously harmed. Chalk the blame up to Pharma or the AMA if you like, but it is the relationship between these two willing and complicit partners that really should get a look.

Some of the folks at AIG and elsewhere are really having a hard time, now. The cost of mental anguish and distress is at a very high point, and there's plenty of breakdown and suicide going down, but some of this was preventable.

For example, as a professional, I have to sleep with decisions that I have made and advice that I have given. I rest somewhat assured, however, because I keep abreast with current research and know that the evidence that I use to make these decisions is of the highest calibre. The folks from AIG, etc. who lose sleep are either those who did not apply diligent attention to the evidence at hand--they were sloppy--or folks who were happy to ride the ride the rollercoaster, knowing that the sheep would never hit the fan and the loot would keep pouring in--they were greedy.

I feel for these people (and especially their stricken families), but I am wary.

[Rich-n-Texas]

What was well lubed? :idea:

:biggrin5:

[Auricauricle]

Oh yeah....I think you can figger it out.

[GMichael]

So, Aa, are you saying that we should all just bend over?

[Auricauricle]

That's about it, GM. BOHICA, indeed!

[Mr Peabody]

GM, did you have to "ah" and bend over in the same post?

[GMichael]

Snicker snicker.....