Aig Bonuses

[Rani]

Okay, so AIG gets a government bail out and turns around and give out millions in bonuses to their employees. Democrats are planning to tax them away. Republicans are saying, no wait.... Don't be hasty about more legislation. I'm so bloody frustrated with the whole mess. When the company I worked for hit the slump, the very first thing that went bye-bye were the company bonuses! What company fighting for it's survival and in such desperate need as to require a government bail out could possibly be so stupid as to give away money in bonuses? Sure employees deserved bonuses when they go above and beyond and times are good, however, not when the very existence of the company they work for is in jeopardy. That's when as an employee worth a damn you're supposed to give you very best to help the company survive. Then after the turnaround, then and only then should you be bonused. Stupid, stupid, stupid.

'Rani

[ilikemyusername]

indeed

[SimplexCoda]

Ah the beauty of a capitalist society eh?
Im not real thrilled with this country right now anyway. dont get me wrong i lik it here, but our government is slowl changing my mind.

[Stuie]

So here's what I don't get...

All their salaried employees are under contract, which spells out benefits, bonuses, salary, etc...

I sign one every year.

So they only way an employer can break this contract is if they fire the employee, they leave, or the company files for bankruptcy.

So if me, a simple man who hasn't taken an economic class or researched labor laws in a decade, know this why didn't our government?

It's not AIG's fault. If they didn't pay the contracted salaries and bonuses, their employees can sue them.

All the brilliant minds in Washington had to do was make bankruptcy a condition of their receiving money.

....but silly me there I go again thinking our government has OUR best interest at heart.

[Rani]

So here's what I don't get...

All their salaried employees are under contract, which spells out benefits, bonuses, salary, etc...

I sign one every year.

So they only way an employer can break this contract is if they fire the employee, they leave, or the company files for bankruptcy.

So if me, a simple man who hasn't taken an economic class or researched labor laws in a decade, know this why didn't our government?

It's not AIG's fault. If they didn't pay the contracted salaries and bonuses, their employees can sue them.

All the brilliant minds in Washington had to do was make bankruptcy a condition of their receiving money.

....but silly me there I go again thinking our government has OUR best interest at heart.

Actually not true. I've personally been through this one before and lost the battle. The overall welfare of the company takes precedence over individual contracts. Think of it as a private industry version of "eminent domain" where the benefit to the many outweighs the individual. It requires producing their financial records to prove they are not in position to pay, but that's easily done since they will have monthly, quarterly and yearly financial statements on file. And I do blame our government as well. The first agreement to qualify for a bail out should be that bonuses and raises are suspended until the company repays the bail out.

'Rani

[Scoop]

bill in works to tax their bonuses. 90% for most of them, 100% tax on some of them

[Bye bye now have fun]

yes be pissed about how they spent .1$ of their money and not that they receved billions of dollars. the bailouts have far exceeded the war on terrorism.

[Canon]

from what i remember hearing over the radio the top 50 executives are getting the bonus. 20 of them are getting over a million dollars

[Dr. B]

Actually not true. I've personally been through this one before and lost the battle. The overall welfare of the company takes precedence over individual contracts. Think of it as a private industry version of "eminent domain" where the benefit to the many outweighs the individual. It requires producing their financial records to prove they are not in position to pay, but that's easily done since they will have monthly, quarterly and yearly financial statements on file. And I do blame our government as well. The first agreement to qualify for a bail out should be that bonuses and raises are suspended until the company repays the bail out.

'Rani

The battle you endured seems peculiar to me as an accountant. Typically wages are recorded as a liability before they are expensed and the firm is required to pay them (they are expensed when paid). Even in the face of insolvency, a company is required to pay its liabilities in a certain order until all assets have been liquidated and the company cannot pay any more of its debts. This is of course a bankruptcy procedure, but nevertheless internal contracts are paid (bonds, salary liabilities, unearned revenue) before any distribution to owners (stockholders) is made. If the "...welfare of the company takes precedence over individual contracts" then stockholders would recieve dividends and distribution first. That's not how it works - in fact that's illegal. You had a contract with the company for services rendered, and you got screwed if any stockholders got paid before you. It is true some liabilities are paid before salaries, but if you were working for a firm that insolvent it was perhaps bad judgement on your part. I don't know the circumstances of your battle, but from what I read it doesn't seem right.

That being said I have mixed feelings about the bailouts as an economic naturalist. I know financial institutions have a greater propensity for money creation than do manufacturing firms and we consequently enjoy a higher standard of living, but I wish the tax burden wasn't distributed amongst completely uninvolved individuals. However, I am willing to bear some of the weight of the failure of our culture of greed and extravagance, as I to am an American - frugal as I may be. We are pioneering a new age people, and if it is a cyclic period of trial and error, so be it - as long as it amounts to something, which I have faith it will.

[TheScotsman]

Okay, so AIG gets a government bail out and turns around and give out millions in bonuses to their employees. Democrats are planning to tax them away. Republicans are saying, no wait.... Don't be hasty about more legislation. I'm so bloody frustrated with the whole mess. When the company I worked for hit the slump, the very first thing that went bye-bye were the company bonuses! What company fighting for it's survival and in such desperate need as to require a government bail out could possibly be so stupid as to give away money in bonuses? Sure employees deserved bonuses when they go above and beyond and times are good, however, not when the very existence of the company they work for is in jeopardy. That's when as an employee worth a damn you're supposed to give you very best to help the company survive. Then after the turnaround, then and only then should you be bonused. Stupid, stupid, stupid.

'Rani

The interesting part is that Democrap senator dodd is the wanker that put language in the stimulus bill that not only allowed the bonuses, but protected them. Then he said he didn't do it, later he admitted doing it, but said the administration requested the language be added.

Quote from the stimulus bill... author C. Dodd (Dem)
The prohibition required under clause (i) shall not be construed to prohibit any bonus payment required to be paid pursuant to a written employment contract executed on or before February 11, 2009, as such valid employment contracts are determined by the Secretary or the designee of the Secretary.


Did geithner know? You bet he did, after all, what did he do before Bo appointed him to finish screwing up the economy? He was Pres of the NY reserve, and handled the original bailout of AIG (well, at least his signature is on it, for whatever that is worth these days.) Now what is he... .hmmmm, that named secretary above. The dems are putting on this AIG show to hide their basic culpability in the whole fiasco. The repubs say there was no way to read the bill before the vote (all 19 hours to read 1100 pages of legal language, let's be realistic, that is impossible)

Now we find out that the 165megabones is really 215megabones, and I am sure it will keep going up. WTH? The gov't knew that was their contract! The NY Fed approved the retention bonuses wanting to keep the crooks that created the frankenstein-money-monster working there in hopes they could fix their own mess. How can anyone believe this fake-outrage from the congress that enacted the legislation that literaly mandated the same bonuses they are now trying to take away? It's just smoke and mirrors for the sheeple... or we have a congress so completely incompetent that they actually enacted that stimulus bill with such stupid provisions... and a president so completely incompetent he signed it without knowing what his office ordered inserted, then defended geithner who is the one person all the snail-tracks keep pointing back to.

All the while we have geithner setting up a system of monitizing the debt by using the fed to finance loans to the treasury. (we are now floating the insane spending by writing ourselves I-Owe-Me's) This alone is going to create some inflation in a frightning way. He anounced his "plan" to loan $ to ourselves at 2:30P, and gold took a near 60$ jump in less than 3 minutes. Looks like the money is running for safe places to hide from this admin. I like big gold $$$ makes that 280$ I paid back in 99 look great.

Oh, and who was AIG's #1 recipient of political donations? Chris dodd! (#2 was obama).

Lets hear it for a just more politics as usual, corruption, payoffs, and buyouts. Aye, I can't resist... "Change we can believe in"
Should have just let AIG, GE, Merril, and the rest go into recievership. The gov't isn't smart enough to find it's own ass with a flashlight, and crap on their collective fingers, How can they expect to be able to manage individual employee contracts of any company?

Many of the bonuses were retention incentives. How can anyone say it's wrong to take money that you are promised in a contract designed to keep you working there? The bonuses were not a preformance incentive, but a bribe to keep the rats on the sinking boat. Hell by the logic that they don't deserve it, we need to go find every Viet Nam vet, and tax their re-up money (Which is a retention bonus), since they lost the war, that was a failure just like AIG. Or go collect any hiring bonuses from cops, after all... there is still crime. That is fooking stuid, but it is the same circumstance.

Don't get me wrong, I think the bonuses are nothing less than theft of taxpayer money, but the AIG people didn't do it...

... the government that promised those bonuses did. First GW stole our bucks, and handed it out to his buddies, then the current admin is following suit. That won't change until the public decides to start throwing these lifetime career politicians out on their cans. Maybe this whole AIG mess will convince them it's time... Or not.

[Rani]

Actually not true. I've personally been through this one before and lost the battle. The overall welfare of the company takes precedence over individual contracts. Think of it as a private industry version of "eminent domain" where the benefit to the many outweighs the individual. It requires producing their financial records to prove they are not in position to pay, but that's easily done since they will have monthly, quarterly and yearly financial statements on file. And I do blame our government as well. The first agreement to qualify for a bail out should be that bonuses and raises are suspended until the company repays the bail out.

'Rani

The battle you endured seems peculiar to me as an accountant. Typically wages are recorded as a liability before they are expensed and the firm is required to pay them (they are expensed when paid). Even in the face of insolvency, a company is required to pay its liabilities in a certain order until all assets have been liquidated and the company cannot pay any more of its debts. This is of course a bankruptcy procedure, but nevertheless internal contracts are paid (bonds, salary liabilities, unearned revenue) before any distribution to owners (stockholders) is made. If the "...welfare of the company takes precedence over individual contracts" then stockholders would recieve dividends and distribution first. That's not how it works - in fact that's illegal. You had a contract with the company for services rendered, and you got screwed if any stockholders got paid before you. It is true some liabilities are paid before salaries, but if you were working for a firm that insolvent it was perhaps bad judgement on your part. I don't know the circumstances of your battle, but from what I read it doesn't seem right.

That being said I have mixed feelings about the bailouts as an economic naturalist. I know financial institutions have a greater propensity for money creation than do manufacturing firms and we consequently enjoy a higher standard of living, but I wish the tax burden wasn't distributed amongst completely uninvolved individuals. However, I am willing to bear some of the weight of the failure of our culture of greed and extravagance, as I to am an American - frugal as I may be. We are pioneering a new age people, and if it is a cyclic period of trial and error, so be it - as long as it amounts to something, which I have faith it will.

Stock owners weren't paid dividends either. Nobody got anything but basic wages and all raises were frozen. You're correct in that they eventually have to give it to you and they eventually did - but it took nearly 4 years. Trust me, I was one of the employee reps on the team fighting it. We spent many, many hours with lawyers on behalf of us going over it. There is a debt priority and bonuses are not anywhere near the top. Everythng else comes first.

'Rani

[Bulldog_916]

Honestly, who really cares? I still have my job, my parents have theirs. My family is employed. I find it hard to give a crap what the rich pigs do with their fortunes while I'm trying to make mine. What are we gonna do? TAX THEIR BONUSES? Good luck, all that money is in some Swedish bank off shore. All they have to do is move overseas and wait this thing out. While it seems practical to tax their money, it really isnt and the bill will likely die in committee before it gets to the Pres' desk.

AIG is in the shitter. They had to insure loans that shouldnt have been made. They took that insurance out through European banks and a couple of American ones. Now they are giving bonuses to the same nimrods that got them into the mess. It's a circular, self reinforcing cycle of corruption and greed. This is the American way. 210 million is a drop in their collective bucket. They dont care what you think, they have no interest in your thoughts on what they did. Chris Dodd said that if you're going to give bonuses, go ahead. It's on the backs of AIG NOT to give out bonuses until all the money is paid. But you're blaming Dodd for putting in the language to protect potential future bonuses. You think he knew they were gonna hand them out right away? Yea right!

[TheScotsman]

Of course they knew the bonuses were going out right away, they were retention bonuses, and right in the contract that was disclosed to the SEC. The stipulation was to pay them within 6 months of contract signing.

Just like barney frank's buddies over at fannie mae and freddie mac getting the same type of retention bonuses...
http://www.washingtonpost.com/wp-dyn/conte...ml?hpid=topnews

Now I personally would give them back their retention bonus, even if they had a contractual obligation to pay, that the gov't approved, and was part of my original hiring. The cheque would be attached to the top of my resignation letter. Who would work for a company that had the gov't fingers in it, screwing with your pay all the time?

[Sonthert]

If they can withhold the bonuses before the bailout, they can withhold them after the bailout. This is exactly what I predicted. Giving companies money is going to only perpetuate irresponsible or destructive actions. It will cause more problems in the long run.

[judgeposer]

Honestly, who really cares? I still have my job, my parents have theirs. My family is employed. I find it hard to give a crap what the rich pigs do with their fortunes while I'm trying to make mine. What are we gonna do? TAX THEIR BONUSES? Good luck, all that money is in some Swedish bank off shore. All they have to do is move overseas and wait this thing out. While it seems practical to tax their money, it really isnt and the bill will likely die in committee before it gets to the Pres' desk.

AIG is in the shitter. They had to insure loans that shouldnt have been made. They took that insurance out through European banks and a couple of American ones. Now they are giving bonuses to the same nimrods that got them into the mess. It's a circular, self reinforcing cycle of corruption and greed. This is the American way. 210 million is a drop in their collective bucket. They dont care what you think, they have no interest in your thoughts on what they did. Chris Dodd said that if you're going to give bonuses, go ahead. It's on the backs of AIG NOT to give out bonuses until all the money is paid. But you're blaming Dodd for putting in the language to protect potential future bonuses. You think he knew they were gonna hand them out right away? Yea right!

Simply moving the money into an "off shore" account doesn't mean it isn't taxable, especially once the government knows you've made it.

[HellCat]

Woah first of all why the fuck did they get billions of dollars from the obama administration/liberal congress in the first place???

And we are talking about less than 1/2 of 1% of the money they got. Go cry a river. Im not happy about it, but it was in the contracts and the fucking morons in congress that gave them the money, it their fault, not AIG's.

[Rani]

Woah first of all why the fuck did they get billions of dollars from the obama administration/liberal congress in the first place???

And we are talking about less than 1/2 of 1% of the money they got. Go cry a river. Im not happy about it, but it was in the contracts and the fucking morons in congress that gave them the money, it their fault, not AIG's.

It was a badly structured deal all around. AIG should not have given the bonuses and there are plenty of ways around legally doing so. Our government should have made deferring the bonuses a condition of the bail out, which honestly I'm not a fan of bail outs period. But there's also the fact that I'm not certain anyone was aware of the extent of the bonuses. Because I don't think they bothered to look closely. Someone said we have to give out the salary attached bonuses and our government said okay, go ahead. Likely thinking they were across the board, and probably not actually thinking about them being directed at a select few. Because in case nobody has noticed, our politicians are not exactly in the people who think things through catagory. AIG should have been allowed to fail I agree. These bail outs never work in the long run - anybody remember Pan Am? Our politicians did an "oh shit, more voters potentially out of work!" and lept in to try and be heroes. What about the auto industry bailout, and banking bailouts? Had any of these companies actually failed, foreign companies would have bought them out pennies on the dollar and life though changed would have gone on. Foreign investment both scares me and encourages me. My gut tells me that until we have industrial and political unity throughout the world with every nation having an interest in each other, we will never have world stability. Until we have that stability, there will never be any real peace and equal prosperity and they will all be trying to get the upperhand on each other. And we the world's general population will continue to be the ones who pay the price.

'Rani

[Sonthert]

Bankruptcy as a condition! Its a good idea on the surface. I'd have to think about it more.

In the city of San Diego, we are teetering on the brink of bankruptcy. Union leaders thought it would be a nice idea to help union members by a) Changing the retirement rules to a percentage of the persons one highest year of salary. and b ) establishing some jobs for good union boys with a one year job, the year before they retire, a salary of say, $250,000/ year. The net effect is a person with that sort of retirement deal would be making $50,000 for most of their career and get the retirement-bound job (which was perfunctory, they still did the same job usually) and make $100,000 a year in retirement. So, the City of San Diego has been nearly choked by their greed. The mayoral candidates say "San Diego doesn't need to file for bankruptcy, we can save the city from that." Like its a huge problem to file for Chapter 9 Bankruptcy...of course, then the City would be able to tell the Union guys to go climb a pole..and all the major candidates for mayor have been union members...imagine that! People expect the whole city will grind to a stop if the City files for bankruptcy. Frequently people with a vested interest in the distress of the entity will discourage actions that will make the entity healthy. Thats the big problem with these bailouts...we assume that the management of these companies want the company to get stronger and healthier, but if their well-being is threatened by reform, they will block and oppose it. Sometime, I'll have to tell the story why GM didn't modernize their plants for 50-80 years as explained to me by a GM manager. On the other hand, I've read that experts say that GM filing for bankruptcy, on the other hand, would drive dozens of other companies to bankruptcy because they rely on General Motors for money and orders. Bankruptcy would interrupt the flow of money to these companies.

I don't know, it seems like a good idea on the face of it.

Maybe we can just declare bankruptcy protection for every company in the United States who want it. No, I don't agree with that either. I don't know.

[TheScotsman]

And if you thought that last bailout was a disaster..

http://www.bloomberg.com/apps/news?pid=206...&refer=home
http://www.wowowow.com/politics/geithner-t...set-plan-247712
Not much info out there yet, but it's looking like a gigantic gov't guarantee program (read hog-trough of $ for big investors)

This it our change, or not so much change. Maybe just more money than the last one.
We are getting the same buzzwords out of Obama's mouth as we did from GW, words like unlocking credit, emergency, immediately, and housing market. Same old crap, just another trillion to the big $ bankers.

I would rather see it go to the broke cities, and automakers than more $ to banks/insurance companies, that have proven they will flagrantly misuse it with no regard for the rules of law, or common sense. Another trillion pissed into the hands of big bank money. The best part is we are loaning the 1-trillion to ourselves!



One really has to wonder just how much GM needed more tax dollars. As soon as we started seeing more restrictions, and oversight coming with the $, we see GM suddenly not needing the line of credit this last month. Sonthert is on to something with GM's lack of modernization. One would have thought they would have learned their lesson back in the '80's When even the cheapest Japan had to offer was miles ahead of the 1946 engineering that was (and, for the most part, still is) coming out of American builders.

[judgeposer]

I would rather see it go to the broke cities, and automakers than more $ to banks/insurance companies, that have proven they will flagrantly misuse it with no regard for the rules of law, or common sense. Another trillion pissed into the hands of big bank money. The best part is we are loaning the 1-trillion to ourselves!

What illegality have we so far uncovered?

[Bulldog_916]

And if you thought that last bailout was a disaster..

http://www.bloomberg.com/apps/news?pid=206...&refer=home
http://www.wowowow.com/politics/geithner-t...set-plan-247712
Not much info out there yet, but it's looking like a gigantic gov't guarantee program (read hog-trough of $ for big investors)

This it our change, or not so much change. Maybe just more money than the last one.
We are getting the same buzzwords out of Obama's mouth as we did from GW, words like unlocking credit, emergency, immediately, and housing market. Same old crap, just another trillion to the big $ bankers.

I would rather see it go to the broke cities, and automakers than more $ to banks/insurance companies, that have proven they will flagrantly misuse it with no regard for the rules of law, or common sense. Another trillion pissed into the hands of big bank money. The best part is we are loaning the 1-trillion to ourselves!



One really has to wonder just how much GM needed more tax dollars. As soon as we started seeing more restrictions, and oversight coming with the $, we see GM suddenly not needing the line of credit this last month. Sonthert is on to something with GM's lack of modernization. One would have thought they would have learned their lesson back in the '80's When even the cheapest Japan had to offer was miles ahead of the 1946 engineering that was (and, for the most part, still is) coming out of American builders.

So far, Wall Street and the banks wont let their money flow until the bad assets are off the bank books. The plan is a 50/50 partnership between the investor and the treasury and is being insured by the government. When (WHEN) housing prices go back up, however slowly, the assets will improve in value. If they dont improve or decline in value, both the investor and the government/tax payer lose out. If this is the best plan they have for finally getting credit flowing again and the economy in a more stable position, if not better, then it needs to get done. Honestly, the economy wont go anywhere if the banks arent lending to businesses and private individuals because that's the way money moves in this system. We cant count on cash and we arent going to change our currency or tie it to gold. So this is all we can do. Wall St. obviously likes it. Now let's see if it helps Main St.

[Rani]

Follow-up:

It hit the press today that about $80 million of the bonus money will be voluntarily returned by the time the dust settles. And that's likely because of the threat of taxes. I do not agree with the taxation scheme for the bonuses either. If the bonus is a part of their compensation package, they have earned it and it should be deferred, not given and then taxed into oblivion as some sort of punishment for having negotiated it in the first place. Notice I never said I didn't think they should ever get the bonuses.... Only that they shouldn't received them until after the bail out money was repaid.

'Rani

[Sonthert]

When the bailout plan was in its infancy, Obama was invoking FD Roosevelt's bailout plan. FDR's plan was simple, as he put it, if we need to pay a line of men to dig a ditch and then pay another line of men to fill in the ditch, then that is what we will do. I don't see new California Conservation Corps (CCC) ideas or Works Progress Administration (WPA) ideas...getting money to people to spend to help the economy is one thing...throwing money at corporations who should have planned better and acted irresponsibly is something else.

[Rani]

When the bailout plan was in its infancy, Obama was invoking FD Roosevelt's bailout plan. FDR's plan was simple, as he put it, if we need to pay a line of men to dig a ditch and then pay another line of men to fill in the ditch, then that is what we will do. I don't see new California Conservation Corps (CCC) ideas or Works Progress Administration (WPA) ideas...getting money to people to spend to help the economy is one thing...throwing money at corporations who should have planned better and acted irresponsibly is something else.

Absolutely.... I still don't agree with the government bailing out any company at all. Period. Why? Because if they are badly managed they should fail. Natural selection should be as much a part of the business industry as it is in the natural world.

'Rani

[Sonthert]

When the bailout plan was in its infancy, Obama was invoking FD Roosevelt's bailout plan. FDR's plan was simple, as he put it, if we need to pay a line of men to dig a ditch and then pay another line of men to fill in the ditch, then that is what we will do. I don't see new California Conservation Corps (CCC) ideas or Works Progress Administration (WPA) ideas...getting money to people to spend to help the economy is one thing...throwing money at corporations who should have planned better and acted irresponsibly is something else.

Absolutely.... I still don't agree with the government bailing out any company at all. Period. Why? Because if they are badly managed they should fail. Natural selection should be as much a part of the business industry as it is in the natural world.

'Rani

That's what I've been saying all along. Its like we share half a brain...