AIG to Dole Out $165 million in Bonuses

http://news.yahoo.com/s/ap/20090318/ap_on_go_pr_wh/aig_what_did_they_know/print

 

Not true.

http://blogs.abcnews.com/politicalpunch/2009/03/obama-adminis-1.html

 

Obama administration sources......interesting.

 

Dubious source at best.

I've been racking up the air miles the last week so Im missing much of the discussion here. However, I read an article in the wall street journal that pointed the finger at Geithner as the one who had knowledge of the bonus situation. I dont know if the article is available online.

Regardless, there is enough smoke out there surrounding Geithner and Dodd to indicate some people had knowledge and had it for months. It sure looks like at least some members of congress knew and may be culpable. Geithner looks like he might have had knowledge and if thats the case, any reports saying the "Obama Administration" knew about this hot potato are correct.

Its amazing how much casual conversation is taking place about these bonuses. Legal or not, they should not be paid. It may be a drip in the bucket but the public perception is impossible to overcome and the outrage is loud and clear.

 

Just providing an alternative point of view, your source isnt anymore credible than mine. We just have different opinions, thats all!

How is it dubious? cause you say so?

 

More interesting tidbits:

http://online.wsj.com/article/SB123725551430050865.html

http://www.foxbusiness.com/story/markets/industries/finance/dodd-cracks-aig---time/

 

The supposed outrage is a smokescreen. It deflects attention. Geithner was at the table with W and Paulsen when the Tarp deal was hammered out. Geithner has been in the loop from day 1 and the "bonus" money was not released until Geithner gave the go ahead. The proposal to use the tax code to get this money back is bluster and will never happen. AIG CEO wrote a letter to the Wahington Post, to try and inject a little reason into the discussion:

The Washington Post

Our Mission at AIG: Repairs, and Repayment

By Edward M. Liddy
Wednesday, March 18, 2009; Page A13

The government rescue of American International Group (AIG) and other financial firms has produced a palpable wave of anger on the part of Americans and a rising public demand for accountability from corporate and government leaders.

The anger is understandable, and I share it. I have been fortunate in more than three decades in business to see firsthand the wealth creation that well-managed American companies bring to their employees and their communities. I have seen the good side of capitalism. But over the past six months, since agreeing to take the reins of AIG and reviewing how it was run in prior years, I have also seen instances of the bad side of capitalism.

Mistakes were made at AIG, and on a scale that few could have imagined possible. The most egregious of those began in 1987, when the company strayed from its core insurance competencies to launch a credit-default-swaps portfolio, which eventually became subject to massive collateral calls that created a liquidity crisis for AIG. Its missteps have exacted a high price, not only for the company and its employees but for the American taxpayer, the federal government's finances and the global economy. These missteps brought AIG to the brink of collapse and to the government for help.

When I answered the call for help and joined AIG in September 2008, one thing quickly became apparent: The company's overall structure is too complex, too unwieldy and too opaque for its component businesses to be well managed as one entity. So the strategy we continue to pursue, in close cooperation with the Federal Reserve and the U.S. Treasury, is to isolate the value in the company's component parts, capture that value to pay back money owed to the government, and allow AIG's healthy insurance companies to continue to prosper for the benefit of policyholders and taxpayers.

What also became clear is that once AIG's relationship with the government and taxpayers changed, our behavior as a company needed to change. So, of our own initiative, we suspended our federal lobbying activities and halted corporate political contributions. We also restricted executive compensation. In all, total 2008 compensation for the top 47 executives is 56 percent lower than their total 2007 compensation. My annual salary is $1. My only stake is my reputation.

No one knows better than I do that AIG has been the recipient of generous amounts of government financial aid. We are acutely aware not only that we must be good stewards of the public funds we have received but that the patience of America's taxpayers is wearing thin. Where that patience is especially thin is on the question of compensation.

I am mindful of the outrage of the American public and of the president's call for a more restrained compensation system. I am also mindful that every decision we make at AIG has consequences for the American taxpayer. We weigh decisions with one priority in mind: Will this action help or hurt our ability to pay money back to the government?

Although we have wound down more than $1 trillion in the portfolio of the AIG Financial Products unit that is at the root of the company's troubles, there remains substantial risk in that portfolio. The financial downside for taxpayers is potentially very large, and that's why we're winding down this business.

To prevent undue risk exposure in the meantime, AIG has made a set of retention payments to employees based on a compensation system that prior management put in place. As has been reported, payments were made to employees in the Financial Products unit. Make no mistake, had I been chief executive at the time, I would never have approved the retention contracts that were put in place more than a year ago. It was distasteful to have to make these payments. But we concluded that the risks to the company, and therefore the financial system and the economy, were unacceptably high.

Where does that leave us?

Taxpayers should know that the government's assistance to AIG has had a beneficial effect. The assistance has provided stability to the company and to the entire financial system.

Taxpayers should also know that AIG has a plan to return money to the government, and we are making progress. We have transferred to the government securities or equity interests that have real value and prospects for future appreciation. We are selling assets and significantly reducing our risk exposure. The business unit that was the source of our greatest losses is being shut down. And we have agreed with the Federal Reserve and the Treasury to pay off AIG's existing loan through a combination of asset transfers, securitization of the cash value of certain life insurance businesses, and cash from the sale of businesses.

What lessons can we draw from AIG's experience? There must be safeguards against the systemic consequences of failures of large, interconnected financial institutions. Where safeguards are lacking, such companies need to be restructured or scaled back so they no longer come close to posing a systemic risk. We have seen all too clearly where the brink lies; our corporate structures need to be pulled back from that edge.

In America, when you owe people money, you pay them. We are pressing forward with our plan to return money to taxpayers, protect policyholders, and give employees a vision of success and a path for achieving it. With the understanding and patience of the American people and the continued support of the Federal Reserve and the Treasury, we can resolve AIG's challenges and help its businesses contribute to a global economic recovery.

The writer is chairman and chief executive of American International Group.

 

The administration can say, er sell, what they like but I'm not buying.

So Geithner was running the NY Fed Reserve Bank and now claims he didn't know? Isn't a money man supposed to complete due dilligence prior to giving a loan for $85 BILLION?

Then we have a program passed by Congress which had rules but just not the right kind of rules? Does nobody in Congress know about retention bonuses? My God, anyone with ANY business experience AT ALL would have been discussing bonus payments of any kind.....retention pay, deferred comp, executive vehicles, premium insurance, etc. The level of incompetence being displayed is on the same level as some of the people being bailed out.