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AIG aGAIN

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Headlined to H2 3/16/09

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Again, in a massive demonstration of complete incompetence and utter greed, AIG continues to ensure that executives are paid six-figure bonuses while millions of taxpayers who were forced to provide the money are out of jobs and losing their homes.1


AIG posted the largest corporate quarterly loss in history, losing over $685,000,000 a day after receiving the largest individual government supplied corporate bailout in the history of the world. How can this possibly qualify anyone for a bonus, especially considering that AIG has laid off scores of thousands of workers?

Forty two executives will each receive an average of $112,000 now, and another $57,000 in July and September if the AIG board determines "that the company is meeting the goals the government has set for dealing with the company's financial troubles."

So, what are these goals? How are these bonuses determined, and how has it been determined that they deserve the bonuses they are receiving now?

According to the news, the Treasury Department didn't have legal authority to stop the bonus payments. Exactly how does the government have legal authority to rob the taxpayers of the money to give to AIG, but they don't have the authority to control what they do with the money? Who is so completely incompetent as to suggest we, the taxpayer, do not have control of either our government or an AIG funded with our money?

Edward Liddy, the government appointed Chairman of AIG, told Treasury Secretary Timothy Geithner that AIG had contractual obligations to pay the bonuses or face lawsuits. Obama's chief economic advisor Larry Summers says the government determined it could not break those contracts after the fact.2

This is the same thing that happens when you give a spoiled teenager money with no restrictions. They squander it without consideration of responsibility, usually with excuses or reasons behind their waste. The fact is, the government gave AIG the money, and like any other responsible lender, should have defined specific purposes for it. But in their regular fascist practice of protecting the boy's club, they didn't.

These contracts where arranged in early 2008, supposedly before AIG was in trouble and received a taxpayer bailout. Yet, by January of 2008, it was already clear something was amiss as AIG's stock value had already dropped by 24% from it's previous 52 week high of $72.65 a share. In the first quarter of 2008, AIG's stock dropped another 23%, a total of 41% from its 52 week high.

Considering that AIG's stock dropped 97% in 2008, by what measure were these contracts honored? That is, how does one guarantee a bonus that still pays when a company suffers a 97% loss?

The truth is, when these contracts were signed, any remotely competent executives had a pretty clear vision of what was occurring, and were simply making legal arrangements to ensure they were financially secure. These contracts were created with insider information under very false pretenses. The contracts themselves are effectively illegal, and, therefore, unenforceable. Yet, they guarantee at least $220 million in retention pay, $55 million of which has already been distributed at an average of $137,500 to each of 440 employees.

In defending the bonuses, Edward Liddy said, "We cannot attract and retain the best and brightest talent to lead and staff the AIG businesses, which are now being operated principally on behalf of the American taxpayers - if employees believe their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury".3

 

Yet the "best and brightest" staff spent a considerable amount of time ensuring their bonuses are subject to "continued and arbitrary" certainty in spite of a 97% stock drop and the largest corporate loss in history, but they couldn't save the company from such failure? I would love for Liddy, or anyone else for that matter, to explain to me with any sense of reason how those contracts were accepted. Basically, the contracts would have to contain language tantamount to, "The bonus is paid no matter what happens," because there is absolutely no measure of success here, reasonable or otherwise.

There are only a few conclusions one can draw from such an irresponsible policy. One is that the decision makers didn't know the money would be squandered. Yet, anyone with the slightest bit of common sense knew that, without protections, it would be wasted in the same way the money had been wasted when AIG took a luxurious executive splash shortly after they received their first bailout.4

If they didn't know, they should now be immediately fired for being such extreme idiots.

The other conclusion is that they knew it, but did it anyway! Again, complete incompetence and maliciousness cannot possibly be tolerated, and such an act is actually illegal with taxpayer money. If this is the case, those responsible should be fired and prosecuted to the fullest extent of the law.

If anyone thinks this is over, think again. Do we really believe Citigroup, Bank of America and General Motors have actually posted profits? Do we really believe after all of the recent corruption in corporate America and within the U.S. government that books are not being cooked in some way?

The government and the corporations are playing on the psychology of financially strapped and emotionally defeated Americans in faking good news to wean another couple of trillion more from the taxpayers. Don't let it work!                                          

  1. MSNBC - AIG paying millions in bonuses despite bailout

  2. USA Today - Summers calls AIG bonuses 'outrageous'

  3. USA Today - AIG agrees to restructure bonuses

  4. MSNBC - After bailout, AIG sent executives to the spa


 

 

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Steven Saw is an activist educating the public about the depth of government and corporate corruption in America. Steven runs a blog, has been published in a number of sites, and was a featured guest on FreedomFighterRadio.
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The scumbag criminals in the government are using ... by Jeff Harris on Monday, Mar 16, 2009 at 1:32:37 PM
Agreed that many of the depression-era laws having... by Steven Saw on Monday, Mar 16, 2009 at 2:04:11 PM
Go to SEIU.org for details in your area.... by Janiece Senn on Monday, Mar 16, 2009 at 4:21:29 PM
The executives are only the flies on the fertilise... by Arktig Silver on Monday, Mar 16, 2009 at 2:53:29 PM
You are absolutely correct. What happened to the ... by Steven Saw on Monday, Mar 16, 2009 at 3:06:23 PM
SEIU.org is organizing a nation wide rally to go t... by Janiece Senn on Monday, Mar 16, 2009 at 4:16:53 PM
Of course, the defense is that these were retentio... by Steven Saw on Wednesday, Mar 18, 2009 at 5:35:48 PM