Basket Case Insurer Gets $170 Billion from Taxpayers, Still Pays Huge Bonuses

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75 Responses to “Basket Case Insurer Gets $170 Billion from Taxpayers, Still Pays Huge Bonuses”

  1. yakta says:

    #41 Bolamig:
    No, no, no. The bonus ridden, egoism enhancing me-first-mentality-generating structures in finance ARE the problem. That’s what have made our economy into a playground for sociopaths.

    The key players with clear intent and responsibility for the bad economic bubble calls should of course be brought to justice, charged with criminal offence and removed from any position where they can influence the economy. But the rest in finance aren’t blameless. They’re guilty of letting all this happen. Of not reacting. Most of those who did not do anything criminal per se have still been soaking up benefits of that sick system. And support the sick bonus structures that fuel the criminal mentality.

    We need a general cleanup here. A starting point is to clean up all newspeak about “retaining the best and brightest talent”. There is no firm empirical evidence that huge bonuses have any total positive effects on social welfare or for the poorest segment of society. If any financial employee isn’t satisfied with his/her already extremely high salary many times higher (10? 20? 30?) than that of an average working poor american then just FRACK OFF AND DIE. No one is irreplaceable (though it’s understandable that people high on power fool themselves into believing that they are). No one does so important work that he/she can’t be replaced by 10 other, slightly less talented people. No individual works 1000 hours a week.

    The whole incentives rhetoric needs to be harshly scrutinized each and every time it is being peddled in media and the public debate (that is, freakishly often). Today its it swallowed whole almost all the time.

    The point gets most clear when put in interpersonal terms. Imagine that financial hotshot A actually sat down with working poor B. A says to B: If I don’t get a fat bonus in addition to my high salary (already 15 times higher than B’s) then I will emigrate/stop working/”go galt”. This is morally acceptable because _________.

    Can A provide a good moral reason to B that can fill that blank? No.
    A does not deserve that much compared to B.
    A hasn’t put in that much more of an effort than B.
    A doesn’t have a worse job – on the contrary, B’s is far more tiring, less fulfilling and more dangerous.
    A is not forced to demand more – A could just choose to be content with the current pay and still work as hard as he/she can. There is no law of nature forcing him/her to blackmail his/her way to more.

    In short, A should just shut the frack up, appreciate that he/she is one of the most well off individuals in the most well off country in the world and then get back to his/her fun and fulfilling job and be content with the salary he/she gets.

    The political philosopher G E Cohen has said all this better of course:
    http://www.tannerlectures.utah.edu/lectures/documents/cohen92.pdf

  2. Takuan says:

    nothing focused about the homes and futures torched by companies like AIG. If you discovered the business you worked for was running a giant kiddie porn ring and made most of its money from it,would you cash your bonus cheque? Is dirty money just a word?

  3. Cicada says:

    @42- The filler to that blank is “because I didn’t get this high salary by sitting around pissing and moaning about what was fair, if I was overpaid, if you were underpaid, or any other crap like that. This is morally acceptable because you can have morals or you can have more money than god. You can be happy with your morals. I’ll take the money. And I will take the money, because while I’m taking it, you’ll be whining about fair. If you’d thought less about fair and just and more about making assloads of money– not enough money to live on, but assloads of money, maybe you’d be wearing the pricey suit and could afford to feed your kids. Every society on the planet’s put sociopaths in charge because we’re the ones who want to be. This one’s no different.”

  4. Alessandro Cima says:

    And where exactly would these ‘talented employees’ go find work if they did stage an exodus?

    I think AIG is full of manure. They need to be strip-searched and arrested and allowed to collapse like the pile of idiots they are.

    If you think the world will collapse because AIG goes under, well, you probably drive an SUV.

  5. Cicada says:

    @43- I’d cash it as soon as humanly possible, before the feds can freeze the accounts. Then I’d probably buy myself something nice if I felt bad about it.

  6. yakta says:

    #44 Cicada: So in short, your suggested filler is a sociapathic rant? If that was the actual filler offered by A then B would have all the moral right in the world to use any measure available against A. Any. A clearly does not accept any moral constraints on himself to others. He just adheres to complete egoism. The world would be a much better place without him/her.

    In general, the problem is not that the working poor waste time “whining about fair”. The problem is that our economy wear them down so much that they at the end of the day they lack the energy and time to claim what is rightfully theirs.

  7. fltndboat says:

    We simply have to expand our idea of criminality to include the Republican enabled trickle down. It was a crime to begin with and could never work. There was no law against it.

  8. yakta says:

    #72 Cicada: You are again just pushing an unsubstantiated, extreme “(almost general) egoism law of nature” hypothesis. It is not supported by mainstream psychological and philosophical research. To put it in another way, it is about as (not) well substantiated as the common pedophile “but the kids are in on it”-excuse or the rapists “she was a tease and sex drive is oh so NATURAL”. It is simply something egoists make up say when they behave immoral to get away with it and make themselves feel less bad. Classic bad excuse.

    Since your view is extremely likely to be distorted by bias (self-interest is well established as one of the most powerful sources of psychological bias) then you have the burden of proof to supply firm empirical evidence for your thesis before believing it. So put up or shut up.

    Furthermore, even if it could be shown that X % of the population are genetically determined to be utter sociopaths then the normative issue will just move to that level: what efforts of genetic screening should we as a society put in place to avoid producing X % utter egoists?

    Anyway, to what degree the extreme egoistic influence on society can be mitigated does not only depend on what how many actual sociopaths there are but to a large degree on what views about sociopathic prevalence the general population has. Economic research has clearly shown self fulfilling prophecies: if enough (non-sociopathic) people push extreme beliefs about wide-spread unstoppable egoism (i.e. just what you do) then that will affect their own behaviour in a more egoistic direction (“everyone else is a scumbag so I have to fend for my self and out-scumbag the others”). In short, if you and many others cheerlead sociopathy then something like that will increase in society. But such cheerleading is an evaluative stance, not an objective description. So the stuff you are spreading is very much a part of the problem.

  9. Anonymous says:

    Other than the fact that the idea of bonuses is totally outrageous there is one other interesting point in the story. The division of AIG that caused all the trouble is based in London. Is this true (I have no reason to believe it’s not) why didn’t Britain bail them out, or at least help? Of course were also giving AIG billions so they can pay bonuses to people that probably avoid paying U.S. income tax in some way because they are based overseas! Talk about getting a double whammy for the U.S. economy!

  10. Cicada says:

    @46- My point is, B isn’t going to do a damn thing to A. He’s too busy being fair, or worrying about what a just society looks like, or how moral people should behave.
    Part of his problem is his attention to fairness– it limits his ambition. The proper mindset to getting lots of money doesn’t start with “How much money to I need to take care of myself and my family”, but “I want as much money as I possibly, possibly can get my hands on, and I will be PISSED if I come as much as a dime short of this.”

    In short, the people with the most money don’t do money as a means, they do it as an end. You don’t have to be vindictive toward them– just adopt their methods. The rest should follow to whatever degree your talents allow.

  11. yakta says:

    #47: That is a tired and patently false contrast. Humans are capable of working hard and efficiently to create a better society (including a better economy and industry) while at the same time accepting strong moral limits on their self interest and moral burdens to help others. Ambition and fairness are perfectly compatible.
    But again, it is understandable that some in the grip of sociopathic delusions, and in positions of power, kid themselves into believing otherwise. They of course feel much better by doing so. In reality their unchecked egoism is not needed and extremely detrimental to any economy. It fuels short term decisions that brings long term devastation. Like the current crisis. And the looming climate catastrophe.

    In any case, even if (counterfactually) your deluded contrast actually was the case, then B would still have all the right in the world to opt for vindication. As the saying goes: if we can’t have justice, then we just might settle for revenge.

  12. sisterbeer says:

    Hey, has anyone bothered to find out that AIG is paying back the money more quickly than the feds expected? No, of course not. You’re too busy lighting torches! Because that’s fun and easy! Yeah, let’s get angry at people who make more money than we do! None of us benefit from a capitalist system, after all. And has anyone bothered to read beyond the headlines for the bailout? That all of this is a LINE OF CREDIT, not free money like most of you seem to believe? AIG hasn’t even touched that last line of credit–they only needed it to be available after posting the $62B quarterly loss.

    Everything you read in the papers or hear on tv or even on blogs IS ENTERTAINMENT. They are SELLING YOU A PRODUCT. Filter what you read before you start losing your collective shit. Find some balance.

  13. pyota says:

    bailout money is often referred to as ‘taxpayers money’, but i really doubt there is such a surplus of taxpayers money just sitting around (especially after iraq). or is the government just going to print a couple of trillion? does anybody know the facts?

  14. coliver says:

    Well, the thing about a pitchfork-toting mob is that no one in it is actually thinking. Seriously…which executives are getting how much money? And did they have anything to do with what happened? Maybe some of them did, but maybe some didn’t. Are you going to ask before you light the torches? Jacob Weisberg wrote in Slate recently that most of AIG’s implosion was the fault of one subsidiary in London, an office of 377 people that specialized in credit default swaps. That’s out of a total global work force of around 116,000. I don’t work for them or anything…I just hate to see sloppy thinking where we just assume that all the guys with money are EEEvil.

  15. Anonymous says:

    This is missing the issue. The only problem here is not one of bonuses or mismanagement of companies. The problem here is the bailout itself. They sell you the notion that the world would end without a bailout. How do you know this to be true? Who predicted this? The same geniuses that ruined the economy, and who did NOT predict the mess. Some people who did predict this mess (Jim Rogers is one) keep telling us that the bailout will only make things worse. But instead you trust washington to give away your money to bad business. The people who did not predict the mess promise to solve the mess by giving your money to the people who created the mess! Sending good money after the bad is always wrong. Sending good money into bottomless pit is worse.

    I’ll tell you what the bailout is about. It is about politicians buying the balls of bad business, with your dough. Without a bailout, bad business would have been ruined and taken over by good business. There are a lot of smaller banks that did not go into this mess and would become bigger, as they should, after the bad banks collapsed. Same for all those companies “too big to fail”. It would be painful, but not as painful as the future will be now. And it would have cleaned things up. Now all you get is that bad business gets an unfair bailout at the expense of good business and the taxpayer. That will ruin both the state, the taxpayer, and good business in the long run. And who wins? Bad business wins because the culprits get a bailout. And, this is the point, POLITICIANS win. Why do you think all over the world politicians are bailing out bad business? They will have them by the balls. All this rabble rousing about details like bonuses is just to show business who’s boss. to flash them the pitchforks. Washington keeps saying it is against the bonuses but cannot help it. BULLSHIT! It is all a game. They allow it and then cry foul, to flex they muscles. It used to be that politicians had to be bought. Now they can DEMAND pay from business, or they will cue in the pitchfork brigade. From corruption we go into extortion. They are bailing out the incompetent and in exchange they get to have them by the balls. This is a takeover of power from the business class to the political class – it is an assault, perpetrated at your expense. The price of such a costly takeover is the economic ruin of us all, but all those trillions and your lives are worth it for those involved. The solution to this is simple: a separation between state and business. The state should NOT be allowed power over the economy. That simple principle would end the corruption of the state by business, and the extortion of business by the state. It would also stop the irrational exuberance that causes all these booms and busts that come from the knowledge that a bailout is always available for the looters. But you will always hear that this is unrealistic -from the people that are lining their pockets. The only world that would end without a bailout is THEIR world, where bad businesses are shielded from competent business by a corrupt political class. There is a reason that these lousy businessmen are being kept on top. The reason is that proper businessmen would not resort to this groveling. Get a clue, people. The supposed class war is a smokescreen behind which the infantry of looters makes its moves.

    omwo

  16. RationalPragmatist says:

    If I were to sell insurance policies without keeping a pool of reserves to pay claims, I would be arrested for fraud. But I guess if I sold $1.6 trillion of such policies and called them credit default swaps, then I would qualify for a bailout and could pay myself massive bonuses funded by taxpayers.

  17. glf says:

    It shouldn’t matter who is directly involved in trashing the company and who is not. Why would anyone be entitled to a bonus when the company has lost billions and have to be supported by taxpayer money? Would these people still get bonuses if the company had actually failed instead of being propped up by the US Treasury? Besides the fact that it absolutely galls me to think my taxes help to pay those bonuses while I could lose my job in the near future.

  18. jonjonz says:

    I think it would be a good thing to lose the ‘talent’ that managed to lose trainloads of money in the last year.

    The person who uttered that idiocy should have their face and the word FAIL posted on every billboard in the country.

    These crooks have gotten so arrogant, how much longer are people going to put up with this crap.

  19. Bloodboiler says:

    In Soviet America, wealth is distributed to officials and poverty to everyone else.

    Communist party official = Corporate official
    Workers paradise = American Dream
    Gardener of Human Happiness = Leader of the Free World

  20. noen says:

    As a matter of fact RationalPragmatist, you could do even better than that. You could meet secretly with Bush and Congress and threaten them. You could say that if you don’t get your debts from gambling with everyone’s mortgages wiped clean you’ll collapse the US economy and very likely the World economy.

    You’d make Maddox look like the petty crook he is.

  21. noah says:

    Tens of million dollars of bonuses you say!? That could mean up to $99 million! If AIG didn’t pay these bonuses, the American taxpayer could save 0.58% of his money!

    Seriously, this is like being worried about their excessive use of staples or something. There are much bigger issues in play.

  22. Anonymous says:

    Whatever happened to those portable-laser-graffiti guys? I’m sure AIG has some buildings that could use “SHAME” in glowing 5-story-tall block caps. Or maybe the silhouette of the neighborhood-watch badguy.

  23. jjasper says:

    “We cannot attract and retain the best and brightest talent “

    They never *had* the best and brightest talent. They had a bunch of crooks and yes-men.

  24. brownhb says:

    Everyone keeps using the phrase “attract and retain the best and brightest talent.” I’m really not convinced that there is any limit to the talent or skills out there, or that those who have these things are only willing to work for ridiculously inflated salaries. Especially in this economy. Maybe we should get the “exodus” started and get some new people in there, who would be appreciative of the jobs.

  25. Cicada says:

    On the other hand, see if from their perspective– the executives could keep on trying at what may or may not be a long-term successful enterprise, or they can screw the taxpayer for every dime they can before retiring to someplace warm with beaches.

    Responsibility to taxpayers and general justice versus oodles and oodles of money? I’m betting you’d have to be quite the saint to pick the first were both options staring you in the face for long enough.

  26. Jack says:

    Hey, okay here’s a crazy idea: How about any one of—or in a perfect world all of—the AIG execs who received bonuses refuse them. Or better yet, take 100% of their bonuses and donate them to a soup kitchen or some place that helps those much worse off than them.

    Seriously, that might sound like one of those delusional ideas that never happen, but hey… Why not? These guys show they are human beings. The money gets put to good use. Everyone wins!

  27. JoeS says:

    If AIG loses the best and brightest, maybe it could hire some of the experienced but honest, instead. What’s wrong with that?

  28. danlalan says:

    The real problem with this is that our economy depends upon the confidence (read: spending) of the consumers within it…the only confidence this gives me is that as long as there are no negative consequences for acts that give the exectives personal wealth while destroying the very system they work within this will continue to happen…and giving these people huge amounts of tax money should forever shut these people up about the strength of unregulated free markets…and it will, at least until the money runs out.

  29. evawes says:

    You have a point there RationalPragmatist – The financial system has always gotten around regulation by the use of new and complicated financial instruments. Instruments that are perfectly legal, and nothing actually wrong with them, but can be used to create very high and insecure gains, getting past the law.

  30. thejudah says:

    AIG is symbolic of the arrogant/greed that has permiated our society for the last 30 years. Americans can understand the legal bindings of a contract, but what does this say about the men and women with AIG who will be taking this money; especially during these economic hard times? They should be tarred and feathered. Sadly our country is heading towards a losely set form of socialism if this continues. When do these rediculous situations stop? When the OBAMA Administration finally decides to play hardball. So you cannot step in and break this lack of rationale, but legal contract AIG has with its employees, Mr. Obama, that is understandable, but you can press AIG through the American people who voted you into office and are paying the brunt of your financial stimulus packages. The American people will rise up and make AIG stop this ill-timed bonus with their voices, and if AIG’s employees do not stop it then AIG beware: THE AMERICAN PEOPLE HAVE A LONG LONG MEMORY. Lastly America doesn’t need anymore financial stimulus packages, America needs a spiritual and rational stimulus package and no government administration can give this. I pray for America’s tomorrow, as every day it is looking bleaker and bleaker…..The Truth.

  31. stupidnickname says:

    Okay, here’s what I’m not getting:

    How, exactly, does a bonus become contractually obligated? If a bonus is contractually obligated, then isn’t it simply payment for service, i.e., salary?

    Furthermore, AIG seems to be making the claim that they are contractually obligated to pay these specific amounts to these specific people. How can a bonus accomplish its intended task — in other words, motivating above-and-beyond improved performance from individuals — when it is already promised, in a specific amount, and clearly can’t be reduced or eliminated, even if the federal government is seconds away from issuing subpoenas and filing criminal charges? If the bonus can never be reduced, how is it not a sinecure, which does not incentivize hard work but rather encourage workers to do the absolute minimum? How the hell does that work?

    Otherwise, if contractually obligated to pay a bonus to employees, AIG could pay them, say, a nominal sum of $1 — contract fulfilled, no torches and pitchforks, appropriate compensation for the individuals who destroyed the company. But the claim here is that AIG is contractually required to pay $100 million and no less — what the hell is this strange place where employers are required to pay employees a specific amount, every year, above and beyond actual salary and benefits? That place sounds like . . . THE SOVIET UNION! BWA-HAHAHAHAHAHA!

    Oh, how strange, I have to sit down, my head is spinning. AIG just went so far in the free market spectrum that they came back on the other side.

  32. Anonymous says:

    If this what “best and the brightest” do it’s no wonder the economy is failing..

  33. ScruffyNerfHerder says:

    http://en.wikipedia.org/wiki/Parimutuel_gambling

    If you can bet on every horse in a race and win money no matter the outcome, then the game is rigged in favor of the gambler.

    Politicians are like that in general but particularly in the US.

  34. gadfly says:

    I was going to say more or less what BrownHB already did. There are plenty of great, bright folks looking for jobs right now, some of whom would certainly be eager to take work helping to fix this big ol’ mess. And I can’t imagine that there wouldn’t be a benefit to some fresh blood at AIG.

  35. GeekMan says:

    There are too many things to respond to. But let me agree with a few key points:

    “Best and brightest” is an aggravating bit of newspeak. I first heard it when Republican representatives were lambasting the DOJ for going after Microsoft’s anticompetitive business practices in the late 90′s. At the time, Microsoft WASN’T coming up with anything original, they were just buying or copying and out-competing smaller companies that did.

    To be the “best and brightest”, people actually have to be helping the system (government, business, etc), not destroying it from the inside like a cancer.

    Might I suggest that anyone who wishes to know the exact material content of the officer employment contracts of a public company, simply go onto the SEC website and search for it? Employment contracts of any significant employee are material and publicly filed.

    http://idea.sec.gov/cgi-bin/browse-idea?action=getcompany&CIK=0000005272&owner=exclude

    Not for the faint of heart, but doable. I would start with the 8-Ks, in my initial perusal I found a number of “Letter Agreement” exhibits that were actually amendments to employment agreements.

    Worth a shot!

  36. garyb50 says:

    #13 POSTED BY EVAWES

    I think you just defined “best and brightest talent.”

  37. Brainspore says:

    @ noah #9:

    Seriously, this is like being worried about their excessive use of staples or something. There are much bigger issues in play.

    Whether or not the bonuses themselves make up a large percentage of the overall bailout, one can argue that rewarding bad decision making is the main reason we’re in this mess today. How can we fix the “bigger issues” when we continue to avoid accountability?

  38. Bloo says:

    One problem is this “too big to fail” idea.

    We’re afraid to let something this big fail (or at least our politicians are). But nobody has the guts to regulate the formation of these corporations and prevent them from reaching this “too big to fail” size!

  39. AnneH says:

    Some of the bonus money is indeed going to the very unit that caused the disaster:
    http://www.nytimes.com/2009/03/15/business/15AIG.html?_r=2&hp

    so, the call for torches and pitchforks does not seem excessive to me.

    An alternative to violence is getting the money back, which Rep. Barney Frank is attempting to do:
    http://www.reuters.com/article/politicsNews/idUSTRE52E0ZJ20090315

    Here’s hoping he succeeds.

  40. Cicada says:

    @#18- Brainspore– Your question is “How can we make the employees of large financial firms more concerned with the performance of those firms and the health of the economy as a whole than with personal remuneration”.
    The answer, I believe is, “You can’t.”

  41. Anonymous says:

    This has come up with a bunch of bail-out receiving banks as well. How on earth do these people have contracts that include bonuses in a year where the company is losing money? I know not all bonuses are based on overall bottom line – but if the bonuses are just corporate tax shelters [and not tied to business performance] they are not bonuses!

  42. GeekMan says:

    In regards to my post #57:

    I do believe that there are some of the droids you’re looking for:

    http://idea.sec.gov/Archives/edgar/data/5272/000095012306006773/0000950123-06-006773-index.idea.htm

  43. Enoch_Root says:

    A couple things before I jump on the “I hate these guys” bandwagon.

    1) “who were principal culprits in the tanking of the global economy”

    Were they? Your proof?

    2) @#2 is exactly right

    AIG never forcibly took money from 300 million people (or the 60% that pay income tax (I know I know everyone pays excise tax etc.)) and distributed it to a wealth of failed companies with no oversight on how that money was spent that was our dear pals in the old Congress.

    3) You are damn right they need to pay their top employees a crapload of money in order to keep the good ones. What talented person that could fix AIG (or at least help part of it) in their right mind would stay with a demonstrably failed company that has become largely controlled by a fickle body of politicians that know very little about running a massive insurance organization and is constantly demonized in the public square, without getting paid awesome wages?

    4) @#2 again is right… before we go with the unreasoning #pitchforks mob mentality lets at least find out who got what and who really did cock up the company. Its pretty simplistic to say “OMG people got bonuses after we bailed some company out that==bad”

  44. Enoch_Root says:

    @#20 CICADA

    one thing that might actually help companies align their incentives with long term institutional health are measure like “bonus banking.” Give senior employees big bonuses that are banked for a couple years and are contingent on the future health of the company.

    It obviously won’t solve all problems with personal vs. institutional incentives but it is the kind of thing that might

  45. Jack says:

    Even if the cause of this mess was one AIG holding in London, my money—and our money—still should not be used to provide a life for these guys.

    The one thing you learn about destructive behavior is there are always two people to blame. Those who committed the act, and those who allowed it to happen.

    Even if the folks who got bonuses did not have anything to do with this, they should not be rewarded. The fact they have jobs in this hellish economy is a reward enough.

    And if that causes a “chilling effect” that scares these folks straight, all the better…

    I’d rather have an army of talented execs scared than otherwise. That way the next time something like this happens… Well it won’t since they will learn from their collective mistakes.

  46. brownhb says:

    I’m sorry — but I just can’t believe that the only talented people out there are only willing to work for gads of money. I love my job and I do it well and I get paid next to nothing. Why do I do it? Because it’s fulfilling, it’s what I love and I’m eager to have new experiences and just beef up my resume. Are we saying that NO ONE works in the financial sector at least in part because they enjoy it, are good at it, and get satisfaction out of doing a good job??

  47. Enoch_Root says:

    “I’d rather have an army of talented execs scared than otherwise. That way the next time something like this happens… Well it won’t since they will learn from their collective mistakes.”

    If the execs were all that talented why would they accept a job where they live in fear and make no money?

  48. the23skidoo says:

    Buckminster Fuller’s ‘Grunch of Giants’ described the Great Universal Cash Heist well when first published in the 1980′s. Not too much has changed since. BB’ers might enjoy the read.

    http://www.aleph9.com/knowledge/08/Grunch%20of%20Giants%20-%20Richard%20Buckminster%20Fuller.pdf

  49. pjcamp says:

    Clearly, I’ve lost my grip on what the word “bonus” means. In my world, a bonus is something I get for doing a good job. If I do a crappy job, I don’t get the bonus.

    But it seems here that bonuses are things that employees are contractually entitled to, regardless of performance. To me, that is a salary, not a bonus, and should be treated as such.

  50. sisterbeer says:

    These bonuses are part of the compensation package for AIG employees. My brother works for them. His bonus is based on his team meeting a set of criteria in 2008. For the 2007/2008 fiscal year. Which ended well before the CDS mess. Will they get a bonus this time next year? Nope. So enjoy that.

  51. Anonymous says:

    What really sad about this story is that it’s the 10 most viewed story on CNN. All these crooks should be in prison if this was a nation of law really. They have contracts you can’t be serious. People are most interested in Dumb stuff like models, and criminals like cheney, Lohan. It must be that fructose corn syrup that affecting their brain…

  52. lestyoubejudged says:

    Funny at my company we have substantial bonuses twice a year but amazingly they are tied to PROFITABILITY and STABILITY. Not only did we skip our last round of bonuses but we also had a pay cut and surprisingly no great pool of talent left. We have this belief that we work there to help the company succeed. We must be really stupid.

  53. Cicada says:

    @52- Yakta- Your sentence is incomplete: “Some humans are capable…” would be more accurate. I actually doubt there are enough of those who are to both keep society running and keep an eye on those who are amorally ambitious.

  54. Jack says:

    #24 POSTED BY ENOCH_ROOT , MARCH 14, 2009 9:51 PM

    If the execs were all that talented why would they accept a job where they live in fear and make no money?

    Because if you follow the trail that created this mess you’d realize that deregulation is the seed that spawned this recession/depression beast.

    These execs have been living high on the hog for years thanks to government non-interference. Re-regulate this mess and the execs will have no choice but to submit to this.

    Also “no money” has no bearing on this discussion. Even the lowest paid person the world of finance and finance-related support services makes more money than others that truly make “no money”…

    So they would have to go to the club and get $500 bottle service once a month instead of once a week. Boo effing hoo.

  55. grimc says:

    The American International Group, which has received more than $170 billion in taxpayer bailout money from the Treasury and Federal Reserve, plans to pay about $165 million in bonuses by Sunday to executives in the same business unit that brought the company to the brink of collapse last year.

    Link

  56. Cicada says:

    @29- Jack- Submit to it? Hell no, buddy– they’d find a great opportunity to make a mint by finding ways around it.
    I understand it’s popular for a bright ambitious fellow fresh out of business school to take a job with the SEC for a few years before quitting and offering his experience to firms who want to weasel around SEC regulations as much as they can.

    When there’s more money to be made as a crook than a cop…and unless you pay the cops a few million a year, there always will be…there’s no such thing as effective law enforcement.

  57. Jack says:

    @#31 POSTED BY CICADA;
    Oh I agree. Corruption is always a temptation. But at this point, with no clear end to this recession in sight I think there might be enough momentum to keep the wolves at bay slightly longer before they raid the henhouse.

    My general attitude is these folks get no sympathy for me and I shouldn’t have to hear their whining.

    If they will weasel around no matter what, why should I expend any energy to support them?

    It’s not like if they suddenly left the U.S. we’d resort to a tribal system and be in the dark? Their excuses are all salesman bullshit and they know it.

  58. Cicada says:

    @32- Then perhaps the ire rests on your congressman rather than the guys who, in your ideal world, would be free to crash and burn without expendig your energy (i.e. money) to support them.

  59. Anonymous says:

    “These people should be drawing unemployment checks, not stealing taxpayers’ money.”

    Is that stupidity or sarcasm? Perhaps you meant they should be starving or earning a living at an honest job.

  60. Jack says:

    So for all the folks waving “contractual obligation”, have you guys ever dealt with contract law on any scale? Do you realize that any sane contract as an “out”?

    In this case if it’s indeed a bonus, then you’d assume there would be a clause that allows for an act like COMPLETE FINANCIAL DISASTER and GOVERNMENT BAILOUT to override contractual obligations?

    Who gets rewarded via contract even when the company fails?

    Anyone making excuses for these AIG jerks get real: They could care less about you. Why spend one ounce of energy defending them?

    If they have a good case let them be adults and defend themselves. I don’t think they need people who make a fraction of what they make to defend their personal decisions.

  61. theWalrus says:

    @10 “Whatever happened to those portable-laser-graffiti guys? I’m sure AIG has some buildings that could use “SHAME” in glowing 5-story-tall block caps”

    Here you go: http://www.hipnerd.com/2009/03/14/too-big-to-fail/

  62. Brainspore says:

    @ Cicada #20:

    Your question is “How can we make the employees of large financial firms more concerned with the performance of those firms and the health of the economy as a whole than with personal remuneration”.
    The answer, I believe is, “You can’t.”

    That’s not what I’m expecting at all. What I’m expecting is that personal remuneration has some relationship to how the decisions of the individual affect the performance of the firm and the economy as a whole.

    In any other industry an employee who put the company billions of dollars into the red and managed to drag down the entire economy with them would be expecting a pink slip, not a bonus check. To award “bonuses” to people who fucked up this badly is beyond obscene.

  63. Anonymous says:

    I think it’s about time we put this sort of talk behind US. No more bailouts if they continue to talk like that. Their tone will change! They ain’t so bright afterall now are they!

  64. newe1344 says:

    I have a simply solution. I paid taxes this year. My taxes went to AIG. AIG gave its executives the money. The executives bought cars with that money. I will just go collect my money and drive it back to Idaho~!

  65. mongo says:

    I’m getting the impression these “best & brightest” AIG execs wrote credit default swap – insurance policies – guaranteeing the mortgage-backed securities that were backed with AIG’s assets…which were largely invested in mortgage-backed securities.

    The corner supermarket parking lot swindler wouldn’t try pulling off such.

    The U.S. should sue the MBA schools these “best & brightest” came from for gross malpractice.

  66. Jenna says:

    Um, “retention pay”??? WTF???

    Where I work, we have something called retention pay, too. It’s called our regular fucking paycheck and our tips we slave for.

    Fuckers are lucky they have jobs which pay the bills, which they will NOT have if AIG goes under.

    Because of them, all of my coworkers and I are having a much harder time paying our bills. Fuck their retention pay! I’m paying their retention pay with MY TAXES, and I have to suffer TWICE at their hands. They fucked up, screwing me out of money, and now I have to PAY them to have done it?!?!? NO!

    Again, I say FUCK THEM!!!

    Sorry for the swearing, but some of those people are getting more in bonuses than I make in years. Not fair, not gonna agree with it.

  67. RationalPragmatist says:

    @Jack: Good points.

    Under US federal law, every single contract, no matter how draconian or one-sided its terms, has an “out.” It is called bankruptcy.

    Let’s assume that, as some suggest, AIG is contractually obligated to pay these bonuses which many of us find offensive. If AIG were to declare bankruptcy, employees would be unsecured creditors. As such, they would only be able to realize against the assets of AIG to the extent that all secured creditor claims were first satisfied.

    Like many here, I fail to understand those defending performance-based bonuses given to people who have significantly contributed to the global economic mess.

  68. Jack says:

    @#33 POSTED BY CICADA:
    I have no idea what you are talking about. Maybe you’re saying ultimately the blame should be placed on politicians who created this atmosphere that allowed these “too big to fail” companies to fail? But right now that’s an abstraction. It’s clear that Washington is dealing with this mess and facing these mistakes so I’m cool with that.

    But why for one second should I care if an AIG exec who contributed to this disaster can’t be retained. Who cares? At this point it’s such a mess what brain trust is being retained? A bunch of self-serving delusional idiots?

    Let them head over to Europe or scrub floors. I could care less. Folks like AIG created a cornerstone in creating the illusion this fiasco was valid. Screw the enablers. Allow them to find new careers.

    Sayonara!

  69. AIG says:

    What about the insurance agents that get a MASSIVE commission every month from our insurance?? Some of these chaps get 20-30% cut off everything we pay every month! It’s time to revoke that once and for all. One-time commission on sign-up, that’s it!

  70. Marcel says:

    Maybe I should also tip the waiter if he spits on my food.

  71. Cicada says:

    @35- Still doesn’t quite work. Let’s say you undertake deliberately shaky financial maneuvers…call it playing russian roulette, say. Year one, click– you get a few million in bonuses. Year two, click– get a few more. Three, maybe the same. Sooner or later you hit a live round, at which time you can smile and exit gracefully with your gains from the last few years. In finance, after all, you can point the gun at someone else while playing.
    And awarding bonuses isn’t obscene– it’s clever. After all, does the firm care whether billions in revenue come from its ordinary sources or the federal government? Nope– money comes in in large quantity, money goes out in bonuses. You may as well expect morality from a housecat.

    @37- Let me try again– the financial firms may be the ones screwing up, and you’re okay with letting them fail. But your own government is the one that’s handing over your tax dollars– the ones you made effort to accumulate.

  72. bolamig says:

    You can’t change the past. The past is that before the big meltdown AIG reported good results, decided to share the profits with the employees, and apparently legally promised it to the employees.

    The great majority of those employees knew nothing of the precariousness of the company; if thousands of them did, leaks would have made their way to the press and the story would have gotten out. At least Martha Stewart would have gotten a call telling her to move to cash.

    There are many changes that need to be made, but reneging on contracts with blameless employees to satisfy political bloodlust is not one.
    Lets punish wrongdoers with focussed lasers rather than torching the house we’re trying to rebuild.

  73. jimh says:

    cc: Jon Stewart

  74. Anonymous says:

    “These people should be drawing unemployment checks, not stealing taxpayers’ money.”

    By ‘these people’, I assume you’re talking about Congress. Unless AIG came and took your money from you?

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