Taking Aim at AIG
Mar 20, 2009
aig,, bailout,, financial,, greed,, obama,, recession
Recently-elected US President Barack Obama has more political drama to deal with now that it has been revealed that $165 million in bonuses have been paid to executives of AIG, the insurance company bailed out by the US Government to the tune of $170 billion last year. And these bonuses are in addition to the $55 million that were paid out this past December.
The President has now been forced into the uncomfortable position of instructing his Treasury Secretary to see if there are legal ways to get this money back, given that the contracts to which the bonuses were applied were apparently signed prior to the bailout of AIG. US elected officials are also threatening to tax the majority of this money if the people who received it do not give at least most of it back.
Indeed, even AIG chief executive Edward Liddy has requested that some of the recipients give at least half of the bonus money back. He has asked that those who received payments of $100,000 or more return at least half of what they were paid.
Of the 418 AIG employees who received bonuses, 298 received more than $100,000 according to the New York Attorney General. The highest bonus was $6.4 million, and six other employees each received in excess of $4 million. Fifteen others received more than $2 million and 51 received between $1 million and $2 million.
President Obama’s declaration that a culture of “excess greed” has been demonstrated in AIG’s dealings could be the understatement of the year. The economy is in a tailspin and tens of thousands of Americans are losing their jobs, not to mention their homes and livelihoods. It boggles the mind to imagine how someone that received such a large sum of money could not give at least a part of it back. Representative Barney Frank has gone so far as to suggest a possible lawsuit to recover the $165 million.
The House of Representatives has taken a slightly different approach. It has just passed a bill to recapture dollars from AIG bonuses. This legislation calls for a 90 percent surtax to be imposed on any bonus paid after December 31, 2008 by a company that received $5 billion or more in taxpayer money from the Troubled Asset Relief Program. The tax would need to be paid by any employee or former employee whose family income exceeds $250,000 annually. It will be interesting to see how the Senate views this proposed legislation.
What is perhaps even more galling than the ridiculous amounts of money given away in bonuses is that many of the people that received them worked in the very unit of AIG that caused it to teeter on the brink of collapse and to require the largest bailout of a private company in US history – one that amounted to $170 billion dollars.
It’s painfully obvious that AIG executives just don’t get it. The week immediately following the bailout they participated in a lavish California retreat that cost almost $450,000 and featured spa treatments, banquets, and golf outings. In October they spent $86,000 on an English hunting trip.
The complexities of restructuring assets and saving banks and other financial institutions are difficult for laypeople to understand at the best of times. But we can all grasp the fact that using taxpayers’ money to pay ridiculously large bonuses to bankers who have caused their banks to collapse is a very hard sell during a recession.
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There's really no word to describe this other than "disgusting". To be one of the ring leaders in bringing the economy down with sub-prime mortgages is one thing, but to expect a bonus after the fact, is hard to fathom. I can't understand how the government wouldn't have made eliminating these bonuses one of the stipulations for AIG to receive bailout money? One more thing to blame Bush on.
Jerry - 2009-03-20 11:15
Check out this cartoon about AIG! http://pastexpiry.blogspot.com/2009/03/cartoon-aig-adventures-in-greed.html <a href="http://pastexpiry.blogspot.com/2009/03/cartoon-aig-adventures-in-greed.html">*CARTOON*</a>
Johnny Ancich - 2009-03-28 21:02