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Rage at AIG Swells As Bonuses Go Out

Discussion in 'Political Zone' started by JBond, Mar 17, 2009.

  1. JBond

    JBond Well-Known Member

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    Obama and his phony rage is absolutely ridiculous. Team Obama new months in advance that those bonuses were going to be paid. In fact Obama's buddy is the guy who distributed them. Obama is a fraud.

    Rage at AIG Swells As Bonuses Go Out


    Fed Decided Payouts Couldn't Be Stopped

    By Brady Dennis and David Cho
    Washington Post Staff Writers
    Tuesday, March 17, 2009; A01

    A tidal wave of public outrage over bonus payments swamped American International Group yesterday. Hired guards stood watch outside the suburban Connecticut offices of AIG Financial Products, the division whose exotic derivatives brought the insurance giant to the brink of collapse last year. Inside, death threats and angry letters flooded e-mail inboxes. Irate callers lit up the phone lines. Senior managers submitted their resignations. Some employees didn't show up at all.

    "It's a mob effect," one senior executive said. "It's putting people's lives in danger."

    Politicians and the public spent yesterday demanding that AIG rescind payouts that they said rewarded recklessness and greed at a company being bailed out with $170 billion in taxpayer funds. But company officials contend that the uproar is scaring away the very employees who understand AIG Financial Products' complex trades and who are trying to dismantle the division before it further endangers the world's economy.

    "It's going to blow up," said a senior Financial Products manager, who spoke on condition of anonymity because he was not authorized to speak for the company. "I have a horrible, horrible, horrible feeling that this is going to end badly."

    President Obama yesterday vowed to "pursue every legal avenue to block these bonuses." But that pledge might have come too late. About $165 million in retention payments started to go out Friday to employees at Financial Products, after numerous discussions with the Treasury Department and the Federal Reserve.

    Attorneys working for the Fed had been examining the matter for months and determined that the retention payments couldn't be touched because AIG would face costly lawsuits and be subject to penalties from states and foreign governments. Administration officials said over the weekend that they agreed with that assessment.

    AIG disclosed its retention-payment program more than a year ago, and the amount of the bonuses -- more than $400 million for Financial Products alone -- had been widely reported. But as the payments were coming due in recent days, the White House began to express its indignation.

    Pressure on the 370-person Financial Products unit, based primarily in Connecticut and London, grew even more intense yesterday when New York Attorney General Andrew M. Cuomo threatened to issue subpoenas if the company failed to provide details about recipients of the retention payments.

    The payments represent only the most contentious of a larger group of bonuses being paid throughout AIG. The company's top seven officials, including chief executive Edward M. Liddy, agreed in November to forgo bonuses through this year.

    After a Wednesday call between Liddy and Treasury Secretary Timothy F. Geithner, AIG agreed to restructure payments for the next 43 highest-ranking officers at the company, who are to receive half of their bonuses -- which total $9.6 million -- immediately, one-quarter July 15 and the rest Sept. 15. The last two payments would depend on whether the company makes progress in restructuring its business and paying back taxpayers. In addition, the company is set to pay another $600 million in retention awards to about 4,700 people throughout its global insurance units.

    But each dollar remains in question after the president's reprimand yesterday and the deluge of rage from legislators and the American public. Government leaders already say they plan to recoup some of the bonus and retention pay while restructuring the company. In addition, administration officials said that the Treasury is planning to try to recover some of the bonus money by adding provisions to the additional $30 billion it gave AIG access to earlier this month.

    The payment plan had been no secret.

    Beginning in the first quarter of 2008, AIG disclosed the plan to offer retention awards at Financial Products. The unit had already begun to hemorrhage money, a problem that would later grow exponentially. The unit's executives, fearing they might lose valuable employees in the tumultuous months to come, successfully negotiated more than $400 million for their workers, to be paid this month and again next year.

    At the Federal Reserve Bank of New York, which has directly overseen AIG since its federal takeover in September, officials have studied the possibility of rescinding or delaying the bonuses. They even brought in outside lawyers for advice. The conclusion: If the bonuses weren't paid, the AIG staffers would be able to sue the company and probably would win, not just what they were owed but also punitive damages that would make the ultimate cost perhaps two to three times as high as the bonuses themselves.

    Moreover, Fed officials also hope to keep current employees with the company. The senior executives whose decisions caused the company's collapse are long gone. Most of those left behind are trying to unwind complicated derivative contracts. Completing that process correctly is essential to preserving as much value as possible for taxpayers, officials at both the government and AIG have argued. If it is mishandled, it could expose taxpayers to billions of dollars in additional losses.

    Law professors agreed with the Fed's assessment but said AIG employees could still agree to reduce their own bonuses.

    And the outrage expressed by the president and lawmakers was designed to put pressure on these officers to do just that, the legal experts said.

    Jonathan Macey, a professor at Yale Law School, said it was unlikely that any AIG employees would end up suing the company for changing compensation contracts, mainly because their names would be revealed publicly in a lawsuit and they would then be excoriated.

    Macey added that the government is caught in a difficult position, squeezed between public outrage over the bonuses and the need to keep AIG Financial Products going so the company can restructure and the government can recoup some of its money.

    "What's good for AIG is definitely not good for the country," Macey said. "But now that the government is invested, it may have to do what's good for AIG."

    Liddy is scheduled to appear tomorrow in front of a House financial services subcommittee.

    Staff writers Neil Irwin and Tomoeh Murakami Tse contributed to this report.
  2. ninja

    ninja Numbnuts

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    The smart move is to let this company fail. Take the hit on the economy. The hedge fund people would get clobbered.:D I would love that.

    The economy will rebound after a while. And it would send a message to all the others to get their heads out of their rear ends.
  3. Jordan55

    Jordan55 Active Member

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    Everyone from President Obama down seems outraged by this. The president suggested on Monday that we just tear up those bonus contracts. He told the Treasury secretary, Timothy F. Geithner, to use every legal means to recoup taxpayers’ money. Hard to argue there.

    “This isn’t just a matter of dollars and cents,” he said. “It’s about our fundamental values.”

    The bottom line here is that Timothy F. Geithner, was the architect. Article from the N.Y. Times, For the last year, Timothy F. Geithner has been at the very heart of dealing with the financial crisis, the junior partner with Treasury Secretary Henry M. Paulson Jr. and Ben S. Bernanke, chairman of the Federal Reserve. Together, they scrambled to save Bear Stearns, American International Group and Citigroup, while letting Lehman Brothers fail.
    Yet he never implemented any stipulations to negate these bonuses being paid by tax payer dollars, The truth is the Dems can ***** and holler all they want, but they were the ones to put us behind this eight ball.
  4. Dallas

    Dallas Old bulletproof tiger

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    It's so quiet in our little political forum lately. Does anyone know why our democrat/liberal users have morphed into being only lurkers? I see them online but they aren't posting in the juicy threads. :cool:
  5. sbark

    sbark Well-Known Member Zone Supporter

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  6. BrAinPaiNt

    BrAinPaiNt Backwoods Sexy Staff Member

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    :laugh1: :laugh1:

    Hmmm...let's see....W and Paulson give butt loads of money to AIG with no preconditions....Obama and Tiny Tim give butt loads of money to AIG with no preconditions.

    Wonder who is to blame or could it be...gasp...both they and congress are to blame.

    Oh noes...we couldn't have that.

  7. ThaBigP

    ThaBigP New Member

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    You left out the fact that Tiny Tim built the original TARP, and was instrumental in lobbying for the original AIG bailout. Not saying there's not plenty of blame to go around (so stop shoving and cutting in line, folks). But facts are stubborn things.
  8. BrAinPaiNt

    BrAinPaiNt Backwoods Sexy Staff Member

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    I do believe I said his name in there as well. Hey while we are at it let's add Bernanke and the funny thing about him is that when he was appointed by W...both sides (yes even many dems) thought he was a good choice.

    So we had Bernanke and Timmy who both sides seem to think was good people for the job...and both seemed to have screwed things up.
  9. burmafrd

    burmafrd Well-Known Member

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    I can kind of give Bernanke a little slack as he has been around only a few years on the fed and the damage had already been done. HOWEVER he was on the board for some years before that........
  10. ThaBigP

    ThaBigP New Member

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    All of 'em were. Tiny Tim was chairman of the NY Fed. Futhermore, some people don't seem to understand the Fed Chairmanship, or how they are appointed. Sure the Pres gets to "pick" them...but only among 3 or so "candidates" selected by the Federal Reserve. No oversight whatsoever that I'm aware of regarding the selection of the "candidates". So chances are, you're just picking the best of the three hooligans presented to you.
  11. Dallas

    Dallas Old bulletproof tiger

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    That has absolutely ZERO to do w/ my post. How about when you quote me you stay on TOPIC of my quote? :rolleyes:

    I have no earthly idea what you are even trying to spin by quoting me and saying what you did.

  12. tyke1doe

    tyke1doe Well-Known Member

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    If this forum is anything like other forums I visit, participation correspondence with whichever party occupies the presidency.

    When Democrats are in office, more Republicans and conservatives show up to complain about the Democratic administration. When Republicans are in office, more Democrats and liberals show up to complain about the Republican administration.

    That's my theory.
  13. trickblue

    trickblue Old Testament...

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    You got that right...

    Our liberal posters that were so outraged with Bush, post occasionally or not at all...

    I will some of the conservies credit for staying around... those on the other side loved dishing it out... but now they can't take it it seems...
  14. BrAinPaiNt

    BrAinPaiNt Backwoods Sexy Staff Member

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    Topic of your quote:laugh1:

    That you were being sanctimonious?

    Or maybe I just stay on topic and say some of you are on some delusional kick that think only the libs are responsible for the clusterfudge we currently find ourselves in...so you think you would make some lame wise crack.

    Then again...you are an odd bird who might be suffering from hypothermia up in Alaska so who knows what the intent of your babbling was.
  15. Dallas

    Dallas Old bulletproof tiger

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    I was asking a valid question. You being you, it's normal that you ALWAYS ASSUME things. I wanted to KNOW WHY they were not in debating these articles? I was not being sanctimonious at all. I have been watching the threads the past few weeks and RARELY are they ever involving themeselves in the serious threads regarding Obama.

    Where in my post did I say GW wasn't at fault? Where did I say Obama was ALL at fault.

    I want to know why our liberal community is not all up in these threads. It is a valid question. Stomp all over it w/ your sick sense of humor if you want. That fact is - I WAS ASKING A LEGIT QUESTION.

    Im an odd bird
    Suffering in Alaska

    Im glad im here bro and not stuck in some po dunk of a state like West Virginny. Go make me some sour mash boy. :) Go get a job that pays more than 18.00/hr. Oh wait. You can't. /wink
  16. Dallas

    Dallas Old bulletproof tiger

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    Thank you tyke. That was a very honest answer. I was just curious why we were not getting more input from our left friends here at the PZ.
  17. ZeroClub

    ZeroClub just trying to get better

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    At some point, I just get tired of the venomous negativity ... the personal garbage that many of the more strident posters here spew.

    Of course I believe that Obama is outraged by the bonuses. Anybody who is following the news knows that the Democrats are trying to set up mechanisms to reclaim the bonuses (there is talk of a focused tax to reclaim them).

    I think it is silly to claim that the democrats are fine with the bonuses or are merely engaging in mock outrage. A claim like that represents such a fundamental disconnect with reality, though, that there isn't much point in discussing it. Ultimately, you aren't going to argue someone out of a nonreality based conviction.

    This forum is dominated by conservative to very conservative voices. Which is fine. But when you put that together with the personal garbage (insults, etc.) that is tolerated here, well, ....
  18. ScipioCowboy

    ScipioCowboy More than meets the eye.

    15,471 Messages
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    I've heard this claim before, and I question its veracity. The political bias of this board seems cyclical, in my opinion.

    And I don't notice that one side is any more vitriolic than the other.
  19. DIAF

    DIAF DivaLover159

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    you ever read any of CC, burmafrd, JBond, or ArtieLange's posts?
  20. burmafrd

    burmafrd Well-Known Member

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    or your own DIAF?

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