Many AIG Bonus Babies Live In London?
By Justin Gardner | Related entries in Economy, Money, The World
Perhaps one of the reasons why the administration didn’t think they could challenge the bonuses in the first place?
The company said it was legally obliged to pay traders $165m (£118m) in “guaranteed” bonuses, despite the near collapse of the insurer last September and its subsequent $173bn bailout by US taxpayers. Staff at the company’s offices in London – many of them in the financial products division identified as the root cause of its downfall – are included in the payout.In an effort to quell a mounting furore, the Treasury Department said late last night that it would require AIG to repay the government more than $165 million in bonuses doled out last week.
In a letter to congressional leaders, Treasury secretary Timothy Geithner said the money would be deducted from the government’s latest $30 billion infusion of bailout funds to the insurance giant at the centre of the nation’s deepening financial crisis.
Geithner also said future bonuses would be subject to tough new limits now being developed for crippled companies getting rescued with taxpayers’ money.
Personally, I understand and sympathize with the populist rage, and I do think AIG should pay back the money, but this bonus situation is sucking the oxygen out of the debate and distracting from some REALLY big problems.
Hopefully we can move past it quickly and get focused on the budget, health care, etc.
This entry was posted on Wednesday, March 18th, 2009 and is filed under Economy, Money, The World. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
March 18th, 2009 at 9:11 am
…this bonus situation is sucking the oxygen out of the debate and distracting from some REALLY big problems.
It certainly is. It’s also being fanned by certain high-profile senators and representatives, who prefer that all the attention is on AIG, instead of on their complicity in creating this crisis.
Cuz, ya’ know, god forbid we should talk about the finance committee’s or the Fed’s role in this mess.
March 18th, 2009 at 9:14 am
…or the previous or current administration….
Though I support the Obama administration, I have been disturbed by the choice of Geithner and nothing the treasury secretary has done has made me any less disturbed.
March 18th, 2009 at 9:36 am
And what about the fact that we (Congress) put Liddy in place, and had every chance to review the bonus structure in place? The information was literally under everyone’s nose. So for the administration and anyone in Congress to cry foul over this smacks of populist political theater.
Again, another argument to spend some time reviewing legislation rather than acting in panic mode. Would also make me feel a lot better if Obama would implement his sunshine promise about legislation, allowing We The People five days to review and comment on legislation before he signs it.
March 18th, 2009 at 9:44 am
…another argument to spend some time reviewing legislation rather than acting in panic mode.
No! No! No! It’s an emergency! We’re all gonna die if we don’t take action! Who cares what the consequences are? Just DO something! ANYTHING!
NOW! NOW!!!
March 18th, 2009 at 9:49 am
We can talk about whatever we want, folks. The oxygen/debate thing is kind of pointless. I think one thing current times show is that issues proven to be important and contentious can and do bubble up from the blogs into the mainstream of discussion. Blogs don’t lead by bitching, they lead by forging a coherent and substantive take on things people care about.
So, snoop, it sounds like you ought to go start a blog to talk about what you view as gov’t complicity.
Personally, I’d be happy to hear any reasonable arguments about it.
Though I really think a better place to start is with the folks who granted AAA investment grade ratings to things like CDOs which were in fact extremely risky, as current circumstances have proven.
We KNOW that most congresscritters are not economists or mathematicians. So while I do expect them to lead and sort of be on top of things, I think it’s fair to note that the government decided to trust entities like Moody’s when it came to complicated (indeed, byzantine) investment vehicles.
The argument for such trust, quite reasonable at the time to many or even most, was that such groups as Moodys had a vested interest in making the correct judgments about such things, so they’d do a far better job of understanding what they were rating than anyone from the government. Regulation, in this view, would be both unnecessary and a tax on the economic lifeblood.
Current times have demonstrated that this argument had a serious fatal flaw of some type. I have quickly learned over the past month or more of snoop visits how often snoop is certain that the majority of the flaw always lies with the government. Yet I remain unenlightened as to what sort of actual prescriptive changes snoop favors that could be enacted in a democracy.
March 18th, 2009 at 1:38 pm
Well, I have to say that I blame the media for really hyping and making a big deal out of this story. They knew that AIG was going to give their bonus’s out to their employees and eventually this was going to happen when they first got bailed out. This is why we should really do our research before we start screaming and shouting on this.
March 18th, 2009 at 4:43 pm
Justin you’re having database problems!
The bonus’ are an egregious display of arrogance, stupidity, or both. However, every single one of us had better hope that AIG and the US government can recruit and retain the very best people available. It is nearly impossible to unwind $3 Trillion in bad investments – do you want someone who doesn’t know what they are doing involved in that – I sure don’t? Paying the bonus’ was stupid, but lets remember that the facts are only trickling in on this and need more time to roll out. Those bonus’ will be paid one way or another – and they will continue to be paid one way or another. I know for a fact that some of the best (worst) derivitive people in the industry were approached and declined positions in this unit with AIG. No one wants to work there – it’s toxic. We have a $170 billion investment in AIG and if we stand any chance of getting it back we had better not be penny wise and pound foolish – after all, the bonus is less than 1/10th of a percent of the whole “nut”. The talking heads will obfuscate, the politicians will politic, the voters will scream, and the traders on Wall street will read the moods and make money off of it. Why is anyone surprised that the chickens are missing after we locked the fox in there with them. What, unmitigated greed on Wall street….well I never…
March 18th, 2009 at 5:33 pm
The latest in the AIG saga is the knowledge that there actually was a provision in the recovery bill which would have put a cap on bonuses paid to bailout recipients. Apparently the provision was removed at the last moment and no one has come forward to take claim for the blunder.
As the economy worsens, the masses have a target to direct their anger and frustration toward – AIG execs. It’s going to get uglier before it’s over.