Obama Orders Treasury Chief to Try to Block A.I.G. Bonuses

[dbackjon]

WASHINGTON — President Obama vowed to try to stop the faltering insurance giant American International Group from paying out hundreds of millions of dollars in bonuses to executives, as the administration scrambled to avert a populist backlash against banks and Wall Street that could complicate Mr. Obama’s economic recovery agenda.


“In the last six months, A.I.G. has received substantial sums from the U.S. Treasury,” Mr. Obama said. He added that he had asked Treasury Secretary Timothy F. Geithner “to use that leverage and pursue every single legal avenue to block these bonuses and make the American taxpayers whole.”

In strongly-worded remarks delivered in the White House East Room before small business owners, Mr. Obama called A.I.G. “a corporation that finds itself in financial distress due to recklessness and greed.”

“Under these circumstances, it’s hard to understand how derivative traders at A.I.G. warranted any bonuses at all, much less $165 million in extra pay,” Mr. Obama said. “How do they justify this outrage to the taxpayers who are keeping the company afloat?”


http://www.nytimes.com/2009/03/17/us/po ... ml?_r=1&hp

[hank scorpio]

[Col Hogan]

What we are seeing here is public outrage at work...just two days ago, the Treasury Department was wringing it's hands saying it could do nothing to stop the payment of the bonuses to AIG execs...

The Treasury Department determined that the government did not have the legal authority to block the current payments by the company _ which are part of a larger total payout reportedly valued at $450 million. AIG declared earlier this month that it had suffered a loss of $61.7 billion for the fourth quarter of last year, the largest corporate loss in history

http://www.wtopnews.com/?nid=111&sid=1586327

But after some outrage on the Sunday talk shows, and on most message boards (us included) http://www.championshipsubdivision.com/ ... =10&t=4417 the President is now taking firm steps to "order" Treasury to try and block the bonuses....

What are the lawyers going to try now that they didn't know about on Saturday when they said there was nothing they could do...

GRANDSTANDING...nothing more...

[dbackjon]

What they can do is have at least some of the top execs to not get them.


Question - if the US Government hadn't bailed them out, and they went bankrupt, would they have still been legally obligated to pay the bonuses?

[Col Hogan]

What they can do is have at least some of the top execs to not get them.


Question - if the US Government hadn't bailed them out, and they went bankrupt, would they have still been legally obligated to pay the bonuses?

That is an excellent question, jon...but...we did bail them out...

[HI54UNI]

What we are seeing here is public outrage at work...just two days ago, the Treasury Department was wringing it's hands saying it could do nothing to stop the payment of the bonuses to AIG execs...

The Treasury Department determined that the government did not have the legal authority to block the current payments by the company _ which are part of a larger total payout reportedly valued at $450 million. AIG declared earlier this month that it had suffered a loss of $61.7 billion for the fourth quarter of last year, the largest corporate loss in history

http://www.wtopnews.com/?nid=111&sid=1586327

But after some outrage on the Sunday talk shows, and on most message boards (us included) http://www.championshipsubdivision.com/ ... =10&t=4417 the President is now taking firm steps to "order" Treasury to try and block the bonuses....

What are the lawyers going to try now that they didn't know about on Saturday when they said there was nothing they could do...

GRANDSTANDING...nothing more...

Unfortunately I think you are right. By the end of the week everybody will be consumed with March Madness and will forget about their outrage.

[dbackjon]

What they can do is have at least some of the top execs to not get them.


Question - if the US Government hadn't bailed them out, and they went bankrupt, would they have still been legally obligated to pay the bonuses?

That is an excellent question, jon...but...we did bail them out...

Robert Reich seems to think so...

The real scandal of AIG isn't just that American taxpayers have so far committed $170 billion to the giant insurer because it is thought to be too big to fail -- the most money ever funneled to a single company by a government since the dawn of capitalism -- nor even that AIG's notoriously failing executives, at the very unit responsible for the catastrophic credit-default swaps at the very center of the debacle -- are planning to give themselves $100 million in bonuses. It's that even at this late date, even in a new administration dedicated to doing it all differently, Americans still have so little say over what is happening with our money.

The administration is said to have been outraged when it heard of the bonus plan last week. Apparently Secretary of the Treasury Tim Geithner told AIG's chairman, Edward Liddy (who was installed at the insistence of the Treasury, in the first place) that the bonuses should not be paid. But most will be paid anyway, because, according to AIG, the firm is legally obligated to do so. The bonuses are part of employee contracts negotiated before the bailouts. And, in any event, Liddy explained, AIG needed to be able to retain talent.

AIG's arguments are absurd on their face. Had AIG gone into chapter 11 bankruptcy or been liquidated, as it would have without government aid, no bonuses would ever be paid; indeed, AIG's executives would have long ago been on the street. And any mention of the word "talent" in the same sentence as "AIG" or "credit default swaps" would be laughable if it laughing weren't already so expensive.

Apart from AIG's sophistry is a much larger point. This sordid story of government helplessness in the face of massive taxpayer commitments illustrates better than anything to date why the government should take over any institution that's "too big to fail" and which has cost taxpayers dearly. Such institutions are no longer within the capitalist system because they are no longer accountable to the market. So to whom should they be accountable? When taxpayers have put up, and essentially own, a large portion of their assets, AIG and other behemoths should be accountable to taxpayers. When our very own Secretary of the Treasury cannot make stick his decision that AIG's bonuses should not be paid, only one conclusion can be drawn: AIG is accountable to no one. Our democracy is seriously broken.

http://www.huffingtonpost.com/robert-re ... 75105.html


Some great points by him, as well.

[Appaholic]

That is an excellent question, jon...but...we did bail them out...

Robert Reich seems to think so...

The real scandal of AIG isn't just that American taxpayers have so far committed $170 billion to the giant insurer because it is thought to be too big to fail -- the most money ever funneled to a single company by a government since the dawn of capitalism -- nor even that AIG's notoriously failing executives, at the very unit responsible for the catastrophic credit-default swaps at the very center of the debacle -- are planning to give themselves $100 million in bonuses. It's that even at this late date, even in a new administration dedicated to doing it all differently, Americans still have so little say over what is happening with our money.

The administration is said to have been outraged when it heard of the bonus plan last week. Apparently Secretary of the Treasury Tim Geithner told AIG's chairman, Edward Liddy (who was installed at the insistence of the Treasury, in the first place) that the bonuses should not be paid. But most will be paid anyway, because, according to AIG, the firm is legally obligated to do so. The bonuses are part of employee contracts negotiated before the bailouts. And, in any event, Liddy explained, AIG needed to be able to retain talent.

AIG's arguments are absurd on their face. Had AIG gone into chapter 11 bankruptcy or been liquidated, as it would have without government aid, no bonuses would ever be paid; indeed, AIG's executives would have long ago been on the street. And any mention of the word "talent" in the same sentence as "AIG" or "credit default swaps" would be laughable if it laughing weren't already so expensive.

Apart from AIG's sophistry is a much larger point. This sordid story of government helplessness in the face of massive taxpayer commitments illustrates better than anything to date why the government should take over any institution that's "too big to fail" and which has cost taxpayers dearly. Such institutions are no longer within the capitalist system because they are no longer accountable to the market. So to whom should they be accountable? When taxpayers have put up, and essentially own, a large portion of their assets, AIG and other behemoths should be accountable to taxpayers. When our very own Secretary of the Treasury cannot make stick his decision that AIG's bonuses should not be paid, only one conclusion can be drawn: AIG is accountable to no one. Our democracy is seriously broken.

http://www.huffingtonpost.com/robert-re ... 75105.html


Some great points by him, as well.

I'm telling you....what is the tipping point? At what outrage will some of the American public start lynching some of these fokkers? If the government forces the taxpayer to bail these companies out, then telss the taxpayer the laws are set up to protect the crooks.......well, you only have really one alternative left.....and it can be applied to the bank official or the government official.....

[OL FU]

Robert Reich seems to think so...
http://www.huffingtonpost.com/robert-re ... 75105.html


Some great points by him, as well.

I'm telling you....what is the tipping point? At what outrage will some of the American public start lynching some of these fokkers? If the government forces the taxpayer to bail these companies out, then telss the taxpayer the laws are set up to protect the crooks.......well, you only have really one alternative left.....and it can be applied to the bank official or the government official.....

I agree. The lawmakers (republican and democrat, except for DeMint )including Obama voted for Tarp funds without restrictions. The Treasury secretary was part of the Fed which was hugely involved in Bailing out AIG without restrictions.

I would suggest that the politicians offer us an apology and admit that they are inept at handling these affairs and then see what they can do about bonuses.

[Appaholic]

I'm telling you....what is the tipping point? At what outrage will some of the American public start lynching some of these fokkers? If the government forces the taxpayer to bail these companies out, then telss the taxpayer the laws are set up to protect the crooks.......well, you only have really one alternative left.....and it can be applied to the bank official or the government official.....

I agree. The lawmakers (republican and democrat, except for DeMint )including Obama voted for Tarp funds without restrictions. The Treasury secretary was part of the Fed which was hugely involved in Bailing out AIG without restrictions.

I would suggest that the politicians offer us an apology and admit that they are inept at handling these affairs and then see what they can do about bonuses.

Can't argue with that.....

[hank scorpio]

WASHINGTON (CNN) -- Senate Democrats want to tax the controversial bonuses doled out to AIG employees who work for the division that led to the company's downfall.

Congress is looking at ways to deal with the outrage surrounding AIG's controversial bonuses.

Senate Majority Leader Harry Reid announced on the Senate floor Tuesday that the tax-writing Senate Finance Committee will pursue a legislative fix in such a way that the "recipients of those bonuses will not be able to keep all their money -- and that's an understatement."

Senate Finance Committee Chairman Max Baucus, D-Montana, will propose a special tax within the next 24 hours, Reid said.

"I don't think those bonuses should be paid," Baucus said Tuesday.

AIG has received $173 billion in U.S. government bailouts over the past six months. The provision would help the government get back the money in the form of tax revenue.

The special-tax idea was first floated Monday by Sen. Chris Dodd, chairman of the Committee on Banking, Housing and Urban Affairs.

"We have a right to tax," the Connecticut Democrat told CNN. "You could write a tax provision that's narrowly crafted only to the people receiving bonuses." Watch why Americans have a right to be angry »

At an unrelated hearing Tuesday at which IRS Commissioner Douglas Shulman was testifying, Baucus asked the nation's top tax official, "What's the highest excise tax we can impose that's sustainable in court?"

Shulman did not respond directly, but Sen. Bill Nelson, D-Florida, chimed in to suggest the tax could be as high as "90 percent."

http://www.cnn.com/2009/POLITICS/03/17/ ... index.html

[houndawg]

I mentioned in a different thread that if the bonuses have to paid they should make them show up in person to collect and then hand them their millions in gold bullion (how much would that weigh?) and let them get it to the bank themselves. LMLWAO at the thought of some slimy executive pushing a wheelbarrow full of gold through the streets of NYC. How far do you think he'd get?

[CSUBUCDAD]

This outcry over the 165 Mil in bonuses is just a cover for what the real outcry should be. 170 billion to AIG who sends over 60 billion to foreign banks and 40 billion to US banks some of whom were given a butt load of money on the first bailout plan. Subterfuge by the boys in DC that caused the freakin problem in the first place.

Pay no attention to that man behind the curtian.

[dbackjon]

This outcry over the 165 Mil in bonuses is just a cover for what the real outcry should be. 170 billion to AIG who sends over 60 billion to foreign banks and 40 billion to US banks some of whom were given a butt load of money on the first bailout plan. Subterfuge by the boys in DC that caused the freakin problem in the first place.

Pay no attention to that man behind the curtian.

That definately is an issue...one reason I think the bonuses are getting the attention is that it is more personal - many Americans are struggling, so the thought of rewarding failure so richly is offensive to most.

[bobbythekidd]

I guess I am the only one that thinks they should get the bonuses.

[wideright82]

I mentioned in a different thread that if the bonuses have to paid they should make them show up in person to collect and then hand them their millions in gold bullion (how much would that weigh?) and let them get it to the bank themselves. LMLWAO at the thought of some slimy executive pushing a wheelbarrow full of gold through the streets of NYC. How far do you think he'd get?

SPIT COFFEE ON SCREEN. Gold bullion.


This entire situation is really more funny than it is anything else. Had AIG not gotten bailed out, the bonuses would not have been paid. However, AIG was bailed out, so now because no contract was legally exterminated, they are paying the bonuses. This entire situation probably would have been avoided had AIG gone up to Geithner and said "look, we're fucked, we have all these douchebags that have contracts for bonuses, and you assholes bailed us out, so now we can pay em. Were gonna pay these failures, because we have to, unless you have a better idea."

[wideright82]

I guess I am the only one that thinks they should get the bonuses.

No you are not bob. I am one of those people. They were terribly written contracts by AIG, and the people who failed should not be penalized because there was no performance incentive. They should get the bonuses, hind sight is always 20/20 and I am sure the same contract would not be written in March of 09 like it was in March of 08

[CSUBUCDAD]

I guess I am the only one that thinks they should get the bonuses.

IF AIG was contractually bound to pay them then the Fed should leave it alone. If they go in and invalidate the contracts that guaranteed them in the first place then what would prevent them from doing to any contract they wanted to invalidate.

[Cap'n Cat]

I guess I am the only one that thinks they should get the bonuses.

IF AIG was contractually bound to pay them then the Fed should leave it alone. If they go in and invalidate the contracts that guaranteed them in the first place then what would prevent them from doing to any contract they wanted to invalidate.

Much as I hate to agree with Mr. Red White and Blue, Captain America, I have to. Doing this sets a dangerous precedent.

[houndawg]

IF AIG was contractually bound to pay them then the Fed should leave it alone. If they go in and invalidate the contracts that guaranteed them in the first place then what would prevent them from doing to any contract they wanted to invalidate.

Much as I hate to agree with Mr. Red White and Blue, Captain America, I have to. Doing this sets a dangerous precedent.

Boolsheet. Nobody thought contracts were sacred when they pertained to the UAW.

[bobbythekidd]

Boolsheet. Nobody thought contracts were sacred when they pertained to the UAW.

Concessions were made by the UAW to help keep their jobs. I have no problem with the execs making concessions. In fact, I think they should offer to take less of the bonuses or waive them in total, but it should be their call not Congress.

[Ibanez]

wHAT DO YOU THINK THE CHANCES ARE OF THESE EXEC'S RETURNING THE MONEY "WILLINGLY"?

[Col Hogan]

Boolsheet. Nobody thought contracts were sacred when they pertained to the UAW.

Concessions were made by the UAW to help keep their jobs. I have no problem with the execs making concessions. In fact, I think they should offer to take less of the bonuses or waive them in total, but it should be their call not Congress.

I gotta agree with the distinguished gentleman from Georgia...apples and oranges, can't compare what the UAW did voluntarily (OK, there was pressure to keep their company alive, but they could have said no and rolled the dice) versus having COngress or the U.S. Treasury try to forcibly violate a legal contract...

I would love for a list of the AIG losers who got the bonuses leaked to the media...embarrass them folks...but some crazies would probably take it too far and try physical harm...

[ASUMountaineer]

Give them an option. The gvt. can let them file bankruptcy and the contracts will be voided and no bonuses awarded, or they can pay for the bonuses and survive on their own with a new repayment agreement of the money already owed. The federal government is in the business of bribing, why stop now? This is ridiculous, if they were using their money, honor the contracts--but, they're not using AIG money to pay the contracts.

Anyways, I just don't see that they HAVE to honor these contracts.

[houndawg]

Contracts are broken every day, I've heard lawyers say they aren't worth the paper they're printed on.

I like Colonel's idea. Publish their picture and their bonus.

Can somebody explain why we don't outsource these jobs to to countries with lowr salaries and more competent managers?