Comments on: Bonuses Are A Drop In The AIG Bucket

By: Tisa Silver

Tisa Silver — Wed, 25 Mar 2009 15:23:55 +0000

Thanks for your comment Jason. AIG’s CEO Edward Liddy (former CEO of Allstate) was chosen by former Treasury Secretary Hank Paulson. Mr. Paulson is the former CEO of Goldman Sachs and selected Mr. Liddy to join that board of directors awhile back.

In my opinion, nationalization involves two parts: money and power. Money as in financing and power as in control of the company. I think the government may have provided the money part without exerting too much control in order to stay on the partial side of nationalization. Now that the formula hasn’t worked so well, Bernanke and Geithner are seeking new forms of power/oversight. Take a look at this MSNBC article: http://www.msnbc.msn.com/id/29849068/

By: jason huffman

jason huffman — Wed, 25 Mar 2009 02:21:19 +0000

I completely agree with you Tisa, can you tell me who choose the CEO? If this is a government corporation why can they not seem to get Anything done to stablize this company?

By: Tisa Silver

Tisa Silver — Tue, 24 Mar 2009 14:50:52 +0000

Nationalization is indeed a slippery slope. Like you said, the government owns AIG and the CEO was hand picked. Ideally, the government would have never been involved. Now that it is, we are seeing how deep AIG’s issues are and how difficult those issues will be for anyone, particularly the government, to resolve.

By: Jim

Jim — Fri, 20 Mar 2009 20:43:36 +0000

The evil comment is pretty over the top and unnecessary. I think the saying that AIG stands for Arrogance, Incompetence and Greed is more accurate.

But let me make sure I understand this, the US Government owns 80% of AIG, put a handpicked CEO in place, can put whoever they want on the Board of Directors but still can’t control what happens there? Did I get that right?

There are two things conveniently being left out of the shoddy reporting and demagoguery on this issue: 1) contract law (which explains why Congress is using the tax angle), and 2) the fact that these were not retention bonus, but performance bonuses based on the speed and efficiency with which some of the bad parts of AIG were unwound. By my Joe Everyman checkbook, these performance bonuses seem excessive, but the company was foolish enough to enter into these contracts prior to receiving TARP money. And AIG has a history of doing incredibly stupid things.

Personally, I think the mistake was made when the government didn’t declare AIG insolvent, put into receivership, sell off the good assets and wind down the bad assets. Then we wouldn’t be on this slippery slope of partial nationalization.

I hate to see taxpayer money being wasted, but it seems to be all the fad in Washington these days.

By: Bill Passes To Tax Bonuses At 90 Percent : Bizzia

Bill Passes To Tax Bonuses At 90 Percent : Bizzia — Thu, 19 Mar 2009 20:10:47 +0000

[...] bill is no doubt in response to the revelation that AIG paid out millions of dollars in executive bonuses after receiving bailout [...]

By: AIG Bonuses: Finance is Not Rocket Science : Bizzia

AIG Bonuses: Finance is Not Rocket Science : Bizzia — Wed, 18 Mar 2009 14:44:06 +0000

[...] agree with Tisa Silver that the AIG bonuses are a drop in the bucket, but all those drops add up and we can only tackle one at a time. Let’s clean up this spill, [...]

By: Tisa Silver

Tisa Silver — Wed, 18 Mar 2009 14:40:32 +0000

Hi Lela. I believe that without the victory there will be more outrage. It would have been nice if the bonus structures, contracts, etc. had been explored prior to the payments being made or even at the onset of the bailout package. As they say, hindsight is 20/20.

By: Lela Davidson

Lela Davidson — Wed, 18 Mar 2009 12:44:11 +0000

I agree that we ought to be spending more time and effort on the 99.9%. However, I also believe a ‘moral victory’ is exactly what we need right now. I’ll be posting on this later today.