Click here to check the ultimate guide to learn how to leverage your PC and internet to make money online.
The Washington Independent
The Washington Independent

AIG Still Living in Denial As It Pays Out Millions in Bonuses

Bailed-out insurance giant AIG will no doubt be a heated topic of discussion today, with The Wall Street Journal and other news organizations reporting that the

Mitchel Nash
Last updated: Jul 31, 2020 | Mar 15, 2009

Bailed-out insurance giant AIG will no doubt be a heated topic of discussion today, with The Wall Street Journal and other news organizations reporting that the failed and essentially insolvent company is vowing to pay out $450 million in bonuses to its “top performers” — you know, the folks in the financial products unit, many of whom contributed to bringing the company to ruin and helped tank the entire economy in the process.

We should all have jobs like that.

My favorite non-explanation comes from AIG’s leader Edward Libby, who said in a letter to Treasury Secretary Timothy Geithner that AIG had to pay those big bonuses to keep all of its super-talented staff, The Washington Post explained. Those highly prized folks might leave the firm, Libby said, “if employees believe that their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury.”

Those employees might actually have a point. When a company takes $170 billion in taxpayer money to keep itself afloat, there’s always the possibility the government might have a few things to say about how those funds get spent.

And this is one of those times.

Clearly, the Obama administration is ticked off about this whole thing, or they wouldn’t have leaked the bonuses payments all over the media. But that’s not enough. This whole mess raises a raft of concerns that aren’t assuaged simply by knowing that Geithner is really, really mad.

Let’s start:

  • Compensation contracts are renegotiated all the time in corporate America. Surely, some court or judge would be open to the reality that circumstances changed greatly after those bonuses were initially promised, before the financial crisis began.  AIG could tell the employees to go ahead and sue. The company might either win, or its legal costs and possibly lower bonus payments still would be less than the $450 million. And AIG would set a precedent – this isn’t the way the world works now. We could be on the precipice of a depression. You don’t get a bonus just for showing up for work anymore.

  • Geithner could say this to Libby: Fine. You pay the bonuses, we take our money back. This would be my preference. It also would severely lessen the chances another bailed out firm would try to pull this stuff.

  • Geithner could say to Libby: Fine. Let those employees walk.

I’ve raised this point before: where are the companies out there dying to hire these people? The most recent experience on their resumes is at a company that failed spectacularly. They worked in the financial products unit — which totally blew it. What firms, exactly, find themselves in dire need of someone highly skilled at devising credit default swaps? Where are the feature stories in Fortune about the race among corporations to get their hands on prized former AIG employees?

Call their bluff. If they all go, there are enough other unemployed or underemployed people out their with financial services experience that I don’t see the difficulty in filling the jobs. And next time around, maybe AIG should look a little closer at character issues and ethics awareness. Just a suggestion.

AIG may have thought it won this round, but I suspect it badly miscalculated. This story is not going away anytime soon, and angry lawmakers and the public will be pushing for even more punitive measures. Government officials are said to be “exasperated” with AIG over the bonuses. That’s nothing. Wait until it sinks in with the rest of us.

Mitchel Nash | Mitchel works for a high-tech telecommunication firm as a software engineer with vast experience and management skills. The company creates and provides technologies that help service providers provide high-quality voice and data services over broadband access networks while maximizing their network infrastructure investment. He is in charge of the production of the company's management software products as a senior software engineer. Mitchel has a B.Sc. in Computer Sciences from Tel-Aviv Jaffa Academic College.


$1.3 Million for Brown

The GOP’s candidate in the Massachusetts special election raised more than one million dollars -- double the goal -- in a 24-hour moneybomb on the Ron Paul

$1.89 billion given to states to fight HIV

The federal government Monday announced more than $1.89 billion in funding to states to fight the HIV epidemic with access to care and with more cash for the failing AIDS Drug Assistance Program. According to an HHS press release , $813 million of that money will go directly to the ADAP programming. An additional $8,386,340 will be issued as a supplement to 36 states and territories currently facing a litany of unmet needs and access issues.

1. Brian Schweitzer

As governor of Montana, Schweitzer doesn’t represent one of the most highly populated, high-profile electoral states in the country. But this

#1 in Conspiracy Theories

Andrew Young’s tell-all biography of John Edwards, hitting shelves next week, is surging in one category in particular. #1 in Conspiracy

$1.3 trillion in federal spending unaccounted for, report finds

Despite calls for independent bodies to keep government accountable, the Sunlight Foundation’s most recent Clearspending report has found the federal

1 Brigade and 1 Battalion

ISTANBUL – It’s 10 p.m. in the lowest level of the Istanbul airport. In 20 minutes I’ll be allowed to board my plane to Kabul, bringing me to the

Ten Loopholes That Can’t Make It Into FinReg

Dan Pfeiffer, the White House communications director, wrote a blog post that lists the loopholes lobbyists most want inserted into Sen. Chris Dodd’s (D-Conn.)

$1 Million for Toomey

Pat Toomey, the former Club for Growth president and leading Republican candidate in Pennsylvania’s 2010 Senate race, has announced a $1 million haul in the

1. Lindsey Graham

Sen. Graham (R-S.C.) is typically regarded as a reliable vote for his party, but he took the bold step of breaking with his fellow Republicans to join Kerry

Bachmann uncomfortable over earmarks ban

Republicans appear to have boxed themselves into a corner with their portrayal of earmarks as wasteful spending, as many of them have backed a moratorium on

Troubled mine holds hope for U.S. rare earth industry

China currently controls 97 percent of the world’s rare earth production. The Mountain Pass Mine could change that -- if it can overcome serious environmental concerns.

© Copyright 2022 The Washington Independent All Rights Reserved

Terms & Privacy |

Click here to check the ultimate guide to learn how to leverage your PC and internet to make money online.