Apparently AIG’s is paying out a large portion of these bonuses to the London unit, the same unit that caused the problems. There were contracts in place, and according to UK law, these contracts are very hard to break. AIG is reasoning that it would cost more in legal fees to try to break the bonus contracts than to just pay them out. They think they are saving $$$.
just don’t pay them, if they ever want to sue AIG, shame on them
AIG got $170B of bailout money and is paying out roughly $165M in bonuses, IIRC. It’s a lot of money, but it’s also only 0.1% of what they received.
Wow, I implicitly assumed bonuses would be much more, given that this came up here. Looking at the facts I think that even if these payments may not be deserved by some - and establishing that fact may be difficult given the information being provided - retaining good staff probably makes sense. Lot’s of money being spent, but if it’s increasing the odds to get money back, I believe it’s OK. P.S.: brianr, thanks for that link on AIG’s failure impact.
I could care less about contract law… paying $0.01 in bonuses is utterly ridiculous. AIG executives should give back bonuses or go straight to jail. Also, saying it’s only 0.1% of what they received is crazy… its still $165 million.
I should have added that if this money went to the top executives (and maybe it did), then one should be more upset. However, maybe there were some equity analysts, for example, that did make profits for their unit. There may be some people that were hired just this year and basically had a bonus that was not tied to performance because it was necessary to attract them to the company for the first year or something. If money went to parts of the organization that did their job reasonably well and therefore prevented AIG from losing even more money, AND those bonuses are a tiny proportion of total bailout funds, then I’m happy to say, look, let’s just move on. Particularly if the cost of backing out of those bonuses is going to be litigation that will cost more than 0.1% of bailout funds. The top executives, however, except possibly those who worked for profitable divisions, shouldn’t be getting bonuses. But remember that there are a lot of people in the organization that aren’t top executives. And some of them may actually have added value.
AIG is up 60% today despite all the negative news, loving the markets these days
AIG has approved $163 million in bonuses. I mean that seems fair because according to their attorney, they were promised…get this….CONTRACTUALLY. Let’s see here, the government owns 80 percent of your ponzi shithole company and we are allowing bonuses because of a contract. It would be cheaper to kill every lawyer and executive associated with the bonuses at this point. The company does not need to retain anybody. It needs to be unwound and quickly. The government’s decision to bail out AIG on the terms it did was a colossal mistake. All of the counterparties that were secretly bailed out via the AIG bailout could have and should have shared at least some of the loss. But because incompetence is clearly not confined to those who work in the financial services industry, the American taxpayer will, once again, foot the bill. Here’s the full list of those who got secret bailouts via AIG, ranked in order of gift. Read it and weep: Goldman Sachs $12.90 billion 2.5 5.6 4.8 . Soc Gen $11.90 billion 4.1 6.9 0.9 . Deutsche Bank $11.80 billion 2.6 2.8 6.4 . Barclays $8.50 billion 0.9 0.6 7 . Merrill Lynch $6.80 billion 1.8 3.1 1.9 . Bank of America $5.20 billion 0.2 0.5 4.5 . UBS $5.00 billion 0.8 2.5 1.7 . BNP Paribas $4.90 billion 0 0 4.9 . HSBC $3.50 billion 0.2 3.3 . Calyon $2.30 billion 1.1 1.2 . Citigroup $2.30 billion 0 0 2.3 . Dresdner $2.20 billion 0 0 2.2 . DZ Bank $1.70 billion 0.7 1 . Wachovia $1.50 billion 0.7 0.8 . ING $1.50 billion 0 0 1.5 . Morgan Stanley $1.20 billion 0.2 1 . Bank of Montreal $1.10 billion 0.2 0.9 . Rabobank $0.80 billion 0.5 0.3 . Royal Bank of Scotland $0.70 billion 0.2 0.5 . AIG Int’l $0.60 billion 0 0 0.6 . KFW $0.50 billion 0.5 . JP Morgan $0.40 billion 0.4 . Credit Suisse $0.40 billion 0 0 0.4 . Santander $0.30 billion 0.3 . Paloma $0.20 billion 0 0 0.2 . Citadel $0.20 billion 0 0 0.2 . Danske $0.20 billion 0.2 . Reconstruction Finance Corp $0.20 billion 0.2 . TOP 18.3 26.7 . Other $4.60 billion 4.1 0.5 . TOTAL $93.40 billion 22.4 27.2 43.8 Here is the link http://www.businessinsider.com/henry-blodget-goldman-sachs-wins-big-in-secret-bailout-via-aig-2009-3
Part of this is a semantic problem—the idea of a “contractually obligated bonus” seems to be contradictory. When it’s contractually obligated, it’s really more like a deferred salary payment, not a performance-based bonus. You can stink at your job and still get a great bonus under those rules. So I think the term is partly stirring the anger because everyone thinks that you get a bonus for doing a good job and that’s not what’s going on. If they called it a salary, probably no one would care. Not that that makes it right. It’s an appalling practice. It produces about as much wonder and admiration as watching someone cheat at poker and win over and over… The CDSs are a different issue. If you think the US should have let AIG fail and default on the CDSs, you probably are willing to try your luck at a 1930s style depression.
At first I thought there was a lot of misplaced rage here. For example, AIG has several very profitable business lines whose employees may well deserve bonuses. Did you know AIG owns ILFC, the largest aircraft lessor in the world? There may be many employees there who legitimately deserve bonuses. There’s also the issue (as pointed out, many times before) that the term “bonus” in finance does not mean what it means in widget manufacturing. Now it appears a huge amount of this is going to the Financial Products group. Contractual or not, this is inexcusable - you don’t need to retain talent to wind down a division. However, for those arguing to let the firm go under, get real. One, do you remember what happened when LEH went under? Now imagine that times 10. Look at the link below. This company is far too intertwined to let it go under. Take the aforementioned ILFC. Did you know they’re the largest single customer for the 787? What do you think canceling those orders would - and don’t just think about BA, go all the way down the aircraft supply chain. http://www.ezodproxy.com/AIG/2008/ataglance2007/images/AIG_ATaGlance_2007.pdf I don’t know what to say to those who are surprised the big banks were receiving the bailout money via AIG. I thought it was well known at the time the rescue was needed to meet collateral requirements on these contracts. If you didn’t know that, you probably shouldn’t be commenting on the issue.
AIG management just doesn’t get it… they throw a lavish party a week after they receive bailout money, now this whole bonus disaster. There’s zero accountability or retribution for stupid decisions. We’ll see if Obama really will recind AIG bonuses. Iron Lotus too fast a death.
can someone explain to me why AIG is up so much today…?
“Obama said he has asked Treasury Secretary Tim Geithner to use the government’s role as a majority owner of the troubled insurance company and “every legal avenue” to stop the bonuses.” I like it, I like it alot. If anyone doesn’t like it they can quit and try to find a job with “AIG Derivative Trader” on their resume…dumba$$es.
Question of the day: AIG derivatives trader vs. Madoff Securities trader unprofitable but real vs. profitable but fake Which one would you want to be?
Awesome question. You gotta pick Madoff’s men! AIGers had real money to invest and figured CDSs without a hedge in the middle of a housing bubble would be a sweet idea…their stupidity is proven. Madoffers stupidity is assumed but they haven’t actually done any real investing to prove it.
Colonel Mustard Wrote: ------------------------------------------------------- > AIG has approved $163 million in bonuses. I mean > that seems fair because according to their > attorney, they were promised…get > this….CONTRACTUALLY. > > Let’s see here, the government owns 80 percent of > your ponzi shithole company and we are allowing > bonuses because of a contract. It would be cheaper > to kill every lawyer and executive associated with > the bonuses at this point. The company does not > need to retain anybody. It needs to be unwound and > quickly. > > > > The government’s decision to bail out AIG on the > terms it did was a colossal mistake. All of the > counterparties that were secretly bailed out via > the AIG bailout could have and should have shared > at least some of the loss. But because > incompetence is clearly not confined to those who > work in the financial services industry, the > American taxpayer will, once again, foot the > bill. > > Here’s the full list of those who got secret > bailouts via AIG, ranked in order of gift. Read it > and weep: > > Goldman Sachs $12.90 billion 2.5 5.6 4.8 > > . > Soc Gen $11.90 billion 4.1 6.9 0.9 > > . > Deutsche Bank $11.80 billion 2.6 2.8 6.4 > > . > Barclays $8.50 billion 0.9 0.6 7 > > . > Merrill Lynch $6.80 billion 1.8 3.1 1.9 > > . > Bank of America $5.20 billion 0.2 0.5 4.5 > > . > UBS $5.00 billion 0.8 2.5 1.7 > > . > BNP Paribas $4.90 billion 0 0 4.9 > > . > HSBC $3.50 billion 0.2 3.3 > > . > Calyon $2.30 billion 1.1 1.2 > > . > Citigroup $2.30 billion 0 0 2.3 > > . > Dresdner $2.20 billion 0 0 2.2 > > . > DZ Bank $1.70 billion 0.7 1 > > . > Wachovia $1.50 billion 0.7 0.8 > > . > ING $1.50 billion 0 0 1.5 > > . > Morgan Stanley $1.20 billion 0.2 1 > > . > Bank of Montreal $1.10 billion 0.2 0.9 > > . > Rabobank $0.80 billion 0.5 0.3 > > . > Royal Bank of Scotland $0.70 billion 0.2 0.5 > > . > AIG Int’l $0.60 billion 0 0 0.6 > > . > KFW $0.50 billion 0.5 > > . > JP Morgan $0.40 billion 0.4 > > . > Credit Suisse $0.40 billion 0 0 0.4 > > . > Santander $0.30 billion 0.3 > > . > Paloma $0.20 billion 0 0 0.2 > > . > Citadel $0.20 billion 0 0 0.2 > > . > Danske $0.20 billion 0.2 > > . > Reconstruction Finance Corp $0.20 billion 0.2 > > . > TOP 18.3 26.7 > > . > Other $4.60 billion 4.1 0.5 > > . > TOTAL $93.40 billion 22.4 27.2 43.8 > > Here is the link > http://www.businessinsider.com/henry-blodget-goldm > an-sachs-wins-big-in-secret-bailout-via-aig-2009-3 I wonder if this money is going to these firms or is it going to the HFs that PB through them? I have to think that ultimately it was only the HFs that were long CDS on mortgages (or anything for that matter).
AIG should go bankrupt. If the government then chooses to make whole those banks and hedge funds that lost money due to the counterparty risk of dealing with AIG, they should do so in a transparent manner.
I think AIG derivatives trader should have to put a special seal on their resumes going forward. It should be brown and blothchy and smell like a turd, which is what they have delivered us.
I’m too pissed at AIG to even join the discussion. I don’t share the “it’s a contract it has to be honored” mentality. They have zero cash. The bonus is being paid from taxpayers. That’s absolute bull sh!t. This is absolute bullsh!t.