After Rescue, Bonuses Still Flow At AIG

[sabra]

Source: CBS News

The Early Show: Insurance Giant Offers Top Employees "Retention Payments" To Keep Them


(CBS) Insurance giant AIG was given $152 billion in bailout money by the federal government since nearly collapsing in September. Now the company is planning to take millions of that money and hand it over to employees in a program that sounds a lot like bonuses.

AIG's new CEO is only taking a single dollar for his compensation this year and the top 60 executives won't be getting bonuses. But that hasn't stopped AIG from finding a creative way to keep some of their top employees in what they're calling "retention payments," reports CBS News correspondent Priya David.

To some it seems like business-as-usual end-of-the-year bonuses.

On Wednesday, lawmakers grilled Assistant Treasury Secretary Neel Kashkari about AIG's bonus plan. Rep. Donald Manzullo, R-Ill., asked if a $3 million bonus was too much.

"It is excessive for a failing institution, yes," said Kashkari.

Read more: http://www.cbsnews.com/stories/2008/12/11/earlyshow/main4661900.shtml?tag=topStory;topStoryHeadline

[mbperrin]

1. So? What will they do about it? Nothin'

Meanwhile, over in the area where people actually MAKE things, nothing is moving...oh, yes, those pesky unions and their unAmerican dream of making a living wage.

Biggest theft in US history committed by banks right under our noses, and Congress continues to enable them.

I'm out of outrage or surprise.

[SpiralHawk]

2. "Smirk." - Republicon fatcat cronies

[nykym]

3. I love it!

"Retention Program" as if in this economy people would really be looking to change jobs.
Pllllllllease!

[Robbien]

4. AIG has a Blog Relations department--They pay people with our money to fight bad PR on the net

It’s true. Someone from this crucial function at AIG apparently emails bloggers to complain about what the company considers inaccuracies in press coverage. Salmon got one related to the Wall Street Journal’s piece on AIG having made $10 billion in speculative bets gone bad. AIG seemed a bit touchy about this news, as well it should have. As the Journal explained, the firm hadn’t quite explained all those risky trades to investors.

Salmon said the blog relations folks were writing to set the record straight. But their efforts didn’t exactly turn out that way. Salmon looked into the matter, and sided with the Journal. Here’s how he summed up the Blog Relations department’s approach:

Unfortunately, they seem incapable of writing in English, and even if you do try to decipher what they’re saying, it seems to be little more than “this isn’t news, it was on page 117 of our 10-Q”.

Old news, move on. Never mind the old news was only reported in internal documents.

or

I also heard from the Blog Relations people, after blogging about Naked Capitalism’s coverage of the “retention bonuses” the company offered to 130 top executives, a day after saying publicly it intended to forgo bonuses for senior executives.

I just don’t get it, the Blog Relations folks essentially wrote to me. AIG wants to pay the government back for all that money, and to do so, it needs to sell off some of its high quality businesses. The people who run those businesses are the best in their fields and everybody else wants to hire them. If AIG can’t keep them, they won’t be able to sell those businesses for as much money, and they won’t be able to pay back the government as quickly. We’ll all suffer if those executives don’t get those bonuses!

This could be a reasonable argument, but if so, why did AIG wait to reveal the retention bonuses until the day after announcing the firm was canceling bonuses for top executives? And why did AIG also choose to reveal the news on the day before Thanksgiving, when it was most likely not to get noticed

Here’s how Yves Smith at Naked Capitalism, who has been following AIG closely, initially responded to all this

Do you really believe, with massive deleveraging and all sorts of big financial firms, including insurers, teetering, that AIG executives have great employment prospects these days? But the bigger issue, as far as I am concerned, is the misrepresentation, trying to claim that AIG was forgoing significant senior level comp, only to learn that they define terms a bit differently than the rest of the world does.

Despite it troubles AIG still employs the Blog Police

[stubtoe]

5. AIG needs to go into some sort of Finance 101 rehab

They never should have gotten a dime until they showed a plan.

[w4rma]

8. AIG should have been allowed to just fail. The debts would have been bought up by valid

buyers and the nation wouldn't have to put up with their BS anymore.

[depakid]

10. Unfortunately, AIG was a worldwide concern that was allowed to grow far too large

broad. Allowing them to fail would have had systemic consequences around far beyond the United States.

[w4rma]

11. I don't see how keeping them around has helped anyone except for them. (nt)

[depakid]

13. Imagine if your insurance coverage went "poof"

Some businesses (or non-profits) wouldn't be able to operate if their AIG policies were cancelled (because for various reasons, they wouldn't be able to get another in a timely manner).

That's just for starters.

The corporation should never have been allowed to expand and operate in the manner which they did- and hopefully that will be the subject of legislation and adminstrative regulations in the coming year.

That along with accountability for possible criminal behaviors.

[w4rma]

14. Other businesses would have replaced them in a timely manner. Insurance isn't rocket science.

Any actuary can handle it.

[depakid]

16. Not if your business is on a tight budget

and you'd already paid the premium(s).

In addition, AIG was and is still a counterparty to tons of other interconnected and international obligations.

It's a Byzantine mess that never should have come to pass.

But since it did- now we have to fix it,

[w4rma]

17. AIG fails. Competitors replace AIG. The problems are fixed. That's how capitalism works.

As for their obligations? The money should have been used towards those first, instead of allowing that (still) bankrupt company to continue operations.

[depakid]

18. That's how it works if you want to crash the world's financial system

and hurt TONS of innocent parties and create cascading effects here and abroad, just to prove a point.

Here's a brief bit about that from just one state in America.

AIG collapse would have cost N.C. $1B

If the federal government had allowed insurance colossus American International Group Inc. and its subsidiaries to fail, N.C. regulators — and ultimately state taxpayers — would have been left with a mess that would have cost, according to a conservative estimate, more than $1 billion to clean up.

That’s the back-of-the-envelope number that officials at the Raleigh-based N.C. Insurance Guaranty Association came up with as they monitored this week’s developments on Wall Street, including the $85 billion federal loan guarantee that’s supposed to save AIG.

“We wanted to see what our exposure would be,” says Mike Newton, the association’s guaranty director. “And the more we looked at it, the wider our eyes got.”

The federal government now controls almost 80 percent of AIG.

Much more ore: http://charlotte.bizjournals.com/charlotte/stories/2008/09/15/daily57.html

[w4rma]

20. Fine, pay $1B to North Carolina, directly, and let AIG crash. That's much less than the $85B used

so that AIG could BUY UP MORE COMPANIES to bring into their circle of failure.

[lifesbeautifulmagic]

6. Oh, What will those southern senators say about this.....

besides absolutely nothing.....

[Name removed]

7. Deleted message

Message removed by moderator. Click here to review the message board rules.

[truthisfreedom]

9. WHat do you want to bet they've already blown more than what would save the automakers on

booze, drugs, whores, limos, corporate jets and resorts?

[Wednesdays]

12. But...but...they earned all that!

Why do you hate 'Murika?

[yurbud]

15. it's time to take the paddy wagon down to Wall St, load these guys up, give them their cavity

searches, and throw their sociopathic, pampered, trust fund baby asses in prison.

[Divine Discontent]

19. I may be wrong, but doesn't this just ENCOURAGE all other companies to SNUB their noses at the govt

about how they use the bailout money?

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