Rage at AIG Swells As Bonuses Go Out

[stevedeshazer]

Source: Washington Post

Fed Decided Payouts Couldn't Be Stopped

By Brady Dennis and David Cho
Washington Post Staff Writers
Tuesday, March 17, 2009; Page A01

A tidal wave of public outrage over bonus payments swamped American International Group yesterday. Hired guards stood watch outside the suburban Connecticut offices of AIG Financial Products, the division whose exotic derivatives brought the insurance giant to the brink of collapse last year. Inside, death threats and angry letters flooded e-mail inboxes. Irate callers lit up the phone lines. Senior managers submitted their resignations. Some employees didn't show up at all.

"It's a mob effect," one senior executive said. "It's putting people's lives in danger."

Politicians and the public spent yesterday demanding that AIG rescind payouts that they said rewarded recklessness and greed at a company being bailed out with $170 billion in taxpayer funds. But company officials contend that the uproar is scaring away the very employees who understand AIG Financial Products' complex trades and who are trying to dismantle the division before it further endangers the world's economy.

"It's going to blow up," said a senior Financial Products manager, who spoke on condition of anonymity because he was not authorized to speak for the company. "I have a horrible, horrible, horrible feeling that this is going to end badly."

Read more: http://www.washingtonpost.com/wp-dyn/content/article/2009/03/16/AR2009031602961.html

---

Uh-oh.

[Rosa Luxemburg]

1. 'they' could do the decent thing and return the bonuses

that would show what america is made of. Besides those fat cats don't need more bonuses.

[No Elephants]

50. Rosa, sweetie, do you really think America is made of people who return two and three million

dollars of "performance" bonuses?

[saigon68]

63. "It's putting people's lives in danger."

Get out the hoes and pitch forks people

Its time to get these fuckers

[Rosa Luxemburg]

80. their time has come!!!

[skooooo]

2. "I have a horrible, horrible, horrible feeling that this is going to end badly."

Maybe if you just gave the money back, you wouldn't have that feeling.

[stevedeshazer]

5. Isn't that the truth?

I agree.

[aquart]

17. No, no. Needs it to bulletproof the limo.

[Tansy_Gold]

18. It already HAS ended badly --- for the taxpayers. n/t

.

[skooooo]

26. Do you really think this has ended?

I hope not.

[Tansy_Gold]

29. For many people it has.

Those who have lost their homes, their jobs, their health. They can never get back what they've lost thanks to the Wall Street scam artists and the boodle they have sucked out of the economy. And those who have lost so much are almost without exception members of the working classes, regardless of level of income. Steel workers, auto workers, sales clerks at Circuit City, tellers at WaMu, bussers at the local restaurant, baristas at Starbucks. These aren't upper .5%ers who are hurting.

Where do you start over when you're 55 and the only job you know how to do is outsourced to India? How do you go back to square one when the company that has supported your town suddenly closes its doors? What do you do when the home you've poured every blessed nickel into goes on the foreclosure auction block?

Is it "The End" and roll credits? No, of course not. Every story in real life goes on past the last page or the final curtain. But in terms of the AIG catastrophe, the financial meltdown, the toxic cloud of ponzified derivatives, yes, it's over for a lot of people and they ain't the fat cat greedy fucking assholes who are taking home seven- and eight-figure bonuses.



TG

[GreatInDayton]

32. Thank you...

Well put.
I tried to leave a "private message" to you, but don't appear to have enough posts. How many posts must I have?

Thanks for your eloquence--yes, "fat cat greedy fucking assholes" and all.

I am going to reread your post daily for the next few.
I am struggling to find footing in all of this.

Thanks.

[Tansy_Gold]

34. I have no idea how many posts you need to PM

I'm not a DU guru! ;-) Just a longtime denizen.

And welcome to our community. :hi:


Tansy Gold

[JDPriestly]

41. Welcome to DU, GreatinDayton

[skooooo]

52. Yes, of course..what I meant was..

Whether it was too late to get the AIG bonus money back. That's all I meant.

[No Elephants]

51. No, it hasn't ended yet. They'll get more of our money yet. Watch.

[Hekate]

44. Spoken like a man who just saw the peasants storming the castle with pitchforks and torches

For some reason that statement made me laugh out loud. People are out on the street with the clothes on their backs and their little kids and HE has a "horrible feeling"?

Sons of bitches.

Hekate

[Taverner]

70. I think by badly, he meant they might HAVE to give the money back

Screw employee safety, they're afraid they'll have to buy the Corolla this year instead of the Bentley

[closeupready]

3. Did a single one of them offer to forfeit their bonuses?

If not, did they expect taxpayers who are themselves struggling and losing homes would NOT be outraged? Come on, these guys are geniuses. Surely they were aware of how angry this would make people.

[Pirate Smile]

6. It mentioned people quitting but didn't give any more details.

[aquart]

21. It said that the bad boys who did bad things are gone.

And the bonuses went to very good boys who must be lavished with luxury or they will deliberately fuck up and destroy the world. I believe that was the general threat.

[Quiz Master]

33. Indeed.

And one may see their good acts here.

[No Elephants]

54. When did they leave? And what did the very good boys do to earn these bonuses so fast?

[WorseBeforeBetter]

79. My understanding is that they received the bonuses on SUNDAY.

One top exec received $6.4M. At least a dozen others receiving around $1M have already left the company -- since SUNDAY.

As far as your second question, aren't these the bonuses that were negotiated in 2008? That ones that we've been told we cannot *legally* renegotiate or break? Bullshit -- Kuttner pointed out this evening on Newshour that Liddy renegotiated some of these contracts to lesser amounts. MUCH more could have been done.

Kuttner also pointed out that billions more have gone from AIG to prop up foreign banks. I don't even know if most Americans are aware of that.

Correct me if I'm wrong, anyone. I can't keep up with the gory details.

[No Elephants]

53. That's called "Take the money and run." Andrew Cuomo just may be our next President.

[earcandle]

31. geniuses? or belief mongers? duh? where does the x/y go?

on the graph?  How many degrees? Uh.. are you sure?  Okay. 

[closeupready]

69. I was being facetious, but it's hard to be facetious with this kind of format,

since tone of voice is an important part of that. :D

[Why Syzygy]

65. IIRC, the Liddy guy said he would give up his, and maybe one or two other top dogs.

Supposedly a lot of them have left.

[marshall]

72. That's about as likely as someone in Congress turning down a raise

In the end everyone is on the gravy train for themselves.

[closeupready]

73. Yes, that's exactly correct. Ayn Rand's "Atlas Shrugged" is their Bible.

It's all about them.

[Pastiche423]

77. Not a good comparison

There are actually a few congresspeople that have turned down the raises. My rep., Pete DeFazio has not taken a raise in the twenty three years he's been in congress.


But for the most part, Congresspeople do not turn down raises.

[Pirate Smile]

4. Very interesting article. People need to read to the bottom (it is only one page).

I'm afraid today was an outrage overload and the feeling has left me.

[Why Syzygy]

9. My outrage is just ramping up.

Enough with the threats. WHAT are the "horrible" things? As bad as we've got?

I read the whole thing.

[agent46]

7. Drip...Drip...Drip... n/t

[Why Syzygy]

8. This right here ...

But company officials contend that the uproar is scaring away the very employees who understand AIG Financial Products' complex trades and who are trying to dismantle the division before it further endangers the world's economy.
...

A bunch of them need to be sent to prison for endangering the "world's economy"! How bad could it be? The horrible? What do they know?

[No Elephants]

57. Lots of very smart people are unemployed now. AIG can hire them. Since the bad people

who brought all this into existence supposedly left and it's the new peeps who are getting these bonuses, apparently learning does not take all that long.

Besides, dismantling a division does not require the same skills and knowledge as it took to create it. Michelangelo created the Pieta and some loon took a hammer to it. Each accomplished his goal, even though the loon could never have created the Pieta.

[Why Syzygy]

64. Just about anyone can run a paper shredder. nt

[Stargazer09]

10. It will end badly, I think

But hopefully, the crooks will be the ones who suffer.

Contracts, especially bonus contracts, should have been nullified when OUR tax dollars had to bail them out.

Chances are, the ones getting the bonuses are not the average workers in that company. And the management certainly does not deserve to be paid extra for what they did.

[No Elephants]

58. I hope you're correct, but I doubt it. White collar crooks just don't suffer commensurate with

their deeds. If they did, Madoff would be on the rack, even as we type.

[Stargazer09]

67. I know

Sad, isn't it?

[tomm2thumbs]

11. maybe people just need to look on the internet

http://google.brand.edgar-online.com/EFX_dll/EDGARpro.dll?FetchFilingHTML1?ID=5896881&SessionID=-7aiWHPDse-1WA7

lots of interesting things to find on the internet, yes indeedie - if Cuomo is looking for 'who', seems like he would just do a search on that page for DIRECTORS AND OFFICERS OF THE DEPOSITOR and find out a good starting point

[earcandle]

35. Thanks! That is awesome.

I am going to study this for my auditing practice.

I am taking a class and want to learn so I can audit the gummint.

[tomm2thumbs]

40. sure a lot of 'vice presidents' on that list - all chiefs and no indians if you ask me

and I am hearing the war drums starting to beat in America

[No Elephants]

59. Some companies give out titles instead of real money. Apparently, AIG was generous with both.

[mbperrin]

12. I warned earlier that anger over this is REAL and the tone deaf

bastards at AIG chose to ignore it. Comment boards from the New York Times to right here on DU show great rage.

And why not? Nobody ever really said Louis and Marie didn't deserve their ends; everyone just agreed it was horrible.

This country has a history of Old Judge Lynch rising when those in power will not do the right thing.

I'M outraged, and hope these dumb greedy clucks have enough sense to head off real trouble. So far, they're complaining about a bunch of name-calling and "my dad can beat your dad up."

Wait till DAD gets here....

[stevedeshazer]

13. This is for real and people are going to be pissed off about it

I AM DAD.

:)

[Larkspur]

14. Sounds like AIG is begining to understand how the French aristocrats felt

when the peasant mob stormed their palaces and hauled them off to the guillotines.

[primavera]

22. Good

It's about fucking time they started to be scared of somebody and, since they own the government that's supposed to regulate their conduct, it sure as shit wasn't going to be any government agency that put the fear of god into them.

[No Elephants]

56. Not only AIG. I bet lots of companies and stockholders are watching this and

thinking. I don't necessarily know what all the companies, on the one hand, and the stockholders on the other hand, are thinking, but I'm sure stuff is occurring to them. Especially stockholders of companies that are not at least 51% owned by one family group.

[Gregorian]

15. I feel compelled to post this video.

I loved it then. I love it now. And it vaguely has something to do with this mess.

http://www.youtube.com/watch?v=8LBPiuq6EMU

[earcandle]

37. oh thank you!

[Gregorian]

75. It was a classic.

:)

[aquart]

16. Yeah, but people with million dollar bonuses don't go postal.

And the guards will stop everyone else, right?

[aquart]

19. How does "keep them going" equal "keep them in luxury"?

[Beacool]

20. Interesting points:

"Attorneys working for the Fed had been examining the matter for months and determined that the retention payments couldn't be touched because AIG would face costly lawsuits and be subject to penalties from states and foreign governments. Administration officials said over the weekend that they agreed with that assessment.

AIG disclosed its retention-payment program more than a year ago, and the amount of the bonuses -- more than $400 million for Financial Products alone -- had been widely reported. But as the payments were coming due in recent days, the White House began to express its indignation.

------------------

The payment plan had been no secret.

Beginning in the first quarter of 2008, AIG disclosed the plan to offer retention awards at Financial Products. The unit had already begun to hemorrhage money, a problem that would later grow exponentially. The unit's executives, fearing they might lose valuable employees in the tumultuous months to come, successfully negotiated more than $400 million for their workers, to be paid this month and again next year.

At the Federal Reserve Bank of New York, which has directly overseen AIG since its federal takeover in September, officials have studied the possibility of rescinding or delaying the bonuses. They even brought in outside lawyers for advice. The conclusion: If the bonuses weren't paid, the AIG staffers would be able to sue the company and probably would win, not just what they were owed but also punitive damages that would make the ultimate cost perhaps two to three times as high as the bonuses themselves."

It appears that the WH was fully aware of this bonus issue, since I doubt that Treasury kept it a secret. So, what's with all the outrage coming from Obama and Congress now? Why didn't they try to do something before these bonuses were due?

:eyes:

[Tansy_Gold]

36. IF AIG is owned by the federal government

doesn't one have to get the government's permission before one can sue the government?

Since when are contracts so sacrosanct? They weren't for PATCO.


Tansy Gold

[No Elephants]

55. No permission necessary. When you sue a company, you are not suing the stockholders. That is

the point of businesses entities, like corporations.

[Beacool]

66. Exactly, there is no permission needed.

What I find disingenuous is the "outrage" of the WH and Congress. They knew that these bonuses were coming up. After all, Liddy was appointed by the Feds, he was not chosen by the board of directors of AIG. The government attorneys were the ones telling Liddy and AIG that they had no choice but to pay these bonuses. So, what's with Obama choking in rage and Congress piling on if they were already fully aware of what was going on.

Same old, same old in Washington, they are all out to cover their own asses.

:eyes:

[cosmicone]

23. Mob mentality fueled by politicians and angry people

AIG is a conglomerate and it has several businesses. The derivative part tanked and caused the problem.

However, there is the insurance and reinsurance business which has done well. Why shouldn't employees working there get their bonus? They didn't do anything wrong and worked hard all year on a lower pay to get a $15K or $20K bonus as was promised to them.

I agree that the top management shouldn't get any bonuses but the middle management and rank and file deserve the bonus. They are, afterall, the future of that company.

[Beacool]

68. Yeah, and from Obama on down they are adding flames to the fire.

They have whipped people into such a point that AIG had to add extra security to their bldgs. because of all the death threats that are being sent to their employees. Somebody could end up getting hurt. Same all shit, different day: the politicians are covering their asses, as usual, and the media loves to stir up crap.

The government was fully aware of these bonuses and it was their own attorneys who told AIG that they had no choice but to pay these bonuses or risk expensive litigation. So, what's with the fake outrage?

:eyes:

[Mr. Hyde]

24. I have more of a problem with my tax dollars being given to foreign banks through AIG.

This is all some serious fucking bullshit and to say I am pissed about it doesn't even begin to do justice to how I actually feel about this. If this is change we can believe in, I think I'd just as soon see things go back to the way they were thank you very fucking much.

[MadrasT]

74. IMO, this is a diversion

to direct public attention AWAY from the foreign banks.

Just sayin'.

[Why Syzygy]

25. What would have happened to the bonuses IF the taxpayers had not paid the bail out?

Would AIG have been sued at that outcome? We saved their ass. So, how long do we get to do that?

[Frank Booth]

27. Grassley had a hell of a quote about this:

"Grassley says AIG executives should follow 'the Japanese example' by publicly apologizing and 'do one of two things: resign or commit suicide.'" http://www.google.com/hostednews/ap/article/ALeqM5jVpSI2RYYzeA58y6EUFrymV_MURAD96VFBHG1

Hey, even a blind squirrel finds a nut once in a while.

[bluestateguy]

28. What a bunch of white gloved sissies

nt

[tomm2thumbs]

30. I suspect "AIG" on a resume is going to be a badge of shame from here on out

Maybe they should have looked at the big picture instead of the short term gain

But to paraphrase Obama's own words to 'keep on doing the same things with the same people all over and over again and somehow expect a different outcome' ??? Seems to me their attitude is one of threat rather than service - so why keep 'em on anyway? If these folks jump ship, send our returning Iraqi soldiers/financial service planners in and have them take over AIG to wind it down - this is not rocket science - and they could use the jobs/money/benefits ... and obviously the idiots who ran it into the ground have no special skills as they have been the ones who f**ked up

[earcandle]

38. does the public lose its life insurance and pensions if this goes down?

Or is it just derivative junkies going down? 

[No Elephants]

60. Depends on who is looking at the resume, I would think.nt

[starroute]

39. Seems like time to quote Phil Ochs' 'Ringing of Revolution'

First three verses here -- rest at the link. Except that the middle class is being left outside with the pitchfork wielders this time, the song seems more relevant now than it did 45 years ago.

http://web.cecs.pdx.edu/~trent/ochs/lyrics/ringing-of-revolution.html

In a building of gold, with riches untold,
lived the families on which the country was founded.
And the merchants of style, with their red velvet smiles,
were there, for they also were hounded.
And the soft middle class crowded in to the last,
for the building was fully surrounded.
And the noise outside was the ringing of revolution.

Sadly they stared and sank in their chairs
and searched for a comforting notion.
And the rich silver walls looked ready to fall
As they shook in doubtful devotion.
The ice cubes would clink as they freshened their drinks,
wet their minds in bitter emotion.
And they talked about the ringing of revolution.

We were hardly aware of the hardships they beared,
for our time was taken with treasure.
Oh, life was a game, and work was a shame,
And pain was prevented by pleasure.
The world, cold and grey, was so far away
In the distance only money could measure.
But their thoughts were broken by the ringing of revolution.

[JDPriestly]

42. Punitive damages? For what cause of action?

Here in California, you don't get punitive damages for breach of contract. Maybe for fraud or discrimination. Punitive damages require a showing of malice, fraud, intentional disregard for the rights of others . . . . What kinds of claims do they think the AIG employees could make? I think there is duplicity in the reports that claim they can't break these contracts. Does anyone really think a jury would award these people punitive damages if the case went to a jury? I don't think these AIG hogs would get much sympathy from a jury.

[JCMach1]

46. If they are bankrupt, it won't matter... the Federal Gov. should have put pressure on employees to

get rid of the bonuses or lose their jobs when the company goes belly-up.

Their choice...

This method has been used with Unions all the time... Contract, what stinkin' contract! The company goes under and you get nothing AND you are out of a job.

[wroberts189]

43. This is a very good read ...highly recommended knr nt

[SlingBlade]

45. "It's going to blow up," said a senior Financial Products manager

Yea, It's going to blow up once everyone finds out how bad your books REALLY are.

These people are first class asses

[christx30]

47. Sounds like a good idea to me

Let's also go after the Postmaster General! That incompetent bastard has gotten bonuses while the postal service has lost millions and asked for handouts from Congress..

[ExExGOP]

48. I don't recommend violence but we, the taxpayers, got exploited and we need our voices heard....

the exploiters need to learn a lesson

[No Elephants]

49. This is like giving me a performance bonus for gambling at Vegas and losing big.

[No Elephants]

61. Why doesn't the law of fraudulent conveyances apply to these bonuses? Yes, a

bankruptcy trustee usually brings the suit, but that is because the trustee is standing in the shoes of the creditors. A creditor could bring the case and get the asset conveyed back. Why can't the U.S.?

This and the law of executory contracts indicate that we should have insisted that some of these companies declare bankruptcy, be it Chapter 11 or Chapter 7.

For this, damn Bushco, Hanky Panky Bernanke, and Congress. Incompetence and folly to the nth power.

[cap]

62. I have a real problem with the arguments for this bonus...

they need to "keep valuable employees".... as in who's hiring???? and who will hire a bunch of a-holes who were involved in these shenanigans?

Hello... NYC is shedding 100's of thousands of jobs in the financial district..... People are going without jobs for months!

There is always someone right behind them on the ladder ready to take their place.... These people are highly replaceable and the company should clean house and throw the bums out..... Yeah, right.... tell me about it....There aren't 25 qualified people ready to take their place. I don't think historical knowledge will mean all that much... in fact, I think it actually hurts at this point.

Who in their right minds are going to hire the jerks who created a mess that is sinking the industry? Who has the budget?


Bonuses may be guaranteed for salesmen who met their quota. But everyone else???? What incentive plan guarantees you a bonus when you don't make your quota? How about firing the HR people who wrote such noise.

I think there needs to be a list of everyone who got a taxpayer-financed bonus, how much they got, and what they did to receive the bonus. Under the law, salaries can be discussed openly.

There may be some heroes in these institutions who objected to the mess and are working feverishly to undo it... these people need to be rewarded, not the a-holes who got us into this mess.

[depakid]

71. "It's putting people's lives in danger."

Not sure what else management or the bonus claimants expected.

Actually, I'm not so sure what The US Senate and the Obama administraion expects. As long as there's the perception of no accountability, this sort of deal is only going to spread and get worse.

[stevedeshazer]

78. IMO, the management, the government and the media all dropped the ball

I agree on that.

[sarcasmo]

76. If " lives in danger" is what it takes to correct this Greedy behavior, then MOB RULES apply.