Obama Admin. Slams Bailed Out AIG For Bonuses

March 15th, 2009 (11) Posted By Pat Dollard.

summers2

FOX:

Obama Advisers Lash Out at AIG Over Millions in Bonuses
President Obama’s economic advisers describe AIG’s bonus pay-outs as “outrageous” and “not sensible.”

President Obama’s economic advisers expressed outrage and anger Sunday over revelations that bailed-out insurance giant American International Group was going ahead with plans to pay executives tens of millions of dollars in new bonuses.

“I don’t know why they would follow a policy that’s really not sensible. It’s obviously going to ignite the ire of millions of people,” Austan Goolsbee, of the White House Council of Economic Advisers, told “FOX News Sunday.”

“It is outrageous,” chief economic adviser Larry Summers told ABC’s “This Week.”

Summers said these kinds of bonus payments should be a matter of future regulations.

AIG has gotten more than $170 billion in a public bailout. Just this month, the company reported a loss of $61.7 billion for the fourth quarter of last year — the largest corporate loss in history.

But AIG’s chairman said the company entered into the bonus agreements in early 2008 before getting into severe financial trouble. Summers said the government determined it could not break those contracts after the fact.

Both White House advisers, though, said the Obama administration had taken steps to limit the AIG bonuses.

Goolsbee said Treasury Secretary Timothy Geithner was “really upset” by the pay-outs and “berated” representatives from AIG after hearing about the plans.

Goolsbee said the administration, which is “angry” the bailed-out company would follow through on its bonus plans, has taken all available steps to prevent such a pay-out from happening again.

Asked if the bonuses could hurt the administration’s attempts to sell its wide-reaching economic plans, Goolsbee said: “You worry about that backlash.”

Obama advisers weren’t the only ones unleashing on AIG over the weekend.

Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, told “FOX News Sunday” that AIG was “abusing the system” and the government needs to find out what payments are “legally recoverable.”

Frank said it’s “inappropriate” for those behind the bonuses to “stay in power” at AIG.

Rep. Elijah Cummings, D-Md., released a written statement Sunday calling on AIG Chairman Edward Liddy to step down.

In a letter to Geithner dated Saturday, Liddy informed Treasury that outside lawyers had informed the company that AIG had contractual obligations to make the bonus payments and could face lawsuits if it did not do so.

Liddy said in his letter that “quite frankly, AIG’s hands are tied” although he said that in light of the company’s current situation he found it “distasteful and difficult” to recommend going forward with the payments.

The large bulk of the payments at issue cover AIG Financial Products, the unit of the company that sold credit default swaps, the risky contracts that caused massive losses for the insurer.

A white paper prepared by the company says that AIG is contractually obligated to pay a total of about $165 million of previously awarded “retention pay” to employees in this unit by Sunday, March 15. The document says that another $55 million in retention pay has already been distributed to about 400 AIG Financial Products employees.

The company says in the paper it will work to reduce the amounts paid for 2009 and believes it can trim those payments by at least 30 percent. AIG also pledged to Geithner that it would restructure $9.6 million in bonuses scheduled to go a group that covers the top 50 executives. Liddy and six other executives have agreed to forgo bonuses. The group of top executives getting bonuses will receive half of the $9.6 million now, with the average payment around $112,000.

This group will get another 25 percent on July 14 and the final 25 percent on September 15. But these payments will be contingent on the AIG board determining that the company is meeting the goals the government has set for dealing with the company’s financial troubles.

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  • Sully

    … from Dhimmi fuck-ups that don’t know shit and have never worked or produced a thing in their lives yet still get paid… by us.

  • http://bd41f1d0e3b34a3887607611a481ade3 Monkeysdad(Anxiously investing in Matresses)

    Not a god damned thing they can or will do about it. Most Federal retirement accounts are tied up into AIG. Hence the billions of $$$$$ they keep pouring into it to keep it alive.

  • Kermit

    For those who are unaware, bonuses are not always payed due to sales and profits. They are contractual obligations. If the government owns part of AIG, it will be liable for these lawsuits.

    Okay, when I was handling all the equipment preservation, and all of the sales for a refinery for Shell in Carson, CA, I was paid a base salary, commissions, and bonuses. Here is how these things work…

    First there is a base salary
    Then for sales there was a percent of profit commission.
    On top of this there were certain percentages of my base salary paid for accuracy and timely reporting for the owner, Shell Refining, a percentage of base salary for coordinating info with other departments (which made them much more productive).
    There was a site wide safety bonus which was paid at end of project.

    This type of arrangement is not unusual and some of it was not dependent on my department making any profits.

    Now what AIG does represent via its re-insuring various companies and facilities around the world is a way for the CIA to obtain blueprints on almost any building or manufacturing facility in the world, since before World War II.

    Perhaps it should be left to fail, but some valuable intelligence assets may be lost to Muslims and Chinese.

  • jessica

    AIG = Allowing Irreversible Greed.
    AIG = All in Greed.
    AIG = Arn’t I Greedy.
    AIG = A$#holes, in general.

    This is sick. Why in the world are we helping these companies that keep sending millions to people who do not know how to run a company? They cry yet get paid millions on the “average joes” taxes. Furthermore, I fear this is just the tip of the iceberg. Look what Enterprise rent-a-car did to get bailout funds:

    http://www.butasforme.com/2009/02/25/alert-enterprise-rent-a-car-may-have-fired-employees-as-fake-evidence-when-lobbing-for-bailout-money/

    Not to make excuses for these people, but the bailouts are making crooks out of everyone that touches the money. :evil: :evil: :evil: :evil: :evil:

  • sully

    AIG owns ALOT of the credit default swap market which Wall St., AIG and London brokerages peddled all over the world.
    How much of the trillion the Fed has put into investment banks and the like has actually been going to cover financial derivative junk? Replacing it with Treasury Notes….
    Don’t think the Chinese and the rest of the world are pissed about buying a bunch of horseshit financial derivatives?

    I saw the Bernanke 60 minute interview tonight. He’s lying AND not telling the whole story.
    He used the scary analogy of banking as a sand castle on a beach not prepared for the “big wave” but never said what that wave was….
    That big wave is called credit default swaps.
    There is not enough GDP in the whole world to cover the liability.

  • http://none PatriotofPast(Thomas)

    I honestly believe AIG recieved a bailout because of its standing in the Council of Foreign Relations (CFR). Besides AIG, Bank of America, Wells Fargo,American Express and a few others are all Corporate Members.
    In my humble opinion, THESE are the people who call the shots in Washington DC and The European Union… You just have to look at the Membership list, it pretty much speaks for itself.

  • TedB

    Kermit nailed it, (I’m in the oil biz myself) projects need to pay out to entice everyone from project managers to pipe-fitters to leave home and go to some less than desireable locations. Bank pay comissions to sales people, it gives them something called motivation to succeed, but the pols don’t appreciate that.

    • Kermit

      :arrow: Ted
      You have that correct down to laborers in construction for chemical plants and refineries. As of a least several months ago, contractors had to guarantee at least 20 hrs overtime per week and pay a per diem just to hire locals. These are jobs which require safety training and certification and at least on the Gulf Coast, full legal documentation and ability to read write and speak English fluently.

      Not all commission jobs are like a that of a car salesman and there are “contractual” obligations.

  • http://www.dirtydozensbunker.com Sanders

    AIG also is about the only game in town that will issue bonds for large construction and environmental remediation projects.

    No bond – no work.

  • Ron

    The bonus payout excesses at AIG are just the tip of the iceberg of what is happening with the other Wall Street bailouts including Bank of America. Working productive Americans are bailing out the same crooks that destroyed our economy along with 45% of the wealth in the world and now the American taxpayers and our children will be forced to live a far lower standard of living with reduced prosperity and opportunities due to this but only we pay the price.

    Washington has bailed out the banks, Wall Street & their Washington special interests and much of the cost is added to the national debt to by paid by this and future generations while real estate and investments continue to fall. Find out what a growing repudiate the debt movement could mean for treasuries, the dollar, gold and the stock market and how this is a better alternative than Washington’s plans to monetize the debt in future years and tax and destroy our remaining wealth by depreciating the dollar.

    The Campaign to Cancel the Washington National Debt By 12/21/2012 Constitutional Amendment is starting now in the U.S. See: http://www.facebook.com/group.php?gid=67594690498&ref=ts

  • Sully

    Of course the ‘bonuses’ are obligated.
    So what?