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Treasury Officials Proposed Limiting Bonuses For AIG



Mar 20, 2009 6 Comments ›› Pat Dollard

treasury-building-in-washington-dc

If I am reading this right, and I admit to getting lost in the swamp workings and financial lingo, this was during the end of the Bush Administration …

Fox Business:

Exclusive: Treasury Officials Proposed Limiting Bonuses for AIG

by Peter Barnes, Senior Washington Correspondent

Treasury officials proposed limiting annual bonuses for all employees of American International Group in November, as they were negotiating the government’s first investment in the troubled firm, according to a document obtained by FOX Business.

In a Nov. 5 e-mail to a Treasury and Federal Reserve officials, who were under the Bush administration, an outside attorney working on the transaction wrote, “We indicated that UST (United States Treasury) … wants to put in place a limitation on annual bonuses that assure that (AIG: 1.2, -0.39, -24.53%) executives/employees will not be enriched out of TARP funds.”

But the e-mail indicates AIG officials pushed back on the proposal. In a section of the e-mail discussing proposed limits on severance packages for AIG employees, the attorney wrote, “They were slack jawed at the idea of imposing the restriction throughout the entire population, especially worldwide.” AIG proposed that Treasury apply such limits “to a class of partners and senior partners (700).”

At another spot in the e-mail, the attorney said about AIG executives, “They will think about ways to deal with the ‘no enrichment’ point. In this connection they again raised the size of the applicable group and kept coming back to ‘700’ as a meaningful, and possibly workable, group for limitations.”

The e-mail also indicates that in their deliberations, government officials were concerned about the effect of compensation on recruiting and retaining AIG employees.

“We also indicated that all parties understand that the restrictions must be designed so that the business can be operated in a reasonable way, including in terms of recruitment and retention of employees,” the attorney wrote in the e-mail.

A key argument in AIG’s defense of its bonus practices has been that bonuses are needed to recruit and retain key employees.

A Treasury official in the department’s general counsel office, Stephen Albrecht, wrote in response to the attorney’s e-mail, “See below. Looks like AIG has some creative thinking to do, but we’ll need to decide to what extent we’re willing to bend.”

Government officials eventually decided to restrict compensation at AIG to just the top 75 company executives. The Treasury agreed to invest $40 billion into AIG.

Congress is considering legislation to limit bonuses at AIG after the company and Treasury disclosed it paid $165 million in 2008 bonuses last week to 400 employees at the AIG’s financial products unit, the division that nearly put the company into bankruptcy last year because it sold insurance coverage on risky securities held by other financial firms.

The Treasury and Fed have committed more than $170 billion to AIG as it seeks to restructure and sell assets. The latest version of the bailout includes a Treasury commitment to invest another $30 billion in the company. AIG has not tapped the funds yet. Treasury officials say they are negotiating tougher limits on bonuses as a condition for dispensing it.


  • Steve in NC

    It reads that the officials in the lame duck Bush administration were trying to limit private citizens level of compensation then. Only instead of grandstanding for the cameras the bush administration was willing to ass fuck citizens in the quiet of the night.

    It’s not much of a difference to me.

    If bush had found his balls in his second term and followed through on his concern that this bomb was lit we may have avoided this mess. This cooking barrel of shit was known well to exist before 2005.

    AIG did sell the insurance products for risky securities because of the need to satisfy the socialistic/marxist goals of carter and clinton and their ilk. If the fucking feds would quit trying to rig a free market this would not have happened.

    assholes.

    BTY, other finance companies are now poaching high talent from banks who cannot afford to keep important employees because to pay them appropriate wages would be immoral in the eyes of most of the ignorant sheep known as the American citizenry.

    GMAC is opening a new operation in Charlotte now and it will be staffing it in such a manner. \

  • tlk

    I knew that would happen…the talent will go elsewhere and the losers will be recruited for these nearly defunct organizations…truthfully, after all of this what kind of people will be attracted to working for the US Government anymore (with all the corruption) much less these pathetic bailed out institutions.

  • Sully

    That’s how socialism ‘works’. Talent goes elsewhere or stays home.

    BTW, it was Greenspan, likely bowing to pressure from both ends of the political spectrum, that told regulators ‘hands-off’ on financial derivatives.

  • Randy

    The funny thing is that not one of our elected officials in Washington are smart enough to run a giant like AIG.

    Further, if these politicians are nothing more than talking heads. Their massive staffs do all the work (ha). I wonder how much of Nancy’s money we can get back for the taxpapers if everyone in congress was required to cut their staffs in half!

  • tlk

    Do ya ever think they are doing all this stuff on purpose..I mean I know we know that they are doing alot of it on purpose..but what about the verbal gaffes like the bowling…are things like that intentional too? It just seems like every day he is insulting another group of people..I find it hard to believe that anyone could be doing all these things accidentally.

    • Sully

      on purpose?
      nah
      lol