Once Again, AIG Bonuses Cause a Clash

[OhioChick]

Source: NYT

14 Oct 2009, 1729 hrs IST, New York Times

The federal pay czar is trying to force the American International Group to reduce $198 million in bonuses promised to employees of its trading unit, where problems posed a threat to the global financial system last year.

But the Treasury’s special master for compensation, Kenneth Feinberg, is running into legal hurdles because those bonuses fall outside new rules against bonus payments at companies receiving government assistance. The bonus agreements at issue were struck before last year’s emergency rescues by the Treasury and the Federal Reserve, and thus are not directly covered by the new rules.

The problem is a recurring one. AIG payments early this year to the same employees elicited public outrage, though government officials said then that they had little legal authority to rescind pre-existing contracts.

To strengthen his hand, Feinberg is threatening to reduce the compensation packages he does control, according to a person close to the talks. That could mean shrinking the pay of other AIG executives – including its new chief, Robert Benmosche – if the firm does not claw back part of the bonuses for the people in its trading unit, known as AIG Financial Products.




Read more: http://economictimes.indiatimes.com/news/international-business/ONCE-AGAIN-AIG-BONUSES-CAUSE-A-CLASH/articleshow/5124199.cms

[Tansy_Gold]

1. Oh, fuck. Just grow a spine and fire all the bastards.

Let 'em live on their accumulated wealth. THEY DON'T NEED ANY MORE.



TG

[rocktivity]

2. What part of, "If you qualify for a governent bailout, you can't possibly qualify for a bonus"

do they not understand?

:shrug:
rocktivity

[ihavenobias]

3. K & R n/t

[AndyA]

4. If these people were overseeing the events that led to last year's financial collapse,

they should be terminated instead of given bonuses.

Bonuses should reward good performance. AIG has not performed well in recent history.

[AllentownJake]

5. This is what happens when you bail out a giant corporation

Instead of allowing it to go into bankruptcy.

The problem with AIG is most of its businesses are well run and were not a part of the business that killed it. If the company had been placed into bankruptcy the profitable segments could have been allowed to be bought or spun off.

No you have a situation where the profitable segments are stuck with the unprofitable segments and no one can succeed.

[JackRiddler]

6. Absolute insanity: Rather than putting them through bankruptcy, the government...

took on their obligations and contracts?

The only circumstances under which any of the bailouts could have been contemplated in a rational system actually designed for the public interest would have required beginning with management decapitation.

[Ruby the Liberal]

7. Screw your contracts. You took TARP funds.

That changed the whole thing. If you had to file bankruptcy, your contracts would be worthless.