AIG Bonus Imbroglio: $165 Million vs. $165 Billion

Joseph J. Cassano is a reprobate who deserves to spend the rest of his days in federal prison.

Two themes keep popping up in our daily bailout culture: bailout politics make for strange bedfellows and advantage commode.

The AIG bonus brouhaha is of the latter. I believe people understand the difference between $165 million and $165 billion, just as they understand the difference between $45 billion for Citigroup (C) and a $45 million private jet, and $45 billion for Bank of America (BAC) versus John Thain's $35,000 commode with legs.

Certain issues resonate more deeply.

Particularly, with AIG, the outrage stems from the fact that we have been told the $165 billion was to prevent global financial collapse, while we all intuitively understand that the $165 million in bonuses were part of employment contracts agreed to BEFORE the failure of AIG.

Every single one of us has had a contractual promise broken against us and have been forced to live with 'tough shit as the response. Or perhaps SOL. We all get it. This should have been shit out of luck for employees at AIG's unregulated, financial products division. The affront is that because of our largesse, these AIG employees are shit IN luck.

Two particular sub-dramas are developing of import. (Not counting Senator Grassley first calling for AIG executives to committ hara-kiri, then, during his apology on national television, saying the phrase 'suck on the taxpayer tit.' He didn't opt for teet. He went boldly for tit or more likely it was a dementia moment and he thought he was back in high school. Make sure to watch the Keith Olbermann video below for the Grassley brilliance.)

Back to the two issues developing: the calls are growing for Geithner's head and title, from Senator Shelby to Henry Blodgett to yours truly. In greatly descending order of importance. And the other kettle brewing is what I smelled and wrote about yesterday. The feigned White House outrage.

ABC and others are reporting tonight that Obama was told about the bonus payments Thursday afternoon and that Geithner knew all week and likely for much longer since he was the principal architect of the AIG bailout along with Henry Paulson.

I postulated yesterday, that Geithner would have simply needed to leak the news to the msm last week, and within 24 hours public outrage would have killed the payments. Instead he sat on the information until Thursday, and then the White House held it tightly until Saturday when someone leaked it to the New York Times.

Since that moment it has been spin city at 1600 Pennsylvania Avenue, including yesterday's moment of Obama channeling Slick Willy Clinton in a speech that sounded like an AIG Clawback from the Big Guy, but was really just an attempt to ride the populism and deflect blame.

I'm too cynical to be so easily fooled. I knew the payments had already been made and Obama was just trying to catch the anti-AIG train before it threatened to run him over. It was lying at worst and disingenuous at best, and it is not a good sign for those who cherish the truth from our leaders.

Comments

[tmlima:]

First, everyone is on AIG's case when there are plenty of other companies out there who need looking at. Second, AIG was used as a back door to bail out these other banks. If the government was going to be on their cases, they should have let them go bankrupt.
Regarding the bonuses, imagine the work that the employees of AIG had to do to retain customers and keep business flowing. Having been in sales for many years, I can tell you first hand it is a 24 7 job. Most people would rather leave than face the challenge. So, if these people stayed and went above the call of duty..THEY SHOULD BE REWARDED!
But let's look at the critics. Does anyone believe that a moron like Barney Frank could run AIG? how about Barney being the sales guy working to retain the customers. I'll bet you he and the others in congress would be the First in line to DEMAND a bonus.
Let these people do their jobs and if they save AIG reward them, THEY DESERVE IT. Because if the people in congress got paid based on merit, they would owe us money.

Mar 18 10:00 AM

[agreewyou:]

I have to agree with you tmlima....congress acts as if they have all the answers but they are the ones who demanded that people unable to afford mortgages be given homes...and then when they couldn't pay for those homes...created legislation that forced the prices to be reduced to and subsidized with public funds. The great socialist act of 2009 will be hard to overcome. AIG didn't do this or create this mess...our very own government has created the monster and now is blaming AIG for letting it get out of the cage.


On Mar 18 10:00 AM tmlima wrote:

> First, everyone is on AIG's case when there are plenty of other companies
> out there who need looking at. Second, AIG was used as a back door
> to bail out these other banks. If the government was going to be
> on their cases, they should have let them go bankrupt.
> Regarding the bonuses, imagine the work that the employees of AIG
> had to do to retain customers and keep business flowing. Having been
> in sales for many years, I can tell you first hand it is a 24 7 job.
> Most people would rather leave than face the challenge. So, if these
> people stayed and went above the call of duty..THEY SHOULD BE REWARDED!
>
> But let's look at the critics. Does anyone believe that a moron like
> Barney Frank could run AIG? how about Barney being the sales guy
> working to retain the customers. I'll bet you he and the others in
> congress would be the First in line to DEMAND a bonus.
> Let these people do their jobs and if they save AIG reward them,
> THEY DESERVE IT. Because if the people in congress got paid based
> on merit, they would owe us money.

Mar 18 11:05 AM

[Firethemall:]

I will run your company into the ground for a mere $100K

Mar 18 11:26 AM

[Sambeaux:]

We are a nation of sheep. The media and the government are using the AIG bonuses as a bait and switch tactic to keep us from knowing the REAL disaster that the AIG bailout was, which is this: OF THE $160+ BILLION DOLLARS THAT AIG GOT IN THE BAILOUT, $93 BILLION DOLLARS OF THAT MONEY WAS GIVEN TO EUROPEAN BANKS AND GOLDMAN-SACHS. So the majority of the bailout money will not even have ANY effect on the American economy.....well....other than a negative effect that is. These bonuses represent 1/10 of 1 per cent of the bailout money, and how can a company keep qualified people if they don't live up to their contracts? You will have to look long and hard to find any media coverage of the $93 billion that for the most part has left America and gone to Europe. It's is a total scam.

Mar 18 11:40 AM

[tshk1221:]

We all now know what happened with AIG and the numerous financial institutions including the State of California thanks to Edward Liddy's brave statement telling us all the details of the use of the $165 billion tax payers' money.

Instead of lashing out at AIG, we have to think of good solutions to help AIG stand up again since our billions of dollars at stake now, and AIG must pay back the money to us. Since getting on board of AIG as CEO right after this crisis, Edward Liddy has been showing us the strongest tenacity, courage and commitment to restructure this complex company into a smaller but nimbler insurance company, trying all of his best and ideas to sell other AIG units in the midst of this historic credit-cruched market. News say AIG generated about 45 billion dollars from asset sales and is ready to pay down the bail-out loan by that much. We have to applaud Edward Liddy for these tremendous jobs done to finish his responsibilities given as CEO. I've never seen this strong tenacity and commitment to his or her responsibilities in any other CEOs.

For $1 compensation a year, Edward Liddy must be struggling by himself every day and ever hour to restructure and get this company stand up again and pay the loan back to the government and go home to take a real rest. He graduated from a catholic university. He must be praying every night to God to give him the courage to finish this daunting task given to him in the midst of criticisms being poured on AIG. Instead of bashing out at him and AIG, we have to at least pray together for him to finish his job good, real good so that he can go home and take a real good rest and so that we get our tax money back.

Mar 18 12:08 PM

[IMWatchingU:]

What is done is done. You have to FIX the issue. Have the old contracts been redesigned?

1. Bonus paid on performance?
2. Bonus deferred 3-5 years to allow for clawbacks. (protects company from high risk short term gains)
3. Bonus paid in Stock/Options. Once again protects company from high risk short term gains.
4. Publicize through investor news who is being retained "for their skillset" and WHY?

Crying over spilt milk is useless. Stop spilling it. Fix the problem and move forward.

Mar 18 12:27 PM

[achilleus:]

Come on!! Bonuses for what???????? Retaining high producers?
I certainly can't imagine that I would want to retain the very employees that drove my company straight down the toilet which is what these guys did at AIG.

On Mar 18 10:00 AM tmlima wrote:

> First, everyone is on AIG's case when there are plenty of other companies
> out there who need looking at. Second, AIG was used as a back door
> to bail out these other banks. If the government was going to be
> on their cases, they should have let them go bankrupt.
> Regarding the bonuses, imagine the work that the employees of AIG
> had to do to retain customers and keep business flowing. Having been
> in sales for many years, I can tell you first hand it is a 24 7 job.
> Most people would rather leave than face the challenge. So, if these
> people stayed and went above the call of duty..THEY SHOULD BE REWARDED!
>
> But let's look at the critics. Does anyone believe that a moron like
> Barney Frank could run AIG? how about Barney being the sales guy
> working to retain the customers. I'll bet you he and the others in
> congress would be the First in line to DEMAND a bonus.
> Let these people do their jobs and if they save AIG reward them,
> THEY DESERVE IT. Because if the people in congress got paid based
> on merit, they would owe us money.

Mar 18 03:06 PM

[achilleus:]

Agree.
Also notice: who gains from the massive money flowing out of the treasury? Answer: the Federal Reserve, who also, if you have noticed, recently acquired some pretty nice investments at firesale prices


On Mar 18 11:40 AM Sambeaux wrote:

> We are a nation of sheep. The media and the government are using
> the AIG bonuses as a bait and switch tactic to keep us from knowing
> the REAL disaster that the AIG bailout was, which is this: OF THE
> $160+ BILLION DOLLARS THAT AIG GOT IN THE BAILOUT, $93 BILLION DOLLARS
> OF THAT MONEY WAS GIVEN TO EUROPEAN BANKS AND GOLDMAN-SACHS. So the
> majority of the bailout money will not even have ANY effect on the
> American economy.....well....other than a negative effect that is.
> These bonuses represent 1/10 of 1 per cent of the bailout money,
> and how can a company keep qualified people if they don't live up
> to their contracts? You will have to look long and hard to find any
> media coverage of the $93 billion that for the most part has left
> America and gone to Europe. It's is a total scam.

Mar 18 03:08 PM

[The Daily Bail:]

If you read my articles carefully, you will see that I am not piling on so to speak with regard to these bonus payments.

I am simply attempting to explain and chronicle the rage that others feel.

We are talking about 16.5% of 1 billion, which is pure chump change when viewed relative to $165 billion. To me it's noise and distraction.

But its outrageous noise, nonetheless and people are angry.

Mar 18 04:00 PM

[matoosa:]

Geithner will never have credibility with the American people. He is a phoney, a water boy for Dodd, Pelosi and the rest.

Obama has proposed sending our troops into combat and when they return with arms and legs missing they would be required to seek medical care from their private insurance companies. Obama is running like Bambi from a truck now, but just the knowledge that he made such a horribly indecent proposal will stick with me more than the thought of him sitting in Trinity pews cheering on Jeremiah Wright, his "spiritual" mentor.

Obama/pelosi/Reid and their ilk are not just incompetent, they are evil, and ant American. They want a Soviet-style communist systwm in place of capitalism, but they don't know how either works . . .

These people are mortgaging your child's future. Supporting them is to destroy your own children.

Mar 18 09:38 PM

[the_lazy_ob...:]

I say: PUBLISH the names of those who did NOT return the bonuses. And for those who grabbed the bonuses and LEFT the company (when the bonuses were supposed to be given to retain them), I say publish their ADDRESSES as well.
I'm sure there's nothing on those contracts against making the recipients' information public.
With their millions, I'm sure they can afford to hire bodyguards -- preferably the unemployed Blackwater mercenaries.

Mar 19 07:30 AM

[jkmac:]

Typical politicians pointing the finger and saying look at me I'm getting the bad guys , , , Typical uninformed Americans thinking yea - Go GET EM. When in fact it's the politicians pointing the finger that WE need to go after, , , The so called bad guys are taking millions -
( CHUMP CHANGE ) - while the fat ass politicians are blowing BILLIONS & TRILLIONS , , , Kind of like a shell game , , & we're falling for it., , Sad, , really Sad , , ,

Mar 19 04:53 PM