AIG HEARINGS
One of the reporters said AIG (originally the American Investment Group) is now known as AIG (Arrogant, Incompetent and Greedy) |
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| Smacks of McCarthy-ism.
Wish I had thought of this line: "Maybe (we) propose re-opening the bonuses paid to Franklin Raines and Jamie Gorelick for their yeoman's work running Fannie Mae into the ground and then collecting bonuses of $90 million and $24.7 million, respectively." |
I guess I've always misunderstood the concept of a bonus  . I thought it was based on good performance, not running your company into the ground. |
| It's an excellent diversion for people to get upset about so they don't think about the fact that the government "bailouts" are allowing them to take control of businesses. |
Quote: I thought it was based on good performance, not running your company into the ground
It really depends on to whom the bonus' go. Maybe I'm wrong, but I thought these went to the guys who were out there selling AIG policies, not those in control of the company. If they sold so much they got their contracted bonus. Sen. Dodd actually made allowances for these bonuses in AIG bailout, they knew they were coming and now acting all indignant. When this story first broke end of last week the Obama-installed CEO said these there contracted bonus and it would be cheaper to pay them than to have the recipients take the gov to court for breach of contract. Gee, I wonder how many more companies the government will take over and run as well as they run Social Security, Medicare, FreddieMac etc? |
| OK, I'll tell what this is all about.
First off, the AIG CEO that was sitting in front of congress was not in charge of the collaps of AIG. He was brought in to run the company after all of the problems hit the fan. He is taking a salary of $1 per year, and has not stock options or other investment in his own performance. (Which may or may not be a good thing...) The bonuses were RETENTION bonuses, not performance bonuses. They were put into place more than a year ago as a way of retaining in AIG the people who needed to keep the company running that held 2.7 TRILLION dollars in positions on AIG books. AIG needed to close down their trading business in an orderly fashion. These people were told to "unwind their books", industry talk way of saying close down your piece of the business, and put yourself out of work. The only way to get these people to stay with the company and do a good job of putting themselves out of work was to pay them to do it -- a retention bonus. This is a common practice in many indstries, I myself have been involved (although not a recipient) in a retention bonus scenario; the company was merging an acquired business and the employes of the "losing side" were necessary to keep around for the transition. They were vital to the success and were paid retention bonuses to keep them from taking their expertise out the door at a critical time. Not any unemployed trader could be brought in from the street and understand a book of derivatives; it is an EXTREMELY complicated thing, and each person in the business needs an intimate knowledge of their book. They needed to do this closedown in a way that didn't cause AIG to lose money. Some of the trades made money, some lost money. The estimate was that "a few billion" was lost, as "the book" was reduced from 2.7 trillion to the current 1.6 trillion. These people did their job according to the promises made and should be paid their bonuses. So now congress is blowing smoke up everyone's behind about this as a way of distracting the public about other things, like 12 billion in earmarks in a 400 billion dollar continuing resolution budget. Now here comes the problem with the country making an investment in a company. Congress thinks they have the right to run the company as an outside agency, on a day to day basis. If congress owns 80% of AIG then they should wait for the annual shareholder's meeting, make proposals for it and vote in a board of directors that is of congress' liking. But you can't run a business with a 535 member board of overseers second guessing everything that is done. Barney Frank is demanding that the names of the recipients of the bonuses be made public. What's up with that? If I had been working for them, should my pay be made public? What if congress decides that your company paid big bonuses and your pay be made public? Are we going insane in this country, willing to toss our values out the window whenever something we don't like comes along? Congress is demanding the bonuses be returned. By what right? These people made a contract and kept up their end of the bargain, and should be paid. So congress is talking about taxing these bonuses to get back for the American People the amounts paid. Have they gone insane? Not to mention that technically, the moneys given to AIG are loans. If a bank gives you a loan, do they have the right to tell you you can't have a fancy meal? What is wrong with this country? Has everyone gone mad? |
| Excellent post, Ron. |
| What about the people that had already left the company? |
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