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="Edgy DC":cr0ou988]This is why I'm for nationalization in certain situations. If we're going to drop all that taxpayer $$, we might as well gobble up the stock, gain control, cut some fat, and sell it off (hopefully) higher further down the road.
I guess, in theory, stockholders should be motivated to do that anyhow.[/quote:cr0ou988]
And in another theory (mine), since the money used for the bailouts is our (tax) money, WE ARE the shareholders of those companies. But don't hold your breath until you receive your voting share. Just imagine what some of us would say in the shareholder meetings.
Later
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metirish
Mar 17 2009 08:10 AM
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I know it means not a jot here but the Irish Government in a report compiled by something called Covered Institutions Remuneration Oversight Committee (CIROC)is to seek a cap on executives at financial institutions covered by the State bank guarantee to a salary of €500,000 or lower or what the CIROC recommend.
Here are the new guidelines
Allied Irish Bank: €690k (down from €696.3k)
Bank of Ireland: €690k (down from €1.185m)
Irish Life & Permanent: €545k (down from €890k)
Anglo Irish Bank: €545k (no chief exec currently in place)
Educational Building Society: €360k (down from €441k)
Postbank: €230k (down from €260k)
Bankers are now saying this will cause a " “mass exodus" of their top talent, the same top talent that made a mess of tings.
In situations like this where a company got bailout money contracts should be torn up .
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Farmer Ted
Mar 17 2009 08:52 AM
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Why are they using tax dollars on bad companies? These aren't compnaies that ordinary people would invest in because they SUCK. If they MUST invest tax dollars, support good companies. Fucktards.
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soupcan
Mar 17 2009 09:02 AM
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]
March 17, 2009
Dealbook
The Case for Paying Out Bonuses at A.I.G.
By ANDREW ROSS SORKIN
Do we really have to foot the bill for those bonuses at the American International Group?
It sure does sting. A staggering $165 million — for employees of a company that nearly took down the financial system. And heck, we, the taxpayers, own nearly 80 percent of A.I.G.
It doesn’t seem fair.
So here is a sobering thought: Maybe we have to swallow hard and pay up, partly for our own good. I can hear the howls already, so let me explain.
Everyone from President Obama down seems outraged by this. The president suggested on Monday that we just tear up those bonus contracts. He told the Treasury secretary, Timothy F. Geithner, to use every legal means to recoup taxpayers’ money. Hard to argue there.
“This isn’t just a matter of dollars and cents,” he said. “It’s about our fundamental values.”
On that last issue, lawyers, Wall Street types and compensation consultants agree with the president. But from their point of view, the “fundamental value” in question here is the sanctity of contracts.
That may strike many people as a bit of convenient legalese, but maybe there is something to it. If you think this economy is a mess now, imagine what it would look like if the business community started to worry that the government would start abrogating contracts left and right.
As much as we might want to void those A.I.G. pay contracts, Pearl Meyer, a compensation consultant at Steven Hall & Partners, says it would put American business on a worse slippery slope than it already is. Business agreements of other companies that have taken taxpayer money might fall into question. Even companies that have not turned to Washington might seize the opportunity to break inconvenient contracts.
If government officials were to break the contracts, they would be “breaking a bond,” Ms. Meyer says. “They are raising a whole new question about the trust and commitment organizations have to their employees.” (The auto industry unions are facing a similar issue — but the big difference is that there is a negotiation; no one is unilaterally tearing up contracts.)
But what about the commitment to taxpayers? Here is the second, perhaps more sobering thought: A.I.G. built this bomb, and it may be the only outfit that really knows how to defuse it.
A.I.G. employees concocted complex derivatives that then wormed their way through the global financial system. If they leave — the buzz on Wall Street is that some have, and more are ready to — they might simply turn around and trade against A.I.G.’s book. Why not? They know how bad it is. They built it.
So as unpalatable as it seems, taxpayers need to keep some of these brainiacs in their seats, if only to prevent them from turning against the company. In the end, we may actually be better off if they can figure out how to unwind these tricky investments.
Not that any of this takes the bite out of paying these bonuses. For better or worse — in this case, worse — someone at A.I.G. decided this company needed to sign bonus agreements last year to keep people before the full extent of its problems became clear.
Now we can debate why A.I.G. felt it necessary to guarantee seven executives at least $3 million apiece when the economy was clearly on shaky ground. Perhaps we will find out these contracts were a bit of sleight of hand to enrich executives who knew this financial Titanic had hit the iceberg. But another possible explanation is that A.I.G. knew it needed to keep its people.
That is the explanation offered by Edward M. Liddy, who was installed as A.I.G.’s chief executive when the government effectively nationalized the company last fall. (He is being paid $1 a year.)
“We cannot attract and retain the best and brightest talent to lead and staff” the company “if employees believe that their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury,” he said.
There’s some truth to what Mr. Liddy is saying. Would you want to work at A.I.G.? Sure, maybe for $3 million. But not if you could go somewhere else for even more — or even much less.
“The jobs are terrible,” said Robert M. Sedgwick, an executive compensation lawyer at Morrison Cohen who represents a number of employees of banks that have taken government money. “You have to read about yourself in the paper every day. These people are leaving as soon as they can.”
Let them leave, you say. Where would they go, given the troubles in the financial industry? But the fact is, the real moneymakers in finance always have a place to go. You can bet that someone would scoop up the talent from A.I.G. and, quite possibly, put it to work — against taxpayers’ interests.
“The word on the street is that A.I.G. employees are being heavily recruited,” Ms. Meyer says.
Of course, if taxpayers had not bailed out A.I.G., these contracts would not be worth anything. Andrew M. Cuomo, the attorney general of New York, made the point on Monday, when he subpoenaed A.I.G. for the names of the people who received the bonuses. If A.I.G. had spiraled into bankruptcy, its employees would have had to get in line with other unsecured creditors.
Mr. Cuomo wants to know who A.I.G.’s lucky employees are, and how they have been doing at their jobs. So here is a suggestion for him. Get the list, and give those big earners at A.I.G. a not-so-subtle nudge: Perhaps they will “volunteer” to give some of their bonuses back or watch their names hit the newspapers. But in the meantime, despite how offensive and painful it might be, let’s honor the contracts. |
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Farmer Ted
Mar 17 2009 09:17 AM
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And the dimwitted mastermind is at it again.
Senator Chris Dodd (D-Conn.) on Monday night floated the idea of taxing American International Group bonus recipients so the government could recoup the $450 million the company is paying to employees in its financial products unit. Within hours, the idea spread to both houses of Congress, with lawmakers proposing an AIG bonus tax.
While the Senate constructed the $787 billion stimulus last month, Dodd unexpectedly added an executive-compensation restriction to the bill. That amendment provides an “exception for contractually obligated bonuses agreed on before Feb. 11, 2009,” which exempts the very AIG bonuses Dodd and others are seeking to tax. The amendment is in the final version and is law.
Also, Sen. Dodd was AIG’s largest single recipient of campaign donations during the 2008 election cycle with $103,100, according to opensecrets.org.
Dodd’s office did not immediately return a request for comment.
One of AIG Financial Products’ largest offices is based in Connecticut.
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RealityChuck
Mar 17 2009 09:18 AM
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The assumption in the article is that those who screwed the pooch at AIG could get better jobs elsewhere.
Is Lehman Brothers hiring? Is any investment firm these days looking to take on high-salaried people who are obviously incompetent?
As for the executives whining they're forced to take the money because it's in the contract . . . oh, wait. They aren't forced to take the money. Considering the US saved their asses, you'd think they'd have the sense to say, "Let's postpone my bonus until the company is solvent" (at the very least).
Scum is rating them too high.
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Farmer Ted
Mar 17 2009 09:25 AM
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They're going overseas. Dubai in particular. Heard the US Chamber has a delegation over there now to work out some "partnerships" so as not to steal away the top talent.
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DocTee
Mar 17 2009 11:45 AM
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Autoworkers gave up their contractually guaranteed raises. So should AIG execs.
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Nymr83
Mar 17 2009 02:31 PM
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what the government should have done was not give them a damn dime until they agreed to not give out these bonuses BEFOREHAND.
the executives should have been asked to renegotiate with the alternative being unemployment and NO money when the company went bust.
this "outrage" on the part of politicians now is bullshit, they were the ones who handed out the money without enough oversight and conditions in the first place.
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cooby
Mar 17 2009 06:20 PM
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I think that AIG has shot itself in the foot - anybody that might have been considering investing with them, even with their recent troubles, certainly wouldn't do so now.
My guess is (and I'd hate to see it) that AIG is toast.
BTW, do I remember correctly that AIG was a company that previously announced that their top management was going to work for a $1 salary this year? That would be one thing in their defense (if it's true)
Edit: Yep, [url=http://www.nypost.com/seven/11262008/news/nationalnews/buck_stops_here_as_aig_boss_takes_1_sala_140966.htm]from New York Post[/url]
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TheOldMole
Mar 18 2009 09:23 PM
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Their stock rose dramatically today. Go figure.
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seawolf17
Mar 19 2009 03:52 AM
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Anyone else have a problem with the government saying, "well, if you're going to take that money, we're going to tax it 100%." Can the government just do that, arbitrarily? Did we elect Mussolini and I missed it?
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Nymr83
Mar 19 2009 04:32 AM
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i have a HUGE problem with the government taxing the recipients of that money or any other money at a higher rate than the normal tax rate that everyone else of similiar income pays.
they (the politicians) are just blowing smoke to cover their asses for what is THEIR screw up in not telling AIG "here are the conditions of accepting taxpayer dollars: 1. no bonuses"
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Kong76
Mar 19 2009 06:40 AM
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I have no problem with it. As a matter of fact, I think they ought to slap
another 10% on top of that ... 110% flat tax for getting everyone all riled
up and wasting the government's time when they should be focused else-
where instead of pig floggin' all day on CNN.
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Edgy DC
Mar 19 2009 07:00 AM
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I have a hard time believing the government can get away with that under the old "equal protection" clause. They'd would have had a better chance acting to cancel the bonuses acting as shareholders before they went out.
I think we need to move on. I think the atmosphere is thick with the need to find somebody to burn at the stake. Any politician who gives in to that is likely trying to save his or her own hide.
Chirs Dodd, yikey.
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jerseyshore
Mar 19 2009 09:21 AM
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the problem is that if you want AIG "wound down" in an orderly fashion, you have to pay people who rae familiar with the operations of the company and you have to live up to contracts signed over a year ago. 165 million is 1 tenth of one percent of the 165 billion we've already given them. I'd be more concerned about why AIG is giving billions of dollars to foreign, government owned in some cases, banks. The US taxpayers shouldn't be supporting the poor investments made by foreign bankers
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Kong76
Mar 19 2009 06:30 PM
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Dang, honey we have to sell the yacht and his 'n her Porsches NOW !!!
WASHINGTON (AP) -- Denouncing a "squandering of the people's money," lawmakers voted decisively Thursday to impose a 90 percent tax on millions of dollars in employee bonuses paid by troubled insurance giant AIG and other bailed-out companies.
The House vote was 328-93. Similar legislation has been introduced in the Senate and President Barack Obama quickly signaled general support for the concept.
"I look forward to receiving a final product that will serve as a strong signal to the executives who run these firms that such compensation will not be tolerated," the president said in a statement.
House Speaker Nancy Pelosi, D-Calif, told colleagues, "We want our money back now for the taxpayers. It isn't that complicated."
The outcome may not have been complicated. But the lopsided vote failed to reflect the contentious political battle that preceded it.
Republicans took Democrats to task for rushing to tax AIG bonuses worth an estimated $165 million after the majority party stripped from last month's economic stimulus bill a provision that could have banned such payouts.
"This political circus that's going on here today with this bill is not getting to the bottom of the questions of who knew what and when did they know it," said House Republican Leader John Boehner of Ohio.
He voted "no," but 85 fellow Republicans joined 243 Democrats in voting "yes." It was opposed by six Democrats and 87 Republicans.
The bill would impose a 90 percent tax on bonuses given to employees with family incomes above $250,000 at American International Group and other companies that have received at least $5 billion in government bailout money. It would apply to any such bonuses issued since Dec. 31.
The House vote, after just 40 minutes of debate, showed how quickly Congress can act when the political will is there.
It was only this past weekend that the bailed-out insurance giant paid bonuses totaling $165 million to employees, including traders in the Financial Products unit that nearly brought about AIG's collapse.
AIG has received $182.5 billion in federal bailout money and is now 80 percent government owned.
Disclosure of the bonuses touched off a national firestorm that both the Obama administration and Congress have scurried to contain.
In a statement issued by the White House late Thursday, Obama said the House vote "rightly reflects the outrage that so many feel over the lavish bonuses that AIG provided its employees at the expense of the taxpayers who have kept this failed company afloat."
"In the end, this is a symptom of a larger problem - a bubble-and-bust economy that valued reckless speculation over responsibility and hard work," he said. "That is what we must ultimately repair to build a lasting and widespread prosperity."
In his statement, Obama did not explicitly endorse the House bill. Instead, he was careful to take a wait-and-see attitude on the details of the final legislation while making clear that he supports the effort to get the bonus money back for taxpayers.
Topic No. 1 raised by Republicans during the House debate was the last-minute altering of a provision in Obama's $787 billion stimulus law to cap executive compensation for firms receiving government bailouts.
The measure might have forestalled payment of the AIG bonuses.
But Senate Banking Committee Chairman Chris Dodd, a Connecticut Democrat and the author of the provision, says the administration insisted that he modify his proposal so that it would only apply to payments agreed to in the future.
That, critics claim, cleared the way for the AIG payouts.
"The idea came from the administration," Dodd said Thursday
Dodd said he was not aware of any AIG bonuses at the time the change was made.
Treasury Secretary Timothy Geithner confirmed such conversations with Dodd. He said the administration was worried about possible legal challenges to the provision.
"We expressed concern about this specific version," Geithner said in an interview with CNN. "But we also worked with him to strengthen the overall bill."
The treasury secretary, who has been criticized for not learning of the AIG bonus payments sooner since he helped orchestrate the bailout last year as president of the New York Fed, said anew in the interview that he was not informed of the bonuses until last week.
"And as soon as I heard about the full scale of these things, we moved very actively to explore every possible legal avenue to address this problem," Geithner said.
A similar - but not as punitive - bill to recoup bonus payments with taxes was gaining support in the Senate.
It would impose a 35 percent excise tax on the companies paying the bonuses and a 35 percent tax on the employees receiving them. The taxes would apply to all companies receiving government bailout money, but they are clearly geared toward AIG.
"This is not just another case of runaway corporate greed and arrogance, ripping off shareholders by excesses lavished around the executive suite," said Rep. Earl Pomeroy, D-N.D. "These bonuses represent a squandering of the people's money. ... Starting right here, right now, we are saying no more."
The Senate measure is sponsored by Sen. Max Baucus of Montana, the chairman of the Senate Finance Committee, and the panel's senior Republican, Chuck Grassley of Iowa. It was expected to be brought to the Senate floor next week.
Meanwhile, New York's attorney general, Andrew Cuomo, said AIG has given him the list of employees who received a total of $165 million in retention bonuses.
Cuomo said he won't release any employees' names until his office has answered any security concerns raised by the AIG employees.
He also said he will work with AIG in the coming days to determine which workers have decided to return the payments.
Cuomo had sought the names from AIG chief executive Edward Liddy through a subpoena. The deadline was Thursday.
About 400 AIG employees and future employees received bonuses, but not all of them earned over the $250,000 family income threshold specified by the House bill.
Obama administration special envoy Richard Holbooke was on AIG's board of directors in early 2008, when the insurance company committed to the bonuses, and during the previous years of aggressive investment strategies that brought the firm to brink of collapse. White House spokesman Tommy Vietor said Thursday: "Mr. Holbrooke had nothing to do with and knew nothing about the bonuses."
While the House legislation calls for a 90 percent tax, Rep. Charles Rangel, D-N.Y., chairman of the tax-writing House Ways and Means Committee, said he expected local and state governments to take the remaining 10 percent of the bonuses.
Rangel said the bill would apply to mortgage giants Fannie Mae and Freddie Mac, among others, while excluding community banks and other smaller companies that have received less bailout money.
"The American people demand protection and that's what we're doing today," he told the House.
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Nymr83
Mar 19 2009 06:53 PM
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Sounds like a Bill of Attainder to me. I'm more interested in the sure to follow litigation than anything else.
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Kong76
Mar 19 2009 07:04 PM
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I don't know what Attainder is (and too lazy to look right now) but it will appease
the public and the 80% disgust, shut up the freakin' media hounds, and add to kahn-
fidence for general joe and jane schmo that things are getting done.
There's good and bad in all of that but I'm glad they don't get the yacht.
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Kong76
Mar 19 2009 07:09 PM
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Of course I had to look up attainder ... and fine ... get the money back and let
them try to get it back in court for ten years while the world gets back on it's feet.
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