So how we should be feeling about AIG’s decision to pay out more than $165 million in employee bonuses and perks, some to the very employees who designed the risky credit schemes that ultimately brought the insurance giant down, ostensibly because it is “legally obligated” to do so.
Furious, that’s how.
“It’s hard to understand how derivative traders at AIG warranted any bonuses, much less $165-million in extra pay,” Mr. Obama complained at the White House. “How do they justify this outrage to the taxpayers who are keeping the company afloat?” -Mimi Hall et al., USA Today.
How indeed. The $165 million is only available for the company to hand out because it took $170 billion in bailout money from the federal government. Last December, in a letter to the White House, AIG Chairman Edward Liddy (former CEO of noted insurance cheat Allstate) vowed with his tail between his legs that he would be cutting bonuses this year. Now that they’ve got the money in hand, they’re unrepentantly—I daresay flagrantly—dolling it out to the very executives who got us into this mess, at as much as $6.5 million a pop.
What should really gall us is that after playing (and losing) irresponsible high stakes games with the financial stability of the entire world, these guys are defending their outrageous bonuses with a responsible nod of the head to their “legal responsibilities” in the matter.
In the letter to Geithner, Liddy said the unit’s 25 highest-paid contract employees will reduce their salaries to $1 this year and all other officers in the unit will reduce their salaries by 10 percent. Other "non-cash compensation" will be reduced or eliminated. But he told Geithner that some bonus payments are binding legal obligations of the company, and "there are serious legal, as well as business consequences for not paying." –CNN
Barack Obama has promised to pursue “every legal avenue” possible to keep AIG employees from pocketing the bonuses. If federal laws have somehow made it possible for this company to gamble away taxpayer money without any legal recourse, and yet protect itself with the law when it turns a bailout sponsored by the taxpayers into bonuses for the unruly gamblers themselves, we really, really have a problem on our hands.
To quote Rep. Barney Frank, “Maybe it’s time to fire some people. We can’t keep them from getting the bonuses, but we can keep them from continuing in their jobs.”