The Economy, stupid

[Cknolls]

Market is up and news came out that AIG has paid out $1.2B in bonuses. AIG pisses me off.

 

 

ACKERT, DAVID

WESTON,CT 06883 AIG FINANCIAL 11/22/06 $2,100 Dodd, Chris (D)

ALLERS, DONALD

COS COB,CT 06807 AIG FINANCIAL 12/3/06 $2,100 Dodd, Chris (D)

BALFAN, MARK

PORT CHESTER,NY 10573 AIG FINANCIAL 12/3/06 $2,100 Dodd, Chris (D)

BUSACCA, SAL

COLTS NECK,NJ 07722 AIG FINANCIAL 11/22/06 $2,100 Dodd, Chris (D)

CASSANO, JOSEPH

WESTPORT,CT 06880 AIG FINANCIAL 11/22/06 $2,100 Dodd, Chris (D)

DESANTIS, JASON

REDDING,CT 06896 AIG FINANCIAL 12/9/06 $2,100 Dodd, Chris (D)

DIAZ-PEREZ, EDUARDO

SYOSSET,NY 11791 AIG FINANCIAL 11/28/06 $2,100 Dodd, Chris (D)

FANG, XUAN

GREENWICH,CT 06830 AIG FINANCIAL 12/3/06 $2,100 Dodd, Chris (D)

FERRAIUOLO, NEIL

PLEASANTVILLE,NY 10570 AIG FINANCIAL 12/3/06 $2,100 Dodd, Chris (D)

FRAADE, JONATHAN

WESTON,CT 06883 AIG FINANCIAL 11/21/06 $2,100 Dodd, Chris (D)

FRAADE, JONATHAN

WESTON,CT 06883 AIG FINANCIAL/EXECUTIVE 6/26/07 $800 Dodd, Chris (D)

FRAADE, JONATHAN

WESTON,CT 06883 AIG FINANCIAL/EXECUTIVE 9/8/08 $800 Dodd, Chris (D)

FRAADE, JONATHAN

WESTON,CT 06883 AIG FINANCIAL/EXECUTIVE 6/26/07 $200 Dodd, Chris (D)

FROST, ALAN

WESTPORT,CT 06880 AIG FINANCIAL 11/22/06 $2,100 Dodd, Chris (D)

KANAAN, ILYAS

, AIG FINANCIAL 12/16/06 $2,100 Dodd, Chris (D)

KOLBERT, WILLIAM

WESTON,CT 06883 AIG FINANCIAL 11/22/06 $2,100 Dodd, Chris (D)

LEARY, ROBERT

GREENWICH,CT 06831 AIG FINANCIAL 11/22/06 $2,100 Dodd, Chris (D)

LIEBERGALL, JONATHAN

NEW CANAAN,CT 06840 AIG FINANCIAL 12/1/06 $2,100 Dodd, Chris (D)

MCGINNIS, JAMES

WESTPORT,CT 06880 AIG FINANCIAL 12/30/06 $2,100 Dodd, Chris (D)

MELTSER, JULIA

RIDGEFIELD,CT 06877 AIG FINANCIAL 12/3/06 $2,100 Dodd, Chris (D)

NELSON, KURT

NORWALK,CT 06853 AIG FINANCIAL 11/21/06 $2,100 Dodd, Chris (D)

NELSON, KURT

NORWALK,CT 06853 AIG FINANCIAL/BANKER 6/21/07 $800 Dodd, Chris (D)

NELSON, KURT

NORWALK,CT 06853 AIG FINANCIAL/BANKER 6/21/07 $200 Dodd, Chris (D)

PALAZZO, JOANN

FAIRFIELD,CT 06824 AIG FINANCIAL 11/22/06 $2,100 Dodd, Chris (D)

PHOLE, CHRISTOPHER

NEW CANAAN,CT 06840 AIG FINANCIAL 12/3/06 $2,100 Dodd, Chris (D)

PIKE, STEVEN

STAMFORD,CT 06901 AIG FINANCIAL 12/3/06 $2,100 Dodd, Chris (D)

PLAGEMANN, THOMAS

NEW YORK,NY 10021 AIG FINANCIAL 12/3/06 $2,100 Dodd, Chris (D)

POLING, DOUGLAS

FAIRFIELD,CT 06824 AIG FINANCIAL 11/21/06 $2,100 Dodd, Chris (D)

POWELL, ROBERT

WESTON,CT 06883 AIG FINANCIAL 11/28/06 $2,100 Dodd, Chris (D)

RAAB, EILEEN

TEANECK,NJ 07666 AIG FINANCIAL 12/3/06 $2,100 Dodd, Chris (D)

ROONEY, JOSEPH

FAIRFIELD,CT 06824 AIG FINANCIAL 12/16/06 $2,100 Dodd, Chris (D)

RUFFA, GREGORY

DARIEN,CT 06820 AIG FINANCIAL 12/3/06 $2,100 Dodd, Chris (D)

SHEKHTMAN, LEONID

REDDING,CT 06896 AIG FINANCIAL 12/3/06 $2,100 Dodd, Chris (D)

SHIRLEY, WILLIAM

LARCHMONT,NY 10538 AIG FINANCIAL 12/3/06 $2,100 Dodd, Chris (D)

STEIN, KEITH

WESTPORT,CT 06880 AIG FINANCIAL 11/22/06 $2,100 Dodd, Chris (D)

TOFT, CHRISTIAN

WESTON,CT 06883 AIG FINANCIAL 12/3/06 $2,100 Dodd, Chris (D)

WAGAR, STEVEN

NORWALK,CT 06850 AIG FINANCIAL 11/22/06 $2,100 Dodd, Chris (D)

WAYNE, MARTIN

BEDFORD HILLS,NY 10507 AIG FINANCIAL 11/22/06 $2,100 Dodd, Chris (D)

 

 

Not a bad take for Dodd. SCUMBAG!

[BaseballNick]

They should have just called it a stimulus plan. Then it would have been unpatriotic to question it.

 

The company I work for laid off 7% of our workforce, eliminated bonuses, and cut salary by a considerable amount. AIG would be in far worse shape than my company if not for government intervention. The fact that they were loaned billions of dollars from the govt. and chose to reward their top talent with loads of cash in the worst bear market in 70 years (due in large part to their own poor decisions) warrants their choices being called into question. They can do what they wish with their profits, but now that AIG is essentially a worthless pawn of the govt., I am free to question what they are doing with my money (especially since there's a lot less of it now). I understand that companies need to keep top talent around, and they do so by awarding bonuses, but how strong is your talent when you've bankrupted a "former" global, AAA rated conglomerate? The short answer is: not strong enough to justify $1.2B in bonuses paid with govt. money.

[StrangeSox]

Unfortunately for us taxpayers, AIG wrote these fantastic contracts for their upper-level people that resulted in bonuses under pretty much any circumstance. They are contractually required to pay them and the government couldn't change these as a requirement of the stimulus money.

[southsider2k5]

The company I work for laid off 7% of our workforce, eliminated bonuses, and cut salary by a considerable amount. AIG would be in far worse shape than my company if not for government intervention. The fact that they were loaned billions of dollars from the govt. and chose to reward their top talent with loads of cash in the worst bear market in 70 years (due in large part to their own poor decisions) warrants their choices being called into question. They can do what they wish with their profits, but now that AIG is essentially a worthless pawn of the govt., I am free to question what they are doing with my money (especially since there's a lot less of it now). I understand that companies need to keep top talent around, and they do so by awarding bonuses, but how strong is your talent when you've bankrupted a "former" global, AAA rated conglomerate? The short answer is: not strong enough to justify $1.2B in bonuses paid with govt. money.

 

The big difference is that these were pre-existing contractual agreements.

[BaseballNick]

Unfortunately for us taxpayers, AIG wrote these fantastic contracts for their upper-level people that resulted in bonuses under pretty much any circumstance. They are contractually required to pay them and the government couldn't change these as a requirement of the stimulus money.

 

Guaranteed bonuses? I need this guy negotiating my contracts. Sounds like a very unusual and dangerous business practice.

[southsider2k5]

Guaranteed bonuses? I need this guy negotiating my contracts. Sounds like a very unusual and dangerous business practice.

 

At these levels of corporations, it is pretty standard practice.

[mr_genius]

Guaranteed bonuses? I need this guy negotiating my contracts. Sounds like a very unusual and dangerous business practice.

 

 

Obviously dangerous business practices mean nothing to AIG. Too bad it seems that no matter what AIG does they will get constant billions from the government. No risk, all reward.

 

[NorthSideSox72]

At these levels of corporations, it is pretty standard practice.

And its also standard contract law that no contract can be binding that is illegal. If the US decides to change a law, it could in fact nullify conditions of that contract.

 

[mr_genius]

ACKERT, DAVID

WESTON,CT 06883 AIG FINANCIAL 11/22/06 $2,100 Dodd, Chris (D)

ALLERS, DONALD

COS COB,CT 06807 AIG FINANCIAL 12/3/06 $2,100 Dodd, Chris (D)

BALFAN, MARK

PORT CHESTER,NY 10573 AIG FINANCIAL 12/3/06 $2,100 Dodd, Chris (D)

BUSACCA, SAL

COLTS NECK,NJ 07722 AIG FINANCIAL 11/22/06 $2,100 Dodd, Chris (D)

CASSANO, JOSEPH

WESTPORT,CT 06880 AIG FINANCIAL 11/22/06 $2,100 Dodd, Chris (D)

DESANTIS, JASON

REDDING,CT 06896 AIG FINANCIAL 12/9/06 $2,100 Dodd, Chris (D)

DIAZ-PEREZ, EDUARDO

SYOSSET,NY 11791 AIG FINANCIAL 11/28/06 $2,100 Dodd, Chris (D)

FANG, XUAN

GREENWICH,CT 06830 AIG FINANCIAL 12/3/06 $2,100 Dodd, Chris (D)

FERRAIUOLO, NEIL

PLEASANTVILLE,NY 10570 AIG FINANCIAL 12/3/06 $2,100 Dodd, Chris (D)

FRAADE, JONATHAN

WESTON,CT 06883 AIG FINANCIAL 11/21/06 $2,100 Dodd, Chris (D)

FRAADE, JONATHAN

WESTON,CT 06883 AIG FINANCIAL/EXECUTIVE 6/26/07 $800 Dodd, Chris (D)

FRAADE, JONATHAN

WESTON,CT 06883 AIG FINANCIAL/EXECUTIVE 9/8/08 $800 Dodd, Chris (D)

FRAADE, JONATHAN

WESTON,CT 06883 AIG FINANCIAL/EXECUTIVE 6/26/07 $200 Dodd, Chris (D)

FROST, ALAN

WESTPORT,CT 06880 AIG FINANCIAL 11/22/06 $2,100 Dodd, Chris (D)

KANAAN, ILYAS

, AIG FINANCIAL 12/16/06 $2,100 Dodd, Chris (D)

KOLBERT, WILLIAM

WESTON,CT 06883 AIG FINANCIAL 11/22/06 $2,100 Dodd, Chris (D)

LEARY, ROBERT

GREENWICH,CT 06831 AIG FINANCIAL 11/22/06 $2,100 Dodd, Chris (D)

LIEBERGALL, JONATHAN

NEW CANAAN,CT 06840 AIG FINANCIAL 12/1/06 $2,100 Dodd, Chris (D)

MCGINNIS, JAMES

WESTPORT,CT 06880 AIG FINANCIAL 12/30/06 $2,100 Dodd, Chris (D)

MELTSER, JULIA

RIDGEFIELD,CT 06877 AIG FINANCIAL 12/3/06 $2,100 Dodd, Chris (D)

NELSON, KURT

NORWALK,CT 06853 AIG FINANCIAL 11/21/06 $2,100 Dodd, Chris (D)

NELSON, KURT

NORWALK,CT 06853 AIG FINANCIAL/BANKER 6/21/07 $800 Dodd, Chris (D)

NELSON, KURT

NORWALK,CT 06853 AIG FINANCIAL/BANKER 6/21/07 $200 Dodd, Chris (D)

PALAZZO, JOANN

FAIRFIELD,CT 06824 AIG FINANCIAL 11/22/06 $2,100 Dodd, Chris (D)

PHOLE, CHRISTOPHER

NEW CANAAN,CT 06840 AIG FINANCIAL 12/3/06 $2,100 Dodd, Chris (D)

PIKE, STEVEN

STAMFORD,CT 06901 AIG FINANCIAL 12/3/06 $2,100 Dodd, Chris (D)

PLAGEMANN, THOMAS

NEW YORK,NY 10021 AIG FINANCIAL 12/3/06 $2,100 Dodd, Chris (D)

POLING, DOUGLAS

FAIRFIELD,CT 06824 AIG FINANCIAL 11/21/06 $2,100 Dodd, Chris (D)

POWELL, ROBERT

WESTON,CT 06883 AIG FINANCIAL 11/28/06 $2,100 Dodd, Chris (D)

RAAB, EILEEN

TEANECK,NJ 07666 AIG FINANCIAL 12/3/06 $2,100 Dodd, Chris (D)

ROONEY, JOSEPH

FAIRFIELD,CT 06824 AIG FINANCIAL 12/16/06 $2,100 Dodd, Chris (D)

RUFFA, GREGORY

DARIEN,CT 06820 AIG FINANCIAL 12/3/06 $2,100 Dodd, Chris (D)

SHEKHTMAN, LEONID

REDDING,CT 06896 AIG FINANCIAL 12/3/06 $2,100 Dodd, Chris (D)

SHIRLEY, WILLIAM

LARCHMONT,NY 10538 AIG FINANCIAL 12/3/06 $2,100 Dodd, Chris (D)

STEIN, KEITH

WESTPORT,CT 06880 AIG FINANCIAL 11/22/06 $2,100 Dodd, Chris (D)

TOFT, CHRISTIAN

WESTON,CT 06883 AIG FINANCIAL 12/3/06 $2,100 Dodd, Chris (D)

WAGAR, STEVEN

NORWALK,CT 06850 AIG FINANCIAL 11/22/06 $2,100 Dodd, Chris (D)

WAYNE, MARTIN

BEDFORD HILLS,NY 10507 AIG FINANCIAL 11/22/06 $2,100 Dodd, Chris (D)

 

 

Not a bad take for Dodd. SCUMBAG!

 

completely paid off. Dodd is one of the worst of the worst in government.

[kapkomet]

And its also standard contract law that no contract can be binding that is illegal. If the US decides to change a law, it could in fact nullify conditions of that contract.

Not after the fact. You can't go back and modify a contract just because you want to. It's binding. If we do as you're suggesting, there's no point in ever having a contract.

 

 

[NorthSideSox72]

Not after the fact. You can't go back and modify a contract just because you want to. It's binding. If we do as you're suggesting, there's no point in ever having a contract.

As I understand it, you can, if a law is passed that directly effects the contract. Laws in the interest of the US (passed by Congress, signed by the President) take precedence over any existing contract. The purpose of a contract is the protection of law, not the protection against future laws. Otherwise, any two parties could agree to all sorts of things to prevent themselves from, say, revealing certain information later (i.e. investment banks). If a law passes that says the info is needed by regulatory bodies (even if it isn't now), that contract is nullified as it pertains to that law.

 

[kapkomet]

As I understand it, you can, if a law is passed that directly effects the contract. Laws in the interest of the US (passed by Congress, signed by the President) take precedence over any existing contract. The purpose of a contract is the protection of law, not the protection against future laws. Otherwise, any two parties could agree to all sorts of things to prevent themselves from, say, revealing certain information later (i.e. investment banks). If a law passes that says the info is needed by regulatory bodies (even if it isn't now), that contract is nullified as it pertains to that law.

Ummm...

 

(trying to think of an example......)

 

So like someone made money on something that was illegal? Then they go back and correct for some loophole? I mean, I can read what you're saying here but it's still not sinking in.

 

Here's the thing. Whether or not people like it, these people made their performance targets and are now due their bonuses. If there really is a way that this could be made "illegal", then they're not doing it, and they are not doing it on purpose, while running in front of the cameras talking about how assholish this is. Again, all for show. If they COULD do something about it and they are just screaming in front of the cameras, this once again is nothing but political posturing (as I've said many many times now - run in front of the cameras, talk about how bad they all are while telling them privately "we got 'cher back".)

 

Making bankers and all these people boogeymen is nothing but a straw man's arguement anyway.

 

[StrangeSox]

Ummm...

 

(trying to think of an example......)

 

So like someone made money on something that was illegal? Then they go back and correct for some loophole? I mean, I can read what you're saying here but it's still not sinking in.

 

Here's the thing. Whether or not people like it, these people made their performance targets and are now due their bonuses. If there really is a way that this could be made "illegal", then they're not doing it, and they are not doing it on purpose, while running in front of the cameras talking about how assholish this is. Again, all for show. If they COULD do something about it and they are just screaming in front of the cameras, this once again is nothing but political posturing (as I've said many many times now - run in front of the cameras, talk about how bad they all are while telling them privately "we got 'cher back".)

 

Making bankers and all these people boogeymen is nothing but a straw man's arguement anyway.

 

A lot of this money (100M+, I think) is going to people in their financial services department; aka, the guys responsible for sinking the world economy via the CDS. What possible performance mark could they have met? $X billions of dollars from the government? % taxpayer ownership of AIG?

 

It's not making them out to be boogeymen if they're receiving millions of dollars for causing billions of dollars of problems.

[kapkomet]

A lot of this money (100M+, I think) is going to people in their financial services department; aka, the guys responsible for sinking the world economy via the CDS. What possible performance mark could they have met? $X billions of dollars from the government? % taxpayer ownership of AIG?

 

It's not making them out to be boogeymen if they're receiving millions of dollars for causing billions of dollars of problems.

They made their contracted targets. Whatever those were. If they made them, whatever they were, they should get the money, screwed up or not.

 

[Balta1701]

They made their contracted targets. Whatever those were. If they made them, whatever they were, they should get the money, screwed up or not.

So, in your opinion, if there was a company called, lets say, "Motors General", and they were in financial trouble and asking the government for a bailout, and they had workers who were part of a union, let's call them the Associated Auto Workers, and the company asked them to make concessions in-between contract negotiations so that the company did not go in to bankruptcy, you would advise the Union to say "Absolutely not, we will not renegotiate contracts unless you go in to bankruptcy and a judge forces us to do so."

[kapkomet]

So, in your opinion, if there was a company called, lets say, "Motors General", and they were in financial trouble and asking the government for a bailout, and they had workers who were part of a union, let's call them the Associated Auto Workers, and the company asked them to make concessions in-between contract negotiations so that the company did not go in to bankruptcy, you would advise the Union to say "Absolutely not, we will not renegotiate contracts unless you go in to bankruptcy and a judge forces us to do so."

It's their right. They only modify the contracts (concessions) on mutual agreement. They COULD choose to not renegotiate. And MG () would have to pay until otherwise stated.

 

And you provided the example I was trying to think of in response to NSS. Bankruptcy is the means to get rid of contracts like this. They would have to decalre bankruptcy before they were paid out. Guess what? AIG is "too big to fail", so they have to honor the contracts. And if $90+ billion of the money made its way to banks, now we see why AIG was too big to fail. Of course, they were.

 

[Balta1701]

It's their right. They only modify the contracts (concessions) on mutual agreement. They COULD choose to not renegotiate. And MG () would have to pay until otherwise stated.

 

And you provided the example I was trying to think of in response to NSS. Bankruptcy is the means to get rid of contracts like this. They would have to decalre bankruptcy before they were paid out. Guess what? AIG is "too big to fail", so they have to honor the contracts. And if $90+ billion of the money made its way to banks, now we see why AIG was too big to fail. Of course, they were.

So...you guys have given us an argument about moral hazard and why we can't fix all those mortgages right?

 

If you're head of a company and you know you're teetering on bankruptcy...you've got 2 options. You can either try to fix things and struggle along, and maybe have money you've been paid already grabbed by the company's creditors if things do go bad, but at least you do the best you can to save it.

 

Otherwise, you can run the company so hard in to the ground that systemic risk means that it can't be allowed to fail. If you do that, you get several hundred million dollars in rewards guaranteed.

 

Which would you do?

[Balta1701]

This is really creative. I wonder if this could be written well enough to work.

Dear Colleague:

 

Like many of you, I was outraged to learn over the weekend that AIG is paying out another $165 million in bonus compensation. For a company that has required $170 billion in U.S. taxpayer assistance and is 80% owned by the United States Government, this is clearly unacceptable. That is why I will be introducing legislation that will instruct the Secretary of the Treasury and the Internal Revenue Service to develop guidelines that tax at 100% any bonus compensation that is not directly related to a commission for any recipient of TARP funds where the United States government is the majority owner of the company. This will allow AIG to continue to meet their "contractual obligation" to pay these bonuses, but will ensure that the recipients are not allowed to keep this money.

 

If you would like to cosponsor this legislation or if you have any questions, please do not hesitate to contact me or Edward Mills in my office at (202) 225-7944 or [email protected].

 

Sincerely,

 

CAROLYN B. MALONEY

 

Member of Congress

[mr_genius]

This is really creative. I wonder if this could be written well enough to work.

 

that would be a great move. i heard someting about a 98% tax on those bonuses earlier

 

of course, the newly appointed head of AIG used the tired "best and brightest" argument again today.

[Balta1701]

of course, the newly appointed head of AIG used the tired "best and brightest" argument again today.

Did they actually use that phrase? The phrase that described the cabinet of John F. Kennedy, the guys like Robert McNamara, McGeorge Bundy, etc., who organized and led that small conflict in southeast Asia?

[mr_genius]

Did they actually use that phrase? The phrase that described the cabinet of John F. Kennedy, the guys like Robert McNamara, McGeorge Bundy, etc., who organized and led that small conflict in southeast Asia?

 

yes, that exact phrase. i saw it in a quote

[lostfan]

In fairness to AIG, I have to ask, are the execs getting the bonuses part of the insurance division or the financial division? Because the insurance division is golden, it's the financial division that's f***ed everything for the entire company.

 

Bottom line, not everyone that works at AIG sucks.

Edited March 16, 2009 by lostfan

[kapkomet]

So...you guys have given us an argument about moral hazard and why we can't fix all those mortgages right?

 

If you're head of a company and you know you're teetering on bankruptcy...you've got 2 options. You can either try to fix things and struggle along, and maybe have money you've been paid already grabbed by the company's creditors if things do go bad, but at least you do the best you can to save it.

 

Otherwise, you can run the company so hard in to the ground that systemic risk means that it can't be allowed to fail. If you do that, you get several hundred million dollars in rewards guaranteed.

 

Which would you do?

You're missing the point. The people who are at fault is not the people getting paid the bonuses (for the most part, 99% of it). Again, you want a boogeyman.

 

Contracts are contracts. What's the mechanism to fix the mortgages? Judges. Courts. Bankruptcy. People lost their homes.

 

Everything's too big to fail, except us consumers, who take it in the ass every time.

 

[Balta1701]

In fairness to AIG, I have to ask, are the execs getting the bonuses part of the insurance division or the financial division? Because the insurance division is golden, it's the financial division that's f***ed everything for the entire company.

 

Bottom line, not everyone that works at AIG sucks.

Overall it's both if you count the $450 million total. A few of the very, very top people have agreed to give up their bonuses because the Feds could probably make them individual scapegoats. There seems to be about $175 million in this batch going directly to the Financial Products division.

 

Also...couple other points. If the government can cut costs and increase profitability of AIG's insurance products division...at some point post-crisis the government is going to sell it off. Breaking down these contracts with them and making the salary for these millionaires go down will likely increase the value of that division when it is sold off to some holding company a few years down the road.

 

And secondly...something like 500,000 in the financial industry are already out of work, IIRC. You think these guys are going to resign if their pay is cut? Right now is the most leverage the higher-ups in the financial industry have had to cut operating costs in the last few decades. If the financial industry were actually all about returning profits to shareholders, that would be the next step for every one of these companies. Of course, it's long since past that point, but in an ideal capitalist world it would be what would be happening everywhere.

[Balta1701]

Contracts are contracts. What's the mechanism to fix the mortgages? Judges. Courts. Bankruptcy. People lost their homes.

Um, you do realize that the exact law I was making an issue of was one that would allow bankruptcy courts to rewrite mortgages, something that they're not allowed to do right now? That's the law that led to Santelli's whole pre-planned tea party rant.