There’s nothing that ruins a good Sunday morning better than finding out that the company at the heart of the financial collapse, A.I.G. — a company that has received more than $170 billion in taxpayer-funded bailout money — is handing out $165 million worth of bonuses to its executives and managers. The reason: the firm is contractually obligated to pay them. It turns out that the government cannot revoke bonuses promised before the bailout began — which means that anyone at a bailed-out firm pledged a bonus before Feb. 11, 2009, is legally entitled to the money, as reported in the last line of this report from the Washington Post. (Dear Congress: The shit hit the fan last September, what the hell is up with Feb. 11, 2009 as a marker? Bogus!)
It gets better: “The bonuses,” reports the New York Times, “will be paid to executives at A.I.G.’s financial products division, the unit that wrote trillions of dollars’ worth of credit-default swaps…” In other words, the clowns that helped get us into this mess to begin with. Apparently, we need these assholes, because nobody else understands what it is they’ve done: “…the company said in documents provided to the Treasury, any steps that encourage specialists at A.I.G. Financial Products to leave could open the U.S. government to further risk because of the hazards still posed by the $1.6 trillion portfolio of complex derivatives those employees are working to dispose,” writes the Washington Post, which was first on this story.
These hosers even get the honor of being referred to as “talent.” Edward M. Liddy, the government-appointed chairman of A.I.G. (we-the-people own 80% of this mess), wrote to Treasury Secretary Tim Geithner and said, “We cannot attract and retain the best and the brightest talent to lead and staff the A.I.G. businesses — which are now being operated principally on behalf of American taxpayers — if employees believe their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury.” I dunno about that Mr. Liddy, as far as I can tell, there’s not too many people hiring right now. I’d love to know which well-capitalized companies all of these financial geniuses plan to defect to.
A.I.G. also has the cojones to tell us that the bonuses aren’t that big. According to the Post, about $121 million of the bonus money will go to more than 6,400 people, for an average payout of about $19,000. “These are not Wall Street bonuses,” an anonymous A.I.G. exec told the paper. “This is an insurance company.” Yes, an insurance company that is currently being funded by my paltry, muthafrackin’ taxes. And for your information A.I.G. dude, I could live on $19,000 — quite comfortably — for six months, so if this money isn’t that big of a deal to you, please feel free to refund it. Also, I don’t care what the letter of the law says about your bonuses, this is about having some sense of moral decency at a time when millions are struggling. (More on that here.)
If you haven’t already, read this harrowing series about the A.I.G. debacle — in one, two and three parts — in the Washington Post. It’s an intriguing tale, one that tangentially involves figures like chrome-domed junk bond king Michael Milken and ho-lovin’ guv Eliot Spitzer. Juicy! (Dear CNBC: The series contains this innovative thing called “reporting.” You might want to check it out.)
- Talking Points Memo raises the question: what happens to contractual obligations such as bonuses once a company is bankrupt, which, for all intents and purposes, A.I.G. is.
- The Formula that Killed Wall Street: Felix Salmon explains the voodoo math, with a metaphor that involves head lice. (Neil Irwin.)
- D.C. types reportedly p.o.’d about the bonuses. Glad they’re finally paying attention.
- Robert Reich on the bonuses: “…if our very own Secretary of the Treasury doesn’t even learn of the bonuses until months after AIG has decided to pay them, and cannot make stick his decision that they should not be paid, AIG is not even accountable to the government. That means AIG’s executives — using $170 billion of our money, so far — are accountable to no one.” (AlterNet.)
- Good luck trying to track all the bailout money handed to A.I.G., says the NYT.
- All about A.I.G. over at Times Topics.
- 25 People to Blame for the Financial Crisis.
- Plus: A funny A.I.G.-related Tweet from Slate‘s John Dickerson.