Dear A.I.G.: WTF????


Mortgage, 2009 by Jota Castro at the Galerie Barbara Thumm in Berlin. (Image courtesy of Galerie Barbara Thumm, via Rebel:Art.)

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.)

Afterwards, get in touch with your senator and your congressman and tell them how much this all sucks.

Further reading:

6 comments

  1. vanderleun

    I share your anger, but the fact remains that if there is a contractual obligation in place, a company cannot abrogate it.

  2. San-suzie

    Hey Vanderleun… what about the contract to their shareholders, and the american people? Does that not count for anything? As my ex-husband the lawyer sez, the whole point of contracts is that they’re made to be broken

  3. tk

    Companies can’t abrogate contracts?? GM had a contract with it’s workers– yet when we bailed out GM, we forced the UAW to renegotiate that contract. If we can force guys who are doing a good job bolting fenders at 20 bucks an hour to take a pay cut, why can’t we force guys making 200 bucks and hour doing an incompetent job and fucking up the financial system to take a pay cut? I don’t believe there weren’t ways to get around the AIG bonuses, or at the very least, cut salaries to recoup those bonuses.

  4. Lorne

    I am afraid this is vicious circle of modern management structure – shareholders can control management to some extent in calm times, but now, when they feel AIG ship has big problems and their days in this company are coming to an end, they try to snatch as much as possible and share owners can’t do much about it. Incentives for managers to work in favor of the company are usually pretty fragile…

  5. sas

    Two words….antecedent breach. If the jerks getting these bonuses breached the contract first, AIG has no obligation to comply with their end. Even if the ARGUABLY breached first — it’s enough for a good defense to get them before a jury who will hand them their you know whats. No one can tell me that these contracts are SO one-sided that there were no performance obligations on the bonus-recipients to receive these bonuses. No one can convince me that AIG attorneys are so clueless that they cannot articulate enough of a defense to even stall these idiots out for a while on any claimed breach of contract. AIG simply wants or feels forced to pay these bonuses for some other reason (hush money, whatever) which they are not willing to articulate.

    This is total, total BS. And the fact we’re finding out about it after the fact — worse than adding insult to injury. Even if we felt the need to save these pathetic jerks from their own ineptness by handing them oodles of money SOMEONE should have still said, only if bankruptcy rules apply as to all these other (supposed) creditors. Taxpayers should come first, just as if we were the friggen IRS or student loan people.