My two cents’ worth in a billion-dollar debacle:
The $165 million is the latest installment of a retention program that is slated to pay the unit’s employees about $450 million. AIG had previously paid out $55 million, and an additional $230 million is pending for 2009.
An administration official said that on Friday Treasury Secretary Timothy Geithner discussed the bonuses and compensation going forward with AIG’s government-appointed chief executive, Edward Liddy. Mr. Liddy informed Mr. Geithner he intended to pay out the bonuses, and the Treasury secretary said there was nothing he could do legally to stop that.
The official also said that Treasury has determined there is no way the government can actually extract the money from the individuals who already received the bonus payments. The government would face lawsuits with the potential of significant damage payouts and lawyer fees that could easily exceed the cost of the bonuses.
Jennifer Rubin spells it out
here are two possible answers. First, Tim Geithner messed up. Or, second, there is no conceivable way of depriving employees of contractual bonuses. If the first is correct, then we have yet another reason to dump Geithner. If the second is the case, then the current round of angry recriminations is — shockingly — disingenuous.
So now there’s Plan B: spending more taxpayer money,
Instead, the administration said it will use a $30 billion installment of bailout funds approved March 2, to bring some pressure to bear on AIG. The official said before AIG can draw down funds from the $30 billion, new rules would be written into AIG’s contract to ensure no government money goes toward paying financial-products division bonuses. The cost of bonuses already paid would be recouped for the taxpayer.
It sounds like we’re supposed to believe that the extra $30 billion will make the execs cough up the $165 million the execs just got paid and which would be too expensive to pursue in court. Good luck with that, buddy. This is the smoke-and-mirrors solution.
On a lighter note, my brother and I were talking about the AIG bonuses and he said, “You know why they feel they should keep the bonus, don’t you? Because they can say ‘hey, we delivered the bailout!'”
And, by the way, looking at the Big Money chart above, I fully expect we’ll be hearing similar stories about Citigroup, BoA, JP Morgan and Wells Fargo.
Shampoo, rinse, repeat.
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Ed has the moral of the story:
In the future, we can avoid having taxpayer dollars go to Wall Street bonuses by not bailing out private companies with taxpayer dollars.
Is AIG’s (mis)handling Obama’s Latest Costly Blunder?