Rewarding Incompetence

About: frank assails bonuses paid to executives at aig - yahoo! finance

Why do the incompetent politicians continue to get elected & appointed to the committees which caused the problems in the first place? All the US Government had to say to AIG & others was get rid of bonuses or go bankrupt - your choice! Apparently the electorate as well is stupid enough to continue to elect them.
~
<==Drudge Headline

Tags

  1. obamanomics
  2. banking
  3. failure
  4. incompetence
  5. bushonomics
  6. democrat bashing
  7. bonuses
  8. item 11639
  9. aig

Comments


Seth says
source: M above
All the US Government had to say to AIG & others was get rid of bonuses or go bankrupt.
Somehow i doubt that is even close to true.  A lot of the bonuses are controlled by British contract law and many of the employees that are getting them are in the London office.  CNBC reported this morning that to break the contracts would take more money than just to pay out the bonuses. 

On the other hand paying these bonuses to the very people who contributed to the crisis is outrageous and everything possible should be done to withhold the monies.   I don't buy that AIG needs to pay the bonuses to retain these people:  they could say take the bonus and loose your job, and/or they could get together and jaw bone these people and make it extremely hard for them.  AIG has over a trillion in toxic assets - i'm sure there are many people qualified to liquidate them. 

Solution of the bonus fiasco requires study and creativity, like this one.

Seth says
There is a good article over at TPM abut this, which brings up more of the actual problem that must be dealt with. 
source: Liddy AIG CEO
In the letter, Mr. Liddy wrote that "outside counsel" had advised that the previously agreed to payments to employees at the financial products unit are "legal, binding obligations of AIG." He wrote that there are "serious legal, as well as business consequences for not paying."
What needs to happen is real business consequences for paying the bonuses needs to emerge.  I do agree, in hindsight, that had it been possible at the time to say "no bonuses or go bankrupt", it would have been the right move.  However not only may that not have been feasible at the time, but one does not point a gun unless one is prepared to shoot.  Was AIG going bankrupt are viable option?  Sorry i'm not qualified to answer that ... but, no, i would not assume that letting AIG actually go belly up would not be a better option.  It is a interesting question and one that i intent to track and one that we have not heard the last of. 

Seth says

Washington Post has one of the best detail articles: Bailout King AIG Still to Pay Millions In BonusesAlso NYT article is very informative.  Is Liddy (pictured to the left) , the CIO of AIG, part of the problem, or part of the solution? 

Mark de LA says
While I did not dig deeply into all the rich details you have provided, I expect if the option was bankruptcy that the company would find some way to deal with bonuses.  Have a judge decide which creditors get paid including executives.  Officers of a bank or any company have a responsibility; even if it costs more to break the contracts then it is worth it to enforce responsible governance. An example should be made just like Enron.  Retaining people who are not competent is of no value at all. The board of directors & the shareholders of a company deserve to lose equity & compensation if the taxpayers have to bail them out.


Seth says
MR 2009-03-16 12:06:29 11639
While I did not dig deeply into all the rich details you have provided, I expect if the option was bankruptcy that the company would find some way to deal with bonuses.  Have a judge decide which creditors get paid including executives.  Officers of a bank or any company have a responsibility; even if it costs more to break the contracts then it is worth it to enforce responsible governance. An example should be made just like Enron.  Retaining people who are not competent is of no value at all. The board of directors & the shareholders of a company deserve to lose equity & compensation if the taxpayers have to bail them out.

The shareholders have in fact lost most of their equity due to the market:  AIG was trading at about $50 last May and is trading for pennies, 83  of them today.  But i think your right about bankruptcy, that should change some of these contracts which allegedly cannot be broken.  It is interesting that Cuomo is actively perusing these guys ... and if you are interested in this at least listen to the first 5 minutes of Obama's speech.  My bet is that these bonuses will be recinded one way or another.  What's your bet?

Seth says
Breaking news ... Obama's comments ...
source: Obama Orders Treasury Chief to Try to Block A.I.G. Bonuses

“In the last six months, A.I.G. has received substantial sums from the U.S. Treasury,” Mr. Obama said. He added that he had asked Treasury Secretary Timothy F. Geithner “to use that leverage and pursue every single legal avenue to block these bonuses and make the American taxpayers whole.”

In strongly-worded remarks delivered in the White House East Room before small business owners, Mr. Obama called A.I.G. “a corporation that finds itself in financial distress due to recklessness and greed.”

“Under these circumstances, it’s hard to understand how derivative traders at A.I.G. warranted any bonuses at all, much less $165 million in extra pay,” Mr. Obama said. “How do they justify this outrage to the taxpayers who are keeping the company afloat?”
... I heard the very end where he started coughing and then said something like he didnt normally get choked up but he was angry.  Video is available here from MSNBC.

Mark de LA says
Well, I don't like Obama's use of the word greed in connection with all of this. It's typical class envy speak.  They are no more greedy than Obama is for taxpayer billion$ for his own chosen uses. 
The original intent of the post, which got lost, is that those incompetents in government should go through the same purge & financial punishment; particularly Barney Frank. He was on the oversight committees when this mess was being created.  Same goes for treasury secretaries & Federal Reserve chairmen.
Throw the bums out or ....


Mark de LA says
seth 2009-03-16 12:55:27 11639
source: M above
The original intent of the post, which got lost, is that those incompetents in government should go through the same purge & financial punishment; particularly Barney Frank.
Yeah it didn't get lost.  For me delving into what actually happened, and what could happen about it in the future, was far more interesting than exchanging hyperpartisan static.
Delving into what actually happened includes those in government responsible; your hyper-hyping & dissing notwithstanding!


Seth says


Seth says
So first you malign the government for not saying "get rid of bonuses or go bankrupt", then you malign them for sufficiently effective measures to get the money back.  You get them cumming of going, don't you?

Seth says
The attorney general of NYC, Cuomo,  is certainly getting to the bottom of this ...
source: Letter from Cuomo to Barney Frank (read the whole letter)
Furthermore, we know that AIG was able to bargain with its Financial Products employees since these employees have agreed to take salaries of $ 1 for 2009 in exchange for receiving their retention bonus packages. The fact that AIG engaged in this negotiation flies in the face of AIG's assertion that it had no choice but to make these lavish multi-million dollar bonus payments. It appears that AIG had far more leverage than they now claim.
... Iow, they made points by working one dollar, but made back door contracts for millions.  Now tell me these greedy bastards don't deserve whatever effective measures that can be brought against them. 

Mark de LA says
seth 2009-03-17 10:45:26 11639
So first you malign the government for not saying "get rid of bonuses or go bankrupt", then you malign them for sufficiently effective measures to get the money back.  You get them cumming of going, don't you?
The key point is that they should have let them go bankrupt! Blame Chris Dodd
source: ...

While the Senate was constructing the $787 billion stimulus last month, Dodd added an executive-compensation restriction to the bill. That amendment provides an “exception for contractually obligated bonuses agreed on before Feb. 11, 2009” -- which exempts the very AIG bonuses Dodd and others are now seeking to tax.

Separately, Sen. Dodd was AIG’s largest single recipient of campaign donations during the 2008 election cycle with $103,100, according to opensecrets.org. 


...I think Dudd got caught with his pants down....

Mark de LA says
Notice in the article that Barack Obama was the 2nd largest beneficiary of AIG's largess - $101,332 .  Should not these two & the others on the list give back their campaign contributions?  Democrats & Republicans both got contributions, but Democrats were 3:1 in receiving campaign contributions. Read the article to get all the stats. Back to the original premise, those responsible for the problems are in charge of fixing them; the fox guarding the hen house yet again in government.
(from AIG)

Seth says
MR 2009-03-17 11:44:37 11639
seth 2009-03-17 10:45:26 11639
So first you malign the government for not saying "get rid of bonuses or go bankrupt", then you malign them for sufficiently effective measures to get the money back.  You get them cumming of going, don't you?
The key point is that they should have let them go bankrupt! Blame Chris Dodd
source: ...

While the Senate was constructing the $787 billion stimulus last month, Dodd added an executive-compensation restriction to the bill. That amendment provides an “exception for contractually obligated bonuses agreed on before Feb. 11, 2009” -- which exempts the very AIG bonuses Dodd and others are now seeking to tax.

Separately, Sen. Dodd was AIG’s largest single recipient of campaign donations during the 2008 election cycle with $103,100, according to opensecrets.org. 


...I think Dudd got caught with his pants down....
Yeah it might be fun to watch Dodd try to dance around the real reasons why he sponsored that amendment.  There are more details on the government blame game here.   Me, i'm just watching this to see how the monies will actually be clawed back or whether the anger will be allowed to simmer down.  For me this is not a opportunity to grind some partisan ax, but rather an obligation to watch the establishment and make sure that they  prevent this kind of theft of public monies and don't just conspire with the thiefs behind closed doors.

Mark de LA says
~


Seth says
MR 2009-03-17 11:44:37 11639
seth 2009-03-17 10:45:26 11639
So first you malign the government for not saying "get rid of bonuses or go bankrupt", then you malign them for sufficiently effective measures to get the money back.  You get them cumming of going, don't you?
The key point is that they should have let them go bankrupt! Blame Chris Dodd
source: ...

While the Senate was constructing the $787 billion stimulus last month, Dodd added an executive-compensation restriction to the bill. That amendment provides an “exception for contractually obligated bonuses agreed on before Feb. 11, 2009” -- which exempts the very AIG bonuses Dodd and others are now seeking to tax.

Separately, Sen. Dodd was AIG’s largest single recipient of campaign donations during the 2008 election cycle with $103,100, according to opensecrets.org. 


...I think Dudd got caught with his pants down....
Actually Chirs Dodd is not to blame, his ammendment did not include the loophole ... it was added by the House/Senate conference committee perhaps "at the specific request of Timothy Geithner" (thanks firedoglake.com).

Mark de LA says
seth 2009-03-17 12:47:40 11639
To be fair to Dodd and his amendment you should take into consideration the intent of the amendment and what it actually did ...
source: foxbusiness
Bonuses can only be paid in the form of long-term restricted stock, equal to no greater than 1/3 of total annual compensation, and will vest only when taxpayer funds are repaid.
... The exception ...
There is an exception for contractually obligated bonuses agreed on before Feb. 11, 2009.
... was put in there because otherwise it would break contracts and probably would not have been legal which is what your conservative friends are bloviating about now.
OTOH, Dodd is crooked & got caught with his pants down.


Seth says
Today CEO Liddy asks employees making $100,000 plus in bonuses to return half - and some have stepped forward to pay back 100% of the bonuses.  You can listen to exactly what he said on my 11649Strangely enough this was my solution that i emailed AIG about and posted here.  I won't get any credit but i did get 10 karma points.


Mark de LA says
seth 2009-03-17 14:48:38 11639
More to the point ... thanks John Sherffius


That pile of shit is you & I & the rest of the taxpayers who own 80% of AIG. Perhaps you should rethink it's governance by the idiots in congress & the white house.

Mark de LA says
http://blog.mlive.com/getting_in_your_business/2009/03/congress_express_outrage_over.html

Mark de LA says
seth 2009-03-18 11:55:03 11639
MR 2009-03-18 11:48:47 11639
Chris Dodd is chairman of the Senate Banking Committee. So.... he had no input into the conference resolution?

I have no idea whether he was on the committee which made the loophole. But according to firedoglake.com the loophole was added "at the specific request of Timothy Geithner".  Seems to me that you would be trying to lay it at his feet. 
CNN differs -
Senate Banking committee Chairman Christopher Dodd told CNN Wednesday that he added language to the federal stimulus bill to make sure contracts for bonuses at companies receiving federal bailout money stayed in place.
Sen. Chris Dodd said Tuesday he had no idea how an exemption clause got inserted into the stimulus bill.

Sen. Chris Dodd said Tuesday he had no idea how an exemption clause got inserted into the stimulus bill.Dodd told CNN's Dana Bash and Wolf Blitzer that Obama administration officials wanted the language added to an amendment limiting bonuses that could be paid by those companies. He said they were afraid that without it, the government would face numerous lawsuits.


Mark de LA says
seth 2009-03-19 11:12:03 11639
For the record here is a bit more about Dodd's role in this matter (watch the movie).  Apparently the loophole was put in at the staff level for legal concerns from the treasury department.  And, yes, it would be nice to nail it down to a specific person with a specific motive.

Someone is trying to pass the buck.  The heads of the various organizations are responsible for how it behaves.  Chris Dodd for the Senate Banking Committee, Obama for the Executives & Pelosi for the House corresponding committees. You can't blame shit on your subordinates if you want to call yourself a leader! Don't these bastards read what they sign?

Seth says
Apparently what i reported yesterday was spot on ...

Source: (CNN)

Treasury Secretary Timothy Geithner told CNN Thursday his department asked Sen. Chris Dodd to include a loophole in the stimulus bill that allowed bailed-out insurance giant American International Group to keep its bonuses.

In an interview with CNN's Ali Velshi, Geithner said the Treasury Department was particularly concerned the government would face lawsuits if bonus contracts were breached.

...  and while were at this blame game, why not go back to where these bonuses were originally allowed ...
source: Bloomberg

President George W. Bush’s administration “specifically contemplated” paying bonuses to American International Group Inc. employees in its November agreement to provide federal bailout funds to the insurance giant, the inspector general for the Troubled Asset Relief Program said today.

Neil Barofsky testified before the House Ways and Means oversight subcommittee. The panel held a hearing on the TARP program, which so far has spent $300 billion trying to reverse the financial meltdown.

The TARP contract between AIG and Treasury “specifically contemplated the payment of bonuses and retention payments to AIG employees, including AIG’s senior partners,” Barofsky said.
... and while were at it, should probably be said that the people getting the bonuses may not have been the people who were responsible for causing the AIG meltdown to begin with.  Again, it would be nice to examine some particular individual examples.

Mark de LA says
Apparently Obama, Dodd, Geithner & Pelosi are not leaders & are passing the buck around as I commented on earlier. The people in charge now are responsible for the mess. If they don't clean it up then they too should join the unemployment lines.


Mark de LA says
 A picture for punctuation - Sen. Dudd speaks out of both sides of his mouth; taking orders from low level administration assistants, eh? 


Mark de LA says
MR 2009-03-17 11:59:25 11639
Notice in the article that Barack Obama was the 2nd largest beneficiary of AIG's largess - $101,332 .  Should not these two & the others on the list give back their campaign contributions?  Democrats & Republicans both got contributions, but Democrats were 3:1 in receiving campaign contributions. Read the article to get all the stats. Back to the original premise, those responsible for the problems are in charge of fixing them; the fox guarding the hen house yet again in government.
(from AIG)


Seth says
Well either MR concern above is seriously misplaced or Liddy, the CEO of AIG is lying through his teeth. 
source: Liddy CEO of AIG in Washingpost.com editorial today
What also became clear is that once AIG's relationship with the government and taxpayers changed, our behavior as a company needed to change. So, of our own initiative, we suspended our federal lobbying activities and halted corporate political contributions.

Btw your quoted contribution stats are misrepresenting the situation.  Obama, and democrats in general, raised far more money in the campaign than republicans, consequently by comparison their absolute figures will look high.  The same phenomona could be seen if you comapred computer programmer's contributions.  Produce new stats that are proportional to the total monies raised and you will discover a better truth. This is the second and last time i will bring up this argument, which has never been refuted.  

Mark de LA says
seth 2009-03-20 12:58:10 11639
Well either MR concern above is seriously misplaced or Liddy, the CEO of AIG is lying through his teeth. 
source: Liddy CEO of AIG in Washingpost.com editorial today
What also became clear is that once AIG's relationship with the government and taxpayers changed, our behavior as a company needed to change. So, of our own initiative, we suspended our federal lobbying activities and halted corporate political contributions.

Btw your quoted contribution stats are misrepresenting the situation.  Obama, and democrats in general, raised far more money in the campaign than republicans, consequently by comparison their absolute figures will look high.  The same phenomona could be seen if you comapred computer programmer's contributions.  Produce new stats that are proportional to the total monies raised and you will discover a better truth. This is the second and last time i will bring up this argument, which has never been refuted.  
If you don't like the numbers in absolute $$$$ then you switch to percentages & that is a better truth? Bullshit! They are still $$$$ and as accurate as the article's research.  BTW, if you want to go to percentages then the bonuses are a piss in the ocean campared to the $80 billion given to AIG as a whole or the amount spent on stimulus packages and TARP & the rest that congress is spending on bullshit including the earmarks that Obama signed into law!


Seth says
MR 2009-03-20 13:29:43 11639
seth 2009-03-20 12:58:10 11639
Well either MR concern above is seriously misplaced or Liddy, the CEO of AIG is lying through his teeth. 
source: Liddy CEO of AIG in Washingpost.com editorial today
What also became clear is that once AIG's relationship with the government and taxpayers changed, our behavior as a company needed to change. So, of our own initiative, we suspended our federal lobbying activities and halted corporate political contributions.

Btw your quoted contribution stats are misrepresenting the situation.  Obama, and democrats in general, raised far more money in the campaign than republicans, consequently by comparison their absolute figures will look high.  The same phenomona could be seen if you comapred computer programmer's contributions.  Produce new stats that are proportional to the total monies raised and you will discover a better truth. This is the second and last time i will bring up this argument, which has never been refuted.  
If you don't like the numbers in absolute $$$$ then you switch to percentages & that is a better truth? Bullshit! They are still $$$$ and as accurate as the article's research.  BTW, if you want to go to percentages then the bonuses are a piss in the ocean campared to the $80 billion given to AIG as a whole or the amount spent on stimulus packages and TARP & the rest that congress is spending on bullshit including the earmarks that Obama signed into law!

The comaprisons being drawn by the statistics are not accurate.

Mark de LA says
You would love to ignore the values of the dollar$$$. BTW, you should read the entire link since I only got a snapshot of it.  What might be more interesting is to compare the dollar$$$ with the bonuses & then normalize them to Obama's share.


Mark de LA says
 
source: ...

No wonder Senator Christopher Dodd (D-Conn) went wobbly last week when asked about his February amendment ratifying hundreds of millions of dollars in bonuses to executives at insurance giant AIG. Dodd has been one of the company's favorite recipients of campaign contributions. But it turns out that Senator Dodd's wife has also benefited from past connections to AIG as well.


...from the CasaDodd pile:


Mark de LA says
talk about rewarding incompetence.....
source: ... Before its portfolio of bad loans helped trigger the current housing crisis, mortgage giant Freddie Mac was the focus of a major accounting scandal that led to a management shake-up, huge fines and scalding condemnation of passive directors by a top federal regulator.

One of those allegedly asleep-at-the-switch board members was Chicago's Rahm Emanuelnow chief of staff to President Barack Obama—who made at least $320,000 for a 14-month stint at Freddie Mac that required little effort.
...
give it back, Rahm !!!!!!!!! - Let loose the irate mobs to picket your house & bug your neighbors until you do.
<===Rham Emanuel mug shot

Mark de LA says
~
This brings to mind the old cry which rallied the Revolutionary War against Great Britain,
source: ...
The fine print in the stimulus bill authorizing the AIG bonuses, which was rushed through the U.S. Congress at lightning speed, has led to a renewed call for politicians to read legislation before they vote on it. That kind of rule may seem like plain common sense, but it's surprisingly common for members of Congress to be handed a bill that's hundreds or thousands of pages long -- and have only a few hours to read it before a vote. In other words, legislators may approve complex and important measures even though they may not know what they're actually voting on.
...More Tea parties are necessary!

Mark de LA says
Cross pollinated cartoon covering three topics:
 

Mark de LA says
The Price for Fannie and Freddie Keeps Going Up Barney Frank's decision to 'roll the dice' on subsidized housing is becoming an epic disaster for taxpayers.
WSJ: ...

On Christmas Eve, when most Americans' minds were on other things, the Treasury Department announced that it was removing the $400 billion cap from what the administration believes will be necessary to keep Fannie Mae and Freddie Mac solvent. This action confirms that the decade-long congressional failure to more closely regulate these two government-sponsored enterprises (GSEs) will rank for U.S. taxpayers as one of the worst policy disasters in our history.

Fannie and Freddie's congressional sponsors—some of whom are now leading the administration's effort to "reform" the financial system—have a lot to answer for. Rep. Barney Frank (D., Mass.), chairman of the House Financial Services Committee, sponsored legislation adopted in 2008 that established a new regulatory structure for the GSEs. But by then it was far too late. The GSEs had begun buying risky loans in 1993 to meet the "affordable housing" requirements established under congressional direction by the Department of Housing and Urban Development (HUD).

... THIS IS BORDERING ON CRIMINAL ...
source: ...

For most people, that freeze-up is the beginning of the financial crisis. But its roots go back to 1993, when Fannie and Freddie began stocking up on subprime and other risky loans while reporting them as prime.

Why Fannie and Freddie did this is still to be determined. But the leading candidate is certainly HUD's affordable housing regulations, which by 2007 required that 55% of all the loans the agencies acquired had to be made to borrowers at or below the median income, with almost half of these required to be low-income borrowers.

...Barney Frank in Wikipedia He is up for election in the House of Representatives this year!Reward his incompetence appropriately!



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