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



Tags
- obamanomics
- banking
- failure
- incompetence
- bushonomics
- democrat bashing
- bonuses
- item 11639
- aig
Comments
All the US Government had to say to AIG & others was get rid of bonuses or go bankrupt.
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.
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."



“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?”


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.


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.
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.






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.





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.



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.







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.
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?



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.
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.











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.
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.

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.



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.


One of those allegedly asleep-at-the-switch board members was Chicago's Rahm Emanuel—now 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.





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.


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).
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.


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