Tech & Biz

AIG CEO Requests Execs Give Back Half of Bonuses

by Jordan Yerman | March 18, 2009 at 06:35 am

227 views | 36 Recommendations | 4 comments

Update: AIG CEO Edward Liddy has asked bonus recipients to give half of the money back. I don't imagine that this will pacify the public, and thus lawmakers must keep re-election prospects in mind when weighing such an offer.

AIG's CEO Edward Liddy is testifying before US Congress, in what CNN is calling "The Grill on the Hill"; I wish I thought of that.

Currently NY Rep. Gary Ackerman is describing popular opinion as a "tidal wave of rage", and the American people as "suckers" who get stuck with the bill for corporate greed. Calling bonuses "retention packages" when referring to employees who have already left is a pre-crumbled argument.

The "too big to fail" argument is getting some serious scrutiny, as the mood on Capitol Hill is suggesting that AIG already failed. Also, one cannot examine the AIG case without looking at the bailout plan itself: Republicans are taking this opportunity to snipe at the White House's bailout plan; Ackerman is re-appropriating some Iraq lingo and calling for an "exit strategy".

At the end of the day, though, AIG was able to deceive the government with ease, since nobody was paying attention to what it was doing, and now their execs are in Washington cranking out the crocodile tears. Liddy himself called the bonuses "distasteful", but only as a setup for his they're-contracts-not-bonuses argument.

Do you believe them?

"AIG made more than 73 millionaires in the unit which lost so much money that it brought the firm to its knees, forcing a taxpayer bailout," Mr. Cuomo said in a letter yesterday to Barney Frank, chairman of the financial services committee in the U.S. House of Representatives.

"Something is deeply wrong with the outcome."

Mr. Cuomo has subpoenaed AIG to get the names and titles of the bonus recipients.

AIG chairman and chief executive officer Edward Liddy is scheduled to defend the bonuses when he testifies today before the financial services subcommittee on capital markets.

Talk about pissing money down a rathole, to borrow a quote from former Bank of Canada governor David Dodge in our paper today.

Andrew Cuomo, New York's Attorney General, is calling for a 91% tax on AIG's bonuses.

The ship is sinking, and the execs not only grabbed the lifeboats, but the silverware as well.

Let's put that in perspective. The median income for a man in the US was a little over $45,000 in 2007. More than half the wage-earners in the country, at whatever their current salary might be, would have to work for more than a century to earn what this AIG joker is walking away with. Scheisskopf walking away with far more money than most of us will earn in a lifetime, and to top it all up, we're the ones who are paying to clean up the mess he left. If Mr. Liddy thinks that he shares the popular anger about this right now, I'd suggest that he think again - preferably after spending three or four years working a long-hour, low pay job.

Actually, the article above is interesting, discussing why a punitive tax could be a bad idea in the long run, though I found this wage comparison to be the most spectacular element.

Meanwhile, Cuomo has demanded that Bank of America turn over details of $3.6 million in bonuses given to MErrill Lynch execs, despite B of A's attempt to block the measure.

The bank had asked the judge to prevent New York Attorney General Andrew Cuomo from publicly releasing the names of individuals who received bonuses and how much they made.

Cuomo's office is probing disclosures related to the timing and nature of more than $3.6 billion in bonus payments made shortly before Bank of America's merger with Merrill Lynch closed last year.

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René

at 07:24 on March 18th, 2009

No accounting for the rest of the frittered away TARP funds.

Pythiian1

at 07:30 on March 18th, 2009

Great Opinion (news) on AIG's testimony in Congress.

Paschen

at 07:47 on March 18th, 2009

Great post, I like it very much the way you put it together. I hope some at AIG and the White House will read this post.

albertacowpoke

at 07:56 on March 18th, 2009

I agree with you jordan. Sure glad Chretien made the decision a few years back not to permit mergers of Canadian banks. If that would have been authorized, Canadian Banks would be in the same boat.