The Reasoned Review

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AIG Deja Vu

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Well, it’s that time of year again: the snow has fallen, the air bitter cold, and AIG decides to award its criminal executives hundreds of millions of dollars in “bonuses”. But wait, haven’t we seen this before? I seem to remember a huge uproar about this sometime last year… hang on – let me check the interwebs…

Okay I found it! It’s a March 15, 2009 Times article entitled “AIG Planning Huge Bonuses after $170 Billion Bailout.” Yeah, now I remember. It was really a big deal back then – there were hearings, emotional speeches, widely publicized resignations – it even came out that AIG owed Goldman Sachs a lot of money, and that much of the AIG bailout really went to GS.  In the end, AIG said it was sorry and it would never do it again.

Well, I guess they must think we’re stupid or something, because it’s a year later and they’re doing the exact same thing again. Okay well, maybe not the exact same thing – last years’ bonuses added up to $170 million – this year they’re cutting back and only handing out a paltry $100 million.

But lets look at some of the similarities:

March, 2009:

The senior government official, who was not authorized to speak on the record, said the administration was outraged. “It is unacceptable for Wall Street firms receiving government assistance to hand out million-dollar bonuses, while hard-working Americans bear the burden of this economic crisis,” the official said.

February, 2010:

“A.I.G. has taxpayers over a barrel,” said Senator Charles E. Grassley, an Iowa Republican, in a statement on Tuesday night. “The Obama administration has been outmaneuvered. And the closed-door negotiations just add to the skepticism that the taxpayers will ever get the upper hand.”

March, 2009:

The second group of bonuses covers some 2008 retention payments from contracts entered into before government involvement in A.I.G. Indeed, in his letter to Mr. Geithner, Mr. Liddy wrote that he had shown the details of the $450 million bonus pool to outside lawyers and been told that A.I.G. had no choice but to follow through with the payment schedule.

February, 2010:

The holdouts seem determined to make A.I.G. pay the full contractual amounts, knowing they can make a reasonably good case under law, because A.I.G.’s own lawyers have previously issued an opinion that the contracts are binding. If they succeed, A.I.G. would have to pay them more money at some point in the future, and might even have to pay penalties for breaking its employment contracts.

Huh.  Well, at least they’ve paid back some of the taxpayer money, right?

March, 2009:

The American International Group, which has received more than $170 billion in taxpayer bailout money from the Treasury and Federal Reserve…

February, 2010:

The government has extended roughly $182 billion in total to A.I.G. It is selling some of its units to help repay the debt.



Written by pavanvan

February 3, 2010 at 10:04 am

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