Tag: AIG

Think AIG’s Bonuses Were Bad? Read This.

By MB

On April 3, 2009

Megan Slack, over at Alternet, reports on what appears to be an important story that has yet to be picked up by bigger news organizations:

Dennis Kucinich sent out a round of letters to top Treasury officials Monday morning, questioning how much they knew about bonuses paid to Merrill Lynch executives that totaled $3.62 billion, nearly 22 times the total bonuses paid to AIG executives. The payouts made up more that 36 percent of the TARP funds the financial institution received from the Federal government. [emphasis supplied]

Kucinich points out that unlike AIG, the bonuses were not locked in by preexisting contracts and were performance bonuses, as opposed to retention bonuses.

From Rep. Kucinich’s letter:

The Merrill bonuses were 22 times larger than those paid by AIG ($3,620 million versus $165 million). They were also very large relative to the TARP monies allocated to Merrill. The Merrill bonuses were the equivalent of 36.2% of TARP monies Treasury allocated to Merrill and awarded to BOA after their merger. The bonuses, awarded mostly as cash, were made only to top management at Merrill. To be eligible for the bonuses, Merrill employees had to have a salary of at least $300,000 and attained the title of Vice President or higher.

The Merrill bonuses were determined by Merrill’s Compensation Committee at its meeting of December 8, 2008, shortly after BOA shareholders approved the merger but before financial results for the Fourth Quarter had been determined. This appears to be a departure from normal company practice, since the type of bonus Merrill awarded was a performance bonus that, according to company policy, was supposed to reflect all four quarters of performance and was paid in January or later. In this case, however, the bonuses were awarded in December before Fourth Quarter performance had been determined.

Why aren’t we seeing more on this?

Must Read: Josh Marshall on Obama, Geithner & the Public Trust

By MB

On March 19, 2009

In Policy, Politics, Society

Marshall writes:

What is so damaging about this isn’t the money — which is almost trivially small compared to the many hundreds of billions we’ve already committed. The problem is what appears to be the president’s mortifying impotence in the face of bankers and financiers who created the problem. The president speaks and acts for the federal government, which is to say, the American people, who have mobilized more than a trillion dollars and all powers of the state to repair the damage emerging out of the financial sector. And with all that, he’s jacked up on a employment agreement between a company the government now owns and derivatives traders who sank the world economy and may quite likely be looking at criminal charges for their activities in the not too distant future?

Anyone can look at that and see that the equation of power and accountability is all screwed up.

Quite.Â Â And really, I hope you’ll click over and read the whole thing.Â It nails the current state of affairs.Â Here’s the end:

Whether Geithner and Summers are too close to the people on Wall Street, either through interest or affinity, is an interesting and possibly important question. But fundamentally Obama needs to start showing that he’s in charge, that he’s operating as the American people’s advocate and that he has the power to do it — which these stories of getting jacked up by some Gordon Gecko wannabes in London just terribly undermines. But to do that, to show that, it has to be true. And that might require some real changes in policy and possibly in personnel too.

Is It Wrong, That I Laughed?

By MB

On March 17, 2009

In Society

Sen. Charles Grassley (R-IA), in a radio interview regarding the AIG execs, yesterday:

“I suggest, you know, obviously, maybe they ought to be removed,” Grassley said. “But I would suggest the first thing that would make me feel a little bit better toward them if they’d follow the Japanese example and come before the American people and take that deep bow and say, I’m sorry, and then either do one of two things: resign or go commit suicide.”

“And in the case of the Japanese, they usually commit suicide before they make any apology.”

Probably a bit over the line, and wrong to laugh. But I did anyway.

Thank You, Sir, May I Have Another?

By MB

On March 16, 2009

In Law, Policy, Politics

Josh Marshall’s analysis here gets at why the situation with AIG bonuses is appalling:

We’re collectively taking our country’s future in our hands, spending vast sums of money to keep these companies from suffering the consequences of their own folly and (in many cases) criminality. And in return we’re receiving cavalier dictates about pay-outs and bonuses from executives who by any reasonable measure work for us — dictates we promptly accede to. There’s a beggars can’t be choosers problem there. And the disconnect is so mighty that it fuels the impression that the whole enterprise is not what it seems, not what we’ve been told, that in addition to picking up the tab we’re being played for fools.

Obviously, AIG and its ilk can’t be shamed, and aren’t at all worried about public perception or pressure.Â You know who should be more worried than they seem to be?Â The Obama Administration.Â Â Their willingness to eat the shit sandwiches AIG keeps feeding them is nauseating.