Can You Believe This?

[HARDCORE]

http://news.yahoo.com/s/ap/20090318/...co/aig_outrage

AIG chairman says retention payments distasteful

By JIM KUHNHENN, Associated Press Writer


WASHINGTON – The chief of failed insurance conglomerate AIG acknowledged Wednesday to skeptical congressional interrogators that the company's multibillion bonuses to employees were "distasteful" to many Americans including himself and that "I share that anger." Lawmakers from both parties expressed fury over the company's behavior.

"Mistakes were made at AIG on a scale few could have every imagined possible," Edward Liddy, chairman and chief executive officer of the American International Group Inc., said in prepared testimony.

But, he told a House Financial Services subcommittee, the $165 million in bonuses paid out over the weekend should be honored as a legal commitment of the United States government, which now owns 80 percent of the battered insurer.

"When you owe someone money, you pay that money back," he said. "We at AIG want to believe that we are all in this together," said Liddy, who was named six months ago to take over the company as part of the government rescue. Some $170 billion in tax money has now been pledged to AIG.

Liddy's stance on this issue drew sharp comments from both sides.

For the American public, AIG now stands for "arrogance, incompetence and greed," said Rep. Paul Hodes, D-N.H.

It is "time for us to assert our ownership rights," said Rep. Barney Frank, D-Mass., chairman of the full committee. Frank said Congress will be asking for the names of the bonus recipients, but if AIG declines to provide it, he will convene the committee to vote a subpoena for the names. "We do intend to use our power to get the names," he said.

Rep. Scott Garrett of New Jersey, the senior Republican on the subcommittee, complained that the administration still has no exit strategy for disentangling itself from the insurance giant.

"Part of me wants to say to some of the loudest critics, `What did you expect and why weren't you asking more questions before?' I would argue that the real outrage now is the $170 billion of taxpayer moneys that's been pumped into this company and to what effect," he said.

Rep. Gary Ackerman, D-N.Y., cited a "tidal wave of rage" throughout America right now.

AIG is under fire for $220 million in retention bonuses paid to employees in its troubled financial products division. The most recent payment of $165 million began to be paid last Friday and caused a furor.

Liddy found himself the reluctant defender of princely employee bonuses that members of Congress — and much of the American public — find indefensible.

The retention payments — ranging from $1,000 to nearly $6.5 million — were not his idea. Liddy himself is not getting a bonus and is only drawing $1 a year in salary. The deals were cut early last year, long before then-Treasury Secretary Henry Paulson asked Liddy to take over the company.

Liddy acknowledged, "We are meeting today at a high point of public anger."

"Because of certain legal obligations, AIG has recently made a set of compensation payments, some of which I find distasteful," Liddy said in his prepared testimony.

He told lawmakers that the company grew into an internal hedge fund that became overexposed to market risks. AIG is the largest recipient of federal government emergency assistance.

"No one knows better than I that AIG has been the recipient of generous amounts of governmental financial aid. We have been the beneficiary of the American people's forbearance and patience," Liddy said. But he also said that "we have to continue managing our business as a business — taking account of the cold realities of competition for customers, for revenues and for employees."

He told lawmakers, "I want to assure you that the people at AIG today are working as hard as we can to execute the restructuring plan that, we believe, offers America's taxpayers the best possible income."

But the payments went out. Congress is in a lather and wants the money back. And Liddy, who had been scheduled to testify about AIG before the bonus story took root, was a timely target.

The clamor over compensation overshadowed AIG's weekend disclosure that it used more than $90 billion in federal aid to pay out to foreign and domestic banks, including some that had multibillion-dollar U.S. government bailouts of their own. AIG is the single largest recipient of government assistance — a company whose financial transactions were so intricate and intertwined that it was considered simply too big to fail.

Liddy said the company's new management team found that the company's "overall structure is too complex, too unwieldy and too opaque for its component businesses to be well managed as one company."

He said the new managers have "addressed our liquidity crisis and stabilized the company's cash position" and is winding down the financial products side of the business.

Lawmakers already were troubled by the idea of an institution that could single-handedly topple the financial system. Now, Liddy's appearance comes just as lawmakers from both parties are casting his company as the symbol of excess and abuse of taxpayer dollars.

The White House and Treasury Secretary Timothy Geithner, both of whom have condemned the payments, have been besieged by questions about why they did not know about the bonus payments sooner.

The White House for the first time on Tuesday night said Geithner learned of the impending bonus payments a week ago Tuesday; he told the White House about them last Thursday, and senior aides informed President Barack Obama later that day.

Geithner said on Tuesday he was working with the Justice Department to find ways to recover some of the payments. He cited a provision in the recent economic stimulus law that gave him authority to review compensation to the most highly paid employees of companies that already have received federal assistance.

[HARDCORE]

http://www.nytimes.com/2009/03/18/bu..._r=1&th&emc=th

Outcry Builds in Washington for Recovery of A.I.G. Bonuses

By JACKIE CALMES and LOUISE STORY

WASHINGTON — The bonuses that the American International Group awarded last week were paid to 418 employees and included $33.6 million for 52 people who have left the failed insurance conglomerate, according to the office of the New York attorney general.

The company paid the bonuses, including more than $1 million each to 73 people, to almost all of the employees in the financial products unit responsible for creating the exotic derivatives that caused A.I.G.’s near collapse and started the government rescue to avoid a global financial crisis.

A.I.G. has received nearly $200 billion in federal bailout funds.

The information adds to the firestorm confronting the Obama administration and Congress since the weekend disclosure that A.I.G., almost 80 percent owned by the government, paid out $165 million in bonuses.

Even before the New York attorney general, Andrew M. Cuomo, divulged the new data on bonus payments in a letter to Representative Barney Frank, the Massachusetts Democrat and chairman of the Financial Services Committee, the White House and Congress separately were rushing to get out in front of the mounting public furor. Officials and lawmakers condemned A.I.G., pointed fingers at each other and promised speedy action to recoup the taxpayers’ money.

The outcry will probably find an outlet on Wednesday, when Edward Liddy, the A.I.G. chief executive who took over after the bailout for $1 a year, testifies before a subcommittee of the House Financial Services Committee.

New York’s efforts against A.I.G. have overshadowed those of the Treasury secretary, Timothy F. Geithner, the official who is responsible for the financial bailout, along with the Federal Reserve. The White House and Treasury have been besieged by questions about why Mr. Geithner did not know sooner about the bonus payments due this month, and whether he could have done more to stop them, prompting White House officials to assert President Obama’s continued confidence in Mr. Geithner.

“He more than has the president’s complete confidence,” said Rahm Emanuel, the White House chief of staff. As angry as the president is at the news about A.I.G., which he learned Thursday, Mr. Emanuel said, “his main priority is getting the financial system stabilized, and he believes this is a big distraction in that effort.”

The House speaker, Nancy Pelosi, on Tuesday asked three committee chairmen, including Mr. Frank, to come up with legislation to recoup the bonus money, and suggested the House might pass a measure as early as this week.

But the reaction of another of the chairmen, Representative Charles B. Rangel of the tax-writing Ways and Means Committee, underscored the legal and political complexities facing Democrats as they scramble for a solution. Mr. Rangel, a Democrat from New York, objected to one of the most popular ideas being floated — a confiscatory income tax on the recipients. The tax code is not “a political weapon,” he told reporters.

A.I.G. has refused to identify the current and former employees on privacy grounds, including one who received $6.4 million, but Mr. Cuomo is seeking to obtain and publicize their names.

The employees took salaries of $1 in exchange for receiving the bonuses, which were supposed to keep them from leaving A.I.G., according to Mr. Cuomo’s office. That, he suggested, undercuts A.I.G.’s claims that it could not renegotiate the bonus contracts agreed to early in 2008, and that the payments were “retention” bonuses.

“The only justification they had for this was, well, we needed to keep these people, but there are 50 people who left anyway or who they decided they didn’t need to keep,” Mr. Cuomo said in an interview.

A spokeswoman for A.I.G., Christina Pretto, declined to confirm the number of people reported to have received retention bonuses before leaving the financial products unit. She said it was common knowledge that A.I.G. was eliminating jobs in that division.

Late Tuesday, Mr. Geithner and White House officials sent a letter to Congress seeking quick action on legislation to give the government more power to intervene and wind down companies like A.I.G., which are huge players in the financial system, but are not regulated the way banks are.

The administration had planned to seek such regulatory powers as part of a broad revamping of financial regulations, but it is expediting this piece in response to the A.I.G. uproar.

In the letter, Mr. Geithner confirmed that the government would subtract $165 million — the amount of the bonuses — from the latest $30 billion loan to A.I.G. that would bring the total loans to $200 billion, from the original $85 billion.

Mr. Geithner reiterated the Treasury position that lawyers inside and out of government had agreed that “it would be legally difficult to prevent these contractually mandated payments.”

That position was being questioned at the Capitol. Congressional Republicans, eager to implicate Democrats, initially blamed Senator Christopher J. Dodd, the Connecticut Democrat who heads the banking committee, for adding to the economic recovery package an amendment that cracked down on bonuses at companies getting bailout money, but that exempted bonuses protected by contracts, like A.I.G.’s.

Mr. Dodd, in turn, responded Tuesday with a statement saying that the exemption actually had been inserted at the insistence of Treasury during Congress’s final legislative negotiations.

While the administration has been mostly on the defensive, the competing expressions of outrage in Congress throughout Tuesday belied the fact that a few less-prominent Democrats had tried to draw attention to the A.I.G. retention bonuses since last November. Except for their condemnations last December, response has been sparse on A.I.G.’s disbursement of an initial $55 million in retention payments.

While House leaders were calling for immediate legislation to recoup payments, Senate Democrats sent a letter to Mr. Liddy demanding that A.I.G. renegotiate the employees’ compensation contracts and return the bonuses. The Senate majority leader, Harry Reid, and other Democratic leaders proposed new taxes, some as high as 91 percent, on the bonuses. But some of the A.I.G. employees are thought to be foreigners based in offices abroad, and not liable for United States taxes.

Congressional Republicans, despite the Bush administration’s role in setting the terms of the A.I.G. bailout six months ago, blamed the Obama administration for lax oversight. Senator Richard Shelby, a Republican of Alabama, seemed to hint that Mr. Geithner should resign.

“This is just another example of where he seems to be out of the loop,” Mr. Shelby said. “Treasury should have let the American people know about this."

David Axelrod, senior adviser to the president, dismissed such talk, citing the financial mess that Mr. Geithner had inherited. “He has been confronted with a situation and challenges that are unparalleled in modern history, and to put it all on his shoulders is not fair and not right,” Mr. Axelrod said. “He’s a brilliant and committed guy with a great deal of experience in this area, and we’re standing with him.”

Jackie Calmes reported from Washington, and Louise Story from New York. Edmund L. Andrews and David M. Herszenhorn contributed reporting from Washington.

[82Rigger]

I thought there were supposed to be spending plans submitted by these companies which had to be approved BEFORE any pay-outs were made.

If so, how did the government not know about these bonus payments?

Or did this apply only to the Auto Big Three?

[SuperScout]

The bonus provisions were inserted back into the bill at the insistence of Sen Chris Dodd, D-CT, who knows full well where all the other skeletons are buried. And the precious B.O. voted in favor the bill, so he's dirty as well, no surprise. During the campaign, B.O. got +$100k in donatins from AIG. Maybe he should send that back, too! The current CEO is ust going to be the whipping boy for all the self-serving, grandstanding people who getting face time on TV, extolling their "virtuous" behavior. Phookin' hypocrits all.

[39mto39g]

Makes little difference if any bonus provisions were inserted or not. The contracts were in place and were binding even if the US government bought the company, You buy the company, you also buy the debt and contracts as well. As a Goverment, our constitution prohibits interfearing with contracts.
What should have happened is that, when we the people decided to give the first installment, our numbers crunchers should have looked at the books they were about to buy. It's really not AIGs fault that we the people are stupid.

Ron

[82Rigger]

Chris Dodd, eh?

Dodd.

That name sounds familiar.

Thomas Dodd?

Connecticutt?

1968?

Gun Control bill?

[reconeil]

Apparently doesn't/didn't apply to: "Big Three Auto Workers", either.

Isn't SUPPOSEDLY broke GM giving 10 BILLION$ of obviously MY/YOUR/OUR "Bail-out" Monies
to UAW for covering all current & future liabilities Company promissed "Them",...actually one-helluva-BONUS from U.S. Taxpayer Funds? Sure-as-hell seems like A BIG BONUS to me.

We are smoothly and/or quite cooly being BIG TIME: "Waltzed-around".
Suckers wanting: "Change" got it,...and truly BIG TIME Big Brother-like; "Change".

Neil

[reconeil]

Still, you just gotta see the beauty of it all from a quite lordly Mt. Olympus or White-Wash, DC perspective.

Keep The Schnooks of: "We The (Schnooks)" busy with a BIG DIVERSIONARY Congressional Carnival over comparative: "Small potatoes" or "Chump-change" like lousy 143 MIL$ in; "Fat Cat" Bonuses,....and We Obedient American Subjects of The Realm will be DIVERTED from MUCH MORE IMPORTANTLY QUESTIONING: "Just where-in-the-hell did OUR 200 BILLIONS GO"???

Ethyl got it right folks and/or:,.........................................
"There's No Business Like Show Business,...dot-daah-dot-dot-dot-daaaah"!

Neil

[39mto39g]

You don't just pile a bunch of money into a company, any company, that is already failing.
If you going to "bail out" a company then there is ways to do it. I can't believe I can figure this out and US treasury, congress, and all the lawyer people can't.

You have the company file for bankruptcy, as soon as the paper is signed, then, and only then you give the bail out money. Why does this matter? The bankruptcy, null in voids all contracts that the company has, that includes unions and pension and vender and any other contract, effectively wipe the slate clean, so to speak. Now the company can have a business than can compete instead of just a pile of money that it gets nothing for, just pay contracts that are already there and not working.

Ron
Sorry no spell check here


Ron
Sorry no spell check here

[reconeil]

Re: "Sorry no spell check here",....just try what This; "Computer Dummy" usually does.

When posting on Patfiles & if having any doubts about some word, just hit your: "Start"
button & click-up Office Word or Word Perfect & type in word not sure of.

If same word gets red underlined, try to fix it.
If isn't so underlined, it's OK & can be used for posting, and makes you look like some
Spelling Bee Champion,...which I most certainly AM NOT.

Regardless, and in fairness to me, I've found that the more times I have so done corrected
myself the better my spelling in general has actually gotten.

Whatever, Ron & whether or not we ever get to meet at some Spelling Bee (or not) ,...
try it if possible and/or if your computer equipped for such?
I just did so with the word: "Equipped",...which checked-out A-OK.

Neil