Tuesday, March 17, 2009

Feds Knew of AIG Bonus Contracts Year Ago

Feds knew of bonus contracts for AIG execs, employees, a year ago! It was no secret! Locked in. But legislators in Congress were so quick to do something before the election of 2008, they of course rushed through the bailout of billions for AIG. Now that the bonus contracts are public, the outcry from legislators is frenzied.

Sen. Grassley called for nothing less than Japanese style resignation, or suicide!

Several lawmakers making the rounds are calling for voluntary return of the bonuses, or they will tax the bonuses at 100 percent!

The special-tax idea was first floated Monday by Sen. Chris Dodd, chairman of the Committee on Banking, Housing and Urban Affairs.

"We have a right to tax," the Connecticut Democrat told CNN. "You could write a tax provision that's narrowly crafted only to the people receiving bonuses."


AIG Bonus Checks May Be Taxed At Up to 100%, Says Sen. Chuck Schumer
Posted March 17, 2009

...Democratic Sen. Chris Dodd, chairman of the Senate banking committee, demanded a full briefing from the Federal Reserve and the Treasury on why clauses weren't attached to the four various AIG bailouts to halt bonuses.

"Why wasn't the Fed putting conditionality four different times they provided resources to AIG?" Dodd asked.

"We need to find out exactly who they are and exactly how many more may be coming along."

Dodd included a clause in the $787 billion stimulus package - different from the TARP bank bailout and the AIG handouts - that allowed payment of corporate bonuses agreed to before Feb. 11.


Has the world gone mad?

Oops, better not claim a conspiracy? The legislators/feds/Treasury Dept. all knew of the bonuses a year back, if they didn't they should've asked before endorsing or voting on the bailout.

Meanwhile, the man and woman on the street are seething with rage. But is it misplaced? Pretend plastic pitchforks in hand, should they not storm the Congress?

When did current Treas. head Geitner learn of the bonuses?

Net the Truth Online

AIG bonus millionaires have left the company
Eleven AIG workers who received retention bonuses of $1 million or more have already left the company


Attorneys working for the Fed had been examining the matter for months and determined that the retention payments couldn't be touched because AIG would face costly lawsuits and be subject to penalties from states and foreign governments. Administration officials said over the weekend that they agreed with that assessment.

AIG disclosed its retention-payment program more than a year ago, and the amount of the bonuses -- more than $400 million for Financial Products alone -- had been widely reported. But as the payments were coming due in recent days, the White House began to express its indignation.

Pressure on the 370-person Financial Products unit, based primarily in Connecticut and London, grew even more intense yesterday when New York Attorney General Andrew M. Cuomo threatened to issue subpoenas if the company failed to provide details about recipients of the retention payments.

The payments represent only the most contentious of a larger group of bonuses being paid throughout AIG. The company's top seven officials, including chief executive Edward M. Liddy, agreed in November to forgo bonuses through this year.

After a Wednesday call between Liddy and Treasury Secretary Timothy F. Geithner, AIG agreed to restructure payments for the next 43 highest-ranking officers at the company, who are to receive half of their bonuses -- which total $9.6 million -- immediately, one-quarter July 15 and the rest Sept. 15. The last two payments would depend on whether the company makes progress in restructuring its business and paying back taxpayers. In addition, the company is set to pay another $600 million in retention awards to about 4,700 people throughout its global insurance units.

But each dollar remains in question after the president's reprimand yesterday and the deluge of rage from legislators and the American public. Government leaders already say they plan to recoup some of the bonus and retention pay while restructuring the company. In addition, administration officials said that the Treasury is planning to try to recover some of the bonus money by adding provisions to the additional $30 billion it gave AIG access to earlier this month.

The payment plan had been no secret.

Beginning in the first quarter of 2008, AIG disclosed the plan to offer retention awards at Financial Products. The unit had already begun to hemorrhage money, a problem that would later grow exponentially. The unit's executives, fearing they might lose valuable employees in the tumultuous months to come, successfully negotiated more than $400 million for their workers, to be paid this month and again next year.

At the Federal Reserve Bank of New York, which has directly overseen AIG since its federal takeover in September, officials have studied the possibility of rescinding or delaying the bonuses. They even brought in outside lawyers for advice. The conclusion: If the bonuses weren't paid, the AIG staffers would be able to sue the company and probably would win, not just what they were owed but also punitive damages that would make the ultimate cost perhaps two to three times as high as the bonuses themselves.

Moreover, Fed officials also hope to keep current employees with the company. The senior executives whose decisions caused the company's collapse are long gone. Most of those left behind are trying to unwind complicated derivative contracts. Completing that process correctly is essential to preserving as much value as possible for taxpayers, officials at both the government and AIG have argued. If it is mishandled, it could expose taxpayers to billions of dollars in additional losses.


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