Keep it or give it back?

[obxeyeguy]

Yes, this is about those AIG bonuses. As I understand it, these bonuses were written in their employment contracts months ago, and with some government knowledge. Who knew what when is debatable.

Very simply, should the government be allowed to void these contracts and take the money back??

[Judy Canty]

Absolutely!

[fjpod]

My question is this...what company...no what responsible company, would enter into a contract that says "you will get a bonus if you make the company lose money"? What should really happen is the company should be forced to declare Chapter 11, then get the government money (i.e. our money), then renegotiate the contracts.

[Now I See]

I think voiding the contracts sounds like a "do-over"...sounds like when I was a kid, and we were playing a game and someone screwed up then we could call a "do-over" and get a second chance. Voiding the contracts after the government decides that they probably weren't the "best" written contracts, doesn't seem reasonable to me. These contracts should have been read and re-read then read again before being acted upon. Now, it's done.

[Judy Canty]

According to my Mom, the local newspaper in her hometown in Western PA would publish the names of those who bounced checks.

I think that since we taxpayers now own most of the company, we should have a published list of who received bonuses and how much.

[fjpod]

I understand that "a contract is a contract", but who makes a contract that says we are going to give you millions of dollars even if the company goes bankrupt? The recipient of such funds should accept the risk that if they are going to get something, even if they literally bankrupt the company, then the company should go into bankruptcy and their contract becomes null and void. We aren't negating their contract. Their actions have negated the contract. That's what bankruptcy and Chapter 11 is all about. Chapter 11 is a legal way for a company that has run out of money to have all their creditors, and in this case, people that are owed money contactually, go on a waiting list until a bankruptcy judge decides who will get what.

Just because a contract is written and signed doesn't mean it can hold up in all situations. If you and I had a contract that said "I'm going to take a one hundred thousand dollars from you unless you give me one million dollars"...it wouldn't hold up, would it?

Now, people have negative feelings about going into bankruptcy...it'll upset the markets...it will upset foreign investors...wall street...Americans will lose jobs, but that's what's supposed to happen. Let them go Chapter 11 and reorganize. Let the risky investors and contractors take their lumps.

[Scott]

Why don't we ask Mr Dodd to pay back the money? This man is amazing, he is on national tv(cnn) and denies that he put the clause in the bill, yet less than 24 hours later he admitts that he was the one who added the bonus clause, not to mention the sweethart deal he got from CountryWide on is mortage. There should be outrage and demands that this man resign he position, he is a liar!

[Leo Hadley Jr]

Did anyone watch the new CEO in front of congress yesterday???

I was outraged like everyone else but now I understand. They are not really bonuses. They are retention bonuses. They need to keep these key employess around for another year to scale down and unwind the mess. These people are soiled with the AIG name and dont even want to do be associated with AIG. These retention bonuses keep them employed to do what they need to do. The only other option is to lose all the employees and uncontrollably collapse costing us billions.

It actually makes a lot of sense.

[bob_f_aboc]

then the company should go into bankruptcy and their contract becomes null and void. We aren't negating their contract. Their actions have negated the contract. That's what bankruptcy and Chapter 11 is all about. Chapter 11 is a legal way for a company that has run out of money to have all their creditors, and in this case, people that are owed money contactually, go on a waiting list until a bankruptcy judge decides who will get what.

This would be great! But the government said that AIG is 'too big to fail'!

Once the government handed over the money, they lost the right to restrict it.

Leo, I agree with you. Does anyone really think these mid-level execs want to be associated with AIG? They are trying to fix in 6 months what took years and years to screw up.

Cut 'em some slack and let them sort out the mess. If they can't do it, then penalize them.

[HarryChiling]

Contracts are not concrete and to be binding they need to have an exchange of consideration. Seems like AIG got nothing but headaches whiel the employees are getting fat wallets, correct me if I am wrong but nothing of value was exchanged by the employees therefore AIG could if they wanted to void the contracts, I suspect they won't and not because of the contracts, but because it was supposed to work out this way. Screw you, screw me, give me what's mine is an attitude that's ingrained in the leadership.

[Jubilee]

While I have some concerns over the bonuses, what I didn't realize till I read this article http://www.slate.com/id/2213942/ is that in many ways the other big financial companies are double dipping into federal funds.

So you have a company like Goldman Sachs who also was "too big" to fail. The fed gives it money to help keep it afloat. Then the fed also gives money to AIG who then gives it to Goldman Sachs as well to come through on its contracts with them.. and Sachs now is receiving federal money left and right. The question I have, along with Eliot Spitzer is "Did the fed realize this?" and if so...Why is it that Goldman Sachs then has to take no penalities for using such risky investment vehicles?

Everybody is rushing to condemn AIG's bonuses, but this simple scandal is obscuring the real disgrace at the insurance giant: Why are AIG's counterparties getting paid back in full, to the tune of tens of billions of taxpayer dollars?

For the answer to this question, we need to go back to the very first decision to bail out AIG, made, we are told, by then-Treasury Secretary Henry Paulson, then-New York Fed official Timothy Geithner, Goldman Sachs CEO Lloyd Blankfein, and Fed Chairman Ben Bernanke last fall. Post-Lehman's collapse, they feared a systemic failure could be triggered by AIG's inability to pay the counterparties to all the sophisticated instruments AIG had sold. And who were AIG's trading partners? No shock here: Goldman, Bank of America, Merrill Lynch, UBS, JPMorgan Chase, Morgan Stanley, Deutsche Bank, Barclays, and on it goes. So now we know for sure what we already surmised: The AIG bailout has been a way to hide an enormous second round of cash to the same group that had received TARP money already.

It all appears, once again, to be the same insiders protecting themselves against sharing the pain and risk of their own bad adventure. The payments to AIG's counterparties are justified with an appeal to the sanctity of contract. If AIG's contracts turned out to be shaky, the theory goes, then the whole edifice of the financial system would collapse. ....

see the link above for rest of article

[bob_f_aboc]

And now the ultimate case of, "OOOOPPPSS! We didn't think they would do that!"

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

90% tax on bonuses retroactive to Dec 31 for any employee of the bailed out companies making family income of $250K or more.

Just remember they can do it to you too!

[optigrrl]

I don't understand this "too big to fail" clause. Even though I am not perpetuating the motion that the thousands of innocent employees should take the fall for the ignoramus decisions of a few, I still think that letting the company collapse rather than adversely affect taxpayers nationwide would send a message to all of the greedy ilk that make up the "Masters of the Universe" financial geniuses that brought the country to its present economic condition.

[Pete Hanlin]

Instituting a retroactive "punishment tax" would be a horrible case of populist reactivism, because it would be a diversion from the real work that needs done. Its Congress saying "Hey, look how tough we are being on 'those people' and the spending of your money!"

Meanwhile, the current budget is trillions of dollars in the red.

Cancel the ill-conceived stimulus package, let the recession run it's course, and let the economy get on with its cycles.