Those AIG bonuses prove…
…that the law is an ass.
Is there no way for the Obama administration to stop huge amounts of taxpayer money from getting to the very executives responsible (or irresponsible) for making such lousy and self-serving decisions, and bringing us all to this sorry pass? The answer is: apparently not.
This is not just a shot at just the Obama administration, by the way. The bailouts were a bipartisan endeavor, begun—in a great hurry—by the Bush administration in concert with the Democratic-controlled Congress. Haste makes waste, as they say, and there seem to have been a paucity of restrictions on what the companies could actually do with that money.
At the time of the AIG bailout, the crisis was billed as one that had to be acted on immediately or the entire financial system would go down. I have my doubts about that, but who knows?
And who was willing to risk it and see? We don’t have an alternate reality in which to test what would have been the result of delay.
I’ll repeat the very wise words of author Milan Kundera on the impossibility of ever knowing the consequences of having done something different:
There is only one history of the Czechs…
In 1618, the Czech estates took courage and vented their ire on the emperor reigning in Vienna by pitching two of his high officials out of a window in the Prague Castle. Their defiance led to the Thirty Years War, which in turn led to the almost complete destruction of the Czech nation. Should the Czechs have shown more caution than courage? The answer may seem simple; it is not.
Three hundred and twenty years later, after the Munich Conference of 1938, the entire world decided to sacrifice the Czech’s country to Hitler. Should the Czechs have tried to stand up to a power eight times their size? In countrast to 1618, they opted for caution. Their capitulation led to the Second World War, which in turn led to the forfeit of their nation’s freedom for many decades or even centuries. What should they have done?
If Czech history could be repeated, we should of course find it desirable to check the other possibility each time and compare the results. Without such an experiment, all considerations of this kind remain a game of hypotheses”¦
The history of the Czechs will not be repeated, nor will the history of all of Europe. The history of the Czechs and of Europe are a pair of sketches from the pen of mankind’s fateful inexperience.
Not to mention the history of America, and of the world. “Mankind’s fateful inexperience.” I love it.
[NOTE: Here’s an explanation for why it might make sense to pay the price—apparently, these AIG hacks may be the only people who can unwind this mess. What a sad state of affairs.
Here’s a comment that’s pretty on-target:
Basically, $100 million is something like 0.1% of the money that’s tied up in these trades. We the people now owe 80% of AIG. Having new folks try to understand the deals and clumsily unwind them will cost us a lot more than 0.1% of their value, so it’s cheaper to just pay the bastards their money and have them do it.
I’m somewhat more attracted to an alternative where we enslave these people for six months and make them unwind the trades for nothing. But that’s neither legal nor feasible…]
[ADDENDUM: Evidence that the Left is far from happy about this state of affairs, as well. And Obama seems to be hearing it—or at least making a show of hearing it.]
[NOTE: My spam filter seems to be overactive today. Bear with me as I try to fix the problem.]
[UPDATE: There doesn’t seem to be any reason these comments aren’t going through properly. My best guess is that it is something about this particular post rather than a generalized problem. Keep trying to post comments, and I will re-post them if they fail to show up, because they are showing up in my spam filter. If the difficulty continues, I’ll have to make some sort of a more general change.]
perhaps we should have let the market run it’s course.
What do you think of Rush Limbaugh’s take on this?
The government should stay within it’s constitutional boundaries and not try to move us toward socialism.
Paulson was an idiot and Githner is an idiot. Geithner was in on structuring the initial bailout yet I hear nothing about why HE didn’t see this coming and address it in the AIG bailout package. I have a feeling these contracts were already signed or they (Paulson and Geithner) new they were going to be signed. If not – then they are bigger idiots. You are right Neo, the best of a bad situation is to pay these guys and let them unravel the mess and get the bad assets sold off.
This is what happens when we get the attitude that some companies are too big to fail. They are not (in fact we would not be going through anything worse than we are going through now) and neither is the government. In fact I have thought for the past 15 years (and the feeling is stronger now) that the government is too big to succeed.
In 1618, the Czech estates took courage and vented their ire on the emperor reigning in Vienna by pitching two of his high officials out of a window in the Prague Castle.
Yes! ‘The Prague Defenestration’….
There are contractual obligations to the execs of AIG. I read somewhere that IF they had taken AIG to bankruptcy, the contracts would have been renegotiated.
The Law of Unintended Consequences rises again to bit the unwary.
I think that:
1. Obama should keep his mouth shut on this. Why do we even care what the POTUS thinks?
2. The execs should be paid. They can then be sacked and all the attendant buyouts can apply but at least the libtards will be appeased.
3. If the contracts are not honored then the execs have the full faith of the court system for redress of their grievances.
What will it say about honor in this country should those contracts not be honored?
the spamminator thingie is now a hastle.
its almost as if they turn it on to prevent conversation on certain subjects by wasting your time on trying to be heard then giving up. When it suddenly starts doing this, it takes upwards of ten tries and splitting things up to get your words up.
Robohobo is almost right. #2 is wrong. Stiff ’em. Then #3 kicks in and lawyers are called in to make the case why said executives failed to perform, which is theater for all, and runs up the price tag on said executives attorneys. That’s the way it works in court. Said executives do have the right to defend themselves legally, at bigass cost, and public exposure.
for get it…
not wo rth tryi ng any more…
no di rty w ords, not even d ouble entend res
had to div ide words up rando mly yes terday to get thi ngs in..
[ma ybe we arent sup posed to men tion the germ an guy, or the chin ese guy, or that… or po int out that by arg uing about the bo nuses your giving permis sion to the t ax the ft.. ]
your figure out what word did it in the paragraph above!!! cause it wouldnt go in till i made nonsense out of it…
[I’m trying an experiment and see whether I can post the comments that are caught in my spam filter. This first one is from “Elise.”]
The ass in this situation is not the law.
I sat down and read Liddy’s letter to Geithner and the AIGFP Retention Plan. Among other things I discovered that Liddy took on AIG because Paulson asked him to and that Connecticut law controls the contracts and the Connecticut Wage Act treats very harshly any employer that does not pay employees what their contracts say they are owed.
Most riveting, though, was this little tidbit (the retention bonuses were contracted for in Q1 2008):
We have been advised that the bonus provisions of the American Recovery and Reinvestment Act of 2009 prohibiting bonuses specifically exclude bonuses paid pursuant to pre-February 11, 2009 employment contracts.
In other words, it’s not bad enough that both the Bush and the Obama economic teams *and* all the now-outraged financial experts in Congress failed to deal with this issue before repeatedly handing AIG tons of money. Worse yet, the ARRA (aka, the Stimulus bill) explicitly kept hands off bonuses contracted in the past. (Legally there may not have been any choice. I’m not sure such restrictions could have been retroactive.)
This means that either everyone in Washington was so ignorant of the world they were bailing out that they didn’t even realize there were non-performance bonuses OR they understood quite clearly and were so dim it never occurred to them that taxpayers would have a cow when retention bonuses kicked in. Either way they look like asses.
I can only say again what I’ve said elsewhere: the politicians are scrambling to cover up their own shortsightedness by screaming at AIG. And when we start trying to circumvent the law because it doesn’t give us the outcome we want, we start down a dangerous path.
(Incidentally, all kinds of numbers are getting tossed around. As far as I can tell the numbers for AIGFP are:
For 2008, AIGFP was committed to $313M in retention bonuses: $55M was paid in December; $93M was at-risk based on performance and has obviously been forfeited; $165M was paid on 3/15.
For 2009, AIGFP is committed to $327 in retention bonuses: $97M is at-risk based on performance and will be forfeited; AIG hopes to reduce the remaining $230M by 30% leaving $161M.
In addition, AIGFP is committed to “contractual arrangements outside of the retention plan”: $6M in 2008 and $7.5M in 2009. I have no idea what these are.)
Interesting that it went through when I tried to post it. Not sure why this should be, but I’ll try to post other comments that are trapped in the filter.
[This one is from “Jimmy J.”]
This is one of those things that arises when there is not a lot of understanding about what is actually going on. Because AIG’s common stock is at such low values, it turns out that the Treasury’s investment in preferred stock makes it a big stockholder. Normally stockholders don’t have much say in the day to day operations of a company, but in this case it’s probably appropriate for the government to question the bonuses because it is a big stakeholder.
That said, it may well turn out that these bonuses are appropriate. They are probably being paid out to salesmen who excelled in selling insurance, which is what AIG does. I doubt if the standard for paying the bonuses had anything to do with the overall performance of the company. I may be wrong. We await the details.
It is too bad that so many people seem to think the financial company managements have failed or are crooks. I can give a case in point. For many years I owned stock in a small financial company, Thornburg Mortgage Associates (TMA). They were a solid company that made mortgages in the jumbo mortgage sector and paid a nice dividend to their investors. When the credit markets froze up they were unable to access money to make more mortgages. They were forced to sell some of their mortgage portfolio to continue to operate and make new mortages. The shorts attacked their common stock and drove it from $28/share to $2/share. Then they were unable to raise new capital as no one would buy either their common or debt. Because of the fear sweeping the market, they could not sell any of their mortgages even though their portfolio was sound and conservative. They were forced to declare bankruptcy and the stock now trades at $0.45/share. Needless to say I lost some money on my investment and because of that I have tried to dig into this and understand it as well as possible. Thornburg did nothing wrong, they didn’t even own any MBSs or other derivatives. Like most financial company executives, Garrett Thornburg, the CEO of Thornburg was blindsided by the credit crunch. He did nothing wrong and believed he was managing in a conservative fashion, but they’re now in bankruptcy and trying to rebuild. There are other small players that have declared bankruptcy and others that are struggling, but we don’t hear about them.
The reliquifying of the big players was, IMO, necessary to prevent a meltdown. The investments in preferred stock that the Treasuty made have bought some time but the “toxic” assets must be dealt with before things can get back to normal. The unfortunate thing is that this reliquification process through investments in preferred shares has been labeled a “bailout,” which is a complete misnomer.
[This one is from “Artfldgr”]
dads family is latvian (stalin, hitler, stalin)
moms family is Czech, and a bunch of others in the area.. (hitler, stalin)
wifes family is chinese and indonesian
(mao, suharto)
cousins husband is cuban (Castro)
batting a 1000…
is it any wonder i know history?
as far as AIG… well, you wouldnt want them to leave and work someplace else that pays better for their skills and has no illusions about it (think dubai, hong kong and quite a number of other places).
i am not sure how to take the “sad state of affairs comment”. that its ok that the bank get the cash but they shouldnt get the bonus? that the whole bailout thing shouldnt have happened? that carter was elected? that eve gave man the apple? that the snake had some interesting neurolinguistic games going on?
anyway…
value is not set by a third party…
value is not a fixed property, and only exists at the point of a deal.
what we ALL are trying to do here is determine value, when not one of us are the people who have to determine it! all tiny little central planners thinking the same as the leader and zealously dicussing what nefarious control thing should the leader have used this time. (in general, not necessarily this thread).
the banks and their people have the right to do with their money (a gift given is not yours any more, or will you accept the sweater and the control of a friend that tells you what parties your allowed to wear it at and wearing terms?), as they please. if they think that the top guy should get a bonus, then give him one… obviously they are more affraid of hiring 10 top guys and using the money that way…
a venture capitalists said to me once that the reason they get so much, is that you dont want a clerk from the DMV to run your stuff and take care of your assets while your not looking. do you really want to let a manufactured crisis (made like a chess play, indirectly and from a long period of time? after all, both russian and chinese planners are many of the same people who were fighting from wwii onwards.. they have continuity of overlapping lifetimes)
if one had reservations as to that money being wasted or mismanaged, the correct thing to do was to withold it and leave it in our own pockets.
like a den of theives the people are sitting around divving up the largess from the largest theft in history, and we and they were the victims!!!
at what point do you forget the original crime and just discuss any point endlessly that comes across your bow regardless of other things previously discussed? that a prior state has no bearing on the next state is quite odd. no?
i dont really care what they did with the stolen money, i just want my future back…
arguing about AIG is just s__k__g you in to a conversation you shouldnt even have in the first place. and its such a stupid argument… since by accepting the argument you accept their theft of your money as justified.
now that we have stolen this car, lets all decide where we will drive it and who gets to use it on which days to run errands…
huh?
Maybe it’s just you, Art….the machines are out to get you, too.
[This one’s from “Baklava”]
My take (and I’m prepared to hear it good),
is that these are two separate areas of the company (there are many parts).
It’s like this for example:
Let’s say Ford has a contract with salesman that if any one sales person sells 100 cars in a month that they get a $100,000 bonus.
Then we learn that Ford’s credit division has been hit hard with people defaulting on their loans and is crippled and is crippling Ford.
Yes, Ford needs to continue selling cars and needs to continue incentive programs and honor it’s contracts.
No, the government should not have the right to break those contracts just because it bails out Ford (due to it being crippled from it’s credit division).
The government should break the contracts with the UAW also. But it won’t.
THIS IS CLASS WARFARE. It’d diversionary. It’s only .1% of the bailout and it ISN’T the problem. THe sales people are the money makers of the operation.
Yes, it LOOKS bad and LOOKS insensitive but with everything Obama it is bad solutions (substance).
[Another from “Jimmy J.”]
IMHO, people get mixed up about what is really going on. The money invested in AIG by the Treasury was just that – an investment. Normally investors, unless they own a majority of the company, do not have much say in day to day management of the company. In this case it turns out that because the common stcok of AIG has dropped to such low values, the government actually has a large position in the company. As such, it would be within the realm of normal business for them to question management’s payment of bonuses. They have done just that.
All that said, it may well turn out that these bonuses are appropriate in size and for excellent performance. Many seem to think these are bonuses to executives, but are more likely being paid to salesmen who exceeded expectations in selling insurance policies, which is the business AIG is in. The bonuses probably have nothing to do with awards for the company’s overall performance. I may be wrong, but that’s the way I see it.
Speaking of that, anyone who has been following the financial meltdown recognizes that most of these companies were blindsided by the freeze up of the credit markets. It was not poor management or criminal activity that led to these companies balance sheet meltdowns. It was the unintended consequence of the mark to market rule and the rumors that all mortgage backed securities (MBSs) were chuck full of sub-prime and alt-A mortgages which led to forced write downs and a complete loss of confidence in all financial company balance sheets.
I can give a case in point. For many years I owned stock in a small financial company, Thornburg Mortgage Company (TMA). This was a company that made mortgages and also managed mutual funds. They were careful about the mortgages they wrote and for years had produced a nice dividend for investors. They did have to borrow money occasonally against their portfolio of mortgages to continue to write more mortgages. They had a sterling credit rating and a solid balance sheet. However, when the credit markets froze up they were unable to borrow money and were forced to sell many of their mortgages to continue to operate. They managed to limp along for a while, but the shorts attacked their common stock and drove it down from $28/share to $2/share. Now they were undercapitalized and even though their mortgage portfolio was sound, could not sell their mortgages to raise additional capital. Fear had taken over the market. They had to file for bankruptcy and the stock now trades for around $0.45/share. They never owned any MBSs, did nothing wrong, and yet were ruined by the credit crunch. Needless to say I lost some money on that stock so I have been aware of what was happening and have done my best to understand what happened and why.
I understand that people think the government is bailing out Wall Street fat cats, but, as I see it, the investments into the huge financial companies (the TARP) were necessary to keep them liquid until a way could be found to deal with the MBS/CDO problem. Admittedly, some of the company managements have been tone deaf. Normally they manage the companies without much interference or criticism from shareholders. These companies like AIG, CITI, BofA, and Morgan Stanley now have the shareholders from hell. They are paying attention to anything that smacks of over spending or overcompensation and raising a ruckus if they see something they don’t like.
[This one is from “Sal”]
I don’t have a problem with the bonuses. Despite the outrage of the press, many of these bonuses are part of salaries that people in the low and mid-level ranks at AIG count on based on their own sales figures. So, if a mid-level manager at AIG does what he is supposed to do and meets his sales targets, and was promised a bonus a year ago if he met those sales targets, why should he not get a bonus? It is easy to rail against bonuses from companies that received bailout money, but if a company is supposed to get back on its feet, shouldn’t it be able to operate as a normal company does?
The bailout money which was given to AIG (and shouldn’t have been, in my view) was given with no strings attached. Why is it fair to suddenly attach strings to money already received? True Free Market Conservatives should speak out against the bailout, not against AIG for giving out bonuses. AIG is simply operating as a normal company, they applied for money and were given it by the Supreme Knowers of All Knowledge in Washington, who said AIG was too big to fail. True free market Conservatives would point out that this is why bailout money should not have been given in the first place, not that the bonuses of the rank-and-file should be rescinded ex post facto.
LeeMaybe it’s just you, Art….the machines are out to get you, too.
Stop making it personal…
obviously the spam filter was filled with other peoples posts…
so given your game of logic (illogic actually)
you tied this to the paranoia you believe i have
so that now the spam filter is after me…
ah… but the spam filther DID filter out me, and many others.
that would make me not paranoid
which in your own broken crappy logic, would make me right the other place too, and you wrong on paranoia.
next.. i trew wit youse…
Sometimes Art, a joke is just a joke. Maybe if you weren’t so paranoid, taking everything so “personally”, you might see that once in a while. Why am I having no troubles? Maybe the machines really do have it in for you, messing up other postings as maskirovka.
But the fact that the execs are owed the money because of employment contracts does not change. That PEBO should tell the US public that he condones NOT following US contract law in this case is beyond the pale. Maybe even illegal. I’ll leave that to one of you legal eagles.
The fact remains that they are owed the money contractually. [Period]
That Geithner or whoever did not find out about the contracts before the bailout is not good. The alternative answers about SecTreas Geithner are bad and worse – he is either incompetent or criminal. Neo says incompetent. I vote for the mostly likely – criminal.
[This one’s from “Elise.”]
I don’t know what the bonus numbers represent for parts of AIG outside of Financial Products (AIGFP) but the $165M for employees of AIGFP are NOT sales bonuses: they’re retention bonuses. I think of them as deferred salary. AIG hires John Smith to get a particular type of business up and running. AIG is willing to pay Smith $2M a year but they don’t want him to get the business half set up and then quit to go work for someone else. So Smith gets $1M the usual way – monthly pay checks – but only gets the other $1M is he’s still working for AIG at the end of the year.
This is apparently pretty common.
Who cares? Chapter 11, Chapter 11, Chapter 11, until the “executive” class of the world of “big business” grows up…. Tough love would have solved a lot of these problems a long time ago.
It seems to me that if it can be shown that the employee in question willfully or wantonly acted in a way that brought the failure about, the contract could be ‘broken’ on the grounds that was already broken in fact by the employee. But this requires a lengthy process in the courts, and if the defense cost the employee and if the suit were ultimately found to be without substantial merit, the employee might have grounds to sue to recover the costs of irresponsible prosecution. Labor law favors the employee in most cases.
Of course, by that time it will be twenty years down the road, millions of taxpayers dollars will have been spent, courts will have been tied up, lawyers enriched, and the business climate will have absorbed just a little more poison.
This financial debackle remind me a humor story of an Russian author about card players so overjoyed by a gamble that when some of them run out of cash they refused to quit the game on such a trivial technicality and agree to take notes. But with this restriction removed, they began to double the stakes and at the dawn they wrote each other notes on billions roubles. This story had a happy end: at some point, they began to laugh, burned all IOY and, happy with a good night spent, went by theirs homes.
Sometimes Art, a joke is just a joke. Maybe if you weren’t so paranoid, taking everything so “personally”, you might see that once in a while. Why am I having no troubles? Maybe the machines really do have it in for you, messing up other postings as maskirovka.
you know lee…
i ahve had a life time of people like you that dont realize that their “jokes” have a way of moving OTHERS to changing their behaivor torwards me.
your taking the refuge of a sick sadistic sociopath withot the balls to stand up for the games they play.
i am not so stupid to think that you can just joke to me after picking on me and its would create comradery on a dime. thats sociopathic posing and tricking – even if you dont know it. .. or maybe narcisism.
your a sad incomplete person who gets their fulfillment from hurting others because you cant actually do what they do. a flaw in your personality causes you to never have the perserverence or ability, or drive to actually accomplish. so you just think that people with exceptional ability are just better scammers than you are…
plink off gadfly… I dont become freinds with people who shoot at me first then find out i can shoot faster, farther, and more accurately than they can, then decide to become freinds.
those kinds of people are just backstabbers. and those who have these kinds fo thought patters tend to not have good freinds, tend to not have decent lives, tend to spoil the lives of others, and tend ot have bad relationships with family who dont want to tolerate their crap and excuses.
they tend to sit on the sidelines and never quite figure out that their own behavior is the cause of most of their miseries… yes others can be the cause of misery… but usually others are just obsticals to those that really try, and excuses to those who wish to get the pitty of those who give it to those who try (without actually trying).
you have attacked me in more than one thread, this same ‘joke’ is running in two threads now..
you saw my reaction to them. most who are not morons would realize its not funny. but you have this bizarro imagination in which you sit behind your keyboard and feel that you are the savior of all those that feel like you but only you have the balls to open your mouth.
guess, waht. you are an army of one, a legend in your own mind, your own worst enemy, a waste of my and others time as you waste ours by wanting us to meet your peer review process… while you act like a smegma sipping super putz… that can only spit smutz..
i have seen your type lots of times. if this was a pool hall i would have cleaned you out, as you would keep trying till you beat me… and then thought that beating me once, woudl man something after losing so many times.
your like an narcisist ex girlfriend i had who would do the exact opposite of what i said as a rule… when asked, she said “i figure that when yoru wrong, then i will finally be right”..
to which i said… “what happens when i keep my mouth shut when i am unsure and dont know, and only say what i clearly know?”
misery is the answer…
so i have had a lot of experience with people whose egoe’s would LOVE to be the one who takes pictures, or sings, or performs, or is smart and can solve the worlds problems, and they imagine some form of adulation from it. narcisistic, and sociopathic at times…
they make life miserable for thos with abilities as they hasve taken it upon themselves to expose all the fakirs… as if marx was right and talent an illusion.
they cant compete with them on any real level, so they basically compete by trying to lower them, harrass them, hound them, tease them, etc… and all under the disarming guise of humor, so that they will not retaliate..
well screw you lee…
i learned really early (like when i was 4) about people like you… which is why i am signed to a top photography agency in ny, do software engineering by day, medical equipment design by night… i compose music and have performed at carnegie hall and lincoln center (orchestra), and my cousin was top of his class at juliard adn performed at lincoln center too… i have met presidents, and other famous people, and even though i am ont wealthy or famous (dont want to be at all!!!!), i know famous authors and others who i call freinds.
but lee… you have no imagination that people with abilities would actually go on the net to enjoy others company… or even that there are such people.
your empty inside, and you want me to be too…
but making me empty inside will not fill you up…
and i dont want to live the hell you make for you.
misery loves company, find someone else to share your own tiny private hell..
and it seems that a lot of other long posts get trapped with the spam machine… so i am not the only long poster. i am just the one that gets through and doesnt give up on himself.
Lee I have an idea I think you will like, why not get your own blog and fill it with personal attacks? Neostalker.com or something?
http://www.washingtonpost.com/wp-dyn/content/article/2009/03/16/AR2009031602961_pf.html 🙁
Amazing AIG story.
My take. The president is using his BULLY pulpit for the wrong purposes.
Let the people BELOW him do their jobs. Or are they incapable.
This looks like responsible reporting by the Washington Post. It should be read out loud by Obama to the people. Like “My Pet Goat”.
Obama’s moves in this debacle have been atrocious.
Gem after Gem on AiG
http://www.foxbusiness.com/story/markets/industries/finance/dodd-cracks-aig—time/
This time Chris Dodd’s hands are soooo dirty. 🙁
Obama and Dodd, Obama and Dodd, Obama and Dodd.
Why do I say this? It seems that Dodd and Obama were large recipients from many players like Fannie, Freddie and now AIG.
The two largest recipients of any politicians.
And we just elected Obama – if only the people knew !!! :O
you couldnt make a believable plot from all this!!!
Obama’s Stimulus Bill Explicitly Grants AIG the Legal Right to Give Unlimited Bonuses
“(iii) The prohibition required under clause (i) shall not be construed to prohibit any bonus payment required to be paid pursuant to a writte employment contract executed on or before February 11, 2009, as such valid employment contracts are determined by the Secretary or the designee of the Secretary.”
so it looks real crappy that he is against himself!!!!
Obama was heard in private saying:
“Petard, whats a F&N petard? and how can i hoist my own when i dont even know what it is?!!??!?!!!!!”
for those challenged:
hoist by or with one’s own petard, hurt, ruined, or destroyed by the very device or plot one had intended for another.
as a noun:
1. an explosive device formerly used in warfare to blow in a door or gate, form a breach in a wall, etc.
2. a kind of firecracker.
3. (initial capital letter) Also called Flying Dustbin. a British spigot mortar of World War II that fired a 40-pound (18 kg) finned bomb, designed to destroy pillboxes and other concrete obstacles.
and the whole reason i bothered..
Origin:
1590—1600;
using the last, it may mean, gassed by your own gas!!! 🙂
the reason its a petard is that they thought there would be more republicans and they would sign it too!!! they didnt, and so the clown has pie on his own face.
Stiff ‘em.
Wrong answer. This is contract law, which is pretty much cut & dried. There are two approaches to attacking a contract: is the contract valid, and was the contract fullfilled? since they’re getting bonuses, I would have to guess that the second condition is true.
As for the first condition? odds are, it is a valid contract written in standard boilerplate that have been examined by the courts and found to be legal and correct.
Sure, AIG could “void” the contracts, but all that’ll do is lower morale, piss of their employees, and get them sued for breach of contract.
Which they’ll lose. So not only will they have pissed-off employees with lowered morale, they’ll have spent money on their lawyers to unsucessfully void contracts, and be on the hook for the plaintiffs lawyers as well.
Oh, and costs & so on.
So litigation + expenditures and so will end up costing AIG in excess of $200 million when the dust finally settles.
Face. Nose. Cut. Off. Spite.
Not only that, but Chris Dodd stuck in language in Porkulus that says something along the lines of “contracts approved by $DATE are OK with us”, with $DATE being something like 11 Feb 2009.
So litigation + expenditures
Errr…So bonuses + litigation + expenditures. The original $165 million, + costs of litigation = some number greater than $165 million. I’m guessing $200 million, but it could be less if action happens quickly, or much more if it drags out for several years, and the employees ask for interest to accrue.
In some ways I wish that my comments, which were an original followed by a second attempt to say the same thing, had been eaten by the spam filter. I now know a lot more about the bonuses and recognize that they were paid to the people who created much of AIG’s derivatives exposure. Since that derivatives exposure is the primary problem they have, these guys/gals were primarily responsible for the AIG difficulties. Paying them extra for putting their employer in deep doo doo does seem contrary to all common sense. On the other hand the amount is small compared to the legal costs of reneging on the contracts. Also, they may believe that only these employees know enough about the CDSs, and other weird derivatives to help them eventually steer into calmer waters.
I’m glad to see that others see the contradiction of Obama and others’ positions. He can’t decide if he wants to be a friend to business or a leader in the class warfare platoon.
All this is, however, a distraction from the real important stuff which is that FASB is considering allowing the financial companies to value their securitized mortgages and other debts on the basis of the income being received rather than some phantom market price. They will make their decision on April 2nd. Should this occur, I predict that much of the uncertainty and doubt about financial balance sheets will be relieved. It might just lead to (gasp) a bottom in the stock market.
Stay tuned.
“i am not so stupid to think that you can just joke to me after picking on me and its would create comradery on a dime.”
Wasn’t trying to be your friend, Artie, ol’ boy. A joke at your expense is still a joke. Thought someone of your infinite intelligence would be able to tell the difference.
I don’t come to a weblog to “make friends” with anyone. Especially nut cases like you. That’s what work and bars and parties are for. There may be some that like your postings, but to assume they are your friends just shows how little you actually have any quality interaction with other human beings.
Maybe you should stop posting so much on a therapist’s blog and go see an actual therapist. That paranoia is really cutting into your social life, and it shows.
Knock it off, Lee.
Art has things to say, and he’s saying them. If you don’t want to read them, skip over and stick to the debate. It’s YOU who are the distraction, not Art.
There are All Kinds of Minds in this world, and we’re all a lot less normal than you’d think. So, a little kindness and tolerance, please.