This is why the Republicans were wary of paying just $14 billion to the Big 3: the bottomless pit of funding that may emerge. Big 3 aside, American International Group Inc. (AIG) has been bad on the taxpayer's dime.
AIG has received a $153 billion in government bailout monies (so far) and tallied over $60 billion in capital losses, but cut just 500 jobs or 0.8% of its work force (from Bloomberg, as of Nov. 21, 2008). That looks a little fishy when compared to UBS AG, who has $49 billion in capital losses and has slashed a massive 10.8% of its workforce.
And now AIG is paying bonuses and award monies using part of the $153 billion. AIG is bad and continues to scoff at the government's taxpayer's 80% ownership stake. From the Washington Post (via Bloomberg):
The bonuses equal one year's salary, and employees were ordered to keep them secret, Bloomberg said.
AIG confirmed the bonuses to Bloomberg.
Retention bonus payments are common in troubled and reorganizing companies as a way to hold onto executives familiar with the companies's operations. Enron paid retention bonuses, for instance.
Except in AIG's case, the bonuses may be coming out of taxpayer money.AIG has already been blasted for giving bonuses to 168 executives, with some getting as much as $4 million, AIG chief executive Edward Liddy told Congress last week.
Prior to that, AIG paid $440,000 for 70 top AIG contractors to spend a week at a California luxury resort -- days after the company got its first $85 billion in taxpayer money.
In late November, responding to bad p.r., AIG said that Liddy would get $1 in salary through next year, salaries would be frozen and seven top executives would not get 2008 bonuses.
This doesn't make sense - how can a firm that is 80% owned by the government run such a scam right under the public's nose? The insurance industry is likely to slash jobs going forward - the Fed can't possibly support them all (sarcasm). It will be interesting to see by how much or even when the government intervenes to downsize AIG because the job loss has been slight at best.
This is becoming increasingly clear: only the
Posts
3 comments:
Rebecca:
Re: AIG in a greater context, and to tie in some points I have already made on the Neo-Con bumbling in this nation, and how that affects the Housing Market, the Globe and Mail run an 'investigation': (the authors must have loved that, obviously a concoction of the editor, as I've made the point more than a few times in this blog alone)
[How high-risk mortgages crept north
The untold story of how elements of the first Conservative budget in 2006 encouraged big U.S. players such as AIG to make a push into Canada, creating our version of subprime mortgages]
http://www.theglobeandmail.com/servlet/story/RTGAM.20081212.wmortgage13/BNStory/Front/home
It has a record number of reader comments, btw, 854 and counting at this time.
And people think the Illinois governor is a crook!! We have been scammed by most parts of our government since this whole debacle started years ago. I say "most" only because there has to be at least one honest part somewhere even though it is hard to find. What makes us think anything is changing or going to change? Boston Globe columnist, Ellen Goodman, makes an interesting point in her "Conspicuous consumption now conspicuous frugality" column today. "The common ethic (of consumers) changed on a dime...we've maxed out on more than credit cards. There's a dovetailing of iconomic and environmental - and human - values." Maybe some of this might rub off on others higher up.
To me that's just disappointing. It seems as though the intense scrutiny and the "revised plans of action" taken to and demanded from the Big Three were lost when other institutions like AIG were seeking their cash. Perhaps I'm ignorant or just don't recall the scrutiny because it was so long ago (in terms of the bailout time line).
I remember reading about the $440K resort bill, and wondered why it wasn't bigger news.
It's a slap in the face to the millions of hard working Americans that get little to no bonuses during the year, and with certainly no one telling them they're "too big to fail."
Nice post,
Tim
Post a Comment