Bailout Bonus Bamboozle

Black Swan

AIG is to award $100 million USD in bonuses to the financial products division in 2010, the people who were largely responsible for the risky investments that compelled the government to give them billions of taxpayer bailout monies to keep the corporation from collapse in 2008-2009?

Source: http://www.gather.com/viewArticle.action?articleId=281474978028645

When will the AIG abuse of taxpayer bailout funds end? Does anyone remember the grand party they threw in late 2008 after being bailed out ($85 billion USD) the first time by the Bush administration? $440,000 Marriott party, including over $23,000 in massages?

Source: http://afp.google.com/article/ALeqM5iu5Il4dPnbfSer6RIAB7ZdLp5I6g

What about the CEO of AIG that only lasted 3 months, and had a $21 million dollar golden parachute to reward him should he fail?

First the GW Bush administration was bamboozled by AIG, now the Obama administration is bamboozled, so when is someone going to step forward from the so-called American political leadership and stop this abuse of taxpayer bailout monies by failed US corporations?

And don't tell me it would have been different under a McCain administration, as he almost received as much in 2008 political campaign contributions as Obama from AIG. Or Mitt Romney in 2012, because AIG gave to him too. The USA needs REAL campaign finance reform, which excludes any contributions that US corporations can make in their attempt to influence congressional legislation and executive actions.

Source: http://209.157.64.200/focus/f-news/2083881/posts

GuanYin

They paid back the last set of bonuses iirc and these new ones are supposedly due to pre-bailout contracts (I'm not 100% sure on the contract laws but I imagine they would be open to litigation if they didn't paythe bonuses). They'll most likely react to pressure from the WH. I'd wait for developments before I screamed murder.

Black Swan

If AIG had not gotten the Bush administration bailout in late 2008, would they have had the $440,000 Marriott party in California, or the $23,000 in massages, which occurred after the taxpayer bailout had been awarded? Or would the corporation been bankrupt and not had the grand party near Santa Barbara?

My concern is that there is a pattern here, beginning with Bush and extending under Obama, where "it's business as usual," with obscenely high bonus packages and extraordinary executive compensation that is not justified for a corporation that contributed to the Great Recession now experienced in the USA.

In American business there seems to always be a hedge, an exception, or a clause which lets rich executives continue to be paid extraordinary compensation, even when their corporations fail? This occurs while unemployment exceeds 10 percent, and housing foreclosure failures are in the millions for the blue collar and middle class.

Source: http://dealbook.blogs.nytimes.com/2010/02/02/aig-plans-100-million-bonus-payout/

Further, I am concerned that campaign finance reform is a joke. Does anyone believe that corporations give to political candidates out of the goodness of their hearts, or rather to influence legislation and a lack of executive oversight by the US government?

Overheal

I wouldn't mind if they spent money like Hollywood Actors who lose it all and then go bankrupt - I mean at least that way the money isnt being stashed in the Financial economy it would be going back to the "Real" economy (The Jobs Goods Services etc. we got told about in school like they were fairytales) - But no, the vast majority of these Executives will reinvest their millions and tie up most of their money in what amounts to keeping them Rich - every once in a while the fruit ripens and they'll go to town and spend an apple - but most of the economy will never see most of the Dollars that are tied up in the whole tree.

Bad analogy. I know. But thats the only argument some of these Bankers can make. "Why if I wasnt so rich who would buy all these cars? Guffaw Guffaw!" The argument holds no water.

But unfortunately while most of us can pick out what we hate about the Bank Bailouts, what still bothers me is Why with No Financial Reform Established, The Democratic Supermajority chose instead to shift its attention to a Controversial and All-Encompassing Healthcare Reform? They couldn't even agree Themselves how to pass such a large Elephant Pill up the Rectum of Americans, and so of course never got the 60 votes. Consider that 6 months Wasted doing Nothing.

Why when the American Population was trained and Focused on the Banks and their missing Jobs does the Obama Administration did they do this? Were they so intimidated by the Tea Party Protests? Did they really have no idea how to reform the Financial Sector? Or were they really just so fixated on losing their Supermajority that they tried to rush in a piece of Legislation that would never get passed?

I don't want to turn this into a Healthcare thread (and please if you do, start a New one) But its just important to note at the Surface Level that we don't have Finance Reform because Healthcare Reform suddenly and dramatically took center stage at the same time as the Tea Party Protests, and it hardly seems coincidence. It seemed like one minute we were talking about the Tea Party moment and then the next it was Town Hall Meetings about healthcare reform. Both exploded in the face of Democrats.

Red Hand

In any other industry, you would be f*cked out on your ear. This is more who you than what you know and old boy networks are what keeps this sort of thing happening.

Black Swan

Overheal and I seem to be reading from the same playbook? Once the Dems got into power, they lost sight of the most important things that would function to keep them in office during the 2010 mid-term elections and 2012 presidential? They should have concentrated their efforts on solving the very complex financial crisis, along with getting out of two expensive wars that had been dragging on for years? But they got side-tracked on reforming health care, and will pay the price later this year? The centerfold Cosmos candidate GOP win of the "Kennedy Seat" should wake the Dems up, but I have my doubts.

AIG may have had contractual bonus obligations that occurred prior to the bailout, but the old saying "extraordinary times require extraordinary measures" should replace "business as usual?" Especially when those being rewarded are the very ones that helped cause the failure of AIG? Without the taxpayer bailout billions, I seriously doubt that AIG could have paid these prior contractual obligations in 2010 (had they closed their doors and gone into receivership)?

I have this cartoon picture in my mind of the government bringing in bags of taxpayer money through the front doors of AIG (and other bailout recipients), with the executives running out the back doors with the money.

I've picked on AIG, because it's the poster child of the poorly regulated financial sector that's loaded with investment firms that have profited the few rich at the expense of the many. The 2004 deregulation of investment banks that occurred under GW Bush appointee Chairman Cox of the SEC has to be reversed.

Further, back then they reduced the number of SEC regulators and the ability of the SEC to oversee the investment banks, essentially leaving these investment banks to oversee themselves; i.e., the fox overseeing the chickens is yet another metaphor that comes to mind? More SEC regulators need be hired to oversee these investment banks, reversing the SEC employment cuts in oversight that occurred in 2004.

The Obama administration needs to look at the big picture of financial reform, in addition to making specific regulatory changes, essentially reversing the Bush era of financial deregulation (along with prior weaknesses passed on from prior administrations and congresses). For example:

• The prevailing theory of market deregulation, allowing for the free flow and self-regulation of markets that's consistent with Reaganomics needs to be exposed for what it really is in terms of outcomes: Our current Great Recession.
• The myth of trickle-down economics used by the rich in the USA to reduce their taxation needs to be exposed for what it is in reality. If there is any trickle down occurring, it often shows up in off shore investments, with a lot of the trickle down creating jobs in China or India at the expense of domestic jobs.
• Executive and professional compensation needs review and regulation, especially in publicly traded corporations regulated by the SEC. Two of many concerns are:

1... Golden parachutes that reward failing executive performance need to be outlawed.

2... Contractual bonus compensation plans need to be regulated to the extent that such contracts will be null and void if they result in financial failure.