I am reading all of the excuses as to why the bonuses must be paid out to AIG employees the same time as we spend $billions to it to maintain stability in the market place that is not providing 1 milligram of liquidity of credit in the US to the average taxpayer as the funds are funneled overseas to Germany, etc. and to the same perpetrators of todays events through AIG, namely Sachs, Merrill, etc. We did not create the situation, they did and they can help pay for it. If the company is not profitable then they all pay for it as we do in such circumstance.

Utter nonsense! Reagan did not hesitate one moment to fire the air controllers under contract when they refused to return to work. The federal courts did not hesitate to relieve Delta of pilot pensions secured by contracts and deny pilots salaries. Delphi has been relieved by the courts of retiree payroll healthcare bennies that were under contract. Who the hell are we kidding here? The pilot who landed the plane in the Hudson Riveer has taken a 40% cut back in salary and a termination of his pension. A hero versus incompetence?

Why are AIG employees different? Because they are on W$? They are no different and they should share in the consequences of poor management decisons which the y followed to the "T." It has been suggested that Merrill employees marked up earning to secure their bonuses and I suspect the same is true for AIG. William Savage had a few comments about AIG. Savage was a senoir bank regulator durin the Lincoln scandal and is known for his pursuit of Keatings. He has less than an admirable view of the treasury.

1) the failure to use Chapter 11 bankruptcy/pass-through receivership to deal with deeply insolvent financial institutions

(2) the failure to expose, and to the extent possible, remedy through restatements the massive accounting fraud that AIG was/is engaged in that triggers the bonuses

(3) the failure to bring criminal charges against the control frauds

(4) the failure of Treasury as negotiators -- they had all the leverage when they bailed out AIG and could have conditioned the aid on at least the VP tier and above giving up their bonuses

(5) the weakness of Treasury's current lawyers who, if press reports are accurate, couldn't think of any way for the U.S. government to take effective action against what it reportedly views as a scandal,

(6) (and I haven't seen this discussed) why was Treasury blind-sided by this? It confirms that they did not conduct even the most obvious due diligence on AIG's assets and contingent liabilities.

As Taken From here: <link> "Wiliam Black Savages Treasury's Conduct on AIG" Yves Smith.

There is no incentive for the senior management of AIG to be honest about the true nature of AIG's losses as they are safe from being fired. AIG is insolvent if we step away from it, management knows it, and there is no incentive not to pick the meat from the boats of the corpse by management. AIG and W$ knows we must save them from themselves and we do.

What executive was not aware the bonsuses would not be taken in a positive manner? They have not acknowledged their past errors in management nor have they acknowledged the manner in which bonus awards were calculated. There has been no effort to minimize the bonuses, muchless a warning of the bonuses, and the treasury has not demanded an accounting.

The treasury is the weak sister in this debacle and without strong council. Remember, Summers and Geithner are W$.

I have broken my pledge not to post here. After the reading the tripe being offered up, it is hard not to offer a countering view. The payment of those bonuses are nothing short of malfeasance by the perpetrators of them.

Those getting bonuses to either return them or pool them for some better use - buy back of stock, a large severance pool for the AIG employees who just got sacked, or even charity. I don't think there is much chance of that, however. Hope is eternal, however.

Goldman Sachs and Merrill Lynch would have been left holding the bag had Paulson allowed AIG to follow Lehman into bankruptcy. The AIG bailout was also a bailout for Paulson's (and Geithner's) buddies at Goldman. It was a dirty non-transparent (opaque) and open-ended bailout.

The contractual agreement can be and is tampered with as easily as if it were an etch-a sketch. Accounting fraud...yes...that is the missing link I was looking for and couldn't think of. It is amazing that they are trying to pull this off in broad day light.

jo

looting.

<link>

It's a damn orgy of looting, only gotten worse since the lid blew off last year.

Free money. It's a giant joke on us all.

America is sooooo close to being dead to me. (Well, to be fair, I'm up and down on that. But really, it's that gyre/falconer/centre not holding thing .. there's nothing there there anymore.)

Reagan did not hesitate one moment to fire the air controllers under contract when they refused to return to work. The federal courts did not hesitate to relieve Delta of pilot pensions secured by contracts and deny pilots salaries. Delphi has been relieved by the courts of retiree payroll healthcare bennies that were under contract.

I'm not looking any of this up, and may err in some of my recollections. But I think the legal situation was different in those situations (different, that is, from where we now stand vis-a-vis AIG).

Reagan could fire the ATCs because they had no legal right to strike against the federal government. The collective bargaining laws governing private industry did not, and do not, apply to unionized federal employees.

The other two instances involved reorganization proceedings. It's always been part of the bankruptcy code that the bankruptcy court can relieve a debtor of contractual obligations under certain conditions. That's what motivates its creditors to compromise their claims to keep the company viable.

In the case of AIG, unless and until Congress passes a statute authorizing post facto abrogation of its contracts (which would be promptly challenged under the Constitution's contract clause), the federal government has no authority to simply order that the bonuses not be paid.

A better idea: Obama has somebody representing him pay a secret call on the top AIG conspirators. The message would be: you pigs and your piglets need to voluntarily waive these bonuses. Anybody who doesn't can be sure that the FBI and the IRS will reopen everything he's ever touched, and will track every move he makes from here on out, until they finally put him away for something. So help us God.

Nobody, nobody, leaves money on the table, save being scared for their lives.

Obama has to take this one, much as I like the guy.

define them as 'economic terrorists' and keep them at Gitmo? Some people won't face the music unless it's an extraordinary rendition.

73 of the bonuses were for over $1 million. <link> The CEO of AIG has been less than honest. The first head to roll must be his.

Fritz;

"... A better idea: Obama has somebody representing him pay a secret call on the top AIG conspirators. The message would be: you pigs and your piglets need to voluntarily waive these bonuses. Anybody who doesn't can be sure that the FBI and the IRS will reopen everything he's ever touched, and will track every move he makes from here on out, until they finally put him away for something. So help us God."

Bob;

"... God say, "No." Abe say, "What?"
God say, "You can do what you want Abe, but
The next time you see me comin' you better run"
Well Abe says, "Where do you want this killin' done?"
God says, "Out on Highway 61."

W4B;

Fritz, I'd say you're describing the natural situation we all live in already, unless we've recieved a "Get-Out-Of-Jail-Free-Card" from someone.

Why does a man who finds a briefcase full of cash just laying out in the desert start looking for the guys with guns right away? It's because he knows that people who have a lot of money do not intend to forget about it.

These guys obviously think they have the keys to the highway, why do you think that is?

maybe they would willingly chose Gitmo for their own protection.

Fritz:

I am aware of the bankruptcy laws or at least the old ones. Much of the reasoning behind going into bankruptcy is to alleviate the company of employee contracts or seek protect. I can't remember in either case of an agreed upon compromise other than this is what you will be left with after all is said and done. In either case much of the penalty was born by the employees due to a failure of business management (which I can argue). Companies that either overforecasted fund results and lost or over forecasted and removed funds were suddenly relieved of the necessity to meet the contract by the federal courts. Akin to having one's cake and eating it too.

That Reagan took action to nullify the impact of a group threatening the safety of the nation, in spite of previous federal employee strikes, has had an impact upon labor since then but it worked for that issue. AIG is holding the US hostage with threats of the demise of the economy and it calls for a similar act of boldness with these contracts. Maybe it should be as you suggested, some representative needs to say hello to each and every person involved.

Latest W$J article:

"Most traders and bankers on Wall Street get a base salary of anywhere from $200,000 for managing directors to $1.5 million for a chief executive. But the lion's share of their pay comes in the form of a bonus, a tradition that began when most firms were private partnerships and partners shared directly in the annual income of the firm.

As banks and securities firms wrestle with growing regulation of compensation practices, substantially increasing the base salaries of top employees could become a popular response, some industry officials say. A larger salary would reduce the relative importance of bonuses but also help financial companies increase those payments, since they usually are calculated as a percentage of total annual compensation." (Hat tip to Yves Smith at Naked Capitalism)

Notice the peculiar language in the second paragraph. This is not over by any means and the total bonus package is upwards of $450 million.

Now, I am not a lawyer but I do engage in come contract writing within my job responsibilities. It is my understanding there are numerous exceptions to the sanctity of contracts and legal contracts are abrogated every day. Quite a bit of court resource is given over to litigating dutes with regard to commerical contracts and the enforceiability of various provisons contained therein. If AIG's lawyers are telling Geithner and Summers they have no legal stance or counterclaims, then it is time to hire other attorneys who will take AIG to task. I am sure there must be some smart attorneys somewhere that can argue the issues. To rollover as Geithner and Summers have done smacks of their W$ backgrounds.

Understand this is not the insurance department we are talking about, it is AIG's Financial Products Unit. This is the subsidiary that has brought AIG to its knees with it speculative method of creating financial instruments or CDS as a method insuring risk based MBS and Derivative from losses using AIG's AAA rating with no reserves set aside. With no reserves set aside the continued appreciation of housing, and new premiums set aside, it worked until the market crashed and investors started asking for their principal back and additional amounts of collateral with each succesive rating decrease (the same strategy was used by Madoff).

Practicing due diligence calls for people to give what is considered a reasonable effort in performance. In the case of Financial Products Unit, these were the epople who design CDS and failed to practice due diligence in on the risks associated with the financial bonds and derivatives they insured under AIG's AAA rating and consequently failed to set aside adequate reserve in case of default . . . ninja insurance? Instead of setting aside the premiums gained, they pocketed thenm in the form of bonus, etc. Can't willful misconduct and gross negligence be used to break a contract? I think so.

9-12 months ago, I knew little about CDS. Since then after readins tons of infor and talking and listening to people such as Smith, Waldman, PGL, Spencer, Houghton, etc; I have learned alot. It would not hurt Obama to go on public TV, explain the crisis as caused by CDS, the fraud perpetuated by these particular instruments, and publicly denounce AIG's executives for talking their bonuses. Along similar lines, he should announce that each executive will have their returns audited for the last 7 years.

You can always knee-cap them later.

talkin.

Geithner and Summers recognize that even if you don't.