AIG; Bill of Attainder; Contracts

[manyeyedhydra]

But they would have gone bust giving those sweet bonuses and kiss-off deals to the executives who were running the business into the ground--which is the business model unfettered by regulations or control.

You've lost me. Isn't this a form of regulation and control?

If a company creates silly contracts, hires people that aren't as good as the hype and pays them more than they can afford, then they cease to exist. In theory you should then end up with survivors that are still around because they were a lot more sensible in who they hired and what they paid them.

 

[JAMESBJOHNSON]

It's not over yet.

According to Bloomberg AIG plans to pay 57 MILLION RETENTION MONEY to execs it intends to lay-off. Huh?

Oh! And Mr. Obama got 125K from AIG.

 

[sr71plt]

If a company creates silly contracts, hires people that aren't as good as the hype and pays them more than they can afford, then they cease to exist. In theory you should then end up with survivors that are still around because they were a lot more sensible in who they hired and what they paid them.

No, you end up with a handful of superrich people who have milked everyone else dry and who have retired to Monaco.

 

[JAMESBJOHNSON]

http://finance.yahoo.com/news/Analysis-White-House-Dems-apf-14677357.html

EVERYONE BUT AMICUS IS PISSED AT AIG...AND OBAMA

 

[Selena_Kitt]

I'm not remotely impartial on this issue, so I'll do my best to separate this post into one bit on what I think (and am told) is actually happening with AIG's bonus payments and one bit on what I think is a fair response.

These aren't bonus payments in the sense of a reward for some achievement - employee of the month with a big cheque-type bonuses. They are pre-negotiated guaranteed minimum bonus payments that are part of the employment contract that was signed when the recipient was hired. It's basically an accounting fiddle. The company runs a lower basic payroll, which looks good to the analysts, and can claim (falsely) that its interests are aligned with shareholders' by paying for performance. In fact, something like a third of the bonus pool in a good year goes in guaranteed bonus payment of the type now in the spotlight at AIG. Clearly, in a bad year, the fiddle doesn't work. (In most places, separating salary from "bonus" also has some useful tax implications for the recipient, especially if the bonus is paid into a pension.) The point is that, whatever internal accounting pool the money is paid out of, these aren't really bonuses, they are, according to just about every nation's employment law, including the US', salary, as defined in the employment contract. Probably something like 5% of AIG 's USD165m pool is actual "you did something special" bonus money, probably for finding grounds to cancel an expensive contract...


I'm not about to attempt to convince anyone that this is a good system. I have been the beneficiary of a guaranteed bonus in past employment - it's a common recruiting tool in the financial industry - and I'm as cynical about its value as a smokescreen as the next guy. I doubt you can get much of this money back, except by fiat, and I'm not fond of rewriting laws to slake the polity's thirst for punishment. What little consolation is on offer, for those who want AIG's worker bees hung, drawn and quartered, is that they're unlikely to be employable in the next few years, if ever again, at anything more than a fraction of their peak earnings. Let it go, make guaranteed bonuses horribly tax-punitive in future if the system really aggravates you, name and shame anyone receiving a bonus to further depress their employment chances if you must, and move on: you have bigger fish to fry.

Hope that's of interest (and congratulations for reading my 500th post - EDIT: damn! 501st - I must have missed one somewhere...)
H

So... it's like waitresses working for $2.75 an hour but living on tips?

except that these "tips" are guaranteed?

Hm. Doesn't seem quite... equitable...

does it?

 

[JAMESBJOHNSON]

SELENA

Its like the add for GINZU KNIVES. Everything for the low low price of 19.95 (PLUS SHIPPING AND HANDLING). The S/H is what fucks you.

 

[JAMESBJOHNSON]

http://www.bloomberg.com/apps/news?pid=20601039&sid=ahidS8P2PDYo&refer=home

SHE AGREES WITH AMICUS: BEND OVER, GRAB YOUR ANKLES, AND SMILE...REGARDLESS OF WHAT IT DOES TO YOUR POLITICAL FORTUNES.

 

[Pure]

note to hand and amicus

They are pre-negotiated guaranteed minimum bonus payments that are part of the employment contract that was signed when the recipient was hired.


several lawyers have posted on this. there are at least three optioins besides taxation that deal with the problem, and avoid the fall of western civilization and the scrapping of the US constitution.

1) the execs obviously had poor, indeed substandard performance; hence they breached their contracts; not eligible for bonuses, indeed perhaps liable to dismissal.

2) some of the execs, at least either misrepresented or defrauded the company and/or its stock holders with crazy investments and NOT reporting the exposure. hence they breached contracts, subject to dismissal.

3) since the company was at the edge of bankruptcy, its promises to employees arguably become unfulfillable. changed circumstances.

it's like a contract with someone to clean your swimming pool; but if a storm blows several dead trees into it, the contract no longer holds, in either direction.

the ability of an employee to sue a bankrupt entity is arguable. (the company, if floating on billions of taxpayer dollars, is de facto bankrupt.)
=========

in any case, there will be changed rules/laws. these will avoid the further issue. the company applying for funds with have to accept certain conditions; it will have to draw on the 'escape clauses' of its contracts, in such case.

further, the law could be written so that in the event of a lawsuit, no bailout funds can be used to pay it; and since no other funds are there, there will be zero to gain in a lawsuit.

 

[JAMESBJOHNSON]

PURE

It's awful politics. It's appeasing thieves and pissing off America.

We had a similar situation with the state government a few years ago. A private contractor made a deal to perform investigative services on behalf of the state. But the contractor didnt perform the work; she had her people invent/ fabricate the investigations. The bogus reports influenced judges to act one way or another, and plenty of people were screwed.

So the Secretary of the Department refused to pay the bitch and sued to get several million dollars back. The contractor counter-sued, and the issue was settled with a status-quo: the contractor got no money but paid back no money.

 

[Pure]

jbj

i agree completely,

contracts are already in breach PRIOR to any bonus issue. and further the courts can decide, not limbaugh or any us senator.

 

[JAMESBJOHNSON]

EVERYONE THINKS OBAMA IS A DRUNK SAILOR THEY CAN ROLL.
http://finance.yahoo.com/news/Fannie-plans-bonuses-of-up-to-apf-14679491.html

 

[amicus]

I scratch my head in wonder as I watch and listen to the news and the feeding frenzy over the piddling 165 million in bonuses.

That ain't the issue, not even a sidebar, barely a footnote to Fannie and Freddie and the Billions that went overseas to bail out foreign bankers.

Dodd & Franks and the civil rights zealots that forced mortgage institutions to grant low income minority loans, forced the Fed to underwrite the expenditures, forced the banks and lending organizations to all cooperate in this social experiment of enabling more Americans to enjoy home ownership.

And now they claim foul?

Christ, people, no one notices the 800 pound liberal in the room?

Amicus...heh...

 

[JAMESBJOHNSON]

AMICUS I'm changing your nic to COUNT OF MONEY CRISTO. He was the guy who went about bailing out people and do-gooding with another guy's money. Like Obama.

 

[amicus]

EVERYONE THINKS OBAMA IS A DRUNK SAILOR THEY CAN ROLL.
http://finance.yahoo.com/news/Fannie-plans-bonuses-of-up-to-apf-14679491.html

~~~

This should be worthy of a thread all its own, JB.

Fannie plans bonuses of up to $611K for 4 execs
Fannie Mae plans bonuses of up to $611,000 for 4 executives; Freddie Mac has similar plans

That from the link you provided and I heard in confirmed on the news today.

Ami

 

[Liar]

I scratch my head in wonder as I watch and listen to the news and the feeding frenzy over the piddling 165 million in bonuses.

That ain't the issue, not even a sidebar, barely a footnote to Fannie and Freddie and the Billions that went overseas to bail out foreign bankers.

It's the same as every conservcative pundit and posing senator or congressman peeing their pants over OMG THE 9000 HORRIBLE EARMARKS, THE DISNEYLAND VEGAS LEVITATION TRAIN AND PELOSI'S MOUSE OHMIGOD THE SKY IS FALLING!

It's called populism. Or soundbite politics. And it's moronic. But heya, it's worked like a charm for the last decade or two, so it takes a while to snap out of.

 

[amicus]

Ahm...being a little cynical are we?

ami

 

[Liar]

Ahm...being a little cynical are we?

ami

Petit moi? Nooo.

 

[JAMESBJOHNSON]

AMICUS

How soon before Obama bails out the newspapers? I do believe editors would suddenly believe in miracles and the 2nd Coming.

 

[jomar]

All in all I like Handprints take.

11th hour changed language to 'allow' the 'bonuses'...whodunnit dammit!?

One more example of obscenely poor judgment on AIGs part...did they not even think about how the public would take the news and at least brainstorm ideas for a public relations spin?? Surely that wouldn't have cost more than a few million...

 

[amicus]

An AIG executive was interviewed and stated they were aware of the uproar it would cause, but because of the stigma of breaking contractual agreements they would never be able to compete in the hiring market for additional analysts.

A twisted web we weave, eh?

ami

 

[jomar]

An AIG executive was interviewed and stated they were aware of the uproar it would cause, but because of the stigma of breaking contractual agreements they would never be able to compete in the hiring market for additional analysts.

A twisted web we weave, eh?

ami

They need more brilliant analysts!

But I'm a bit surprised then they didn't get in front of this with some damage control by explanation. People hear 'bonus' and assume it's for performance, not, as HP noted, a back end salary game. Maybe they a did focus group and decided they were fucked either way.

I do the Casablanca dramatics and outrage of the politicos.

 

[sr71plt]

An AIG executive was interviewed and stated they were aware of the uproar it would cause, but because of the stigma of breaking contractual agreements they would never be able to compete in the hiring market for additional analysts.

A twisted web we weave, eh?

ami

And bullshit. People needing jobs will take them. And lots of well-qualified people need jobs now. And the current round of AIG executives have shown it doesn't take a genius to hold the position.

 

[JAMESBJOHNSON]

The timing of it is a disaster. AIG did the same with the resort fiasco a few months ago. The ink wasnt dry on the bailout check and they take off for the resort junket.

Wait till you save the company, then get your money.

 

[DesertPirate]

All in all I like Handprints take.

11th hour changed language to 'allow' the 'bonuses'...whodunnit dammit!?

One more example of obscenely poor judgment on AIGs part...did they not even think about how the public would take the news and at least brainstorm ideas for a public relations spin?? Surely that wouldn't have cost more than a few million...

Sen Chris Dodd D-CT put the language in the bill. He now claims Treasury asked for it.
Of course all the money given to Dodd and Obama's election campaigns by AIG had nothing to do with it.
When Dodd, Barney Franks and Tim Geithner are in jail, we might stand a chance.

 

[jomar]

The timing of it is a disaster. AIG did the same with the resort fiasco a few months ago. The ink wasnt dry on the bailout check and they take off for the resort junket.

Wait till you save the company, then get your money.

Agreed. And...nobody paid attention?