Surprise! AIG Gives Out Bonuses Despite Taking Billions in Bailout Money

If you think that getting $170 billion in taxpayer bailout money would embarass the AIG from giving millions in bonuses, think again: the beleagured financial company is going forward with plans for $165 million of bonuses and employee retention pays ... with the government's grudging approval:

A.I.G. had set up a special bonus pool for the financial products unit early in 2008, before the company’s near collapse, when problems stemming from the mortgage crisis were becoming clear and there were concerns that some of the best-informed derivatives specialists might leave. It locked in a total amount, $450 million, for the financial products unit and prepared to pay it in a series of installments, to encourage people to stay.

Only part of the payments had been made by last fall, when A.I.G. nearly collapsed. In documents provided to the Treasury, A.I.G. said it was required to pay about $165 million in bonuses on or before Sunday. That is in addition to $55 million in December.


(Photo: threecee [Flickr])

Previously on Neatorama: Posts tagged Economic Crisis

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AIG has contractual agreements with their employees that go something like this:

If "A" happens then we will pay you "X" dollars in bonus money.

They (AIG) are contractually (legally) obligated to fulfill the terms of these contracts.

Now that we, the taxpayers own approx 80% or so of AIG, we own their obligations as well.

If AIG fails to meet the requirements of their contracts then the employees can sue AIG (and the US taxpayer) for failing to fulfill the obligation.

It's interesting that the Dems don't want to cancel the UAW contracts that are sinking the auto industry while, at the same time, wanting to cancel the AIG contracts.

This situation is another prime example of why it was never, ever a good idea for the fed gov't to put money into a private company.
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It's a question of what is more "right." Should the CEOs and managers take the bonuses, or should they donate their bonuses to charity? Charities are getting hit hardest. And these guys walk away with 500K bonuses? Evil.
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