AIG seeks to pay $235 million bonuses to 400 employees

Posted on July 13, 2009 by stacyherbert| 38 Comments

Stacy Summary: Interesting to look at the debate of contractual obligations as related to FIRE workers at an insolvent company that is ‘too big to fail.’ I’m sure also it doesn’t hurt that AIG maintained a massive fleet of lobbyists that insured they would always be too big to jeopardize obligations to senior execs with bankruptcy court. Also note that the size of the bonus pool amounts $587,500 for each of the 400 employees, some of whom will probably have been integral to the collapse of the financial system . . .

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38 Responses to AIG seeks to pay $235 million bonuses to 400 employees

snoop diddy | July 13, 2009 at 10:32 pm |

a whole universe controlled by the path of least resistance. Money, people, everything.
Catalyst | July 13, 2009 at 8:11 pm |

OMG, Dennis Kneale is such a cheerleader for the worst type
of scoundrel in the financial sector. He is the type to defend Bernie Madoff if he can get away with it.

I just hope he gets the boot from CNBC, his presence does not help CNBC’s image in any way. Who’s the idiot to put him on this show anyway.
Martin Blake | July 13, 2009 at 6:31 pm |

I would like to slap the shit out of the main guy with glasses. What a peice of garbage. Actually if i saw any of these people in public i would i would yell obscenitys at them hoping they would respond somehow. lesly was the only smart one there. Max and stacy you guys need to be on these debates. You guys would destroy the stupid fuck with the glasses.
Joe | July 13, 2009 at 1:22 pm |

@JERM

Have you ever heard the expression “keep your friends close but your enemies closer”?

For God’s sake, man. The posting of a video on one’s web site does not automatically infer a partisanship or a tacit agreement with the ideas of the originator of the video.
Jerm | July 13, 2009 at 12:36 pm |

While I love you guys, this clip is ridiculous. You are promoting CNBS here! I am sure if you wanted to touch on this issue you could have found a video with a more reasonable and logical discussion. My $.02.
Wayne | July 13, 2009 at 12:25 pm |

Get Stacy on shows like this, she’d let them have it

They also make the argument that the ‘best people’ are paid appropriately to their skill level, if they are not paid at these levels then there will presumably be a skill shortage and the institutions will collapse? Really? There is a great speech here:

http://fora.tv/2007/10/30/Paul_Krugman_Future_of_the_Middle_Class

By Paul Krugman (the whole video is worth a watch – little or no rise for the middle and working class for 30 years!). At around 14 minutes he points out that comparably educated people are not being paid to their skills. The highest paid hedge fund manager getting the same in a year as 80,000 teachers do in 3 years! So I doubt very much that there really is a skill shortage.

The other, elephant in the room, and a failure to confront reality is the problem of how much wealth is ever going to be available (and believe me I do not want this to be true). Global GDP is around $55 trillion the world population around 6.7 billion. If that was evenly distributed that would be less than $10,000 for every man woman and child a year. However even at this level of consumption humanity is taking 1/3 more than the world can replace each year which means if we are each taking more than around $6000 we are not only destroying our children’s future we are destroying the planet (the biosphere)!

No one wants to deal with this fact and it also means that people are not suitably outraged by the utter greed of these people. The bonus alone is nearly 100 years their fair share of resources! In a finite world what they get means others do not. And we must remember that these are not the ‘zazzionaires’ these are just the grunts doing their bidding.

Interestingly, top ranking people are also finally getting the message. Thomas Friedman has recently written a book on it and (shockingly) Prince Charles has recently come out and basically said it:

http://www.telegraph.co.uk/earth/earthnews/5781888/Prince-Charles-next-generation-faces-living-hell-unless-climate-change-tackled.html

Just in case you fancy a little more insight:

http://vodpod.com/watch/267310-david-suzuki-speaks-at-the-2006-green-festival-in-san-francisco

Watch from the 30 minute mark to the end of the test tube analogy.

http://www.youtube.com/watch?v=F-QA2rkpBSY

It’s in 8 parts but the logic is impeccable.

And finally:

http://www.well.com/~davidu/extinction.html

SLOWLY scroll down through the links on the page to get an indication of what is being done. 50% of all the species gone in the next 50-100 years. The recovery time for the planet after this level of devastation is 5-100 million years. We are about to be the most vilified generation that will ever walk the planet! And bankers STILL haven’t got enough… You can destroy the planet as much as you like just don’t break contracts to people involved in the biggest financial collapse in history! Sheez…

BTW I am not a conspiracy buff but I have a feeling ‘they’ know we face catastrophe and they are either getting their share before the brown stuff hits the fan or they have deliberately crashed it in order to put the breaks on things…

Sorry this is a long reply. Did ramble a bit but the arrogance of the presenter really got my hackles up they just seem to have unquestionable belief that what they are doing is right no ifs buts nor ands…

And finally thanks SO much for the great work both Max and Stacey are doing (I have even gone back and listened to all their past shows (found on radio4all.net )). I am a very big fan. I have no doubt treasure is being piled up in heaven for all the great work they are doing…
Joe | July 13, 2009 at 12:08 pm |

This guy might be able to help. He seems very caring.

/SARCASM

http://www.youtube.com/watch?v=ONM7148cTyc
Ingvend Storrs | July 13, 2009 at 11:29 am |

I think they should get their bonuses, but in the form of free tickets to Disney World, or corporate promo items, i.e., a 1oz. box of Tide laundry detergent. Maybe free fish food, or dried Koala Bear excrement?
Kaks | July 13, 2009 at 11:16 am |

@Mini US

Your post about smacking the presenter’s nose and his “hideous countenance” made me laugh. Thanks for the light relief!
Douglas | July 13, 2009 at 9:39 am |

These banksters will keep pushing and see how far they can go with the rest of America knowing that they are backed up by the White House goon squads. I think a good measure would be the body fat index, once that drops and Americans become slimmer the shit will hit the fan big time.
T | July 13, 2009 at 9:33 am |

First, CNBC is a GE neocon propaganda channel. Then again, you already knew that.

As for the bonuses, this just illustrates that the Great Divide between the Haves and the Have Nots is even bigger. Obama keeps talking about accountability. In the global depression, show me where that’s been done. I know that six months into his Presidency, some people say you’re not allowed to criticize Obama. I disagree.

If he’s so awesome, then explain these:

Many of his key economic people were part of this global depression. (The govt. will fight as long as possible before the admit that it IS a depression. Then again, that’s their job).

The rates of homless, unemployed, uninsured.

Rampant global predaotry capitalism (call it what it is). Do I have the Perfect Alternative to this? If you want that, you have to pay me my outrageous consultanting fee.

But despite all of this, what’s the Haves response? Screw the rest of you. We’re ENTITLED to this megamillions in bonuses. My response: hang on a minute. You destroyed your firm. If I did that, I’d have to go bankrupt. But since you’re way richer than I am, laws don’t apply to you?

Which means the ONLY way anything is going to change is for millions of people to have The Great Tipping Point Moment (the favorite phrase of chat show hosts everywhere). Millions of people will finally have to realize that yes, you’re dealing with a lot of stuff. But outsourcing protest doesn’t work. Ringing up your favorite chat host and taking the mickey out of politicians doesn’t cut it. It keeps the host employed (which is good I suppose). But overall, they don’t care about you.

This means endless hours organizing, fighting for attention from any media that will listen. And then NOT backing down until the politicians change. This is peaceful and legal protest. Tie up their offices so they literally can’t get anything done. At that point they HAVE to listen to you. This means a sustained effort.

So if millions of people are so pissed off, then why don’t they do this? Is it that lazy-ass-we-are-superior-American thing? If not that, then what is it? In France, to your credit people don’t screw around.

Please explain this to me.
Evan | July 13, 2009 at 7:40 am |

What we really need is a CNBC for the rest of us. It’ll never ever take hold in America, where you are only allowed to have a show where you talk about money if you’re in the business of making useless paper, so it’d have to be a website, or a Youtube-like video compendium, where financial advice for the remaining 95% of us, that has nothing to do with speculative markets, is broadcast with the same frequency and ferocity as the Ponzologist Channels (CNBC, FoxBiz). Programming would include: “The World of Job Retraining Centers”, “Precious Metals Hour”, “How’s the Fed screwing you today?”, “Bailout Boogie”, “Mortgages…really, WTF? I don’t get it” and so on in that fashion.
gr8mikey | July 13, 2009 at 7:02 am |

I heard a good idea a while back, I think it came from denninger. Any company that gets a government bailout and becomes majority taxpayer owned, the pay scale of all employees of said company should be converted to the government GS pay scale.
stacyherbert | July 13, 2009 at 6:42 am |

@egan – are you going to go dance with your local firemen tonight?
robert | July 13, 2009 at 6:42 am |

If you have to ask a “czar” permission for anything, then law really has no meaning.
Egan | July 13, 2009 at 6:33 am |

This hardly merits comment but here I am eating a salad grown in my French garden thinking how much tastier it might be if it were fertilized with composted bankers and media pundits.

Just a thought.
Richard@lattitude30N | July 13, 2009 at 4:42 am |

@Stacy: ” …before their $1.2 trillion derivatives ponzi scheme blew up…”

That’s the bottom line….not one legislator or DOJ or IG investigator or any other entity has declared the derivative/CDS market as illegal!!! or as we here in Max and Stacy land mostly believe “a global fraud”….It continues…as I remember the argument these “bonus paid” employees were needed to wind down the derivatives in a reasoned way…anyway that was the argument to keep these folks as I remember the argument…and I presume it succeeded. I take note of you mentioning the lobbyists as well,
James A. Catalanotto | July 13, 2009 at 4:37 am |

All of the buttheads in Congress and in the media that thought it was good idea to bailout AIG should have the contractual agreement that makes their pay checks appear made null and void also. AIG should not have been bailed out to begin with. I have a better idea. If the sanctity of the contract is something that the government does not care about, perhaps they should just call off the whole deal. Take all of that digital fiat currency back from the firms that received payment from AIG along with the remainder of the bailout booty that AIG may still possess and “wez calls it even.” Then we can let AIG finally die the death that it so richly deserves.
Richard@lattitude30N | July 13, 2009 at 4:28 am |

Let’s not forget the bonuses have Congressional/WH backing…logically it may seem incongruent …particularly after a company goes bankrupt due to the workings of a minor rogue ( CDS reading floor/office) sector that topples the entire company…well true the contracts are enforceable..but not very wise to pursue….as an 80% owner the new majority stake partner has a right to review IMHO…AIG may have believed when the contracts were written that they were based on a surplus due to some future projection…but they went belly up and now their employees will have to face another tune…one they hadn’t anticipated…let the injured parties go to court…yes give them their fair opportunity to recoup this remuneration.
snoop diddy | July 13, 2009 at 3:59 am |

oh yep, that Geithner one is recent from looking at the news ticker
snoop diddy | July 13, 2009 at 3:57 am |

@Max

see if these vids are any use:

(a good vid)
Trader on Bloomberg says markets are manipulated and volumes ‘ficticious’.
http://www.youtube.com/watch?v=V4cRYI2x60Q

The Financial Flogging Continues
http://www.youtube.com/watch?v=hqG1OXNU6yI

(not sure when this one was – recent?)
TIM GEITHNER REFUSES TO ANSWER BRAD SHERMAN’S QUESTION!!! SUPPORT H.R. 1207 AUDIT THE FED
http://www.youtube.com/watch?v=WccPO-lkK8I
Makreel | July 13, 2009 at 3:43 am |

That’s the “journalist” that looks like Beaker from the muppets:

http://caps.fool.com/blogs/viewpost.aspx?bpid=187982
Mini US | July 13, 2009 at 2:59 am |

America.
The land where the polite, educated and respectful are shouted down by the greedy morons.
I am not a violent person by I would relish smacking that presenters nose to the back of his head.
Oh, its already been done I hear you say. That would explain his hideous countenance.
Mep | July 13, 2009 at 2:27 am |

Holy crap. How come it is that whenever I look at a clip from CNBC, all there it is are a bunch of people in boxes yelling over top of each other? It’s so incredibly annoying that I can’t believe anyone watches that crap on a regular basis.

The one thing that was semi-entertaining was the lead douche bag asking if it’s expected that the rabble will get out of line again and cause AIG to hire personal security guards. Besides the ridiculous victim card play, one would think that AIG would rather like to take some taxpayer money and shove it in Blackwater–or whoever’s–general direction for personal protection.
Mother Earth | July 13, 2009 at 2:14 am |

Opps miscalculated..only a hamburger.
Mother Earth | July 13, 2009 at 2:13 am |

This is outrageous. The discussion panel is skewed and the arguments won’t fly in any serious context. We forget these are people of flesh and blood with no exceptional capacities other than complete lack of social conscience.

An insurer is supposed to take my fee, invest it wisely and pay whenever I have an accident that is convered. Same goes with pensions etc. Afaik AIG isnot swimming in reserves, it is80% Goldman owned..

Now, for each american citizen, on top of cost for salaries, about 2 dollars goes to these ‘bonusus’ !! Each american could eat a hamburger with a coke for the same money!!

I wonder what hattrick is perpetrated in the background of this scandal..
Grant in oz | July 13, 2009 at 2:13 am |

Could the computer trading be the massive buying of the GM shares that are defunct?
I know this is few days old now.
http://tinyurl.com/m7to9m
gonzo | July 13, 2009 at 1:57 am |

Interesting comparing it to the workers story below it. to paraphrase Orwell “all contracts are equal but some contracts are more equal than others”

this could be good. Freefall http://tinyurl.com/m8awer it’s the 1st drama i’ve heard of about the crash. the Guardian called it a “Boys from the Black Stuff” (http://tinyurl.com/3647g6 a must see drama from the early 80′s) for the crash!

For those woundering about why the French are so bolshie http://tinyurl.com/ndkhlj

oh and Stacy, there will be a new series of The Tudors this summer.
max keiser | July 13, 2009 at 1:56 am |

the money programs are an integral part in funding the US war effort. CNBC is owned by GE – a major war profiteer and to help finance the war they need lots of people to lose lots of money. It’s the same business model of a casino that is funded by the losers, not the winners. Cramer is there to keep the war money coming in. It’s a lot cheaper to fund war from money people are willing to gamble and throw away than to go through the expense and hassle of congressional appropriations, etc.

hey, i need links to vids of outrageous banker antics for this week’s ON THE EDGE
Phil | July 13, 2009 at 1:56 am |

@Stacy …. yes, I re-read your comment and see your point .
stacyherbert | July 13, 2009 at 1:54 am |

@Dan – indeed! When over 50% of all volume is computer trading . . . these programs are just to entice marks in to the market for those computers to skim; and also if over 50% of trading is done by computers . . . why exactly has there been an explosion in the number of employees at these banks?
M | July 13, 2009 at 1:54 am |

AIG bonusses?

Party like a rockstar!

Be sure to watch until the beat is dropped after 2mins

http://www.youtube.com/watch?v=hqG1OXNU6yI
stacyherbert | July 13, 2009 at 1:52 am |

@Phil – I pointed out the $587k number because it is the US taxpayer who earns on an average oh something like $37,000 per year that is having to pay this bonus; (the one in 9 Americans on food stamps and the 16% who are unemployed aren’t paying taxes, so it is an ever decreasing pool of taxpayers as well – who are also having to make up for the short falls in other govt employees pensions . . . like Calpers, etc.)
Dedo | July 13, 2009 at 1:52 am |

I’m for a free market, but that obviously hasn’t and never will be the case !
Dan | July 13, 2009 at 1:50 am |

I cant stand watching these money programs, I mean whats a trader/investment banker? or anyone engaged in some activity that basicly involves buying low selling high or vise versa in some form or another…. well they are parasites that sit within the interval of society leeching away.

There should be no money programs about trading and investment they should be ashamed that they create nothing real and provide no service they shouldn’t be screaming from the rooftops(tv) about how they make their living and inform their fellow ticks on how to maximise their bloodsucking abilitys.
Phil | July 13, 2009 at 1:48 am |

@Stacy … yes of course, you are right.

I wasn’t condoning the bonuses at all .. just saying the Govt. did not do their Due Dilligence in voiding those bonus contracts when they had the chance !
stacyherbert | July 13, 2009 at 1:46 am |

@Phil – “It is ‘normal’ for many traders to get way in excess of $1 mil bonus” . . . . that was before their 1.2 quadrillion dollar derivatives ponzi scheme blew up; AIG was at the heart of this global ponzi scheme
Phil | July 13, 2009 at 1:41 am |

When the Govt. bailed out AIG – which they shouldn’t have IMO – they should have AT LEAST made a condition that all bonus contracts become null and void until re-appraised.
If these workers ( who are ALREADY well paid ) think they can get another job elsewhere, then bye-bye and good luck .

On the comment about IT-workers ( for example ) getting bonuses – I doubt that very much ; it’s normally traders etc. that get those “bonuses” !

IMO, the average of 587K$ you mentioned skews the facts somewhat. It is “normal” for many traders to get way in excess of 1 mio$ bonus, so I suspect that you may find that e.g. 75% of the bonuses belong to 10% of the top traders ad the other 25% to the 90% rest .
Simply CAP all bonuses to 10% of original agreement .. or close AIG !
JMHO FWIW