Sunday, March 15, 2009

"Okay, Then. Pay Back Our Money, and Do What You Want."

Why isn't that a perfectly legitimate response to the failed CEO of a failed company as he describes a plan to use perhaps half a billion dollars of taxpayer money to pay bonuses to the people who ran the company into the ground... so they won't quit. Seriously, had I presented this scenario to you last year as fiction, wouldn't you have protested, "Nobody is going to believe that"?

Geithner negotiates with AIG's Liddy
AIG has burned through $173,000,000,000.00 in taxpayer money because these yahoos screwed up. When the auto industry asked for a fraction of that, Congress was sputtering endlessly about overpaid workers and the need to renegotiate labor contracts as part of any bailout. Why are the idiots who played a central role in the collapse of the world economy immune from a similar demand?

If in fact AIG can't get out of paying these absurd bonuses because of "contractual obligations", well, guess what. Those obligations change the second AIG enters bankruptcy. So how about sending them into Chapter 11. Seriously.1

You can blame the failure of AIG on... well, the division that's supposed to get the lion's share of these bonuses, and say, "The rest of the company was doing good work," but the incompetents in that division bankrupted the entire company. As for this nonsense,
But [AIG Chairman Edward Liddy] also told Geithner that he felt it could be harmful to the company if the government continued to press for reductions in executive compensation.

“We cannot attract and retain the best and brightest talent to lead and staff the AIG businesses, which are now being operated principally on behalf of the American taxpayers - if employees believe their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury,” Liddy said.
If he can't attract sufficient talent to lose hundreds of billions of dollars and run his company into the ground, my heart bleeds for him. But he thinks they're going to quit? Who's going to hire the losers who crashed and burned AIG? Liddy - if you finally get around to doing your job and firing the clowns who ruined your company, will you still owe them these bonuses?

Update: It just gets better:
"Any credibility that could have been given to Mr. Liddy’s argument that these payments are necessary to retain top talent was completely destroyed in last month’s 10-K filing when AIG itself disclosed that nearly $60 million of those retention payments are going to employees who will be terminated."
How incompetent do you have to be to negotiate a contract unavoidably requiring payment of "retention bonuses" to employees you're not retaining? This doesn't exactly back up AIG's other line, that they can't fire these people because they're the only ones who understand the toxic witch's brew they created well enough to produce an antidote.

1. There would be a question of whether these bonuses constitute wages, and thus get priority for payment in bankruptcy; but I suspect that in a bankruptcy AIG would be shedding employees long before bonuses were due, while renegotiating compensation packages for any who remained on the job - provided the company didn't just liquidate.

1 comment:

  1. The bonus payout excesses at AIG are just the tip of the iceberg of what is happening with the other Wall Street bailouts including Bank of America. Working productive Americans are bailing out the same crooks that destroyed our economy along with 45% of the wealth in the world and now the American taxpayers and our children will be forced to live a far lower standard of living with reduced prosperity and opportunities due to this but only we pay the price.

    Washington has bailed out the banks, Wall Street & their Washington special interests and much of the cost is added to the national debt to by paid by this and future generations while real estate and investments continue to fall. Find out what a growing repudiate the debt movement could mean for treasuries, the dollar, gold and the stock market and how this is a better alternative than Washington’s plans to monetize the debt in future years and tax and destroy our remaining wealth by depreciating the dollar.

    The Campaign to Cancel the Washington National Debt By 12/21/2012 Constitutional Amendment is starting now in the U.S. See: