Truth during a Crash - Bailouts, Bonuses, and Spending

[Analyst]

I've been reading everything I can get my hands on regarding AIG, the bailouts, bonuses, and what seems to be an overwhelming number of oversights by Congress. It's just so frustrating that it seems impossible to get the real story - everything I read has such a fabricated feel to it.

I'm absolutely disgusted and horrified by the quagmire that is the current political and economic climate. What's worse is I don't feel like I'm able to piece together the whole story - I'm not a conspiracy theorist, but I've got a sneaking suspicion that there are numerous and hugely important facts being glossed over in the media regarding the economy (surprise, surprise). Sure, AIG is reprehensible for paying millions in bonuses - but why is this comparatively paltry sum being argued so heatedly for days? Same with the auto bailouts. Those issues just scream "smoke screen" to me, but I don't have all the facts to back that position up.

I'm sick to death of bailout mania, and watching trillions of taxpayer dollars being thrown around as if we're a limitless source of cash.

Does anyone else feel like we should just let these failed companies die the death they've earned?

Should we be outraged at the actions of our Treasury Department and Congress?

Does anyone have links to reliable new sources that contain facts that aren't disclosed by the big national media outlets?

Phew. I feel a little better now. Thanks! :2wave:

 

[Grateful Heart]

Sure, AIG is reprehensible for paying millions in bonuses...

I found that AIG Chairman Liddy made a much more logical and rational case in his testimony today as to why the bonuses were advisable, compared to some of the grandstanding I heard from a few Congressmen.

If you believe the bonuses are reprehensible, why is that? Since we don't even know the names of the individuals who received them, how can we judge that they are reprehensible? In fact, how do we know that some of those who've received bonuses (negotiated as far back as 2007 or early 2008, btw) haven't done an exemplary job in helping get rid some of these toxic assets?

Do you know for a fact that all these bonuses are reprehensible?

 

[Tucker Case]

I found that AIG Chairman Liddy made a much more logical and rational case in his testimony today as to why the bonuses were advisable, compared to some of the grandstanding I heard from a few Congressmen.

If you believe the bonuses are reprehensible, why is that? Since we don't even know the names of the individuals who received them, how can we judge that they are reprehensible? In fact, how do we know that some of those who've received bonuses (negotiated as far back as 2007 or early 2008, btw) haven't done an exemplary job in helping get rid some of these toxic assets?

Do you know for a fact that all these bonuses are reprehensible?

I agree. I think Liddy has done a great job defending them. I also think Congress is looking like a bunch of assholes.

 

[Analyst]

I found that AIG Chairman Liddy made a much more logical and rational case in his testimony today as to why the bonuses were advisable, compared to some of the grandstanding I heard from a few Congressmen.

If you believe the bonuses are reprehensible, why is that? Since we don't even know the names of the individuals who received them, how can we judge that they are reprehensible? In fact, how do we know that some of those who've received bonuses (negotiated as far back as 2007 or early 2008, btw) haven't done an exemplary job in helping get rid some of these toxic assets?

Do you know for a fact that all these bonuses are reprehensible?

What I mean is that paying any bonuses while taking taxpayers dollars to stay afloat is reprehensible. I'm not making any value judgment on whether the bonuses were justified for each individual or not, just that AIG paying any bonuses at all while taking taxpayers bailout money because their business is failing is wrong.

It's my opinion, not a fact. It seems the most logical position with the information I possess. I'm not someone who has such a strongly entrenched opinion that I won't see reason or the other side of an argument (quite the contrary), so if you'd like to change my mind on the matter, feel free to try and convince me. I'm open-minded, but as my handle indicates I won't be swayed by anyone's "because I say so". Hard facts from experts and logic get my attention much more quickly - which is the whole point of my post.

You do seem to have picked the one item from my post you found objectionable just to construct a counter-argument, rather than responding to my questions, which are genuine in nature. I'm truly looking for more information and guidance on this issue, as the whole mess is very disheartening to me. I'm not sure what you were trying to accomplish with your post.

 

[American]

Barney Frank, Charlie Rangel, Tim Geitner, Osama Obama, and Christopher Dodd are examples of reprehensible.

 

[Grateful Heart]

You do seem to have picked the one item from my post you found objectionable just to construct a counter-argument, rather than responding to my questions, which are genuine in nature. I'm truly looking for more information and guidance on this issue, as the whole mess is very disheartening to me. I'm not sure what you were trying to accomplish with your post.

You're correct. I understand your frustration. That particular sentiment popped out to me because I'd been watching Liddy's testimony... and the grandstanding aspect about these bonuses really ticked me off.

No offense.

:2wave:

 

[obvious Child]

What I mean is that paying any bonuses while taking taxpayers dollars to stay afloat is reprehensible.

It seems the most logical position with the information I possess.

Here is where we start.

First of all, as I said to Lexrst, the problem was indeed with the small London financial products department. Second, the bonuses paid were not just to them but as retention payments to keep employees who made money in other areas of the business from jumping ship. Essentially AIG ensured future bonuses to certain employees to ensure that they stay with the firm. This is exactly what we want. The insurance portion of AIG is indeed profitable. What is killing them is credit default swaps (see link at bottom for what exactly a CDS is). We want AIG employees who bring in the insurance profits to stay, especially since the US government and by association the taxpayers on the hook, the more the firm makes, the less chance we'll have to cover it like we had to do in the S&L crisis. The last thing we want is profitable employees from jumping ship. We've seen how losing key employees destroyed Circuit City, allowing it to happen to a nationalized firm is something most people wouldn't want.

I got absolutely no problem with the bonuses paid to non-financial product department personnel.

And it seems really wrong to get angry at a bonus to an employee that's help keeping AIG floating.

Credit default swap - Wikipedia, the free encyclopedia

 

[Analyst]

You're correct. I understand your frustration. That particular sentiment popped out to me because I'd been watching Liddy's testimony... and the grandstanding aspect about these bonuses really ticked me off.

No offense.

:2wave:

Fair enough, thanks for clarifying. :mrgreen:

Grandstanding indeed. Seems to be a political illness in Washington..it's going around.

 

[Analyst]

Here is where we start.

First of all, as I said to Lexrst, the problem was indeed with the small London financial products department. Second, the bonuses paid were not just to them but as retention payments to keep employees who made money in other areas of the business from jumping ship. Essentially AIG ensured future bonuses to certain employees to ensure that they stay with the firm. This is exactly what we want. The insurance portion of AIG is indeed profitable. What is killing them is credit default swaps (see link at bottom for what exactly a CDS is). We want AIG employees who bring in the insurance profits to stay, especially since the US government and by association the taxpayers on the hook, the more the firm makes, the less chance we'll have to cover it like we had to do in the S&L crisis. The last thing we want is profitable employees from jumping ship. We've seen how losing key employees destroyed Circuit City, allowing it to happen to a nationalized firm is something most people wouldn't want.

I got absolutely no problem with the bonuses paid to non-financial product department personnel.

And it seems really wrong to get angry at a bonus to an employee that's help keeping AIG floating.

Credit default swap - Wikipedia, the free encyclopedia

A reasonable argument. I was aware of the credit default swap fiasco, but not that it was such a small group of people who perpetrated it.

While I don't necessarily agree that bailing the company out in the first place was the correct first step, I suppose that now that we are financially committed I'd agree that we want them to retain their best people, to turn the situation around.

Good insight and distinctions, thanks.

 

[UtahBill]

I wouldn't make a wholesale committment to withholding bonuses for the reasons already given. But I would offer additional bonuses in the form of rewards to those who turn in the crooks involved in making our current economic situation so bad. Little of this happened behind closed doors. Way too many employees know things about those responsible. Pay them a bonus for providing evidence that helps convict those responsible...
And President Obama needs to be the one who announces the plan to go after the crooks. There are plenty of idle attorneys available to help prosecute the crooks...
Elliot Spitzer, redeem yourself!!!

 

[Middleground]

Why are bonuses necessary in the first place? What ever happened to a raise or how bout a vacation to Jamaica for doing a good job??? Point is, it seems the culture is corrupt, and must change as the wage gap seems too extreme. No employee is worth no more that 15 times more than the office janitor.

Time-and-time again, it's coming out that crooked and shady executives were taking huge sums of money despite running a business into the ground. The latest is Nortel, who despite a tax payer bailout, is handing out executive bonuses while laying off employees with zero compensation.

 

[Analyst]

The latest is Nortel, who despite a tax payer bailout, is handing out executive bonuses while laying off employees with zero compensation.

Disgusting. If this isn't illegal, it damn well should be.