The American International Group, which has received more than $170 billion in taxpayer bailout money from the Treasury and Federal Reserve, plans to pay about $165 million in bonuses by Sunday to executives in the same business unit that brought the company to the brink of collapse last year.
Word of the bonuses last week stirred such deep consternation inside the Obama administration that Treasury Secretary Timothy F. Geithner told the firm they were unacceptable and demanded they be renegotiated, a senior administration official said. But the bonuses will go forward because lawyers said the firm was contractually obligated to pay them.
The payments to A.I.G.’s financial products unit are in addition to $121 million in previously scheduled bonuses for the company’s senior executives and 6,400 employees across the sprawling corporation. Mr. Geithner last week pressured A.I.G. to cut the $9.6 million going to the top 50 executives in half and tie the rest to performance.
Make no mistake, these bonuses were only able to be paid because of the additional $30 billion in taxpayer money that was handed over by the Obama administration.
The Obama administration was well aware of contractual obligations. Contracts were signed and binding and had to be paid or employees could have sued and won their cases in court.
By handing AIG bailout after bailout (4 of them to date) our government assured that AIG had the funds to pay these bonuses.
Lawrence Summers, chairman of the White House National Economic Council, calls these bonuses "outrageous", yet, it was this very administration that has made them possible... THAT is what is outrageous!!!
More from George's Bottom Line:
In a phone call Wednesday to AIG CEO Edward Liddy, Treasury Secretary Timothy Geithner said it was unacceptable for the company to give out tens of millions of dollars in bonuses for senior executives after the government committed $170 billion to keep the struggling company afloat -- far more government bailout money than has been awarded to any other firm.
In a letter to Geithner Saturday, AIG's chairman and CEO agreed to restructure some of the payments. But Liddy wrote, "quite frankly, AIG’s hands are tied," arguing the firm would risk a lawsuit if it scrapped the bonuses.
Liddy also wrote the government's demands could affect AIG's ability to retain "the best and brightest talent to lead and staff the AIG businesses" if "employees believe that their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury."
So, the Obama administration makes phone calls, claims they "tried" to stop it, yet they knew full well contracts had to be honored, before they handed over an addition $30 billion.
Had the government kept their nose out of this whole thing, AIG would have had to file for bankrupcty and your tax dollars would not have gone toward paying out $165 million to AIG execs.... that is the bottom line.
Hows all this "change" working out so far folks?