Bonus paid to AIG Executives on the US Taxpayers BudgetAgain.

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Written by Wade Henderson

Tuesday, 17 March 2009 11:29

You need to keep a scorecard to keep up with the AIG issues in regards to the finance practices that are in question, that the US Taxpayers are ultimately responsible for.

by WadeHenderson

You need to keep a scorecard to keep up with the AIG issues in regards to the finance practices that are in question, that the US Taxpayers are ultimately responsible for.

In the NY Times on Sunday March 15, 2009 this was the announcement:

WASHINGTON " 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.

So what was argument to support the excessive bonuses to be paid to AIG Executives? Pre-Existing Contracts. How convenient. I have a dumb question here, who negotiated the deal with them to save their company, without revising these contracts? I realize that these contracts were secured prior to the announcement of the financial distress of AIG, but in light of the rescue mission the US Taxpayer is launching, should this have not been a point of discussion and been resolved prior to giving AIG the funding they wanted?

Is it just me or did we not see the same thing on Wall Street with the Sub-Prime Mortgage Executives draining the company of billions of dollars? Perhaps we can learn something from thatperhaps.

I know all about contracts, most of us have been on both sides of them and if you have been in business for very long you know that things happen that were not within your realm of control. I am not so sure if this was beyond control or not, but giving the benefit of the doubt, the contracts should have been renegotiated. Prior to the US Government giving the first dollar to AIG the existing contracts should have been reviewed, including the Executive pay scales and the realistic modification of these contracts should have happened or no deal.

We may be a bit late for this since billions of dollars have already been invested, but if these excessive Executive payout persist, it will be a matter of time before AIG is bleed dry again. Time to go back to negotiations, make the required concessions or pull outbottom line. It is a hard line to take, no question as this will really hurt the world economy if they fail, but if they fail today or in 9 months from now, it is better to let it happen today.

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