Rep. Frank wants to see if AIG bonuses recoverable

[pinto]

Source: Reuters

WASHINGTON (Reuters) - U.S. Representative Barney Frank, chairman of the House Financial Services Committee, said on Sunday the government needs to determine if millions in employee bonuses at American International Group Inc can be recovered.

"We need to find out whether these bonuses are legally recoverable," Frank, a Democrat, told the "Fox News Sunday" program, adding that the timing of the company's commitment to make the awards to its employees was important.

Embattled insurer AIG, which has received three government bailouts totaling $180 billion, had promised to pay about $1 billion in retention bonuses over a period of several years, half of which has already been paid.

AIG Chairman Edward Liddy said in a letter to U.S. Treasury Secretary Timothy Geithner that the firm was legally obligated to make already-committed 2008 employee-retention payments, the value of which were set early last year before problems at the Financial Products unit became public.



Read more: http://www.reuters.com/article/politicsNews/idUSTRE52E0ZJ20090315

[dkf]

1. Go Barney!!!!

Best news I've heard today.

[skooooo]

12. God bless Barney..

...he comes on TV a lot for a congressman, imo. I love hearing him tell the truth.

[SlowDownFast]

28. LOL!

You love hearing him tell the truth?

You really haven't been paying attention.

[natrat]

42. these fucking lying politicians, he's the turd who wrote the law in the first place

he's gonna see what he can do, kind of like when bill clinton signed the financial services modernization act that allowed all this stuff to happen

[GreenTea]

48. You're right along with the slimy fucking republicans!

[JDPriestly]

63. You are correct, however, I give Barney Frank some leeway

on this.

The Bush administration placed Obama and Congress under enormous pressure to pass the bail-out.

The original Paulson proposal was a draconian, unconstitutional power grab. It gave Paulson carte blanche to hand out money to his friends at the banks and on Wall Street without any oversight at all -- and just a few weeks before the election.

Do you remember how Paulson loudly proclaimed a crisis right before the 2008 election? We do not know the full extent of the threats that were made privately to members of Congress, but it bordered on extortion and blackmail from what I have heard. Apparently Paulson threatened total economic collapse if Congess did not give him free reign to hand out money that he demanded. And all this was done at a time when members of Congress needed to be home talking to their constituents and running their campaigns.

In the face of Paulson's threats, Barney Frank and other members of Congress attempted to impose limitations on Paulson's power grab, on Paulson's ability to just hand out taxpayer money as he saw fit. In spite of the valiant effort of Frank and Obama and other members of Congress (remember Paulson on bended knee before Pelosi), Congress did not have the time to investigate or do proper due diligence. This was just another instance of the contempt of the legislative process that the Bush administration showed again and again.

Obviously, AIG knew before it received taxpayer money or even requested it, that it had entered into contracts that would require it to pay unreasonable amounts of money to the crooks that were running it.

Because of the timing and Paulson's demand for total discretion in giving away the money, doing due diligence was Paulson's responsibility, not Frank's, not Congress's. Paulson didn't do what he should have done to protect the interests of the American taxpayers.

I hope that Congress will investigate and that Paulson will have to describe what he did to Congress and that the names of all those receiving these bonuses will be made public, very public.

Perhaps, if their names are made public, we can, as a nation, shame these greedy individuals into waiving their contractual "rights" to these bonuses. After all, as someone else pointed out (maybe Barney Frank himself), the auto industry union members are being forced to waive their rights under their contracts in order to get government loans. Surely we can ask as much of the AIG employees.

The AIG employees who are claiming the right to this money should be called upon to demonstrate their patriotism -- by just saying no to taking this money -- or taking only a very small amount of it. The AIG employees are already rich, and contracts or not, should be informed that they are literally taking food out of the mouths of the children of people who will lose their jobs and incomes thanks to the greed and risk-taking of the AIG executives.

How can I claim they are taking food from the mouths of children? Today I went to a local grocery store. The cashiers were talking about who was being fired. I asked about what they were saying. They were young, the right ages to have small children -- and as supermarket cashiers, they are certainly not rich. They all looked sad and scared and told me that the most recently hired are being laid off first.

It was Sunday at noon. Usually some customers drop by the store to pick up things after church. But today, there was almost no one in the store. It's really sad. So, these AIG executives, by taking money that should go to the banks to loan to businesses to pay ordinary employees are taking money out of the mouths of children. Shame on them.

Sorry for the long rant. But when you really talk to people who are facing losing their jobs, you get pretty emotional.

[saigon68]

66. They will eventually go into Chapter 11

After one more round of fleecing by the criminal executives in-charge

[liberalmuse]

2. No more bailout for you.

AIG should be cut off from any future bailout money. Fuck this shit. It's mindboggling that they think that beggars have the right to distribute bonuses on the tax payer dime. I think they should also have to give back the exact amount they distributed in bonuses, with penalty.

[pinto]

6. AIG is claiming they are legally contracted to make these payments.

At least that's their line and they're apparently sticking to it. :eyes:

[dkf]

13. How's about they fire the department for malfeasance and then

see if they are still obligated by contract?

[Rashel]

38. If we wouldn't have given them our money, there would be no contract - OR AIG!

Much less the stinkin'bonuses!

[SammyWinstonJack]

44. Yeah, no kidding! But many here were so glad we handed them billions of our tax $$$!

x( THANK GOD IT PASSED! x(

[valerief]

14. If they were so worried about their contracts, they wouldn't have sold

insurance for so many bad mortgages they knew were bad. They didn't care then. All of a sudden they care? Nah, I don't so.

[Name removed]

45. Deleted message

Message removed by moderator. Click here to review the message board rules.

[JDPriestly]

64. AIG should be chopped up and its various parts should be sold

to private investors. The practices that led to this disaster must be made illegal. Once AIG is broken up into small parts, its executives can "compete" for the jobs in the new companies. If AIG is broken into as small of pieces as it should be, the new jobs won't be so highly paid. Considering the condition that AIG is in, the executives claiming these bonuses did not do a good job.

Maybe the jobs in the new, smaller companies that are created when AIG is broken up (under my proposal) will not be quite so overwhelming, and these characters will be able to manage the new companies better.

[GoesTo11]

16. Clawback any bailout money already given too.

And arrest them. You can't tell me that there were no crimes committed. Maybe they have covered them up so far, but it's time to investigate. Why has there been no move to figure out what criminal action - fraud, RICO, mail fraud, interstate commerce, tax evasion, etc. happened in the course of this whole clusterf.

[earthboundmisfit]

25. Damn right.

AIG for damn sure, and all the rest of the bastards too - you know they're all doing basically the same shit. Talk about "entitlements" - these are the ultimate!
Fuckers.

[Alcibiades]

32. Bonuses=entitlements

Good catch.

[Rashel]

37. If they can send Martha Stewart to jail, can't they find a way to send these crooks?

[earthside]

3. What crap.

Cut-off AIG.

Frank is proposing a fig-leaf that lets the crooks at AIG keep coming to YOU and ME for billions and billions more dollars.

For what?

WE don't know.

This convoluted, overly complex insuring of risk and loss that AIG has involved itself in has got to end ... or we will be right back where we started at the beginning of this depression.

Why Barney Frank is so intent on saving AIG is beyond me, but that is really what he is supporting -- bonuses are nothing in the big picture of what they are doing.

[pinto]

5. Would repeal of the banking/investment deregulation cover these practices?

Or would it take insurance-specific regulation?

[BeyondGeography]

4. Is AIG "recoverable"?

The Administration needs to explain why keeping this amoral zombie company going is so damned important and what the taxpayer rewards will be. Tomorrow, first thing.

[wordpix]

7. "too big to fail" - why? The dinosaurs failed and this is just one more

Same laws of evolution - adapt to the new climate or die off.

[mbperrin]

8. Let's see: good union auto workers are forced to take huge pay cuts,

huge layoffs, lose pensions, reduce health coverage; good union air traffic controllers were simply fired, period, as a group; many other workers who paid into retirement funds for decades are told that those plans no longer exist, and they'll have to take much less from the stub government program instead; Texas school teachers are being told that their retirement fund lost 1/3 its value in bad investments last year so they'll have to make it up with increased contributions from their paychecks,

BUT

the fuckity fuck fuck fuckers who are responsible for the largest corporate loss in world history anytime anywhere are entitled to bonuses paid from taxpayer money??

In any situation, there is a tipping point that can lead to physical violence, and I do not think the tone-deaf bastards at AIG realize how close they are to it - there is REAL anger on boards all around, including the NY Times comments, and if the greedy fuckers at AIG don't get it, the

POLITICIANS had better.

US taxpayers own 80% of AIG - fire the incompetent bastards who brought it to here!!

[madmom]

10. You said it MUCH better than I could ever think of, thank you!

[valerief]

15. Yep, and a lot of angry homelosers still own their guns. nt

[EFerrari]

18. Frank never could have imagined AIG would use this money to pay out bonuses. n/t

[marshall]

62. Relying on the kindness of strangers is not a good plan

Frank should have learned by now that people will screw you over for a buck if they can.

[madmom]

9. Wait a minute.. they say they are legally obligated to pay out these bonuses, ok, but

by the same logic aren't the Big 3 legally obligated (by contract) to pay it's blue collar workers health care and agreed upon wages, not to mention the retirees. I don't get the double standard that is being allowed here.

[closeupready]

11. Summers, Geithner and Bernanke must protect their Wall Street friends.

Blue collar workers don't count. Same shit, different administration.

[MannyGoldstein]

23. We Need Democrats To Take Their Places

"Democrats" like Geithner and Summers are the most dangerous people in politics: Republicans who call themselves Democrats. There's a reason why uniformed soldiers who are captured get jail, while spies are shot.

[katandmoon]

29. I fault Obama for appointing them and it really makes me question whose side he is really on

[MannyGoldstein]

30. FWIW, I Think Obama's On Our Side

I believe that he picked these folks in a misguided quest for evolutionary change to the left, rather than revolutionary change (which can be very, very messy). But any alternative here will be very messy, so we might as well just take a deep breath and get on with what needs to be done.

[No Elephants]

57. Excellent point!

[Sgent]

67. The UAW has agreed to every

change in pay/benefits that has happened -- maybe grudgingly, but they agreed none the less.

These guys would probably wind up suing if they weren't given their bonuses (as many/most could make the same money elsewhere), and winning. Unless the US allows AIG to fail, the may have no choice but to pay it -- absent congressional action which invalidates the contracts.

[mbperrin]

70. Let 'em sue. Half the lawyers in every case are wrong and lose.

I'm not at all surprised that their own personal lawyers would write a letter saying they must be paid.

My lawyer once wrote a letter to Allstate Insurance saying that I must be paid.

Their lawyer wrote a letter saying I must not be paid.

Three years later, I was paid. Turns out the Allstate lawyers were wrong.

Let's get into court!

[nradisic]

17. What do you mean if?

Go git'er done!

[Wizard777]

19. Yet in the back rooms they knew and did it any way.

AIG Chairman Edward Liddy said in a letter to U.S. Treasury Secretary Timothy Geithner that the firm was legally obligated to make already-committed 2008 employee-retention payments, the value of which were set early last year before problems at the Financial Products unit became public.

[MindMatter]

20. Forget the bonuses. Go for the throat

Break that company up.

If a company is "too big to fail", then it is too big, period.

[kiranon]

22. Agree and fire the top leadership and anyone who got a bonus.

[MindMatter]

35. Definitely. Go for the lasting consequences

We probably can't get most of the money back. And why we chase after that, these guys are free to keep doing it. SO far, neither Bush nor Obama has done one damn thing to change the root cause. Here are things that will make a real difference.

1) Break up any company that is judged "too big to fail."

2) Fire any executive who was in on the destruction of these companies.

3) Jail terms. You can bet that some of them broke a lot of laws in the process of "earning" their bonuses. Let's see some of their asses in jail for 20 years.

You want to see some real changes in behavior, you must do these things. Otherwise all they have to do is lay low until the storm blows by, and then they will be back to the same games.

[No Elephants]

58. AMEN!

[pleah]

21. MF! I am so sick of these bastards, and, I sick to death of "our" government

bailing out these thieves.:grr:

[gristy]

24. Take the AIG bonuses back, then let the bastards sue.

I am more disheartened by these bonuses than I have been in quite some time. For the government to decide a priori that they "can't" take back the bonuses is just nuts. If individuals in AIG wants to sue over the loss of their bonuses, then let the courts decide, preferably in a jury trial. Discovery could be a very interesting!

[Abq_Sarah]

71. I'm pissed about the bonuses

To say the least but I'm less pleased with the idea that legal contractual obligations between an employee and employer can be voided by the government retroactively on a whim. The time for setting conditions was before the money was delivered and accepted, not months after the fact. The Congress massively fucked up the allocation of TARP funds, throwing out massive quantities of money with no strings attached. As far as the courts deciding, they only thing they have to consider was whether or not the contract was legal and whether or not the conditions of the contract were met.

[AlbertCat]

26. early last year before problems at the Financial Products unit became public.

Ahhhh....but not before someone....maybe not the public....but someone knew about them.

[SlowDownFast]

27. Barney Fife didn't see this coming?

Congress didn't see all this coming?

I saw it coming.

Barney Fife and the rest of Congress are complicit.

[tomm2thumbs]

31. My guess is that if AIG execs didn't get their money, they were going to tell the truth about AIG

I bet if anyone knew what was really going on with AIG, all the connections through Asia, the fears of the Chinese government that the populace would riot if they lost their massive savings in AIG's Asian companies, we would realize that the Chinese are puppeting what is happening and that little of these decisions are coming from the American government. It makes complete sense that when China is lending the money, they are making the rules.

If the execs didn't get their money, I'm guessing the details on how intwined Chinese financials are with America would collapse the markets entirely.

[EFerrari]

36. That never occurred to me but you're probably right.

Maybe these aren't bonuses, they're bribes.

[bagrman]

33. They say that these bonuses are to keep people from leaving, who's hiring.

[LynneSin]

34. Legally obligated to reward the people who tanked the company

that's utter bullshit

[lsewpershad]

39. Maybe I have it all wrong

I always thought that bonuses were given when people help the company do well . If that is the case????
These people who caused failure should receive none and should be made to pay back every penny. Besides don't we now own AIG? Can we now fire the lot of them?

[Sherman A1]

40. Seize AIG and auction off the assests

at least we might get something for the office furniture.

Oh, and while we are at it......

Jail the Exec's under RICO.

[Althaia]

41. the text of the contract, at the SEC site

http://idea.sec.gov/Archives/edgar/data/5272/000095012306006773/y21578exv10w1.txt

some relevant bits:

"PURPOSE

The Compensation Committee of the Board of Directors (the "Committee") of
American International Group, Inc. ("AIG") has determined that certain key
employees of AIG and its subsidiaries (together, the "Employer") contribute
substantially to the long-term growth and profitability of AIG. AIG has created
this AIG Executive Incentive Plan (this "Plan") to reward these individuals and
to provide incentives for their continued contribution to the long-term
performance of AIG. It is also intended that all Incentive Award Amounts (as
defined in Section 4) payable or provided for under this Plan be considered
"performance-based compensation" within the meaning of Section 162(m)(4)(C) of
the Internal Revenue Code (the "Code"), and the regulations thereunder, and this
Plan will be interpreted accordingly."

and

"A. CALCULATION. Each Participant may be paid or provided with an incentive
award amount under this Plan equal to 0.3% of AIG's Adjusted Net Income with
respect to each Performance Period. Notwithstanding anything to the contrary in
this Plan, the Committee may, in its sole discretion, reduce the incentive award
amount for any Participant for a particular Performance Period at any time prior
to the payment of incentive awards to Participants pursuant to
<PAGE>
Section 5 (a Participant's incentive award for each Performance Period, as so
reduced, the "Incentive Award Amount")."

I am not a lawyer, but I read that as AIG NOT being legally obligated to pay any bonus to the screw-ups.

However, they still plan to pay $160 million to the unit who caused their problems-
http://www.nytimes.com/2009/03/15/business/15AIG.html?_r=3&hp

[pinto]

43. Thanks for the snag. To tell you the truth, a lot of this is over my head, part of the problem, imho

We're ponying up some big bucks on the premise that it'll help the general public, either in the short or long term. I'm OK with that. What I would like to see is some plain speaking about what it entails from all and for all.

I tend to trust Rep. Frank and his history on the committee. Yet I think we need some clearer nuts and bolts info from all. i.e, from the Admnistration on where Bush's bailout funds went, if they know, and where this Administration's funds are expected to go. And from Frank on what oversight, between the Congress and the White House, actually entails.

This is an intricate dance, of course, yet I favor some clear outlines from the powers that be over TV analysts' talking points. We all know it's a big deal for the country.

[Rashel]

46. $170 billion in taxpayer bailout money $165 million in bonuses.

:wtf:

[RowdyRacer]

47. Some contracts are better than others??

The line from the gov't today is that their HANDS ARE TIED due to the contracts with the AIG employees.
What about the Auto Workers contracts?? The first condition for the auto companies to receive bailout money was to renegotiate the UAW contracts.

[Petrushka]

73. Hm-m. Depends on what "may be paid" means . . . I mean . . .

. . . "may be" = maybe . . . if it said "SHALL be paid", payments or incentive awards would be mandatory. Contractual obligation, did they say? Hm-m.

[MasonJar]

49. Excuse me, but if your company goes under there is no money for bonuses.

How would these crooks have legally paid the bonuses if we taxpayers had not bailed them out with our very hard earned money? How much is Chairman Liddy getting? Get it back please, Barney, and no more funds for AIG under any circumstances. They have been funneling that money to Goldman Sachs and other Wall Street and big bank customers. If we want to give those institutions money, we can make that decision separate from AIG. In fact most have also received bailout. There had better be significant reform and regulation. If not, then the country needs a taxpayer revolt.

[GreenTea]

50. !

[GreenTea]

51. Too late, those bonuses & employees are on the seven mile beach on the Cayman Islands. Along with

The Goldman Sachs employees & bonuses, of course it's our tax money they are lavishing themselves with as well as stockpiling our same tax dollars into the Cayman Island banks.

[Belial]

52. Nice.. Real Nice...

Yet another example of the new administrations oversight.. sigh

[tomm2thumbs]

53. I propose trade embargos with any country acting as tax haven - start with Cayman and continue

Is it too much to ask? Just dig up the paperwork on Cuba and dupe it with Cuba scratched out and Cayman Islands written in.

[Optical.Catalyst]

54. Change the name from 'Bonus' to 'Severance Pay' and put those rich fat cats out on the street

They did such a good job of running their company into the ground that they deserve a bonus, then they should have no trouble at all finding another equally good job.

[kmlisle]

55. Congress has the power to tax the B%$#@ds on those bonuses!

Why not lay a 95% tax rate on any bonus over a certain amount? We could use that money to pay for education, health care, Mortgage restructuring, energy infrastructure! Congress has the power and I am willing to bet that some rebugs will join in on this one as they are also complaining!

[Thothmes]

65. Congress can do that

but that change in the tax law would not take effect until the next tax year and would not cover these bonuses.

[flyarm]

56. Hey Barney do the people who have lost their pensions get a recovery too???????

just asking..they were contractual as well!!!!!!!!!!

and got pissed all over!!

[No Elephants]

59. You have to question executives who obligate a company to pay

$1billion in bonuses without putting in any conditions about solvency of the company, let alone profitablity of the company.

BTW, whatever happened to Chapter Eleven?

[Abq_Sarah]

72. I would have prefered to see AIG

Go the Chapter 11 route. It would force restructuring and change the way they do business. What guarantee do we have that they won't come back with their hands out over and over requesting more money since they powers that be have determined "they're too big to fail". That, by the way, is bullshit.

[pam4water]

60. I know how to recover it. You put a 100% tax on bonuses for people at companies that

received bail out money. And while you are at it tax any capital gains they got by selling their own company stock at 100%. And on money made on options.

[Trav72]

61. Get Em Barney

No more Mr Nice Guy

[bemildred]

68. Tax the hell out of the very, very rich. That ought to do it. nt

[No Elephants]

69. We own 80% of this company. Whether or not we can get back the bonuses, we can

vote out any directors who voted for the bonuses and we can fire whichever executives we want.

That oughtta be an incentive for the execs to rerurn the bonuses politely. If not, sayonara.

If Congress and Obama have the will, that is.