Big banks don't seem to have any shame. Or any sense of what the rest of the country is suffering because of their reckless, speculative spree of easy credit, easy inflation of assets. Bonuses, they seem to think, are their due. Merrill Lynch paid out bonuses as it was going under. Claim was that it was necessary to keep the employees on board--retention bonuses. This, in a Great Recession that leaves bankers and lawyers at a loss for a job. Now, it's AIG.
Having received $170 billion from the US Treasury, AIG will pay $100 million of that "to executives in the same business unit that brought the company to the brink of collapse last year." Andrews & Baker, A.I.G. Planning $100 Million in Bonuses After Huge Bailout, NY Times, Mar. 14, 2009. The company claims that it is contractually obligated to pay them to the big guys in the financial products division that wrote all those worthless credit-default swaps. CEO Liddy wrote Geithner that "[w]e cannot attract and retain the best and the brightest talent to lead and staff the AIG businesses...if employees believe their compensation is subject to continued and arbitrary adjustment by the US Treasury." These deals were locked in early 2008, when AIG was trying to make sure its employees stayed around, when it was already realizing it was going to lose a bundle. Seven of these loser executives will get more than $3 million! But those are just payments on their total pay. The 50 top executives are supposed to get $9.6 million between march and September. Next year, the current CEO indicated he "hoped to reduce its retention bonuses for 2009 by 30 percent."
Who is kidding whom here? Of course these bankers' compensation should be subject to continued adjustment by the Treasury--we're paying it, after all. And it isn't arbitrary to refuse to pay a bonus to losers who caused a catastrophic market meltdown. This is a perfect example of the problem of allowing these maverick financial institutions to continue to run their own show when they are gorging on taxpayer handouts. The CEO and those executives receiving bonuses should be fired, not praised. The government owns 80% of this company, and still we are letting them pay millions to losers?
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