March 15, 2009
The Facts
Edward M. Liddy, CEO of AIG, has said the company will pay out additional bonuses to the tune of $170 million. Once again, Liddy is using that same old stand-by worthless excuse that AIG has to take action in order to retain desirable talent. Timothy Geithner, Treasury Secretary, claims he’s not happy about the bonuses and said so in a meeting with Liddy last Wednesday. As a pacifier for Geithner, Liddy now says he will take a chance of loosing some people and lower a few of the bonuses. However, all he’s really doing is postponing parts of the bonuses until later in the year.
My View (and some more facts)
Liddy is blackmailing the government. He points out that there is still $1.6 trillion of bad assets in their portfolio, and if the government puts that in jeopardy the taxpayers will be left holding a much bigger empty bag. Therefore, in Liddy’s eyes, he has the government over the preverbal barrel. In fact, according to this article, AIG sent government officials a 21-page letter on March 10th (just days after the latest release of bailout funds) essentially saying that AIG was on the verge of collapse. The article quotes AIG as saying that the government should prevent “potentially catastrophic unforeseen consequences”, meaning more money – a lot more money. So Liddy feels perfectly comfortable in doling out millions more in bonuses without retribution.
Jim Hoagland, for the Washington Post, recently wrote the article “Follow The Money“, in which he points out just how close the public is in going ballistic over AIG and the others. Hoagland says he has been putting the question to several Obama Cabinet officials of how concerned or angry is the general public. The answer he almost always gets is “— concerned, but not angry. Pause. Not yet”.
Hoagland also points out in his article that billions of the bailout dollars handed over to AIG was used to pay off foreign banks. There are many according to Hoagland, but he quotes the Wall Street Journal as identifying Deutsche Bank of Frankfurt Germany as being one of those banks that received billions from AIG’s bailout money.
With the bonuses, AIG is demonstrating their conviction that ‘we know we are too big to fail’ and the government is going to do nothing about the bonuses. Putting up with the outrage of the taxpayers who are helpless to do anything about their action, and receiving a tongue lashing from a few government officials is a small price to pay for a few million dollars in their personal accounts. The fact that AIG and those employees know they wouldn’t have so much as a regular pay check had the taxpayer Calvary not come charging in makes no difference to them. They are well aware of having powerful friends in high places to protect them.
The only thing that’s going to bring all this to a complete stop is action by the common people. Until we are literally standing in front of the White House, the Capital, and Wall Street by the millions, this outrage is going to continue. The taxpayer piggy bank has been broken open and they are not going to stop until every drop of blood is sucked out of us.
World’s Biggest Ponzi Scheme: AIG and Treasury « Cynical Synapse // Mar 15, 2009 at 2:37 PM
[...] and pieces come out from time to time. We know AIG’s spending $170 million on bonuses. They justify this on the need to keep talented people so they can fix the remaining $1.6 trillion [...]
Cynical Synapse
// Mar 15, 2009 at 3:30 PM
It’s all just the world’s biggest Ponzi scheme! Of course there’s no transparency. The people who claim to be fixing it were all in positions to have had something to do (or look the other way) with the making of the Wall Street debacle.
I was opposed to the bailout from the very start. While I knew there would be consequences with AIG’s failure, I figured at least the executives would have to take their lumps, too. And I figured my share would be less. Instead, we’re all paying and the executives are pocketing it. With no end in sight.