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A case, gulp, for paying the AIG bonuses

A solid argument in favour of paying the $165 million in bonuses


 

You won’t like it, but there is a solid argument in favour of letting AIG pay its employees the controversial $165 million in bonuses. As inconvenient as it might sound, those bonuses fall under contracts that shouldn’t be so easily cast aside by the government. It’s one thing to try and renegotiate them, but to tear them up? Some argue it would lead down a slippery slope, spreading worry through the business community. Sure, the bonuses are going to people who helped create this mess, but they’re also the ones who will help fix it. Arguably, the problem would be made worse if they were driven from their jobs. Perhaps that’s why AIG offered the bonuses in the first place—it knew just how badly it needed to keep some of these people.

The New York Times


 
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A case, gulp, for paying the AIG bonuses

  1. This business with contracts is a devilish issue. Why should AIG folks get their bonuses when American government expects the UAW to rewrite their contracts and cramdowns on mortgages are on their way. I don’t know why bankers contracts have to be respected but other contracts can be rewritten willy nilly. I am glad I am not an American or my head would be ready to explode due to special treatment these Wall St types seem to receive.

  2. Jwl:

    For one of the few times, I actually agree with you.

  3. Jwl:

    For one of the few times on this site over a comment you’ve made.., I actually agree with you.

  4. Why should bonuses be payed to a bankrupt company? Were it not for the taxpayer these incompatant empoyees would be on the street without even a paycheck, let alone a damn bonus. And this is a direct cause of there own malfeasance, greed and stupidity. This company is, for all intents and purposes, in receivership and the government is the trustee. In these cases regular empoyees or people working on contracts can get in line and settle for pennies on the dollar or nothing at all as has happened to many hourly empoyees. If they don’t like the situation they can offer their wonderful services to another employer, good luck with that. All bonuses to be put in trust until the company shows a profit and the government as a secured creditor is payed back with interest. If any of these clown raise a stink they should be escorted to the door by federal marshals. Let them sue and go before a judge and explain in open court(and it should be televised) why they deserve a bonus for causing millions of people to be put on the street with nothing. A cage full of monkeys couldn’t have done any worse than these shamless hucksteers. All the monkeys would cost would be a bunch of bananas. GOD, the nerve.

  5. It’s a mystery why the bailouts to AIG and others wouldn’t have included a clause that none of the money was to be awarded as bonus payments to employees and that failure to comply would result in forfeiture of the bailout. How many of the bonus entitlement recipients would be willing to be responsible for their firm losing it’s bailout?

  6. This is precisely the kind of disgusting inevitable mess you get when government gets involved with running private business. JWL is right of course: if insanely overpaid UAW assembly line workers need to swallow a reality pill, so should insanely hyper-bonused incompetent financial execs.

    But the real solution for losers in the marketplace remains: bankruptcy. Then all this insanity, contractual or otherwise, goes poof. Shareholders are cleaned out. Creditors line up for slim pickings. Employees sharpen their focus big time, are let go, and-or find another line of work.

    For all that Darwin and evolution seem to be taking over the focus of media on Parliament Hill, wouldn’t it be nice if “survival of the fittest” actually allowed creative desrtuction to work its magic on Wall & Bay Streets? If we could all step off of Goodyear’s back for just a sec (what’s he supposed to do to recover, crack his own neck?), can we not see that governments all over are denying “natural selection” in the marketplace left, right and centre? Why is everybody praying for the corporate meek to inherit our kids’ taxes?

    • Oh really, the 1929 stock market crash and the dirty thirties is a better alternative than government intervention. Just let the market look after it all. Let the Maydoffs and all the rest of the shysters waltz out the door with billions and retire to Palm Beach, meanwhile millions are in soup lines and hobos are riding the rails etc. During that time government did nothing but attempt to balance the budget and watch the misery continue for a decade. More neocon baffle gab Madeyoulook. The depression never ended until Roosevelt intervened with the New Deal.

      • Care to learn a little history, wayne? Like how that New Deal likely prolonged the misery?

        The Depression was richly earned; society was living unsustainably and deserved the payback. What gives us the right to steal from the future to avoid our own well-deserved pain? What lessons will future businesses learn from this: “It’s a high-risk move, the payoff could be sweet, but the downside is the government saves our asses anyways” is hardly the curriculum we should want in the MBA courses.

        And it’s fun to watch you try to bring Madoff’s crimes into this. It means you’ve basically rhetorically lost already. He belongs in jail, and that’s where he’s going. What, you want the US government to bailout all his “investors” too? Ask a loved one to check your temperature.

  7. “Sure, the bonuses are going to people who helped create this mess, but they’re also the ones who will help fix it.”

    This would be very funny.. if you were not serious. But on a serious note: Do you want to buy some marsh land in Florida from me? Act now..it’s going fast.

  8. We you are aware that 12 of the people that received bonus are no longer with the company.So much that the are needed to turn the company around

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