AIG gives $100,000,000 in bonuses

[KrauserKrauser]

The sad thing is this bonus money is chump change compared to the amount of money going out the doors of AIG. Everyone is up in arms over the guy that no longer works there getting 4.5 million when BILLIONS are going unaccounted for through the gaps.

Not to mention the 1.2 TRILLION in spending that we should all be looking at with intense fucking detail. The Democrats sure have a knack for getting the eyes of the public off the shady shit they have going on.

[Erik von Nein]

While it's a fair point that the amount of money going into bonuses is paltry compared to the amount of money AIG is bleeding away it's a sign of what the rest of AIG's business model is like. Also, it's the most easily identifiable and correctable waste of money for that company currently.

What "shady shit" are the democrats doing, exactly?

[SirNitram]

Only for companies that received bailout monies, not economy wide.

And only those companies who received more than five billion. Not terribly objectionable.

[Big Phil]

While it's a fair point that the amount of money going into bonuses is paltry compared to the amount of money AIG is bleeding away it's a sign of what the rest of AIG's business model is like. Also, it's the most easily identifiable and correctable waste of money for that company currently.

What "shady shit" are the democrats doing, exactly?

Obviously its fascist/communist totalitarian take your guns and money away and force you to have gay abortions shady shit, totally unlike the virtuous Republicans that ran Washington with a velvet glove for the previous eight years.

[Knife]

Hmm, all the talking heads are bitching the House Bill is unconstitutional due to ex post facto and bill of attained. I'm a bit confused by that since every year congress passes tax laws that take effect that year that affect people.

The sad thing is this bonus money is chump change compared to the amount of money going out the doors of AIG. Everyone is up in arms over the guy that no longer works there getting 4.5 million when BILLIONS are going unaccounted for through the gaps.

Lets face it, a lot of those fucking thieves that tanked the economy for us all will probably get away with it. This is a chance, that most people percieve as one of our only chances, to get the fuckers who did this to us.

[Darth Wong]

Funny how Republicans are falling over themselves trying to prove how much they despise high executive pay and tried to stop Obama from letting it happen, when just a few months ago they were raging that executive pay limits are a form of socialism:

http://www.salon.com/opinion/greenwald/2009/03/19/gop/

During the debate over those limits in early February, The Huffington Post's Ryan Grim wrote an article headlined "GOP Opposes Pay Limits On Bailed-Out Bankers" and compiled some of the statements from key GOP leaders:

President Obama has proposed capping compensation for executives at banks that take taxpayer bailout money at $500,000. Republicans hate the idea -- a position puts them uncomfortably on the side of people currently about as popular as child-porn producers and subprime mortgage brokers.

Senate Minority Whip Jon Kyl (R-AZ) blamed the "tone deaf" bankers for creating the political environment that allows Obama to call for a cap.

"Because of their excesses, very bad things begin to happen, like the United States government telling a company what it can pay its employees. That's not a good thing in America," Kyl told the Huffington Post.

"What executives have done is troubling, but it's equally troubling to have government telling shareholders how much they can pay the executives," said Sen. Mel Martinez (R-FL).

Sen. James Inhofe (R-OK) said that he is "one of the chief defenders of Obama on the Republican side" for the president's efforts to reach across the aisle. But, said Inhofe, "as I was listening to him make those statements I thought, is this still America? Do we really tell people how to run [a business], and who to pay and how much to pay?" . . . .

The objection to the government intervention in salaries is rooted in the Republican belief that government is inherently ineffective. "If Congress can run a financial institution, it belies everything I've seen in this body. Government does not do a good job running private institutions," said Sen. Kit Bond (R-MO).

Sen. Tom Coburn (R-OK) agreed: "If we do such a good job of running the federal government, what business do we have telling them how to run the banks?"

The GOP is also concerned that setting compensation limits could put the country on the road to serfdom. "This is just a symptom of what happens when the government intervenes and we start controlling all aspects of the economy. This is just the first piece," said Sen. Jim DeMint (R-SC). "If you accept the fact that the government should be setting pay scales in America, then it's hard not to go after these exorbitant salaries. But I think it's a sad day in America when the government starts setting pay, no matter how outlandish they are."

That's the Republican Party: vehemently advocate positions that result in great harm, and then, once political controversy erupts, once the destruction becomes transparent, shamelessly pretend to have opposed the policies in the first place.

Seriously, how long is the media going to allow Republicans to get away with such incredibly blatant lies? They're jumping on the "let's get those fat cats" bandwagon right now, but just two months ago they were screeching that such an action would be "socialism".

"I am all for the AIG bonuses" - Rush Limbaugh.

[Vendetta]

"If Congress can run a financial institution, it belies everything I've seen in this body. Government does not do a good job running private institutions," said Sen. Kit Bond (R-MO).

Well they could hardly do a worse job, could they?

[Starglider]

Well they could hardly do a worse job, could they?

Doesn't that phrase come under the category of 'tempting fate'?

[Darth Wong]

Well they could hardly do a worse job, could they?

Doesn't that phrase come under the category of 'tempting fate'?

No, "tempting fate" is trusting greedy unaccountable financiers to voluntarily limit their own greed. At least politicians have to answer to the public at some point. Financiers can thumb their noses at us and laugh all the way to their Swiss bank accounts.

[Justforfun000]

I see nothing wrong with the Government being involved in major corporations. Hell, the LCBO.. (Liquor Control Board of Ontario), is owned by the province of Ontario and almost all liquor (excepting beer and local wine), is purchased, rigorously tested to pass acceptable standards like lead PPM and other concerns, and is consequently the largest buyer of alcohol worldwide. As you can imagine, this gives them quite a bit of clout and also results in cheaper prices.

The down side of this is that you get what they bring in as a choice, and if you personally desire a specific brand not offered by them, you have to place a special request through Private ordering. However you have to buy by the case, and if it's a $20 bottle of wine, you're looking at $240 +. Ah well. You can't have everything.

[J]

If you think that's bad, check out where the bailout money went via CDS collateral postings and various securities lending programs. <snip>

As far as I know, those are insurance payments on all the financial bullshit that's going on. I think it's fair for AIG to honor those obligations, given that those are the obligations that make it insolvent in the first place and these other banks would be fucked if AIG didn't send them the money. After all, AIG is an insurance company; one would thus expect it to send money out on insurance claims.

Actually I'd argue that under contract law, the CDS contracts can and should be voided on the grounds they were fraudulent and/or invalid in the first place. Many of those contracts were written "naked", that is with absolutely no capital to back them, and no ability nor intention to pay in the case that the contracts are called. AIG peddled these products and enticed others into buying & signing contracts on which it neither had the ability nor intention to pay, this falls under fraud. Writing several trillion dollars worth of "insurance" when one is flat broke is fraud. I can't sell $100k of insurance when all I have is a few dimes I found under my couch, yet this is what AIG did with its CDSs and other finance products. Any contracts I've written under the above conditions would be voided and I'd be fined and/or jailed, and the same applies to AIG.

[KrauserKrauser]

If you think that's bad, check out where the bailout money went via CDS collateral postings and various securities lending programs. <snip>

As far as I know, those are insurance payments on all the financial bullshit that's going on. I think it's fair for AIG to honor those obligations, given that those are the obligations that make it insolvent in the first place and these other banks would be fucked if AIG didn't send them the money. After all, AIG is an insurance company; one would thus expect it to send money out on insurance claims.

Actually I'd argue that under contract law, the CDS contracts can and should be voided on the grounds they were fraudulent and/or invalid in the first place. Many of those contracts were written "naked", that is with absolutely no capital to back them, and no ability nor intention to pay in the case that the contracts are called. AIG peddled these products and enticed others into buying & signing contracts on which it neither had the ability nor intention to pay, this falls under fraud. Writing several trillion dollars worth of "insurance" when one is flat broke is fraud. I can't sell $100k of insurance when all I have is a few dimes I found under my couch, yet this is what AIG did with its CDSs and other finance products. Any contracts I've written under the above conditions would be voided and I'd be fined and/or jailed, and the same applies to AIG.

Right, and who and when do you think is going to grow a set of balls big enough to actually act on that knowledge. Obama? Please! He has a tax cheating Greenspan trainee in the Treasury. I'd rather have Romney in there, but that'll never happen.

[Darth Wong]

The fraudulent nature of those contracts seems to fall under the "if too many people do it for too long, then you can't convict them for it" unwritten rule.

The fact is that the authorities were all too happy to let them get away with this shit as long as it kept the Bush Administration's fraudulent economic growth bubble afloat (you know, the one that the entire financial industry kept bragging about until it exploded).

[septesix]

If you think that's bad, check out where the bailout money went via CDS collateral postings and various securities lending programs. <snip>

As far as I know, those are insurance payments on all the financial bullshit that's going on. I think it's fair for AIG to honor those obligations, given that those are the obligations that make it insolvent in the first place and these other banks would be fucked if AIG didn't send them the money. After all, AIG is an insurance company; one would thus expect it to send money out on insurance claims.

Actually I'd argue that under contract law, the CDS contracts can and should be voided on the grounds they were fraudulent and/or invalid in the first place. Many of those contracts were written "naked", that is with absolutely no capital to back them, and no ability nor intention to pay in the case that the contracts are called. AIG peddled these products and enticed others into buying & signing contracts on which it neither had the ability nor intention to pay, this falls under fraud. Writing several trillion dollars worth of "insurance" when one is flat broke is fraud. I can't sell $100k of insurance when all I have is a few dimes I found under my couch, yet this is what AIG did with its CDSs and other finance products. Any contracts I've written under the above conditions would be voided and I'd be fined and/or jailed, and the same applies to AIG.

Actually most of the payment going out has been as the form of collateral on the contract. Their counterparties already doesn't trust AIG's ability and had been asking for more collateral that are being met by the bail-out money.

And what if you declare those contract voided? Do you know what's going to happen next? Just about every counterparties had position themselves on the assumption that these contract can be honored one way or another. If the contract are simply voided, that's no different than AIG declare bankruptcy, and will force all those counterparties to write down the lose on those contract with AIG, and possibly forcing those counterparties to declare bankruptcy as well. That was precisely what the AIG bail-out aimed to prevent.

Now, is that actually a bad thing? we don't know, and I think probably not, which is why I don't like the bail-out to AIG. But to simply say that you can voided those contract without considering the consequence is very ignorant and dangerous.

[Illuminatus Primus]

Right, and who and when do you think is going to grow a set of balls big enough to actually act on that knowledge. Obama? Please! He has a tax cheating Greenspan trainee in the Treasury. I'd rather have Romney in there, but that'll never happen.

You're such a fucking moron. Let's just cut-out the middle man and just have a banker himself in charge! He made his fat cash co-founding a private equity investment firm, Bain Capital, and is cut from the same deregulationist, lassiez-faire, just-trust-us-Masters-of-the-Universe-financiers cloth that destroyed the economic foundation of the United States. Ugh, I bet you have humped at the man's "conservative" credentials with the rest of the Romney True Believers, without taking two-seconds to look up that his "business acumen" is being one of these corrupt financier pukes, and the man took AIG money himself. You're such a moron. You'll believe anything as long as it comes from the mouth of a partisan of God's Own Party.

[aerius]

And what if you declare those contract voided? Do you know what's going to happen next? Just about every counterparties had position themselves on the assumption that these contract can be honored one way or another. If the contract are simply voided, that's no different than AIG declare bankruptcy, and will force all those counterparties to write down the lose on those contract with AIG, and possibly forcing those counterparties to declare bankruptcy as well. That was precisely what the AIG bail-out aimed to prevent.

The holders of the contracts get to hold a "netting out" session where the contracts are netted out among the holders & counterparties, and the remains which can't be canceled out are paid off. This was done when Lehmans' went kaboom last fall and left $400 billion of CDS's and other crap lying around, they held a netting out session and zeroed out all but $6 billion, which then had to change hands among the bagholders. If Lehmans' is anything to go by, no one will take catastrophic losses, and those Lehmans' contracts were every bit as shitty as anything AIG has.

AIG also has around $400 billion of CDS contracts, if they go kaboom the netting out process will likely have a similar result. Let's say they were really shitty and $10 billion got vaped, that's still a hell of a lot less than the $65 billion in taxpayer dollars which AIG has funneled to its counterparties. We can void those contracts, pay off the holders after "netting out" and still come out well ahead.

Now, is that actually a bad thing? we don't know, and I think probably not, which is why I don't like the bail-out to AIG. But to simply say that you can voided those contract without considering the consequence is very ignorant and dangerous.

It would be fucking great, it would take a crapload of bad debts and shitty make-believe "assets" off the banks' books and get them started on honest accounting. AIG should've been crammed down and killed in the first place as my wife & I have said all along, voiding the CDS contracts and effectively doing the same thing now would be the next best thing.

[septesix]

The holders of the contracts get to hold a "netting out" session where the contracts are netted out among the holders & counterparties, and the remains which can't be canceled out are paid off. This was done when Lehmans' went kaboom last fall and left $400 billion of CDS's and other crap lying around, they held a netting out session and zeroed out all but $6 billion, which then had to change hands among the bagholders. If Lehmans' is anything to go by, no one will take catastrophic losses, and those Lehmans' contracts were every bit as shitty as anything AIG has.

AIG also has around $400 billion of CDS contracts, if they go kaboom the netting out process will likely have a similar result. Let's say they were really shitty and $10 billion got vaped, that's still a hell of a lot less than the $65 billion in taxpayer dollars which AIG has funneled to its counterparties. We can void those contracts, pay off the holders after "netting out" and still come out well ahead.

Actually, netting out in this instance doesn't work. First of all, it is the CDS contract that got AIG into trouble. AIG wrote those contract acting, essentially, as an insurer. There's nothing they have on their book that can net it out. If there was any, they wouldn't make anywhere near as much profit, but then they also probably wouldn't need the bailout. That $400 billions (I don't know the actual figure, I'm assuming you had the correct one) will remain $400B no matter how hard you tried to net out the notionals.

Now, is that actually a bad thing? we don't know, and I think probably not, which is why I don't like the bail-out to AIG. But to simply say that you can voided those contract without considering the consequence is very ignorant and dangerous.

It would be fucking great, it would take a crapload of bad debts and shitty make-believe "assets" off the banks' books and get them started on honest accounting. AIG should've been crammed down and killed in the first place as my wife & I have said all along, voiding the CDS contracts and effectively doing the same thing now would be the next best thing.

Hell ya, I echo your sentiment. It's not as if I don't believe there might be a systematic risk, but I believe that we can setup other ways to deal with (ie, by support the survivors) , without bailout the guilty parties. Let AIG and other reckless companies, and even reckless individuals burn.