AIG (AIG): Paying Taxpayers Back With Taxpayer Money

March 18, 2009
from 24/7 Wallst.com

Using the oblique reasoning techniques of politicians, the Administration has decided to get back the big bonuses that AIG paid to some of its employees by withholding the next of many payments made to the insurance company. Without the infusions, the company would have gone under and may still falter in the future.

According to Reuters, the barely competent Treasury Secretary Timothy Geithner will insist that AIG pay back taxpayers the $165 million in bonuses before the government will send AIG its next $30 billion in bailout cash. The news service reports that Geithner wrote in a letter to Congress, “We will impose on AIG a contractual commitment to pay the Treasury from the operations of the company the amount of the retention awards just paid.”

The planned action is hardly more than spitting into a strong wind.

AIG’ paid out the bonuses, probably obtained by the employees fair and square in outrageous employment packages. No one seems to have disclosed the name of the people who signed the agreements on behalf of AIG, or who approved them in the first place. AIG’s clueless CEO, Edward Libby, will go before Congress to try to explain that.

The long and short of it is that AIG will pay back taxpayers for the bonuses using taxpayer money. AIG has no money of its own. It has planned to sell off some of its divisions to raise capital. With one or two exceptions, there have been no takers. Perhaps the cause of that is tight credit markets, or perhaps the AIG operations that are one the block are not terribly attractive.

After a day or two of thrashing AIG and its employees, Congress and the Treasury can pretend to use government bailout money to pay the government back. Or, they can hang on to the issue because it makes for a good political circus. If the latter path is the preferred plan, the business of putting hundreds of billions of dollars into the economy to save it from a deepening recession can be put off to the side of the agenda and the most important work of the Administration can be delayed.
Click to read the rest of the article

AIG has been the bailout from hell - This is a great article!

AIG Shame
The bottom line is that the bonuses fail the outrage test.
from The National Review Online
March 17, 2009
By Rich Lowry

Now, that’s cost efficiency. It took a mere $165 million to discredit the entire $11.6 trillion edifice of bailouts, capital infusions, and guarantees that have accompanied the financial meltdown.

The bonuses AIG wants to pay its employees are a pittance compared with the $170 billion it has received in government bailouts, a trifling .097 percent. But nothing so angers the gods of populism as the word “bonus” (surely some genius is formulating a suitable euphemism even as we speak). Pres. Barack Obama wants to try to block the bonuses, and other administration officials talk of making AIG pay back the government for the amount of the bonuses. Fine, but where do we go to get the other $169.835 billion back?

AIG has been the bailout from hell, dysfunctional and opaque. The government has had to restructure its rescue over and over, throwing billions more into its maw. Only now have we learned the identity of the true recipients of the bailout, the so-called counterparties to AIG’s credit default swaps, financial firms strewn around Wall Street and the globe, from Goldman Sachs to Deutsche Bank and France’s Société Générale.

Republicans and Democrats are now stumbling over one another to give AIG a good populist beat-down, and no one should pity AIG. But what everyone in Washington wants to ignore is that the banking system, festooned with $1 trillion or $2 trillion worth of bad assets, may still need more government attention rather than less. Obama has been taking a pass on cleaning up the banks in favor of passing Great Society II because the issue of the banks is too politically difficult.
Click to read the rest of the article

AIG: No Teflon For Obama

Shelby assails Geithner's handling of AIG bonuses
March 17th 2009
from Cheat Seeking Missles
Posted by: Laer at 04:51 am

This morning, the AP nailed Pres. Obama for political grandstanding, a sign that the media is sniffing the wind and questioning the continued viability of Obama-fawning as an editorial policy. The story covered the White House’s failed and weak effort to stop AIG from paying out $165 million in bonuses to executives in the division that screwed up so badly it necessitated - or so they say - the company’s federal bailout.

Obama directed Treasury Secretary Timothy Geithner to see whether there was any way to retrieve or stop the bonus money — a move designed as much for public relations as for public policy.

And that’s in the news hole, folks, not on the opinon page.

Obama and Geithner had plenty of time to stand in the schoolhouse door on this one, but instead they shook their fists impotently and moaned about contracts. Contracts, schmontracts. If it weren’t for the bailout, AIG would be BK, the execs wouldn’t have jobs, and they certainly wouldn’t be divvying up a cool $165 mil of your money and mine.
Click to read the article