The Chinese would shoot the creeps!

GOOD MORNING FLINT!
3/17/09
By Terry Bankert
http://attorneybankert.com/

Open a window and shout "We are mad as hell and we are not going to take this any more."

GOOD NEWS- If AIG were Chinese the Executives would be shot.

BAD NEWS -Its an American Company.

GOOD NEWS-A Congressmand said they should resign or committ suicide!

AIG Bonuses: What Can the White House Do? Obama Urges Treasury to Use Leverage and All Legal Means to Recover AIG Bonuses[1]

YES WE CAN ,YES WE CAN, YES WE CAN.

The U.S. Treasury will modify a planned $30 billion capital infusion for American International Group (AIG.N) to try to recoup hundreds of millions of dollars in controversial bonuses paid by the insurer, a Treasury official said on Monday[3]

President Obama moved to the front of a growing line of government officials and taxpayers who are furious that the insurance giant AIG agreed to pay $165 million in bonuses after taking more than $170 billion in taxpayer money to stay afloat. [1]

NATIONAL OUTCRY..WE WANT OUR MONEY BACK

Channeling the populist outcry, Obama vowed to do whatever he could to recover the AIG bonuses, calling them a fundamental violation of American values. He urged Treasury Secretary Timothy Geithner to use his leverage and legal avenues to rectify the situation. [1]

SOME SAY THE OUTRAGE IS THE POLITICIAN RUNNING FOR COVER

President Obama joined yesterday in the clamor of outrage at AIG for paying some $165 million in contractually obligated employee bonuses. He and the rest of the political class thus neatly deflected attention from the larger outrage, which is the five-month Beltway cover-up over who benefited most from the AIG bailout.[8]

PURSUE EVERY LEGAL AVENUE

"I've asked Secretary Geithner to use that leverage and pursue every single legal avenue to block these bonuses and make the American taxpayers whole," Obama said. [1]

CAN WE GET OUT MONEY BACK?

At issue is whether the government can recover the money. Sunday was the deadline for paying the bonuses. [1]

JUST WHO ARE THESE PEOPLE

Separately, state Attorney General Andrew Cuomo said he will subpoena the names of AIG officials involved and copies of their employment contracts to determine whether the bonuses are legal, given the firm's weak finances.[6]

AIG paid $165 million in bonuses to 400 executives in its financial-products unit over the weekend under employment contracts negotiated last summer, before the full force of the crisis in financial markets broke around the globe[7]

YES,CONGRESS CAN IMPOSE A 100% TAX

Rep. Carolyn Maloney D-N.Y, the chair of the Joint Economic Committee, is also calling for a 100 percent tax on bonuses not related to commissions. [2]


THEIR PAMPERED HANDS ARE TIED, WELL OUR CALLOUSED HANDS ARE AT THEIR THROATS

AIG CEO Edward Liddy wrote a letter to Treasury Secretary Tim Geithner Saturday explaining that "AIG's hands are tied" regarding the $165 million in bonuses and that "there are serious legal, as well as business, consequences for not paying." [1]

WHY ARE THEY GIVING IT TO THEM

AIG traders were promised fat bonuses. And Liddy--who was brought in to clean up the mess the traders and product managers made--has decided the bonuses must be paid. Outside lawyers have told him so.[4]

Now we can debate why A.I.G. felt it necessary to guarantee seven executives at least $3 million apiece when the economy was clearly on shaky ground. Perhaps we will find out these contracts were a bit of sleight of hand to enrich executives who knew this financial Titanic had hit the iceberg. But another possible explanation is that A.I.G. knew it needed to keep its people.[6]
That is the explanation offered by Edward M. Liddy, who was installed as A.I.G.’s chief executive when the government effectively nationalized the company last fall. (He is being paid $1 a year.)[6]

JUST WHOSE FAULT IS IT?

The politicians also prefer to talk about AIG's latest bonus payments because they deflect attention from Washington's failure to supervise AIG. The Beltway crowd has been selling the story that AIG failed because it operated in a shadowy unregulated world and cleverly exploited gaps among Washington overseers. Said President Obama yesterday, "This is a corporation that finds itself in financial distress due to recklessness and greed." That's true, but Washington doesn't want you to know that various arms of government approved, enabled and encouraged AIG's disastrous bet on the U.S. housing market.[8]

YES-FORC E THEM INTO BANKRUPTCY, THERE WILL BE A 6 MONTH LOOK BACK, THEN GO GET IT

It turns out that the leverage of future bailout money may be a far more powerful tool for the administration than legal action. However outrageous, the contracts are legally binding. [1]

YES-FIRE THEM ON THE SPOT BEFORE THE BONOUS OR LOSE THE COMPANY

Liddy likely has the power to fire AIG's bonus babies on the spot. Employed as they are on at at-will basis, he can simply let the whole lot of them go, say compensation experts familiar with AIG's structure.[4]

It's true the times have changed since those employments contracts were written in early 2008. Schaumburg-based Motorola, Continental Airlines and Applied Materials are among struggling companies where top executives are ripping up their contracts and giving back pay. A growing number of companies are reclaiming bonuses from executives who puffed up financial results.[4]A move against the bonus babies at AIG would merely be an extension of a trend.[4]

WHEN A BANK EXECUTIVES LIPS ARE MOVING ITS LYING

But there is one very small catch: the so-called "clawback option" that comes with government TARP money. The government can literally claw back bonus money, but only when it can prove executives lied about bank financing or knowingly took excessive risk. [1]

CONGRESS HAS TO GET THE MONEY BACK, THEY LET IT GO.

Compensation consultant James Reda says he has never seen it work. "To actually 'clawback' the money that's been paid is very difficult to do," said Reda, author of "Pay to Win." [1]

BREAK THE AIG CONTRACTS

Asked if he'd favor trying to see if those AIG contracts could be broken so the government could recover some of those payouts, Rep. Barney Frank, chairman of the House Financial Services Committee, stopped short of endorsing the idea. But he said "that's something that has to be examined."[5]

WE WILL NOT KNOW IF WE CAN DO IT UNLESS WE TRY

"I would want to know the consequences of not paying those debts," Frank, D-Mass., told The Associated Press.[5]

NO MORE TO AIG LET THEM FAIL

Still, taxpayers have already spent $170 billion on AIG. And the Obama administration pledged an additional $30 billion to AIG two weeks ago. The White House hinted today that future help could depend on what ultimately happens with the bonuses. [1]

OBAMA HAS TO THROW AIG IN THE TRASH HEAP AND GET OUR MONEY BACK.

"President Obama has to be the umpire," said Robert Johnson, former chief economist for the Senate Banking Committee. "He needs to the set a precedent that Wall Street doesn't set the tune." [1]

IF THEY CAN BREAK A UNION CONTRACT WE CAN BREAK AN EXECUTIVE KNUCKELS, GIVE US OUR MONEY BACK

Many analysts point to the auto industry, where federal help came with a catch, breaking open those longtime union contracts. [1]

TAX THE CREEPS

As public and political outrage grows over $165 million AIG paid as bonuses to executives while taking billions in taxpayer dollars, an idea is germinating in Congress. If you cannot get the money back, tax the bonuses.[2]

WRITE A NEW TAX PROVISION

"It's an idea very much at the embryonic stage," said Senate Banking Committee Chairman Chris Dodd, D-Conn., "You can write a tax provision targeted specifically at 98 percent of the taxable proceeds."[2]
Dodd said that "doesn't violate the terms of the contracts," referring to legally-binding agreements that appear to preclude government action.[2]

DON’T ASK AIG, TAKE IT FROM THEM. THEY ARE THE SAME PEOPLE WHO HAVE NO MERCY ON THE AUTO WORKERS.

"The autoworkers are being asked to turn back some of what they are making," said Gretchen Morgenson, a New York Times columnist. "I think the same can now be asked of AIG." [1]

RETENTION PAY! IN THIS MARKET JUST WHERE WILL THEY GO.

Also, some experts say that the idea of "retention" pay, or giving bonus to keep talent on board, is unjustified in these uncertain times. Many say that the government could legitimately make such a case, especially when AIG just posted a $61 billion loss. [1]

"If they want to quit, then let them quit," Johnson said. "As simple as that." [1]

THEY USED OUR TAX MONEY TO GIVE THEMSELVES BONUSES

Many critics made a similar point today: If the government hadn't bailed out AIG in the first place, there would have been no bonuses.[1]
100% TAX

Rep. Carolyn Maloney D-N.Y, the chair of the Joint Economic Committee, is also calling for a 100 percent tax on bonuses not related to commissions. [2]

In a letter she distributed to fellow legislators for co-sponsorship, Maloney introduces legislation that will instruct the Treasury and the Internal Revenue Service to develop guidelines that tax at 100 percent any bonus compensation that is not directly related to a commission for any recipient of TARP funds where the government is the majority owner of the company.[2]

"For a company that has required $170 billion in U.S. taxpayer assistance and is 80 percent owned by the United States government, this is clearly unacceptable," said Maloney.[2]

AND THE LEGAL BEAGLES SAY....

Obama didn't specify a possible legal strategy for blocking the payments. However, Cuomo said he was investigating whether the employment contracts cited by AIG were legally flawed - technically "fraudulent" - under state debtors and creditors law. They would be, he said, if AIG management knew when it signed them that weak finances would render them unable to pay the bonuses without outside help. Contracts can be renegotiated, he said, adding, "You could argue that if the taxpayers didn't bail out AIG those contracts would be worth the paper they're printed on."[6]

Experts in corporate law said the Obama administration has an important advantage in the controversy. In return for the bailout, the government now owns 80 percent of the company. "They're the big dog in the room now and can put some leverage on AIG to straighten this out," said attorney Jim Ervin, a partner at Benesch, Friedlander, Coplan & Aronoff Llp in Ohio.[6]

Attorney Ross Albert, a partner at Morris Manning & Martin Llp of Atlanta, said it's difficult to be specific about the government's options without seeing the contracts in question, but added, "If the bonus is based on achieving some bench mark and it turns out the bench marks achieved were through accounting hocus-pocus, not reality, they wouldn't even have a legal right to this bonus," Albert said.[6]

But Stephen Breitstone, a tax specialist in the Mineola law firm Meltzer, Lippe, Goldstein & Breitstone Llp, said the law Cuomo cited is intended for cases where companies facing bankruptcy are seeking to keep money away from creditors by giving it to employees or others. "If he can prove that's what this is, that's a pretty bold accusation," Breitstone said.[6]

Labor and employment attorney Carmelo Grimaldi, who works with Breitstone, said, "I think the government is going to have a difficult situation given the fact that these contracts were made. If they provide for bonuses, AIG faces a breach of contract if they don't pay these bonuses."[6]


DO NOT GIVE THEM ANY MORE MONEY

The Treasury is finalizing the terms of its latest rescue package for AIG, announced on March 2, and will attach new provisions to it, the official said. The company was due to pay $165 million in employee retention bonuses by Sunday to employees of AIG Financial Products, the unit that made bad bets on toxic mortgages and credit default swaps.[3]

The official, who spoke on condition of anonymity, said the Treasury was considering several repayment arrangements aimed at giving the money back to taxpayers. (Reporting by David Lawder; Editing by Leslie Adler)[3]

ON THE OTHER HAND

The government agreed to uphold those contracts when it seized control of American International Group in September. It argued that failing to repay the debts of the globally interconnected company could cause catastrophic losses at big international banks, potentially toppling the financial system.[5]

The Washington crowd wants to focus on bonuses because it aims public anger on private actors, not the political class. But our politicians and regulators should direct some of their anger back on themselves -- for kicking off AIG's demise by ousting Mr. Greenberg, for failing to supervise its bets, and then for blowing a mountain of taxpayer cash on their AIG nationalization.[8]

Whether or not these funds ever come back to the Treasury, regulators should now focus on getting AIG back into private hands as soon as possible. And if Treasury and the Fed want to continue bailing out foreign banks, let them make that case, honestly and directly, to American taxpayers.[8]


AND THEN ANOTHER HAND

"If you're in Las Vegas, and you leave the casino to go play craps with a bunch of people on an alley way, you shouldn't be able to go to the state and ask for your money back," said Barry Ritholtz, a financial analyst and author of "Bailout Nation: How Corrupt Money Shook Wall Street."[5]

BITING THE HAND THAT FEEDS THEM

"How do they justify this outrage to the taxpayers who are keeping the company afloat?" Obama asked.[6]

Posted Here by
Terry Bankert
3/17/09
You are invited to continue this discussion on my Face Book Page. http://www.facebook.com/people/Terry-Bankert/645845362


Sources...
[1]
http://abcnews.go.com/Business/story?id=7097000&page=1
[2]
http://www.foxnews.com/politics/2009/03/16/tax-aig-executive-bonuses-dodd-says/
[3]
http://www.reuters.com/article/americasRegulatoryNews/idUSWAT01115720090317
[4]
http://www.chicagotribune.com/business/chi-greising-aig-liddy-mar16,0,4836148.story
[5]
http://www.google.com/hostednews/ap/article/ALeqM5hA1jnv7991tSy_WtaI5DEow0DKMAD96VD3AG0
[6]
http://www.newsday.com/business/ny-bzaig176072311mar17,0,2024512.story
[7]
http://www.philly.com/inquirer/business/20090317_Outrage_on_AIG__but_options_less_clear.html
[8]
http://online.wsj.com/article/SB123725551430050865.html?mod=googlenews_wsj

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