High Emotions arising from AIG $165 million bonus payout
Insurance giant AIG paid out $165 million in bonuses to top executives at AIG, 73 of which topped $1 million. The largest sum was $6.4 million.
Why this now raises everyone’s eyebrow whilst in the past big and fat bonuses was the best reward to keep their so called “best talented and right person” at top posts?
Well, when you are a rising and shining star and remain high and sparkling, everyone looks up to you admirably with all your actions and moves. But then, when you fell, loosing shine and have to beg for survival, you must be prepared to bow, stay low, stay humble and maintain a sympathetic profile.
Obviously, the bonus payout after AIG received more than $170 billions in federal assistance had caused controversies amongst the high profilers and storm of reactions from US taxpayers which they now own nearly 80% of AIG. Their voices should be heard. Let’s be fair, when you involuntary (because out of no choice) became an owner of a troubled company, the emotions are very entangled and complicated. There are more loathe than love as your taxed money are used to drain out the dirt, to give the toxic assets some breather and you still place hope you will get back your money soon.
This drama is staged by high profile names and we are the innocent audience. Sadly, we enter the theatre without knowing what to expect. The scripts only came out when the curtain drawn open. Some scripts and sequence of events are confusing and contradicting. Too many roles but none is able to deliver the scripts in a clear and understandable way to us. Luckily, without disappointment, the final hero stood out at the end of show, Barrack Obama. Hooray! Hooray! We still have hope! Let hope the ending of this drama becomes a reality in life.
There are three major plays in this drama. See below.
1. WHO SHOULD BE ANGRY?
President Obama was angry. Why? Let’s believe he put his hands on his heart when he said it. Otherwise, the rest of the taxpayers will shift the anger from AIG to him. Again, President Obama’s job is to clean out AIG financial mess with proper execution teams. Sadly, the inability to prevent this bonus payment has cast further doubt re how the bailout money is being used effectively to save 74 million clients of AIG in 130 counties.
The grass roots are angry re this “legally contracted retention bonuses” arrangement. What about Obama administration teams which are lack of knowledge and lack of transparency in handling this issue? More should be done to prevent the bonus payment?
President Obama said “That anger, if channeled correctly, can be an important tool to help fix the problem with troubled financial institutions” This is a hero’s statement.
2. WHO TO BE BLAMED?
Anyone stand out to take the blame? Who should we point figures to for this insensitive act? Big question, “When did Obama administration officials first learn that AIG was planning for the bonus?”
a) Senator Banking Committee Chairman, Christopher Dodd?
Is he responsible for language added to the federal stimulus bill to make sure the already–existing contracts for bonuses at companies receiving bailout money were honored? Is he more worried or being pressured that US government will face lawsuits without the new language?
Why give protection net to a greedy group, i.e. top executives who still expect their bonuses to be honored with the taxpayers’ money? Why these golden parachutes are provided if 74 million client’s money is at risk?
b) US Treasury Secretary, Timothy Geithner?
President Obama defended Geithner by saying “he is making all the right moves in terms of playing a bad hand” Yes, he was briefed by his staff only on 10 March 2009. Well, if you know “too little, too late”, you obviously don’t have a good start ahead of your game. Well, your main task may be trying to revive the very badly shaped economy worth trillion dollar and get the credit system to function properly again. Hence, this small amount of money $165 million may not seem to worth bothering your mind at first? The penalty, AIG is to be paid less by $165 million from federal assistance. Is this just a mathematical equation?
c) AIG CEO Edward Liddy?
The President said Liddy got this job after these bonus contracts were agreed to. And Liddy’s argument is, this bonus is necessary due to legal obligation and competition and to keep the best minds to run the business. We have no clues as how he is going to undone these contracts although he has asked the employees who had took home more than $100,000 to return at least half. Why only asked after payments were made, after fundamental values are broken?
d) Top executives who cashed in the bonus?
What are the reward criteria? What make them think they deserve this when others sorrow? Who decided who get what and when? With the tug of war, some employees have stepped forward to return their bonuses. Why now everyone realized that short term rewards does not provide long term financial stability?
3. WHO TO CLEAN THE MESS?
I am glad I do not have to provide the answer. Listen, President Obama said “…..Just go ahead and talk to me, because it’s my job to make sure that we fix these messes even if I don’t make them”.
We shall see.
By: Talk2U Dreamer
29 March 2009