Bonus For Me But Not For Thee
The government owns 80% of AIG. We've provided $180 billion dollars in taxpayer money. Somehow, these companies don't understand that you can't turn around and provide $165 million in employee bonuses, from the stanpoint of optics, after doing that. The Treasury Secretary urged a renegotiation of the bonuses and AIG's chief executive just went ahead and defied him and took care of his own. Larry Summers called it outrageous on ABC today.
The bonuses are apparently contractual. But we could put them in bankruptcy tomorrow, and then they'd all be out of luck.
I don't think contractual bonus obligations have much standing in bankruptcy proceedings. But this article from CFO.com, sent along by TPM Reader JM, suggests that that's only the start of it. The article is about the follow-on to the Lehman bankruptcy. But what it argues is that if creditors can show the the bankrupt institution was actually insolvent at the time the payments were made they can force the execs to cough up earlier bonuses as well. And remember AIG was in dire straights long before the US government stepped in and provided the lifeline last fall.
Late Update: As we know, AIG isn't legally in bankruptcy, though it's only been saved from that fate by a government bailout. But TPM Reader CW raises what is in many ways a more spot-on point: "Have Richard Shelby and Bob Corker held their press event demanding that AIG break their contracts with their overpaid Financial Products workers for their shoddy work?"
Silly, only auto workers getting health care benefits bankrupt the country, not Masters of the Universe getting millions in bonuses!
With so many people hurting, it's really criminal for this to be taking place.