Tuesday, July 14, 2009

Haiku 071409

baseball fans

cracking sunflower seeds --
gray squirrels


Recently, we read the following:

Washington Post: “AIG Is Preparing to Pay Millions More in Bonuses” by Brady Dennis and David Cho

American International Group is preparing to pay millions of dollars more in bonuses to several dozen top corporate executives after an earlier round of payments four months ago set off a national furor.

“The company has been pressing the federal government to bless the payments in hopes of shielding itself from renewed public outrage….

“AIG doesn't actually need the permission of Kenneth R. Feinberg, who President Obama appointed last month to oversee the compensation of top executives at seven firms that have received large federal bailouts. But officials at the troubled insurance giant, whose federal rescue package stands at $180 billion, have been reluctant to move forward without political cover from the government….

“AIG's proxy statement filed last month explains why AIG initially instituted the retention payments. The company stated that after the federal bailout began in September, ‘we needed to confront the fact that many of our employees, perhaps the majority, knew that they long-term future with us was limited, and our competitors knew that our key producers could perhaps be lured away ... Allowing departures to erode the strength of our businesses would have damaged our ability to repay taxpayers for their assistance…’

“The recent discussions between the company and Feinberg illustrate how politically sensitive the bonuses have become, both for AIG and for the Obama administration. No development in the government's bailout of financial firms has angered lawmakers and ordinary Americans more than the disclosure in mid-March that the global insurer was paying more than $165 million in retention bonuses. Those were aimed at retaining 400 employees at AIG Financial Products, the troubled unit whose complex derivative contracts nearly wrecked the global insurance giant….”


And we thought:

… How can AIG strengthen its ability to repay taxpayers by retaining the very same people who wrecked AIG? In fact why weren’t they fired in the first place? How can you bring down your company and still be offered more money to stay?

This retention deal smells. Why are AIG officers and employees being allowed to snack on their bailout seed funds? Makes one wonder if the so-called retention bonuses are really hush money. Are the bonuses supposed to keep people from spilling the beans on a bigger scandal?

Are there silent players -- "insiders" -- being protected who made a bunch of money on the "complex derivative contracts"? Maybe top AIG executives and officials of the past administration?

Coffee shop talk....

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