Obama "outraged" by bonuses paid after firm got funds

To Patrick

If i were Obama and any AIG executive asked me about contractual obligations on bonuses i would tell him to FO and take me to court.
In the meantime i will initiate criminal investigation and arrest these bankers and insurance executives for criminal negligence ,fraudulent bookkeeping and operating ponzy schemes in one form or another.
The only way that a goverment can lend taxpayers money to the banks is by nationalising them so they come under the taxpayers control. In the absence of nationalisation the taxpayers monies just fade away in a black hole.

What does Obama expect when he practically handed them a blank cheque on a silver platter????? Actually this president seems even dumber than Bush!

Obama hasn't realised yet that the kind of people he's dealing with (AIG hierarchy)and he should've seen this coming.
The issue here is why did Obama and the Democratic congress rushed AIGs bailout without making certain that all issues regarding bonuses were resolved.AIG was bankrupt and all employees were potentially out of work.
Therefore, they should've been told that no bonuces would've been paid in exchange of employmemt.
The idea that the goverment cannot abrogate contracts is ludicrous.These companies have gone bust and any contractual obligations are null and void.
Obama's motto during the election campaign was change and change which starts looking like a big waffle.
His resistance on a new regulatory regime on the financial sector is nothing but an attempt to resuscitate
and preserve the old system and the old actors.

Patrik I'd turn your comment around a little. What amazes me is how little those in business know about business.

Some companies and their management behave as if we will live in a constant boom and pay their senior management accordingly. They do not spot the very obvious indicators that recession is on the horizon and then the public is expected to bail out their mistakes.

I'm working for a business in which the owner has not managed his company properly. He did not plan ahead and now he has to sack workers. If he had moved office premises, cut expenses (largely his own) and had not employed a useless deputy manager the company would not be in such a mess. And this is happening everywhere. Company bosses don't know how to cope in these conditions - as if this has all never happened before. Unbelievable!

Still, when you see how useless a large proportion of highly paid executives actually are, it inspires you. After all if talentless, sleeping at the wheel, greedy people can do it, so can the rest of us.

A majority of the American people are outraged by the bonuses, but Obama is just pandering to public sentiment. These are "retention" bonuses and the contracts are legally binding. The last thing an ailing company needs is multiple lawsuits to enforce pre-existing contracts. The bonuses are not based on merit or profit goals. Back in the day, AIG would convince people to leave their other company with the promise of a retention bonus at the end of the year if they remained with the company. It was this promise that lured people away from other companies. You can't just take that back now because it angers people. The best thing to do is learn from the experience and make changes to prevent or minimize it from happening in the future. Sometimes I am simply amazed with the public's lack of understanding of the business world. No wonder we are in this mess.........

Leonidas,

I am not a big fan of bank nationalization - banks are for profit and for a good reason. There is no guarantee that nationalized organization would run any better. Think government corruption.

There are organizations where "for-profit" is a proven disaster: railroads, infrastructure, roads, airlines - and in special, healthcare. No one ever made money long-term on infrastructure and probably the richest man in history (Persian Chosroes I, if I recall his name properly) made his fortune by securing the roads and providing hotels to businessmen FOR FREE. He did assume, they will have business meetings in these hotels and bring more business to Persia - which he of course did tax. He did not fail his expectations. ;)

As for giving the hell of criminal justice to responsible of AIG failure: sure, I think no one will object and we probably will see Obama doing just that. I won't object for sure.

To all:

I work in the insurance industry and for a company that went under due to the ingnorance/arrogance of a few in upper management. The company is contractually bound to provide me with a modest retention bonus every year (which is reviewed and revised every year). The reason being is that they want to hold on to talent for as long as possible until the company closes it's books. I know there is an end in sight and that is why they pay the retention bonus. If another company really wanted me, I would expect them to somehow make up for that lost bonus. That is precisely what AIG did. They lured people from other companies with the promise of a retention bonus. (Notice, I did not say "merit".) Certainly the fact that the US government is bailing out AIG and they are still paying a bonus angers people. But, you take your companies as they come. If they came with this bonus "baggage", you get that too. The government should spend less time bitching about what they got and more time figuring out how to prevent it further. What they don't want to admit is that they did not do their homework and did not attach restrictions to the bailout money. They did the same with the banks. They gave money out but no one is using it to lend. Government never wants to take responsibility for their mistakes and politicians do not ever want to admit them.

A majority of the American people are outraged by the bonuses, but Obama is just pandering to public sentiment. These are "retention" bonuses and the contracts are legally binding. The last thing an ailing company needs is multiple lawsuits to enforce pre-existing contracts. The bonuses are not based on merit or profit goals. Back in the day, AIG would convince people to leave their other company with the promise of a retention bonus at the end of the year if they remained with the company. It was this promise that lured people away from other companies. You can't just take that back now because it angers people. The best thing to do is learn from the experience and make changes to prevent or minimize it from happening in the future. Sometimes I am simply amazed with the public's lack of understanding of the business world. No wonder we are in this mess.........

To all:

I work in the insurance industry and for a company that went under due to the ingnorance/arrogance of a few in upper management. The company is contractually bound to provide me with a modest retention bonus every year (which is reviewed and revised every year). The reason being is that they want to hold on to talent for as long as possible until the company closes it's books. I know there is an end in sight and that is why they pay the retention bonus. If another company really wanted me, I would expect them to somehow make up for that lost bonus. That is precisely what AIG did. They lured people from other companies with the promise of a retention bonus. (Notice, I did not say "merit".) Certainly the fact that the US government is bailing out AIG and they are still paying a bonus angers people. But, you take your companies as they come. If they came with this bonus "baggage", you get that too. The government should spend less time bitching about what they got and more time figuring out how to prevent it further. What they don't want to admit is that they did not do their homework and did not attach restrictions to the bailout money. They did the same with the banks. They gave money out but no one is using it to lend. Government never wants to take responsibility for their mistakes and politicians do not ever want to admit them.

What does Obama expect when he practically handed them a blank cheque on a silver platter????? Actually this president seems even dumber than Bush!

Obama hasn't realised yet that the kind of people he's dealing with (AIG hierarchy)and he should've seen this coming.
The issue here is why did Obama and the Democratic congress rushed AIGs bailout without making certain that all issues regarding bonuses were resolved.AIG was bankrupt and all employees were potentially out of work.
Therefore, they should've been told that no bonuces would've been paid in exchange of employmemt.
The idea that the goverment cannot abrogate contracts is ludicrous.These companies have gone bust and any contractual obligations are null and void.
Obama's motto during the election campaign was change and change which starts looking like a big waffle.
His resistance on a new regulatory regime on the financial sector is nothing but an attempt to resuscitate
and preserve the old system and the old actors.

To Patrick

If i were Obama and any AIG executive asked me about contractual obligations on bonuses i would tell him to FO and take me to court.
In the meantime i will initiate criminal investigation and arrest these bankers and insurance executives for criminal negligence ,fraudulent bookkeeping and operating ponzy schemes in one form or another.
The only way that a goverment can lend taxpayers money to the banks is by nationalising them so they come under the taxpayers control. In the absence of nationalisation the taxpayers monies just fade away in a black hole.

Leonidas,

I am not a big fan of bank nationalization - banks are for profit and for a good reason. There is no guarantee that nationalized organization would run any better. Think government corruption.

There are organizations where "for-profit" is a proven disaster: railroads, infrastructure, roads, airlines - and in special, healthcare. No one ever made money long-term on infrastructure and probably the richest man in history (Persian Chosroes I, if I recall his name properly) made his fortune by securing the roads and providing hotels to businessmen FOR FREE. He did assume, they will have business meetings in these hotels and bring more business to Persia - which he of course did tax. He did not fail his expectations. ;)

As for giving the hell of criminal justice to responsible of AIG failure: sure, I think no one will object and we probably will see Obama doing just that. I won't object for sure.

Patrik I'd turn your comment around a little. What amazes me is how little those in business know about business.

Some companies and their management behave as if we will live in a constant boom and pay their senior management accordingly. They do not spot the very obvious indicators that recession is on the horizon and then the public is expected to bail out their mistakes.

I'm working for a business in which the owner has not managed his company properly. He did not plan ahead and now he has to sack workers. If he had moved office premises, cut expenses (largely his own) and had not employed a useless deputy manager the company would not be in such a mess. And this is happening everywhere. Company bosses don't know how to cope in these conditions - as if this has all never happened before. Unbelievable!

Still, when you see how useless a large proportion of highly paid executives actually are, it inspires you. After all if talentless, sleeping at the wheel, greedy people can do it, so can the rest of us.