BF2S Forums AIG bonuses

DrunkFace wrote:

AussieReaper wrote:

ATG wrote:

In a perfect world, the stock market would decline another 70 or 80 percent along with the shuttering of about that fraction of our nation’s banks.

You do know what would happen to every bodies pension plans should the market drop another 80%, right?

Compulsory superannuation is an Australia only thing I believe.

You know more of our 'big government' taking control of our lives kind of shit Lowing (and co.) are so against.

specialistx2324 wrote:

well i guess most american citizens knew that big business that is not regulated is sooner or later going to bite this country in the ass one day.

i feel sorry for people who invested in American Intercontinental Greed. to tell you the truth, i doubt this bailout plan is going to fix the system, and thats the problem , the system , not how much money is in it.

CameronPoe wrote:

usmarine wrote:

CameronPoe wrote:

Nailed haha!

http://news.bbc.co.uk/2/hi/business/7953869.stm

hmm... well Dodd said the obama admin made them change the language in the bill to allow the bonuses?  now we tax it back?  wtf

Who cares about that shit - the main thing is that your money is being clawed back from those brazen fuckers. Is that a bad thing...?? Those who received the bonuses must be thanking their lucky stars they get to keep 10% of something they should never have had in the first place!

The Economist wrote:

“RESIGN or go commit suicide.” According to Charles Grassley, these are the only honourable choices open to the executives of American International Group (AIG) who have taken $220m in bonuses since the insurance giant was bailed out with $170 billion of taxpayers’ money. When even Republican senators start advising businessmen to kill themselves, you know things have got nasty.

The row has been fanned by the media, delighted at last to have a simple story to tell about a financial crisis that is hideous in its complexity as well as its consequences, and stoked by politicians from the most junior representatives to the president himself. This week Barack Obama ordered his treasury secretary to find a legal way to claw back the bonuses (see article). The Democratic leadership in Congress suggested a special tax, set as high as 98%, to do it if that failed.


The instinct to punish such shameless greed is understandable. The financial crisis and its repercussions have been horribly unjust. A handful of people took staggering risks with America’s largest financial institutions. The gambles went wrong, but they made out like bandits, and now the institutions they wrecked are being bailed out with public money.

Raging at bankers, however, is a dangerous road to tread. Banks and insurers are being bailed out not because they deserve it, or for the sake of their employees, but because there is no choice. America lacks an orderly system for winding down big financial institutions such as AIG; letting them fail would ultimately have been costlier than saving them, and the pain would have fallen on Main Street even more than on Wall Street. More broadly, demonising finance and bankers makes it politically harder to repair the financial system, which involves working with, and even rewarding, them. Some financiers now say they are reluctant to take part in government bail-out schemes, precisely because they fear retrospective vengeance in the future. That will slow the recovery.

Besides, it is not clear what Mr Obama can do about those AIG bonuses. Since it seems unlikely that there is a legal way to avoid paying them, his protest will merely have served to highlight his impotence. The same thing happened when the British government tried, and failed, to get the boss of the ruined Royal Bank of Scotland to surrender part of his pension.

Mr Obama has several other options, but none looks good. He could try to use executive power to break the contracts; but that would tie him in legal knots and might undermine confidence in the rule of law. Investors are already fearful that nasty things could happen to some of the debt they hold, such as having it converted into stock against their will.

Alternatively, Mr Obama could seek to recoup the money, on behalf of taxpayers, by withholding an equivalent amount from the next tranche of bail-out money, some $30 billion, due to be paid to AIG. A moment’s thought should show how foolish that would be. The bonuses would still remain in the pockets of the employees whose failures deserve censure, not reward. AIG itself would get less; but that would send the odd signal that the government had been prepared to give the company more than it really needed.

Or else Mr Obama can simply ventilate a bit, as he has done, but actually do nothing. That might seem harmless enough. But by revving up the outrage he will probably weaken his position with Congress. Getting money from the legislature has not been easy, even for the newly elected Mr Obama. He pushed his stimulus package through Congress by a wafer-thin margin; the Troubled Asset Relief Programme, money to be used for bailing out banks, was originally turned down by Congress. If Mr Obama now has to go back for either a second stimulus package or a new round of funding to buy toxic assets from the banks, he could face stouter opposition. Perhaps realising this, the president had rowed back a bit by mid-week.

Mr Obama’s best course is to explain, calmly and patiently, why bailing out banks and honouring contracts are necessary evils. He needs to eschew easy gestures, just as he should have avoided delighting a few populists this week by closing down a scheme that lets Mexican trucks into America. It demands leadership, which he was elected to provide. In the past few weeks he has shown signs of forgetting that.

Last edited by ..teddy..jimmy (2009-03-25 12:33:34)

Pug wrote:

However, to retain quality folks working for you, you have to pay them.