Critique of AIG bonuses

I read this blog and decided to critique how the bonuses and case with AIG are being handled.

http://kpatel53.blogspot.com/
Obama anger at AIG bonus payouts

The blog states that it is AIG's responsibility to know in this current economic state that taxpayers money should be going in the right places and not into high paying executives. I believe the government should only intervene if they feel AIG is not being responsible with their bailout package. The government has intervened because AIG has used bailout money to pay bonuses. So according to the blog, this is right.

In my opinion, the government should have researched better where the bailout money for AIG was going to go. The government also knew about the bonuses beforehand, according to the Republican view. In my opinon, whether the Republicans are correct or not, the government should have figured out whether there were bonuses to be paid or other "frivilous" uses for the money were to be made. There is no restriction against paying bonuses with bailout money in the stimulous package: as ABC News' Capitol Hill Correspondent Jonathan Karl reported, in February, the Senate unanimously approved an amendment restricting bonuses over $100,000 at any company receiving federal bailout funds, but during the closed-door House and Senate negotiations the provision was stripped out and replaced with a measure by Dodd exempting bonuses agreed to prior to the passage of the stimulus bill on February 11, 2009. In my opinion, there should be a provision that bailout money is not used for bonuses, but there is not restriction against it. Therefore, the AIG executives should get the bonuses the government gave them indirectly through the bailout money. The bonuses should not have to be repaid because the government made the mistake of not researching where such a large amount of money was going.

Another opinion is that maybe if the government did know about the bonuses, the amount of money given wass such a small proportion of the governmental budget that it did not matter. Also the amount paid in bonuses was small compared to the actual amount AIG received (top individual bonus was more than $6.4 million, and the top seven received more than $4 million each. The Obama administration proposed a budget in the trillions of dollars. AIG only paid a few million to the executives in bonuses. I don't think that small percentage is going to make a difference in the budget or the deficit for that matter if they are paid back. And by the way, they will never get paid back. It will be impossible for them to pay it back because I guarantee you they actually do not have the money to pay back. So the government is going to spend all this extra money on a lawsuit when they could just admit they made a mistake and potentially break even rather than spending even more on lawsuits. The government could have been fine with the small percentage being paid to executives in bonuses, but the fact that the public found out and is now enraged, has made the government try to make it better. Their way of making it better is pretending like they didn't know about it in the first place.

It was impossible to prevent the contractual bonuses from being paid and said it may be difficult to recoup the payments. The government would "impose on AIG a contractual commitment" to repay the 165 million dollars to taxpayers.---http://www.business-standard.com/india/news/aig-boss-faces-grilling-in-angry-congress/56835/on

These bonuses were also guaranteed through contractual agreements, which were due even if bankruptcy occurred. Therefore, the executives should be paid these bonuses. They were promised before hard times occurred and were guaranteed. http://www.msnbc.msn.com/id/29739834/ Contracts written last March guaranteed employees 100 percent of their 2007 bonus amounts for 2008.The company and some federal regulators have said it was obligated by contract to make the payments. There is no restriction against paying bonuses with bailout money, I will state again. "It is also noteworthy that everyone who is complaining obivously didn't read the bill they voted for. This nation is in real trouble when congress passes laws to punish private citizens. Those bonuses were legal contracts made before the government bailout and legally must be fulfilled, like it or not" --http://blogs.abcnews.com/politicalpunch/2009/03/obama-adminis-1.html These bonuses are guaranteed to these executives at anytime, whether in good economic standing or poor. “These bonuses are payable regardless of performance and are calculated at 100 percent of 2007 compensation for all employees except senior management, who receive 75 percent of 2007 compensation. The amount is payable unless they are fired with good cause, resign without good reason or fail to meet performance standards. For those hoping that these employees could now be fired, “good cause” is defined in the agreement as a very high standard. This is normal for these agreements.“ There is no cause. And “failure to meet performance standards is another hard test to meet. If you could meet this latter standard, the contract provides that the employee still keeps his or her 2008 payments, just not next year’s. So even if the employee fails to meet performance standards this past year, they still keep the money paid this past weekend.”--http://dealbook.blogs.nytimes.com/2009/03/18/dissecting-the-aig-bonus-contract/