Posted By Vicki McClure Davidson on March 17, 2009

By Vicki McClure Davidson * Frugal Café Blog Zone

There is outrage among American taxpayers, Congress, and the White House, about failing company AIG paying $165-million bonuses to its executives. This bonus-paying, accomplished with the taxpayer bailout money that our government gave to AIG with no “strings” attached, is being decried hotly by Congress, Pres. Obama, all the morning TV news shows.

Outrage? Against AIG? Or is it instead to distract the American taxpayers from connecting the dots and realizing who is actually to blame? Ahem, Congress, that would be you. Neat trick.

By Congress huffing and puffing, they’re trying to deflect attention to keep America from savagely turning on the federal government three-ring circus that created this huge amateurish blunder in the first place. Rather than going full-force to kick, bash, and demonize AIG, who in the heck is investigating the unmitigated bozo (or bozos) who authored the flawed bill in the first place? The head honcho bailout creator who didn’t see fit to insert anything about responsibility or liability in getting the billions of dollars in bailout money or how they were to be used? The one who would likely flunk a Business Contracts 101 exam?

Number one culprit is none other than “Wonder-Blunder Boy” Tim Geithner. The man who didn’t pay his taxes, still hasn’t filled positions for his department of the Treasury, has made sketchy, lame proposals with no concrete details to US financial heads about the pending new taxes and other money matters that have left them scratching their heads, the man Obama said was the only man in the entire country smart enough to get America out of the financial mess it was in. THAT Tim Geithner. Who is the real culprit, the inept screw-up, and who is a convenient scapegoat here?

AIG is held contractually to pay those bonuses. You don’t have to like it, I don’t have to like it. It’s our taxpayer dollars, and we should never have given them the money in the first place. In a free market, companies come and go and no matter how sad that is, the government has no business getting involved. But they did, and our elected officials did give the money to AIG. Rumor has it (not yet substantiated) that one of the reasons for pushing the bailout through so quickly for AIG is because AIG insures the pensions of Congress. So, they were protecting themselves (and who cares about 300 million Americans?) But like I said, that is not 100 percent affirmed.

AIG is legally bound to pay the bonuses. Period. Don’t have to like it, and believe me, I don’t. But they are not in the wrong here. Not legally, not contractually. “Bonus-Gate” is the massive blunder of our government. Many members of Congress (and Obama) KNEW about the contracted AIG bonuses months ago, and now that they’ve been given out to the executives, are feigning surprise and anger. They are LYING. Talk about trying to throw AIG under the “bailout bus” to save their own butts.

In the strangest bout of this “pay no attention to that man behind the curtain” sordid comedy, Senator Chris Dodd is now hoping to undo the damage HE inserted into the bailout bill (get in line behind Geithner, Mr. Dodd). The deliberate addition of protection for AIG to pay out those bonuses. Now that there is national outcry, Washington is scrambling like scurvy rats on the Titanic to avoid going down with the ship, trying anything that will laser-beam the blame from themselves. Obama, too. Good luck with that plan… we’re on to all you dopes. Obama’s approval numbers are dropping; they are now below those numbers of popularity that George W. Bush’s had at the same point of his presidency.

From Fox Business:

Amid AIG Furor, Dodd Tries to Undo Bonus Protections He Put In
By Rich Edson – FoxBusiness
March 17, 2009

Senator Chris Dodd (D-Conn.) on Monday night floated the idea of taxing American International Group (AIG: 0.9364, 0.1563, 20.04%) bonus recipients so the government could recoup some or all of the $450 million the company is paying to employees in its financial products unit. Within hours, the idea spread to both houses of Congress, with lawmakers proposing an AIG bonus tax.

The move represents somewhat of an about-face for the Senator.

While the Senate was constructing the $787 billion stimulus last month, Dodd added an executive-compensation restriction to the bill. That amendment provides an “exception for contractually obligated bonuses agreed on before Feb. 11, 2009” — which exempts the very AIG bonuses Dodd and others are now seeking to tax.

The amendment made it into the final version of the bill, and is law.

Separately, Sen. Dodd was AIG’s largest single recipient of campaign donations during the 2008 election cycle with $103,100, according to opensecrets.org. Dodd’s office did not immediately return a request for comment.

One of AIG Financial Products’ largest offices is based in Connecticut (the state Dodd represents).

Dodd Amendment Rules

* Crack down on bonuses, retention awards and incentive compensation: Bonuses can only be paid in the form of long-term restricted stock, equal to no greater than 1/3 of total annual compensation, and will vest only when taxpayer funds are repaid. There is an exception for contractually obligated bonuses agreed on before Feb. 11, 2009.
* For institutions that received assistance totaling less than $25 million, the bonus restriction applies to the highest compensated employee; $25 million to $250 million, applies to the top five employees; $250 million to $500 million, applies to the senior executive officers and the next top 10 employees; and more than $500 million applies to the senior executive officers and the next top 20 employees (or such higher number as the Secretary determines is in the public interest).

From the Washington Post:

White House press secretary Robert Gibbs, peppered with questions about why the president had not done more to block the bonuses at a company that has received $170 billion in taxpayer funds, struggled for an answer yesterday afternoon. He explained that government lawyers are “looking through contracts to see what can be done to wrest these bonuses from their recipients.”

Michelle Malkin’s blog covers more about this mess: AIG Derangement Syndrome and Chris Dodd: For AIG bonuses before he was against them

Other good reads:
Democrat = Socialist: Nevermind the Billions Going to ACORN, Those Damn AIG Exec’s Need to Burn!
The American Pundit: Senate Passed Dodd-Sponsored Amendment that Allows AIG Bonuses
Yahoo! News: Who is the real Tim Geithner?
Frugal Café Blog Zone: White House Sneer from ‘Thug’ Barney Frank: Who Cares AIG Families’ Lives Are Threatened?

Categories: Economy, Government, Health, Knowledge, Law & Constitution, Social and Political Climate
Tags: AIG, bailout, bonuses, Chris Dodd, Congress, executives, Government, Michelle Malkin, Obama, Tim Geithner, Washington DC, White House