22
Mar

AIG´s bonus scandal clarified

Escrito el 22 marzo 2009 por Antonio Rivela Rodríguez en Uncategorized

I wanted to take advantage of this article published by Bloomberg on AIG´s bonus scandal to clarify 4 points that men in the street are not familiar with. Many times it is easier to be negative than to be informed, aware and cool. But information is key and this blog is about unbiassed info.

1. The fact that AIG has made losses does not mean that all the employees contributed to that situation. In fact, at most of the banks/insurance companies only 50/100 traders out of 50,000-100,000 employees dealt with CDOs & Subprime stuff (1 per thousand of the total).

2. Many other employees (99%) of the insurance company not only did not damage AIG´s reputation, but honorably made their corresponding budget for the year.

3. I understand Americans are furious & frustrated and the easy solution is to use taxes as a tool to get moneys back asap (congress was working on 80%/90% tax on AIG´s Bonuses for year 2008)

4. You need to bear in mind that executives were on guaranteed contracts

 

And that´s the key… Guaranteed Contracts mean and always meant that you get paid under any circumstances…. And try to twist that sacred legal concept upside down is not consistent with democracy…

Anyway… now with the “pan et circus” kind or article by Bloomberg so we can all be happy with other´s problems…

 

March 22 (Bloomberg) — Protesters hired a bus to hand deliver the message that President Barack Obama sent executives of American International Group Inc.last week: Give the bonus money back.

About 20 protesters, along with a press corps of national and international media who outnumbered them, yesterday rode to the Fairfield County, Connecticut, homes of two AIG executives who received portions of $165 million in extra compensation. The payments were made after their Financial Products unit in nearby Wilton had losses that precipitated the insurer’s $173 billion government bailout.

“There needs to be some accountability,” said bus rider Mark Dziubek, a father of five from Southington, Connecticut, who was laid off recently at a Theis Precision Steel Corp. rolling mill after 19 years on the job. “It’s putting pressure on them to do what’s right.”

Douglas Poling and James Haas, whose houses the protesters stopped at, weren’t seen. Both have agreed to return their bonuses, AIG spokeswomanChristina Pretto said in an e-mail yesterday. She declined to say the amount they received.

The AIG bonuses have sparked a national furor, with Obama calling them an outrage and vowing to get the money back. This week the Senate will consider legislation passed by the House of Representatives that would impose a 90 percent tax on employee bonuses at companies that received at least $5 billion in taxpayer bailout funds.

‘More Harm’

AIG Chief Executive Officer Edward Liddy, summoned to Washington on March 18 to explain the bonuses, told a Congressional subcommittee that the bonuses have brought death threats and that he was unwilling to name the payment recipients because he feared for their safety.

Asaad Jackson, 24, a musician, agreed. “With how the country feels right now, naming these executives might do more harm than good,” he said on the bus.

The house tour in Fairfield County was organized by the Connecticut Working Families Party, a coalition of union and community groups. The county had a population in 2007 of 910,003 and a median income of $79,326, according to the Connecticut Economic Resource Center, Inc. It’s located about 60 miles north of AIG’s headquarters in lower Manhattan. In addition to the protesters on the bus, another 20 demonstrators along with more print and TV reporters, cameramen and photographers trailed in a caravan of cars.

‘A Good Start’

When a handful of protesters got off the bus to deliver their written message at both houses, they were met by private security guards.

At Poling’s house, one of the people read the group’s letter aloud. Returning the bonuses was “a good start,” said the letter, which asked Poling and Haas to press for public policy that addresses the concerns of working and middle-class families. The protesters then left the letter in a mailbox at the end of the driveway and got back on the bus for the 4.3-mile drive to Haas’s house.

“They bear responsibility for some of the malfeasance that that company took part in,” said Stacey Zimmerman, a 35-year- old political organizer for Service Employees International Union in Stamford, Connecticut. The tour was “a way to show our members and members of our community how the other half lives.”

The Gold Coast

For Craig Stallings of Hartford, the state capital, that was one of the reasons why he took his three sons, ages 4, 6 and 11, on the bus. The trip was their first visit to Fairfield, parts of which are known as “the Gold Coast” because of large houses and views of Long Island Sound. Poling’s house has three chimneys and at least 18 windows facing the front yard. To the rear of Haas’s house is the Sound and the Fairfield Country Club.

“It’s important for my kids to see what hard work and an education will get you,” said Stallings, a 36-year-old small- business tax preparer.

Stallings said there was another reason why he made the bus trip. “You shouldn’t be afraid to confront people when they’re wrong,” he said. “You’ve failed at your jobs, so why should you be rewarded?”

AIG declined 97 percent in the last 12 months of New York Stock Exchange composite trading.

“While this controversy is very regrettable, it should not overshadow the fact that all AIG employees, including the employees of AIG Financial Products, are working very hard to pay back the government,” said AIG’s Pretto in an e-mailed statement. “The people working at AIG today are part of the solution, not part of the problem.”

A Point to Be Made

After stopping at the two homes, the bus pulled up to the AIG unit’s red-brick offices, where there were three police cars with flashing lights. The protesters chanted “Money for the needy, not for the greedy!” and held numerous signs, some saying, “Middle Class, Too Big to Fail” and “Taxpayers Want Their Money Back!”

On the streets of Fairfield County, one resident acknowledged that the demonstrators had a point.

“Of course, any American would be appalled by this gross excess in the financial sector right now,” said Sissy Biggers. At the same time “it’s gotten personal,” she said. Her husband Kelsey called the demonstration “classist warfare.”

“You’re bringing people from outside to come and, in essence, harass a neighborhood,” he said. It’s just not right, and I wonder where it might go.”

 

Comentarios

Miguel Amaral 24 marzo 2009 - 20:23

Dear Antonio,

I’m not agree with your point of view, I don’t care if a Guaranteed Contract means that you always get paid under any circumstances, specially, if you are the main responsible for a massive bankrupt and the bonuses are paid with taxpayers money, it seems to me not ethical and I think a lousy management should never in any circumstances be rewarded.
Best regards,
Miguel Amaral.

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