AIG Seeks Political Cover for $2.4 Million in New Bonuses

July 10, 2009

(ChattahBox)—AIG, the tone-deaf insurance giant that nearly took down the U.S. economy with its greedy Financial Products unit and exotic derivative contracts, is now once again preparing to reward its top executives with bonuses, totaling $2.4 million. And the firm is looking for the blessing of the federal government, as political cover for its controversial payouts.

The insurance firm, declared “too big to fail” was bailed out with $180 billion in federal funds and became the subject of public scorn and outrage at its decision to reward $9.6 million in retention bonuses last March, to the same executives that nearly wrecked the company.

AIG executives are in the process of negotiating with the newly appointed compensation czar, Kenneth R. Feinberg, to obtain a written advisory opinion from Treasury, approving the additional bonus payouts. The insurance giant is hoping to obtain political cover for its bonuses, to deflect public criticism that reached a fevered pitch during the last round of excessive bonus payouts.

Feinberg however, is under no obligation to provide AIG with the Treasury stamp of approval for the bonuses. In fact, AIG doesn’t even need the approval of the compensation czar for the payouts, because they were promised to executives last year.

Feinberg is empowered to oversee current and future bonuses and executive compensation. Still, “We would want to feel comfortable that the government is comfortable with what we are doing,” said an AIG official.

Regardless of whether AIG is successful in obtaining political cover from Treasury to hide behind, the bonuses are scheduled to be paid out next week to about 40 high-ranking executives.

Meanwhile, as AIG continues to pay out bonuses at the same time its stock continues to drop, with company officials addicted to risky exotic derivative contracts, the firm may very well become nothing but a worthless house of cards.

A Citigroup analyst recently declared that AIG is on course to become worthless to shareholders if or when, it pays back the billions it owes the U.S. government.

“Our valuation includes a 70 percent chance that the equity at AIG is zero,” said Joshua Shanker of Citigroup.

Source


Comments

2 Responses to “AIG Seeks Political Cover for $2.4 Million in New Bonuses”

  1. Old Man Dotes on July 10th, 2009 2:26 pm

    No one is too big to fail. Liquidate AIG now, and reduce the chaos that will come if – no, *when* – it fails spontaneously.

    And send the pork-barrel-riding executives to China, as rice farmers. They need to understand what “work” really means.

  2. White House to Cut Pay of 7 Bailed Out Firms Up To 90% | ChattahBox News Blog on October 21st, 2009 5:32 pm

    […] which rode the wave of exotic financial instruments cooked up by its financial products division, right into financial collapse, will have additional compensation orders to follow. Top executives working in the disgraced […]

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