Despite Anger and Backlash, AIG 'Justifies' Bonuses

In regards to the hefty bailout of the banks and Wall Street, AIG remains defiant as it tries to justify the hefty payout in bonuses. It has brought anger from the government as a result of this.

Recently, it was revealed that AIG has received about $170 billion in money for a bailout. However, United States President Barack Obama had specific stipulations and ultimatums. The stipulations had much to do in regards to hefty bonuses. So far, AIG has been the proverbial whipping mule as a result. It has been the proverbial whipping mule for good reason. Back in 2008, AIG received bailout money in 2008. It was revealed that the AIG executives spent it on retreats. One week after getting the financial bailout in September, the executives went on a California spa retreat worth over $440,000. It was revealed that $86,000 was used for a hunting trip for the AIG executives. Also, it was reported that AIG spent $343,000 on a resort trip in Arizona. After receiving bailout money, AIG spent almost a million on retreats and vacations. Now, it is revealed AIG plans to pay out bonuses worth up to $165 million. So far, it is pressured by the US Treasury to reduce the 2009 bonuses. But, there is still much anger directed towards AIG. “There are a lot of terrible things that have happened in the last 18 months, but what’s happened at AIG is the most outrageous,” said Lawrence Summers, head of the National Economic Council. Summers in his words said that what AIG did is outrageous. But AIG defended the bonus payments. According to chairman and CEO Edward Liddy, compensation and bonuses are limited. However, he said that some of the payments such as the one worth up to $165 million HAVE TO BE PAID OUT. Liddy said that if it’s not, there will be severe legal and business consequences. One question should be asked: How many people are going to buy Liddy’s explanation? In this respect, it makes the people of AIG look even worse. So far, it has those in Washington DC questioning the legalities of trying to justify the hefty bonuses. According to AIG, it is afraid of losing its best employees. In a nutshell, after receiving the bailout money from the government, AIG is going ahead and paying out millions of dollars in bonuses. One should ask: What is going on in the heads of the AIG executives? So far, the bonuses have drawn much anger. There were stipulations in regards to receiving the bailout money. In all respects, AIG violated the stipulations by planning to hand out the $165 million in bonuses. Summers had some more interesting things to say about AIG. He said that nobody cares what the AIG shareholders think and feel. Summers adds that they have no obligation to appease those people. Summers adds that those contractual agreements cannot be violated either. According to Democratic Representative Barney Frank of Massachusetts, AIG is abusing the system. Despite AIG’s “justifications,” there is more anger directed towards it. This is anger for very good reason. Overall, the heat is on AIG. There are several questions that need to be asked. What is the future of AIG? Will other banks be doing the same thing as AIG? When you factor everything together, this could spell out a major problem for Obama’s administration. In this respect, AIG may have found a legal loophole in regards to receiving bailout money and being able to pay out hefty bonuses. Frank has implied that AIG has abused legal loopholes. But, will there be other banks planning to do the same thing? We will have to find out in the near future. When one looks at it, AIG has definitely found a wide loophole in this regard. Most importantly, one should ask this question: What is going to be the fallout from this? Perhaps this is the needed ammo for the GOP to use against Obama for the 2012 election year.