Congress and President Obama are to Blame for AIG Bonuses

In the first quarter of last year, AIG published it’s financials for the coming year. It publicy listed several of it’s employees that would work for $1 salary for a whole year and be eligible to receive a retention bonus at the end of the year. Even the current CEO, Edward Liddy, called out of retirement last year to head AIG, is drawing a $1 annual salary with no bonus.

Before TARP ever appeared on the horizon, these bonuses had been negotiated and agreed to in employment contracts. When the economy began to slip due to the sub-prime lending crisis, the stock market began to shed value and many financial institutions lost billions in value.

AIG was among the first recipients of the TARP funds, first with $87 billion, and then and additional $40 billion, and earlier this year another $30 billion. With 80% of the company purchased with taxpayer dollars, every American feels free to scrutinize and judge every action of AIG and it’s business. Except, it seems, it’s distribution of TARP funds to foreign banks.

More than 50% of the $173 billion given to AIG in TARP funds has been transferred to other banks, including European financial institutions. Even Goldman Sachs, which was refused assistance directly from the government, was given billions in AIG TARP money. Why?

The Treasury Department, led by Sec. Geithner, has used AIG as a clearinghouse for bailout funds. To avoid the stigma of handing tax dollars to foreign banks, and to the failed Goldman Sachs, the U.S. Treasury and the Federal Reserve have used AIG to front for them. Where is the outrage over that?

All the focus has been on these bonuses that were agreed to before there was an economic crisis, and they were compensation for work already performed. If we didn’t want AIG to pay any salaries & bonuses, or make payment on claims (they are a major insurer), then we shouldn’t have given them any money. Everyone else at AIG got paid as agreed, but these few employees who did their work all year for just $1, have become the lightning rod for outrage. This is tragic, as they did nothing illegal or immoral, they simply worked as they had agreed to in their employment contract.

Add to that the fact that when congress passed the most recent bailout bill, and President Obama signed it into law, they made legal the very type of bonuses that they are now outraged about! The American public was told repeatedly that we did not have time to debate the bill, we did not have time to study the ramification of some of the provisions of the bill, it had to be passed immediately. Rather than keeping a campaign pledge to go through every spending and budget bill “line by line” to avoid waste, President Obama signed into law a bill that approved these bonuses.

The false outrage by our congress and president is sickening. These employees that received their pay as agreed have been made into a public spectacle because our leadership is incompetent. At the very least, Sec. Geithner should have known about the bonuses listed in the public financial filings of AIG in early 2008. This is a colossal misdirection of attention, as our outrage should be directed at Washington, D.C. and their policy of bankrupting our future by spending revenues not taxed or collected yet, and at the Federal Reserve Bank for printing trillions of dollars out of thin air. Inflation will rob us of what the stock market crash has not.