Let's Play AIG Bonus Bonanza

The current chief executive of AIG, Edward M. Liddy, will be testifying in a congressional hearing today to defend the retention bonuses paid out to current and former employees. Mr. Liddy will not be receiving a bonus himself. The bonuses were negotiated prior to his taking over the reins of the troubled organization and he finds them to be "distasteful". All told, there are or were $220 million paid out in bonus - that sure sounds like a LOT of money to me. But, when that amount is compared to the entire value of the bailout funds, a truly staggering sum of $170 billion so far, the bonuses are just a nit - approximately .13% - that's point one three percent - not even a drop in the bucket! This is starting to look like a whole lot of political bluster and posturing that obscures the more important issues of where is the money going and when will it be repaid?

Bailout Fakeout

Don't let the indignation that President Obama has recently expressed about the enormous bonuses that AIG doled out to executives using bailout funds get you all riled up. It is just another example that illustrates that His Highness Barama and his Court of Fools do not have a clue about the forces that drive our economy and now (thankfully) others from the Democrat leadership are beginning to see the light.
AIG ought to have known better to distribute bonuses of such a magnitude as they have, but the bailout funds were provided to them (and other financial institutions that were deemed to be in jeopardy of collapse) with little or no strings attached. Now, the Barama administration is learning damage control on a scale they may never have imagined necessary considering the president's presumed popularity.
The poorly considered bonuses are not the only problem regarding AIG and their allotment of bailout funds. AIG used much more of those funds to fulfill their contractual obligations to other banks and financial institutions. Recognizing that the U.S. Government now has a majority ownership stake in AIG, the administration is now in the position of trying to determine how much, if any, of the bailout funds they may hope to recoup in the future. Considering what has happened to this point, I do not have much faith that any appreciable amounts will be repaid soon (if ever).

Online Recovery Monitoring Resources

A news article I read today mentioned a couple of web sites for monitoring the impact of the variety and array of federal stimulus programs (read: Socialism in the name of Bailout) that we should all consult to keep an eye on its value, good or bad.

• Recovery.gov
• Stimulus Watch
  

Let us all check them out frequently and see where our money is going!

It Pays To Pay Attention

When I first heard of the proposal to implement a limit on the salary paid to an executive of a company that received federal assistance (bailout money), my immediate thought was "good idea." The version that I heard indicated that direct compensation would be limited to an annual salary of $500,000 (quite a bit more than I make!) and any additional compensation would have to be in the form of shares of company stock. Since there would be restrictions on the shares regarding value and when they could be sold (hopefully for a profit), there would be considerable incentive to improve the performance of the company thereby increasing the value of the stock - for the executive as well as the average shareholder.
But then the specifics have begun to come to light, where it is harder to withstand the proper scrutiny it deserves, and it is apparent to me, at least, that the whole proposal is just more grandstand politics. As Jim Jubak aptly explains, the salary cap is a joke! That horse has already left the barn! The cap will not be applied retroactively thus having little to no actual value to the shareholders of these companies let alone the taxpayer. Pay attention people, there is going to be a quiz and you will need your wallet instead of a number two pencil!