According to AIG, Good Work Must Be Rewarded
AIG, whose fourth-quarter loss was the worst in corporate history, earmarked $1 billion in retention pay for about 4,600 of the company’s 116,000 employees so they won’t leave the crippled insurer.
The company’s fourth-quarter loss of $61.7 billion was the biggest ever recorded for any U.S. company, and AIG considered seeking court protection before accepting the U.S. rescue in September.
Bonuses paid by companies receiving public funds have sparked outrage among lawmakers. New York Attorney General Andrew Cuomo is probing $3.6 billion in bonuses paid by Merrill Lynch & Co. shortly before it was acquired by Bank of America Corp. on Jan. 1.
Troubled insurer American International Group Inc., now 80% owned by U.S. taxpayers, spent the weekend deflecting mounting criticism of how government funds have been funneled to various banks and used to pay employee bonuses at the business unit that almost sank the company.
After calls for more transparency, AIG disclosed Sunday that roughly two-thirds of the $173.3 billion in federal aid it received has been paid out to trading partners such as banks and municipalities in the U.S. and abroad.
The disclosures came as AIG was lambasted for about $450 million in bonus payments planned for employees at a business unit that lost $40.5 billion last year. The unit’s woes pushed the company to near-collapse, forcing the government bailout.
The government’s bailout of AIG has been a disaster. The bailout been a public relations nightmare and the cost to taxpayers is open ended. A controlled liquidation of AIG would have been a more complex but better option.
How does AIG, which is now 80% owned by the US taxpayers, get away with this outrageous conduct? Had there been no bailout, AIG would not have had the cash to make these ridiculous bonus payments.
What has the $170 billion (and counting) bailout of AIG accomplished? We still have an organization that is losing huge amounts of money and is now using taxpayers money to pay ridiculous bonuses to the people who ran the company into the ground to begin with.
Let the free market work here. Stop the government bailout of a failed company and let AIG go bankrupt as they should have. Executives who have “contractual rights” to huge bonuses can get in line with other creditors in the bankruptcy court. The taxpayers supporting this atrocity have been screwed enough already.