At a time when many of the American people are being asked to take pay cuts to keep their companies afloat and people working, the insurance giant AIG is again planning to use our money to give out retention bonuses. Way back in March, the public felt so strongly about multi-millionaires getting multi-million dollar bonuses after taking billions in taxpayer dollars, the company asked back (a paltry) $50 million from 400 of its executives. This week, “Bailed-out insurer AIG again found itself in the crosshairs of bonus rage on Friday over its plans to pay $2.4 million in executive bonuses next week. But the larger issue is how AIG will deal with its obligation to pay roughly $235 million still owed to employees of its crippled financial products division.” (CNN, July 10, 2009)
On June 25, 2009, a press release was issued by AIG announcing that it "entered into an agreement with the Federal Reserve Bank of New York (FRBNY) that will accomplish two key goals: reducing the debt AIG owes the FRBNY by $25 billion; and positioning two of the company's leading international life insurance franchises, American International Assurance Company, Ltd. (AIA) and American Life Insurance Company (ALICO), for initial public offerings, depending on market conditions…Taken together, upon closing, the transactions will result in a reduction in the debt owed by AIG under the FRBNY credit facility and the line available to AIG by $25 billion. As of today, AIG's outstanding balance under the FRBNY credit facility is approximately $40 billion… The agreements further the goals of enabling AIG to fully repay the assistance that it has received from U.S. taxpayers and advancing the company's global restructuring process.”
So, we are $15 billion short? But I thought AIG originally received $85 billion. Did the company already pay down $45 billion?
So far as I can tell, the only debtor to be fully repaid in the AIG fiasco is Goldman Sachs, the investment bank whose alumni seem to run the Federal Treasury. Where taxpayers receive a few cents on the dollar, Goldman Sachs got its 100 cents on the dollar for its CDO trades with AIG. “Of the original $85 billion bailout loan (to AIG), Goldman Sachs received $12.9 billion.” (March 18, 2009, Goldman Sach’s AIG double dip?, Real Clear Markets) In other words, $12.9 billion of our money went straight to Goldman Sachs, just pausing at AIG long enough to make an entry in its mainframe computer.
Goldman Sachs returned $10 billion of TARP money it borrowed from the federal government last year in order to evade executive compensation limits by the federal government. Its stock is up more than 65 percent in the past year. The company is online to pay record bonuses to its staff this year. In the first quarter, Goldman Sachs made $2.5 billion. (Not to mention getting paid in full for its investments with AIG by taxpayers.)
OK. If I get this right, we bailed out AIG. AIG paid back Goldman Sachs and partly as a result of our “honoring” AIG’s debt, Goldman Sachs employees will receive the biggest bonuses in the firm’s history. And, AIG wants to pay millions of dollars to its own executives.
As one of those citizens squeaking by and worrying about keeping a job, here's what I would do if I were the Obama administration: I'd tell AIG to send a letter to its executives: you are lucky to have jobs. Get back to work and stop complaining. Be grateful you work five days a week and your pension plan still exists, that you get great health care benefits, and that your company is not asking you to do the unthinkable: work for an hourly wage.