Our financial system is crumbling this week.

[TheoSqua]

I think the only way that you can argue that the payouts are necessary is as a confidence issue.

From the standpoint of government involvement, if companies have to worry about contracts they've made with companies that are taken over by the government, or use it as an excuse to break other contracts, then the precedent set could be far more negative than to let some executives get their payouts.

[maddash]

The outcry over the bonuses seems silly to me. The problem isn't with these traders getting a bonus, the problem is with these traders being allowed to do what they did. All this outrage from Congress is nothing more than grandstanding. If they really cared, they'd get off their asses and start looking into regulating things like credit default swaps and other practices that got us in this mess.

Besides dishing out a [expletive] load of money to financial institutions, what is Congress and the Fed doing to address the systemic risk these institutions have?

Why not change the capital ratio for banks and for companies (like AIG) who insure these crap bonds? Oh gee, AIG didn't have the collateral to meet the calls? I thought at least with normal home/car/health insurance, these companies were regulated to put a certain percentage of their cash into accounts specifically set aside to make payments... was there no regulation for this for insuring bonds? What about the mortgage application process? Are "stated income" loans still a common practice? It amazes me that all the unregulated practices that got us in this mess, to my knowledge, haven't changed.

As far as I'm concerned, give the traders their money - they apparently earned it, and it's pennies on the dollar anyway - but make sure they can't do it again.

[cpebbles]

While it may be serving as a red herring that allows Congress to get around curbing the bigger problem, the outrage over these bonuses is perfectly acceptable. The taxpayers saved AIG from a bankruptcy reorganization that almost certainly would have seen these obligations wiped out, and clamping down on these bonuses will be the first real action the government has taken to insure that the bailout money they're feeding into these corporations is actually going to the purposes they intended.

[BW23]

Are the ones that got AIG into this mess still with the company? Or is it new "leaders"?

[maddash]

While it may be serving as a red herring that allows Congress to get around curbing the bigger problem, the outrage over these bonuses is perfectly acceptable. The taxpayers saved AIG from a bankruptcy reorganization that almost certainly would have seen these obligations wiped out, and clamping down on these bonuses will be the first real action the government has taken to insure that the bailout money they're feeding into these corporations is actually going to the purposes they intended.

I understand the outrage, but it just seems so petty when you look at the big picture problems. You know, if they [expletive] up that badly, AIG should fire them. Wouldn't firing the people at AIG who created and implemented the flawed derivative polices be a better solution? Oh, and fire the people who drafted a contract that says you're still entitled to a bonus even if the company has a net lose for the year.

I'll take a line from Obama on the omnibus - these are last year's contracts. I don't like the idea of paying these execs and traders with taxpayer money, but I do think we should honor their contracts. Once that business is done, then you start getting into re-organizing AIG from the top down.

[maddash]

Are the ones that got AIG into this mess still with the company? Or is it new "leaders"?

From what I've read only 11 of the 73 eligible for bonuses are no longer with AIG. And of course Liddy took over the CEO position is September. I'm sure there are a few other top execs/traders that have been replaced, but I never got the impression that AIG cleaned house within their Financial Products division. Even if they did, I get the feeling it would be a "meet the new boss, same as the old boss" kind of thing. But that's just frustrated speculation on my part.

[BW23]

Okay, thanks.

[Socnorb11]

Are the ones that got AIG into this mess still with the company? Or is it new "leaders"?

From what I've read only 11 of the 73 eligible for bonuses are no longer with AIG. And of course Liddy took over the CEO position is September. I'm sure there are a few other top execs/traders that have been replaced, but I never got the impression that AIG cleaned house within their Financial Products division. Even if they did, I get the feeling it would be a "meet the new boss, same as the old boss" kind of thing. But that's just frustrated speculation on my part.

My impression has been that it wasn't a "house-cleaning", but that those folks left on their own, taking their bonus with them. I could be wrong.

[Socnorb11]

While it may be serving as a red herring that allows Congress to get around curbing the bigger problem, the outrage over these bonuses is perfectly acceptable. The taxpayers saved AIG from a bankruptcy reorganization that almost certainly would have seen these obligations wiped out, and clamping down on these bonuses will be the first real action the government has taken to insure that the bailout money they're feeding into these corporations is actually going to the purposes they intended.

I understand the outrage, but it just seems so petty when you look at the big picture problems. You know, if they [expletive] up that badly, AIG should fire them. Wouldn't firing the people at AIG who created and implemented the flawed derivative polices be a better solution? Oh, and fire the people who drafted a contract that says you're still entitled to a bonus even if the company has a net lose for the year.

I'll take a line from Obama on the omnibus - these are last year's contracts. I don't like the idea of paying these execs and traders with taxpayer money, but I do think we should honor their contracts. Once that business is done, then you start getting into re-organizing AIG from the top down.

I'm for firing the guy that issued the contracts.

But saying "these are last year's contracts" doesn't really pacify me much. I don't think the demise happened overnight, or even within the last year. If it was so bad that they needed a government bailout, these people have been doing their jobs poorly for quite awhile, and don't deserve a bonus for their efforts last year or the year before or whatever the case may be.

It may seem "petty" by their standards, but to the average taxpayer, it's not petty at all. Those people don't deserve the bonuses........ period. As a taxpayer, I think they money should be given to someone that needs it more, and those people wouldn't consider it "petty" at all.

[maddash]

While it may be serving as a red herring that allows Congress to get around curbing the bigger problem, the outrage over these bonuses is perfectly acceptable. The taxpayers saved AIG from a bankruptcy reorganization that almost certainly would have seen these obligations wiped out, and clamping down on these bonuses will be the first real action the government has taken to insure that the bailout money they're feeding into these corporations is actually going to the purposes they intended.

I understand the outrage, but it just seems so petty when you look at the big picture problems. You know, if they [expletive] up that badly, AIG should fire them. Wouldn't firing the people at AIG who created and implemented the flawed derivative polices be a better solution? Oh, and fire the people who drafted a contract that says you're still entitled to a bonus even if the company has a net lose for the year.

I'll take a line from Obama on the omnibus - these are last year's contracts. I don't like the idea of paying these execs and traders with taxpayer money, but I do think we should honor their contracts. Once that business is done, then you start getting into re-organizing AIG from the top down.

I'm for firing the guy that issued the contracts.

But saying "these are last year's contracts" doesn't really pacify me much. I don't think the demise happened overnight, or even within the last year. If it was so bad that they needed a government bailout, these people have been doing their jobs poorly for quite awhile, and don't deserve a bonus for their efforts last year or the year before or whatever the case may be.

It may seem "petty" by their standards, but to the average taxpayer, it's not petty at all. Those people don't deserve the bonuses........ period. As a taxpayer, I think they money should be given to someone that needs it more, and those people wouldn't consider it "petty" at all.

Well, I sympathize with that view. I'm just saying that A) there are bigger fish to fry, and B) I really think that the government's hands are tied as far as the bonuses go. I'm certainly no expert, but I would imagine that the contracts in place are pretty solid, and even our government just can't go in and start nullifying contracts (without some kind of bankruptcy). But again, I'm not an expert.