Obama and his team knew about the AIG bonus issue for quite some time. They had already concluded there was nothing to be done without causing greater risk. Now the very people AIG claims it needs to sort out the mess and prevent further economic damage are resigning, or just not showing up due to death threats and whatever else.
Two months in and Obama has helped tank the stock market with pessimism only to help him pass a political agenda in the form of a stimulus package. His latest blurt seems to have been counter-productive to his stated economic goals. But hopefully Obama feels better for having gotten his rage on.
How far in over his head does he have to get before he starts wearing water-wings?
Attorneys working for the Fed had been examining the matter for months and determined that the retention payments couldn't be touched because AIG would face costly lawsuits and be subject to penalties from states and foreign governments. Administration officials said over the weekend that they agreed with that assessment.
But company officials contend that the uproar is scaring away the very employees who understand AIG Financial Products' complex trades and who are trying to dismantle the division before it further endangers the world's economy. "It's going to blow up," said a senior Financial Products manager, who spoke on condition of anonymity because he was not authorized to speak for the company. "I have a horrible, horrible, horrible feeling that this is going to end badly."
I feel like I'm watching the out-takes of a Hollywood parody of the American presidency in action -- only the consequences are real. I don't think the Obama administration is actively trying to make themselves look foolish by screwing everything up, but they couldn't do a better job of looking foolish and screwing up even if they were trying.
Posted by: Mark Turner | Tuesday, March 17, 2009 at 02:35 AM
They don't have to try to look stupid. They are STUPID. All of them are scumbags as far as I am concerned. Self made.
The left hanbd has no clue what the right hand is doing and to be honest they don't even care.
These last few months have only proved what I thought might happen long ago.
And ...is anybody else tired of seeing this women, Christina Romer,on TV all the time smiling and smiling and saying everything is going so well and Obama is doing a fine job. PUKE PUKE. I would love to splatter egg all over her face and elsewhere. GET THE HELL OFF MY TV. She is so far up Obama's rump that I don't think JOE THE PLUMBER AND ONE OF HIS PLUNGERS COULD GET HER OUT.
Posted by: WBestPresidentEver | Tuesday, March 17, 2009 at 03:06 AM
aig...
up 33 cents a share to .83, or 66%, today.
get some. not a lot, though-no such thing as a 'sure' thing.
obtw-they are scum of the earth, but they also are backed by the govt*.
(by 'govt', I mean the 60% of the country who pays their taxes.)
Posted by: mark l. | Tuesday, March 17, 2009 at 03:17 AM
""It's going to blow up," said a senior Financial Products manager, who spoke on condition of anonymity because he was not authorized to speak for the company. "I have a horrible, horrible, horrible feeling that this is going to end badly.""
Hmm, that's funny. I thought that it ended badly when you went to the govt with your palms turned up. The thing is, if AIG is so important, then Obama and his crew should do something to try to make them less important. Admittedly I've never worked in the insurance business, but even I know that you shouldn't cover something that you can't cover. How deep does this thing go?
Posted by: Xerocky | Tuesday, March 17, 2009 at 06:28 AM
It was a cheap trick on Obama's part...to demand that 'everything' be done do prevent the bonuses when he already knows they cannot legally be prevented...but then, that's all Obama is, cheap tricks, he doesn't appear to possess any ability to govern or act as a chief executive.
Posted by: anon | Tuesday, March 17, 2009 at 09:07 AM
These bonuses need to stop, the problem is, how do you stop a valid contract. I don't think you can simply stop a valid contract.
Watched a video the other day, that said "Mr. Obama, who said paying bonuses was 'shameful' while companies were on government life support, has found changing Wall Street culture to be more difficult than anticipated."
Obama needs to lose his cool and get mad about this. Let AIG have it for wasting taxpayer money.
Here's the link: http://www.newsy.com/videos/bailouts_and_bonuses_for_aig/
Posted by: Steve | Tuesday, March 17, 2009 at 01:15 PM
Obama is practicing faux outrage -
"Obama’s Stimulus Bill Explicitly Grants AIG the Legal Right to Hand Out Unlimited Bonuses
by admin on March 17, 2009 · 0 comments
This amendment provides an exception for contractually obligated bonuses agreed on before Feb. 11, 2009, which exempts the very AIG bonuses Obama is condemning every single chance he gets. The amendment is in the final version and is law."
http://www.butasforme.com/2009/03/17/obamas-stimulus-bill-explicitly-grants-aig-the-legal-right-to-hand-out-bonuses/
Posted by: Lala | Tuesday, March 17, 2009 at 02:19 PM
The current administration has crossed the line from stupid, I'm afraid.
The One has decided to leave our wounded swinging in the wind.
http://www.e3gazette.com/2009/03/obama-still-plans-to-make-vets-pay.html
- MuscleDaddy
Posted by: MuscleDaddy | Tuesday, March 17, 2009 at 05:10 PM
This is what happens when politicians enter the marketplace. They make decisions based on finger-in-the-wind impulses, NOT economics. Could there be a better example of F.A. Hayek in action than this AIG mess?
What is ironic is that this political posturing is guaranteeing that we will lose everything we put into AIG!!! AIG has one asset-- its highly skilled employees. When they leave, it's just an empty building. Drive away the money makers, and AIG becomes worthless.
Christ, this is pathetic....
Posted by: Mike | Tuesday, March 17, 2009 at 05:52 PM
AIG has one asset-- its highly skilled employees. When they leave, it's just an empty building. Drive away the money makers, and AIG becomes worthless.
This is true of the entire nation, not just AIG. About 20% of the people in this country pull the freight for the rest. Our wealth resides between their ears. If they flee for greener pastures elsewhere, or go Galt on us, the current pain and suffering will seem like the good old days.
Posted by: John Skookum | Tuesday, March 17, 2009 at 06:13 PM
Chuck Schumer's answer to this is to suspend the Constitution. We are all in a lot of trouble.
Posted by: John Galt | Tuesday, March 17, 2009 at 06:59 PM
I wonder if Obama is really rocketing into the abyss, whith the anti-socialists hating his guts..... as they do right now for completely obvious reasons...... and the socialists hating his guts for having the White House and Congress on a silver platter to create a socialist America, and totally blowing it through sheer incompetence.
Not a happy place to be.
Posted by: Andrew X | Tuesday, March 17, 2009 at 07:02 PM
Maybe this is a silly question. But since everyone has their panties in a knot, it's worth asking: Has anyone discerned the terms of these AIG bonus agreements, which are supposedly above legal reproach?
Seems to me that most people object to the AMOUNT of the bonuses, not the mere fact that they're being paid. Here's the thing. Most bonus packages have some discretionary (i.e., non-mandatory, non-legally binding) component. Is this true with AIG?
And if so (big IF here), why wouldn't the Obama administration advise AIG not to pay the discretionary portion (thereby reducing the amounts)? Did the Obama administration even bother to ask these questions? And if not, why not?
Posted by: CaptainVictory | Tuesday, March 17, 2009 at 07:09 PM
"The left hand has no clue what the right hand is doing and to be honest they don't even care."
Strike "right" and insert "far left" and you've nailed it.
Posted by: Chris | Tuesday, March 17, 2009 at 07:35 PM
Chris -
LOL! Speaking of nailing it......
Posted by: Andrew X | Tuesday, March 17, 2009 at 07:47 PM
"Obama needs to lose his cool and get mad about this."
That will take some good acting, as Obama is on board with what's happening with AIG.
Posted by: flenser | Tuesday, March 17, 2009 at 07:49 PM
"Did the Obama administration even bother to ask these questions? And if not, why not?"
Some people in Congress attempted to provide for some restrictions and some oversight of the bailout mone. Obama opposed them. As President-elect, he threatened to veto any such measures.
Posted by: flenser | Tuesday, March 17, 2009 at 07:51 PM
To me, His Majesty is, day-by-day, looking more like Phillip Green (portrayed by Kevin Pollak) in "Casino." As you may recall, Green was the ostensible CEO of the Tangiers Hotel who looked good and gave great speeches. However, in reality, Green was simply a clueless shill for the mob bosses back East who really ran the place through "Mr. Rothstein" (Robert De Niro).
Life imitates art, doesn't it?
Posted by: MarkJ | Tuesday, March 17, 2009 at 10:20 PM
flenser,
"That will take some good acting, as Obama is on board with what's happening with AIG."
Well, we know who'll have a lock on "Best Actor" at the Academy Awards next year, don't we? Too bad nobody will be watching when the envelope is opened and Obama's name is read. ;)
Posted by: MarkJ | Tuesday, March 17, 2009 at 10:22 PM
These bonuses have been discribed as retention bonuses. That means that the employees were told if they stay with AIG, a sinking ship, then they will receive additional money. Rentention bonuses are used all the time in bankruptcy like situations to keep talent from leaving. To take the money from them now is akin to defrauding them. Presumably these employees could have found a job with a better future, but chose to stay in part because of the bonus.
Posted by: Sam Spade | Wednesday, March 18, 2009 at 02:12 PM
Speaking of stupid; people who aren't know that A. the stock market has been going down for well more than a year now, and B. that it has gone up several hundred points in the last week.
Posted by: Clark | Wednesday, March 18, 2009 at 08:29 PM