March 22, 2009

What Did You Know, and When Did You Know It?

For our reading pleasure, the House Financial Services Sub-committee offers the now infamous AIG employee retention agreement. The general public may now savor language protecting the excessive usurer’s bonuses for their high level of dedication to the company, and protection of the American public. Turn to pages 10 and 11 for the real meat of this contract.

You may notice that, by contract and with full approval of the U.S. government, the bonus pool cannot be reduced by more than $67.5 million annually. This effectively ensures a minimum bonus, regardless of company or employee performance, or even if the employee still works there.

And pay they did. According to AIG, the company paid retention bonuses totaling $165 million. Wallace Witkowski of WSJ’s MarketWatch reports that bonuses in excess of $1 million were paid to 73 AIG financial-products-unit employees, 11 of whom had already left the company. So much for retention.

So much for truth, too, as it appears that AIG’s Liddy lied about what they paid out. According to Witkowski, the actual figure was closer to $218 million. But Liddy isn’t the only liar in this mess.

What Did You Know, and When Did You Know It?

This is the big question, about which there has been plenty of debate. Aaron Task asks the question on Yahoo Finance. Who knew (or should have known) that AIG had rigged the bonus deal, and why did our Treasury feel it necessary to step in? From all I can tell, the following is a general timeline:

From the March 19, 2009 New York Times: "As early as December, two Democratic lawmakers had vociferously and repeatedly complained about the bonuses, and one of them went so far as to demand the resignation of A.I.G.’s chief executive,"

From the January 27, 2009 Bloomberg electronic edition, Reporter Hugh Son quotes Congressman Elijah Cummings and Senator Richard Shelby opining on the AIG retention bonuses. Obviously both houses were aware of the impending fiasco.

On February 28, 2009, Federal Reserve officials say they warned Treasury officials about the bonuses.

On March 3, 2009, in a hearing before the House Ways and Means Committee. New York Congressman Joe Crowley asks Treasury Secretary Geithner if anything could be done to stop the bonuses.

March 10, 2009: Treasury Secretary Tim Geithner says he just learned about the AIG bonuses.

March 15, 2009. AIG pays out $165 million in retention bonuses.

And they paid them with our money. Stinks, doesn’t it? It stinks even more considering the language may have been allowed due to the efforts of Geithner’s Treasury Dept.



Anonymous said...

Damn straight, it stinks!