by Eric Martin
There was much fanfare in March of last year, when an indignant AIG vice president, Jake Desantis, quit in a huff over the great injustice of being asked to forfeit a portion of his enormous bonus by dint of the fact that the firm that was scheduled to pay that bonus would have gone bust absent a massive infusion of taxpayer dollars.
But to Desantis, and his many defenders, this was unconscionable, and a distressing sign of looming class war and hoary socialism, etc.
Then, early this month, AIG made the following announcements:
American International Group plans Wednesday to pay another round of employee bonuses, worth about $100 million, said several people familiar with the matter, a year after similar payments at the bailed-out insurance giant infuriated many Americans and inflamed Washington.
This week's retention payments go to those employees at the company's Financial Products division who agreed recently to accept 10 to 20 percent less money than AIG had initially promised them two years ago. In return, they are to receive their payments more than a month ahead of schedule.
The company is still scheduled to pay out tens of millions of dollars more in March, mostly to former employees who did not agree to the concessions.
AIG executives have been scrambling to hammer out a compromise before March 15, when the firm faces a deadline to pay nearly $200 million in bonuses to employees at Financial Products, the unit whose risky derivatives deals brought the insurer to the brink of collapse in 2008. Government and AIG officials have been eager to avoid a repeat of the public furor that erupted last March when an earlier round of payments -- worth $168 million -- went to the same set of employees. [emphasis added]
It appears that the expedited timeline might have take on an added sense of urgency due to some, shall we say, inconvenient facts for those asking for millions of dollars in bonuses for their stellar performance:
AIG, the bailed out insurer, said on Friday that it lost $8.9bn in the fourth quarter of last year, as charges on its massive debts weighed down its performance. [...]
In a filing with the US Securities and Exchange Commission, AIG noted that if management’s plans do not move forward as stated, “AIG may need additional US government support to meet its obligations as they come due”. Moreover, it warned that without additional support in such a scenario, there could be “substantial doubt” over AIG’s ability to continue as a business.
Awesome. But let's not question the insanely high levels of compensation we're paying out on the taxpayer's dime. Any suggestion that losses should be borne by the private sector is socialism. Unless we're talking about the blue collar labor force - in which case, government assistance to help those affected by market losses is also socialism.
I know it's a bit tricky to follow, but such is the magic of free market capitalism.