# Bonuses For AIG **URL:** \ **Category:** The BBQ Pit\ **Created:** [March 15, 2009, 6:11pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541 "2009-03-15T18:11:24Z")\ **Posts on this page:** 20\ **Page:** 27
**Author:** ![Monster104](https://avatars.discourse-cdn.com/v4/letter/m/c6cbf5/32.png) [@Monster104](https://boards.straightdope.com/u/Monster104)\ **Post date:** [March 24, 2009, 6:58pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/521 "2009-03-24T18:58:07Z")
> [@Squink](#): > > Dunno, however I do know that fancy govt. lawyers made it legal to torture people these past few years. AIG isn’t the government and couldn’t just ignore the law and get away with it like the government apparently can. They would have been successfully sued into nonexistence if they had tried to illegally break their contracts! > [@](#): > > I see nothing which suggests that there is anything to block the government from taking a similar, admittedly flakey, view towards the compensation of AIG execs. > The feds _have_ the power, and if anyone disagrees with that, they certainly have the power to tie things up in court for years. Yes, the Feds have the power, but AIG _does not_. And the Feds chose to use their power to explicitly protect AIG’s contractual obligations rather than use their power the prevent the bonuses! What’s so difficult to understand about what I’m saying? ---
**Author:** ![Squink](https://avatars.discourse-cdn.com/v4/letter/s/b5e925/32.png) [@Squink](https://boards.straightdope.com/u/Squink)\ **Post date:** [March 24, 2009, 8:04pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/522 "2009-03-24T20:04:06Z")
> [@Monster104](#): > > Yes, the Feds have the power, but AIG _does not_ The distinction between AIG and the Feds has become somewhat blurred of late: [Fed rescues AIG with $85 billion loan for 80% stake](http://www.iht.com/articles/2008/09/17/business/17insure.php) ---
**Author:** ![Monster104](https://avatars.discourse-cdn.com/v4/letter/m/c6cbf5/32.png) [@Monster104](https://boards.straightdope.com/u/Monster104)\ **Post date:** [March 24, 2009, 9:41pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/523 "2009-03-24T21:41:00Z")
> [@Squink](#): > > The distinction between AIG and the Feds has become somewhat blurred of late: > [Fed rescues AIG with $85 billion loan for 80% stake](http://www.iht.com/articles/2008/09/17/business/17insure.php) Yeah it’s too bad esteemed officials like Dodd and Geithner saw fit to explicitly approve of the bonuses with their exemption. :smack: Again, do you _really_ think that if the officials at AIG had reneged on their contracts, that they would have been able to get away with it in court? ---
**Author:** ![Squink](https://avatars.discourse-cdn.com/v4/letter/s/b5e925/32.png) [@Squink](https://boards.straightdope.com/u/Squink)\ **Post date:** [March 24, 2009, 9:48pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/524 "2009-03-24T21:48:41Z")
Yup, if their owners, the Feds, had told them to. ---
**Author:** ![Typo\_Negative](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/typo_negative/32/484_2.png) [@Typo\_Negative](https://boards.straightdope.com/u/Typo_Negative)\ **Post date:** [March 24, 2009, 10:15pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/525 "2009-03-24T22:15:17Z")
> [@Monster104](#): > > AIG isn’t the government and couldn’t just ignore the law and get away with it like the government apparently can. They would have been successfully sued into nonexistence if they had tried to illegally break their contracts! OK, I have to ask about this. Say I am an AIG exec and I did not get a bonus I feel was contractually owed. I take AIG to court over it and win. (Ignoring the fact I may have to avoid people storming the courthouse with torches and pitchforks) What could I collect, seeing as how the division is defunct? Would I be able to collect from the insurance divsion? Is there really anything _there_ to collect? Do they have any assests that were not part of the bailout? If the government deems this insurance company too vital to fail, would it allow this payout? Would it OK the payout, but delay it until AIG was back on it’s feet? Side question: Has _any_ company actually been sued out of existence? ---
**Author:** ![kaylasdad99](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/kaylasdad99/32/3398_2.png) [@kaylasdad99](https://boards.straightdope.com/u/kaylasdad99)\ **Post date:** [March 24, 2009, 10:39pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/526 "2009-03-24T22:39:41Z")
> [@Squink](#): > > Yup, if their owners, the Feds, had told them to. Problem is that their owners, the Feds, _didn’t_. And the suggestion that the Feds, presently under the control of the Democrats, should monkey around with legislation in order to do a take-back is, IMHO, worthy of the God-Damned Republicans, NOT us. ---
**Author:** ![kaylasdad99](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/kaylasdad99/32/3398_2.png) [@kaylasdad99](https://boards.straightdope.com/u/kaylasdad99)\ **Post date:** [March 24, 2009, 10:45pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/527 "2009-03-24T22:45:03Z")
> [@spooje](#): > > Side question: Has _any_ company actually been sued out of existence? Does LOOK magazine count? How about [Bryco Firearms?](http://en.wikipedia.org/wiki/Bryco_Arms/Jennings_Firearms/Jimenez_Arms#Bryco_Arms_and_Jennings_Firearms) ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [March 24, 2009, 11:00pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/528 "2009-03-24T23:00:10Z")
> [@Squink](#): > > Yup, if their owners, the Feds, had told them to. Just to be clear, it’s the Federal Reserve that bought ito AIG. Strictly speaking, the Fed is not the federal government, strange though it sounds. Monster104’s point is simply this; while the federal government can take away the bonuses, AIG could not do so by itself. The government makes the law and enforces it, so they can do apretty much anything they want; that’s why civilized governments have checks and balances, to keep the government from go nuts using is legislative and enforcement powers. AIG, a private entity, can’t do anything it wants. Had AIG merely cancelled the bonuses they would have been sued, and would absolutely have lost, since they wouldn’t have had any case. ---
**Author:** ![Squink](https://avatars.discourse-cdn.com/v4/letter/s/b5e925/32.png) [@Squink](https://boards.straightdope.com/u/Squink)\ **Post date:** [March 24, 2009, 11:02pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/529 "2009-03-24T23:02:45Z")
> [@kaylasdad99](#): > > Problem is that their owners, the Feds, _didn’t_ That’s true, but contrary to what **Monster104** would have us believe, they chose not to do it not because they could not do it, but because they did not want to do it. Legally binding contracts aren’t like the laws of thermodynamics, with the right forces applied they can and are modifiable. ---
**Author:** ![Scylla](https://avatars.discourse-cdn.com/v4/letter/s/a5b964/32.png) [@Scylla](https://boards.straightdope.com/u/Scylla)\ **Post date:** [March 24, 2009, 11:35pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/530 "2009-03-24T23:35:42Z")
> [@China\_Guy](#): > > What’s your view on currency debasement now? Still think Uncle Sugar is making money on debt issuance with the trillions this plan is going to cost? It’s all a mater of degree. We’re talking about a lot more money than we were the last time around. last time, I thought the risk was deflation. They certainly seemed to have taken care of that worry, havent’ they? ---
**Author:** ![China\_Guy](https://avatars.discourse-cdn.com/v4/letter/c/779978/32.png) [@China\_Guy](https://boards.straightdope.com/u/China_Guy)\ **Post date:** [March 24, 2009, 11:44pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/531 "2009-03-24T23:44:03Z")
> [@Scylla](#): > > I thought the risk was deflation. > > They certainly seemed to have taken care of that worry, havent’ they? Ya, I feel so much better now. Deflation followed by inflation and a lost decade are looking more and more likely. .. ---
**Author:** ![Estilicon](https://avatars.discourse-cdn.com/v4/letter/e/848f3c/32.png) [@Estilicon](https://boards.straightdope.com/u/Estilicon)\ **Post date:** [March 25, 2009, 1:35am UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/532 "2009-03-25T01:35:12Z")
> [@Monster104](#): > > Congress originally had a legal mechanism that would have prevented those bonuses. Then they got rid of it and made an explicit exception for those bonuses. AIG had _no_ legal means to ignore their contracts, specifically because they didn’t go into bankruptcy and because of Congressional fiat. Ok. We need an american lawyer to answer this in full but, as lawyer I can assure you that while contracts are to the signing parties as the law itself, and thus have to be honoured this doesn’t mean that there are no exceptions to the rule. 1. The first one “Pacta sunt servanda res sic stantibus” means that a contract doesn´t have to be honored if the circunstances at the time of it’s execution are “radically different” that those at the time of the signing. I don´t know the american casebook but I would very surprised if your laws (or tribunals) don´t have a similar rule. 2.- We call it abuse of law and I think you call it “inadequate consideration”, if I promise to pay you millions of dollars and you don’t promise something in return, then the contract is not valid. This usually happen when one party is “stronger” than the other and can force the other to an unequal bargain. If the value of your promise is significantly less valuable than the one of the other party, this applies as well. Of course, I am sure that neither applies to this particular case… after all AIG is a solid enterprise and the bonus recipient didn´t have the power, (much least interest) to force the company to enter this contracts ---
**Author:** ![furt](https://avatars.discourse-cdn.com/v4/letter/f/439d5e/32.png) [@furt](https://boards.straightdope.com/u/furt)\ **Post date:** [March 25, 2009, 5:36am UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/533 "2009-03-25T05:36:56Z")
> [@China\_Guy](#): > > Ya, I feel so much better now. Deflation followed by inflation and a lost decade are looking more and more likely. .. On the plus side, after a decade of double-digit inflation leading to the $3 bottle of soda, maybe dollar coins will finally catch on. (I’m betting we still keep making pennies, though.) ---
**Author:** ![Monster104](https://avatars.discourse-cdn.com/v4/letter/m/c6cbf5/32.png) [@Monster104](https://boards.straightdope.com/u/Monster104)\ **Post date:** [March 25, 2009, 12:53pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/534 "2009-03-25T12:53:05Z")
> [@Squink](#): > > That’s true, but contrary to what **Monster104** would have us believe, they chose not to do it not because they could not do it, but because they did not want to do it. > Legally binding contracts aren’t like the laws of thermodynamics, with the right forces applied they can and are modifiable. Tim Geithner requested the exemption because of the risk of lawsuits, according to [Bloomberg](http://www.bloomberg.com/apps/news?pid=20601087&sid=aDYvjoj6a6ME&refer=home), and the relevant tidbit I’d like to quote here: > [@](#): > > The bonuses paid by AIG and the banks were allowed under a congressional exemption from compensation limits on companies getting government rescue funds. The Treasury staff requested the exception to avoid lawsuits over agreements signed before Feb. 11, Secretary Timothy Geithner said last week. I’m arguing they chose not to do it for a bit of both reasons you list there, plus my conspiracy-oriented side of me would like to believe a healthy bit of some nebulous ulterior motives. > [@Estilicon](#): > > Ok. We need an american lawyer to answer this in full but, as lawyer I can assure you that while contracts are to the signing parties as the law itself, and thus have to be honoured this doesn’t mean that there are no exceptions to the rule. Yes, by no means am I an expert on American law, especially really niche stuff like this - I’m just going by what I’ve read up on over the years as a sort of past-time. Though I do like to think of myself as being more interested and read up than the average layman, but I will not pretend I know the answers to your questions. 🙂 ---
**Author:** ![Scylla](https://avatars.discourse-cdn.com/v4/letter/s/a5b964/32.png) [@Scylla](https://boards.straightdope.com/u/Scylla)\ **Post date:** [March 25, 2009, 2:10pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/535 "2009-03-25T14:10:40Z")
It turns out that I was right. The one dollar salaries are not just for Liddy. Here is the resignation letter from “Fred.” [Www.nytimes.com/2009/03/25/opinion/25desantis.HTML?pagewanted=1&\_r=1&emc=eta1](http://Www.nytimes.com/2009/03/25/opinion/25desantis.HTML?pagewanted=1&_r=1&emc=eta1) A must read for any participant in this thread. ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [March 25, 2009, 2:26pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/536 "2009-03-25T14:26:30Z")
I’m certain the response will be a shrug and some comment about how Jake (a.k.a. ‘Fred’) is just a rich fat cat, how he deserved 14 hour days working for a dollar to fix a mess he didn’t have anything to do with (though of course, he works at AIG…so it MUST be his fault somehow), and a snide remark or two about how he won’t be able to find a job anywhere else, implying that ‘Fred’ should just be happy to soldier on for a buck at the beck and call of The People™ and he should be grateful The People are giving him that buck. I note with no little irony that after doing his part to inflame the situation in the last 2 weeks that Obama has done a complete about face and is now in frantic mode trying to calm down the witch hunting atmosphere…and has said that if Congress were to pass legislature to seize the 90% of the bonus thingy that he won’t sign it (yeah, this happened yesterday but I’ve been away). Of course, if enough Fred’s decide to give the American people, AIG and our wonderful elected officials the one finger salute then we will lose a good chuck of that $100 BILLION investment when AIG goes completely tits up and takes on water. I’m sure many in the thread will feel righteous justification…after all, it’s about the principal of the thing, not the money, ehe? Fuck that $100 billion plus…we were talking a $165 million in BONUSES to RICH FAT CATS!!! Stupid bastards… -XT ---
**Author:** ![Estilicon](https://avatars.discourse-cdn.com/v4/letter/e/848f3c/32.png) [@Estilicon](https://boards.straightdope.com/u/Estilicon)\ **Post date:** [March 25, 2009, 3:39pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/537 "2009-03-25T15:39:44Z")
> [@Scylla](#): > > It turns out that I was right. The one dollar salaries are not just for Liddy. > > Here is the resignation letter from “Fred.” > > [Www.nytimes.com/2009/03/25/opinion/25desantis.HTML?pagewanted=1&\_r=1&emc=eta1](http://Www.nytimes.com/2009/03/25/opinion/25desantis.HTML?pagewanted=1&_r=1&emc=eta1) > > A must read for any participant in this thread. If he didn’t do anything wrong why is he donating the money? ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [March 25, 2009, 3:40pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/538 "2009-03-25T15:40:48Z")
[QUOTE=Estilicon] If he didn’t do anything wrong why is he donating the money? [/QUOTE] You are kidding…right? -XT ---
**Author:** ![elucidator](https://avatars.discourse-cdn.com/v4/letter/e/8edcca/32.png) [@elucidator](https://boards.straightdope.com/u/elucidator)\ **Post date:** [March 25, 2009, 3:58pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/539 "2009-03-25T15:58:45Z")
I note that you seem to have misplaced your usual skepticism, you take this fellow at his word without any question, and apparently expect that we should as well. Since it simply _can’t_ be a matter of it fitting neatly within your set of opinions, we are left to wonder why? For instance, his proclaimed innocence on this whole “credit default swap” fiasco. He is an executive VP for the Financial Products area, specializing in commodities and equity. He claims to have no responsibility for these decisions. Well and good, but did he have no knowledge? Was he entirely ignorant, or did he keep a discreet silence? These toxic instruments were cobbled together in the division of which he was Ex. V.P., and he knew nothing about them? Perhaps not, it appears this Cossano fellow was anxious to keep it all under wraps and compartmentalized. Might be willing to buy that, if offered evidence. But you don’t require _any_ evidence, he bats big brown innocent eyes your way and the matter is settled! And this whole “$1 a year” thingy. He was expecting a “bonus” of $700,000, apparently. This doesn’t count? That’s not money? Are we to applaud his noble self-sacrfice, working 10 hour days for a mere three-quarters of a million? Do you know anybody who wouldn’t leap at the chance to work such hours for such pay? Well, maybe you do. I sure don’t. Mind, I’m not indicting here, this is the first I’ve heard of him. First you’ve heard too, I venture to guess. All I’m saying is that if you accepted _my_ assertions with the same open credulity you accept _his_, you might well be the proud owners of a historic bridge. ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [March 25, 2009, 4:15pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/540 "2009-03-25T16:15:46Z")
[QUOTE=elucidator] I note that you seem to have misplaced your usual skepticism, you take this fellow at his word without any question, and apparently expect that we should as well. Since it simply can’t be a matter of it fitting neatly within your set of opinions, we are left to wonder why? [/QUOTE] Stated baldly…it fits neatly within my set of opinions, obviously. Same reason why you toss out your own logic whenever some nugget that conforms to your own world view comes up. You are right, of course…I have no external reason to believe his story, or even that the letter is by a real person or is a real letter (though I assume it wouldn’t have been printed where it was if it was a complete fabrication…though, news media being what they are it’s always possible). By the same token, you have nothing to base your own knee jerk reaction on except the same (though opposite) set of your own opinions and world view. Interesting the way that works, no? > [@](#): > > For instance, his proclaimed innocence on this whole “credit default swap” fiasco. He is an executive VP for the Financial Products area, specializing in commodities and equity. He claims to have no responsibility for these decisions. Well and good, but did he have no knowledge? Was he entirely ignorant, or did he keep a discreet silence? These toxic instruments were cobbled together in the division of which he was Ex. V.P., and he knew nothing about them? Go back and read through your Mudraker cite earlier…it’s entirely plausible that this guy (if he is real of course) had no knowledge of what was going on. It’s fairly clear FROM YOUR OWN CITE that Cassano was playing things pretty close to the vest, had cut out whole sections of the company from what was going on…and didn’t seem to know even himself what the fuck was going on or what the extent of the risks were. > [@](#): > > Perhaps not, it appears this Cossano fellow was anxious to keep it all under wraps and compartmentalized. Might be willing to buy that, if offered evidence. Cassano. And it’s in your own cite from earlier in the thread. > [@](#): > > But you don’t require any evidence, he bats big brown innocent eyes your way and the matter is settled! Ah…well, as to that, I’d say that, based on my own reading of what happened (and based on several cites you helpfully provided up thread), I’d say that the linked letter is plausible. True, I have no external evidence corroborating the story, or even verifying the guy is a real person or the letter a real letter. I have to fall back on the hope that the New York Times did the donkey work to corroborate it, and look at the content in light of plausibility and my own reading of the situation. What are you using btw? Entrails? Magic Mirror? Innate and in-depth knowledge of the financial, economic, social and political situation in general and AIG specifically? > [@](#): > > And this whole “$1 a year” thingy. He was expecting a “bonus” of $700,000, apparently. This doesn’t count? That’s not money? Are we to applaud his noble self-sacrfice, working 10 hour days for a mere three-quarters of a million? Do you know anybody who wouldn’t leap at the chance to work such hours for such pay? Well, maybe you do. I sure don’t. I know several people who wouldn’t leap at such a chance, yes…especially in light of the current very ugly situation. You know, all those death threats and other playful actions by our wonderfully well informed citizens and representatives. Some of them in this very thread. > [@](#): > > Mind, I’m not indicting here, this is the first I’ve heard of him. First you’ve heard too, I venture to guess. All I’m saying is that if you accepted my assertions with the same open credulity you accept his, you might well be the proud owners of a historic bridge. To be sure. And your own skepticism on this is refreshing, considering that this isn’t always the case with you, depending on the subject matter. You really should try that whole ‘remove the mote from your own eye before pointing out the one in mine’ thingy though…it would be much more convincing. -XT [Previous page](https://boards.straightdope.com/t/bonuses-for-aig/489541.md?page=26) [Next page](https://boards.straightdope.com/t/bonuses-for-aig/489541.md?page=28)