Everyone is angry with the ailing insurer, AIG and its resent executive bonuses totaling $165 million. Are these guys out of touch with realities? I believe that those that take more risk should be rewarded more. Those that make bad choices should not be rewarded with taxpayers’ money. But are you frustrated that authorities knew of this provision for executive bonuses about a year ago? It was not concealed. Some cable news reported of this Novembers 2008. Before the last disbursement of the bailout fund, the regulatory body new of the bonuses, including the date of the payment, and could not stop it.
Liddy was brought in about six months to oversee this company that has received $182 billion in federal bailout money, said he, too, was angry about the bonuses. He was not there when the contract was made. He voluntarily pays him $1 per annum.
Can we say that the AIG boss, Edward Liddy is the scapegoat of regulatory irresponsibilities and leadership?
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Liddy should have told the hypocrites and pharoses to hire someone else to try and get their $170B back and walked out. He does not need the money, the pain or the sanctamonious redicule from congressional leaders who have never run a complex financial organization. The company had a contract with these individuals, the government accepted the contracts at the time of investment and the Senate included and approved a provision protecting the bonus contracts in place. Now they want to legislate an illegal bill which will likely will be in conflict with an article of the constitution.
ReplyDeleteYes, he is a scapegoat answering to a bad boss.
The only reason this is an issue is due to the Dodd (Chris Dodd, D: CT who also received the most campaign money from AIG, with the President a close second) Amendment to that portion of the Stimulus Plan that allowed the bonuses to be paid. The absurdity to all this is that no one is asking the pertinent question; Aren't bonuses paid when predetermined milestones are achieved? Considering the state of AIG how is this possible? Were bonuses paid to AIG employees who did in fact perform as agreed and are deserving? If so then knock off the guilt trip and leave them to enjoy the fruits of their labor. But if what we have vis a vis bonuses is say another Franklin Raines and Jamie Gorelick style bonuses then we have a problem.Come to think of it, why aren't they asking for the millions those two got in bonuses back?
ReplyDeleteFred Palacios
TMS Associates
I posted my video response here:
ReplyDeletehttp://www.youtube.com/watch?v=KKYIUaz4-kE
And, yes, it is time for "we the people" to say enough is enough. That's why we have courts. It's time to use them.
Time For 'We The People' to Say Enough is Enough?
ReplyDeleteWednesday March 18, 2009, 1:21 pm EDT
BUSINESS LEADERSHIP GURU AND AUTHOR CALLS FOR ACTION - SAYING NEWS OF AIG A "BOOKMARK IN TIME"
CENTERBROOK, Conn., March 18 /PRNewswire/ -- This week's news about AIG paying 76 executives bonuses that started at $1,000,000 each, (including several who then immediately left the company), was the last straw. It's time for "We the People" to say enough.
This recession is more than an economic nightmare for America. It's an in-our-face wake-up call. And we'd better listen. Our economy was destroyed by compromise -- from the White House to the bankers, automakers to Wall Street, and plenty of consumers who overdosed on credit -- and we're all paying the price for it. But with millions out of work, no real let-up in sight and China now holding the mortgage on the most powerful nation on earth, can America rekindle hope, pride, honest living and prosperity?
In a word, yes. America can do whatever it sets out to do, but not until "We the People" stand up and end this seemingly endless era of greed, entitlement, deceit, and living beyond our means, and begin a new chapter built on respect, accountability and fiscal responsibility.
"We the People" are paying for the decades-long compromising behaviors of our elected officials, business leaders, and financial institutions -- including con men like Bernard Madoff who single-handedly destroyed the financial lives of thousands, and members of Congress who think they're exempt from paying taxes. Are they not American citizens, bound by the same laws as the rest of us? From Watergate to Enron to the Bush administration's misrepresented facts as the rationale to invade Iraq that has cost us 4,258 American lives and a tab of $656 billion that grows by at least $200 million every day, we've all been complicit.
Now, we're learning of the mismanaged bailouts that were handed to the very leaders that contributed to this meltdown. Rather than using it as intended to stimulate lending, banks have been foreclosing on homes while using bailout funds to buy up other banks. The titans of Wall Street, including Lehman Brothers, Bear Stearns, Morgan Stanley and others, have been laughing all the way to their safely stashed accounts, while knowingly bilking millions of Americans out of their life savings. And the fact that AIG, while crying for more bailout money, was simultaneously paying all those people with money that was flat-out stolen from hard-working American people, is unconscionable. Will any of them be held accountable? Not as long as America remains the "land of greed and entitlement" without consequence. And it MUST NOT be tolerated.
When President Obama first announced his stimulus plan, he promised full transparency AND oversight, so that we'd know where every penny was going and how it was being managed. Until last week, that hadn't happened. Now, the President has announced a plan to, in the words of the Wall Street Journal, "revamp financial market oversight". Will it be enough? No one knows.
The audacity of greed, power and entitlement at the expense of "We the People" will continue to ravage America until we heed this wake-up call. And the fact is -- we have no choice. It's time to adopt "NO-COMPROMISE" as America's new mantra to guide our thinking and behavior. "No Compromise" means, if it needs to be done, get it done --- make the right, and when necessary, tough -- decisions. It means leading and living with the highest level of accountability, honesty and integrity. For America's light to shine bright once again we must hold not just elected officials and corporate leaders accountable to a higher standard, but all Americans to a higher standard --- the No-Compromise standard.
What is Enough? Enough would be stripping Bernie Madoff and whomever he worked with of every penny. Taking the stolen profits of Wall Street robber-barons, the obscene bonuses of everyone at AIG and together, placing all that money into an escrow fund from which the US government could truly help Main Street Americans get back on their feet and back to business. Let the criminals have a taste of the anxiety and fear that the rest of us have been dealing with every day.
So what does a "bookmark in time" mean? Simply, we can't change the past. We're in an economic maelstrom created by compromise. Compromise is easy. No compromise is hard work. The bookmark divides the two. If we are to pull ourselves out of this and get back the America we -- and the world -- once believed in, we need to change. Now.
We need President Obama to be a no-compromise leader. His promise of change gave us hope. No compromise would ensure the reality of that change --- that he will hold himself and his administration to the no-compromise standard no matter how tough it may be.
We need Congress and our elected officials to do their job. To work for us --- not their political party. No compromise means doing what's right, not partisan politics. It means a 100% commitment to representing their offices with integrity, honesty and duty to their country, and being held to the same standards as the citizens who put them in office, for ethical behavior and adherence to the laws they pledged to protect. It means paying their taxes like everyone else, or face double the penalties for violating trust.
We need business leaders to balance the need for profit with the need to innovate and be responsible to their employees and customers. The Big 3 automakers could have been making cool, environmentally-friendly cars for a decade instead of greedily building SUVs and tomorrow's profits. And the labor unions and automakers need to realize that they will all lose their jobs if they don't work together. Fact is, the oil companies that boasted massive profits should have bailed out the automakers that produce the vehicles that guzzle their product -- not our government.
We need the courage to blow up our dysfunctional healthcare system and replace it with one that puts patient care first -- a no-compromise healthcare system. Profit at the expense of an individual's or family's health and wellbeing must end.
Most important of all, we need to get our financial house in order. As of this week, the U.S. federal debt surpassed $11 trillion dollars. Japan and China hold 47% of the foreign-owned debt. No-compromise fiscal accountability must be embedded in government spending. And those who steal the livelihoods and life savings of others should be prosecuted and forced to pay it back. It's not their money. It's ours.
America's shift to no-compromise thinking and behavior cannot be delayed, and must not be ignored. Just as the world's scientists warned last week that if we don't move immediately to stem global warming we may cross the line of no return on this planet, we must heed this recession's wake-up call or risk losing everything we've worked for over the past 200 years. It's time to place the bookmark in time to end compromise in America and begin a new chapter where no-compromise thinking and behavior can create a safe, secure and accountable culture that ensures the future of our children. Anything less is a compromise.
Neil Ducoff is the author of No-Compromise Leadership (DC Press/January 2009, and CEO of Strategies, a Connecticut-based training and coaching company that teaches leaders and organizations worldwide how to live the no-compromise mantra. During 39 years as a coach, speaker and author, he has gained respect for his turnaround strategies and innovative growth solutions, helping business owners and leaders by sharing how "no-compromise" can make the difference between success and failure, and how to put it to work. His No-Compromise Leadership is the game-changing business manifesto for our times -- and nothing less than a paradigm reset.
For further information or to schedule an interview or speaking appearance with Neil, call Nina Zucker Associates at 610.667.0706, email neil@nocompromiseleadership.com or visit www.nocompromiseleadership.com.
I was fascinated to read an "economic expert" say that giving money directly to people was a bad idea to stimulate the economy and fix the mess. Here is his reasoning:
ReplyDelete1. Americans will simply pay off their debt or put it in savings.
2. This will not fix the problem.
The problem he said is that the big banks need capital to shore up their reserves in order to keep the flow of credit moving.
Uh, ok, so if every American paid off their credit cards, car loans, students loans, and mortgages... as well as putting money in their savings accounts in the bank.... um, wouldn't the big banks (who own the credit card, mortgage, car loan, and student loan debt that we would be repaying) then have new financial capital to shore up their reserves?
What am I missing here?
On 03/19/09 11:00 AM, Rik Yerzik wrote:
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Actually the government is making light of this issue but the Feds are using AIG to funnel money to EU and to other countries.. so far the US Treasury has given over $100Billion to AIG, they in turned funneled 62 Billion to the UK and other EU countries, including 17 Billion to Germany, 19 Billion to France, 28 Billion to the UK.. they are bringing these bonuses up as a smoke screen for the money laundering scheme for the Treasury.. by the way out of the $106 Billion that went to AIG, 62 Billion went outside the country, 44 Billion to our country... that's the real problem.. unchecked spending in Government with no accountability.
If you actually look into it Pelosi, Obama, Speaker of the House, and many other ranking leaders have all accepted considerable campaign donations from AIG. Do you think this anything to do with how the government is really minimalizing all of this??? Do you think AIG is now being made a scape goat because politicians are worried about re-election?? It has nothing to do with the government protecting "we the people" it is about protecting their own behinds, while the rest of us lose our careers.. sad sad reality in today's world.
I would be prepared to call him a scapegoat, if he had blown the whistle as soon as he discovered that these obligations existed! What did he THINK was going to happen when the matter came to light?
ReplyDeleteHave your ever interviewed a candidate for a job opening who told you that he had sued a former employer? You rejected him, of course, but not because of the lawsuit- it may have been legitimate. You rejected him for his horrendously bad judgement. Who would mention something like that in a job interview?
On 03/19/09 8:06 AM, Cesar J. Chekijian, MCR wrote:
ReplyDelete--------------------
It may more be the fault of our Congressmen who agreed to allow the payment of these bonuses, in order to cram Billions in Pork-Barrel Spending, and now are perhaps using AIG's bonuses as smoke screen to cover? Congressmen/women should be interrogated on nationalized TV next.
On 03/19/09 12:50 PM, Rodney Dapilmoto wrote:
ReplyDelete--------------------
And to further elaborate on John Zogby's suggestion......when these executives return the bonuses, they should do it with a smile and move on!
On 03/19/09 1:55 PM, James C Brandon JCBCapital.com wrote:
ReplyDelete--------------------
Hi Benjamin,
Yes. The misinformation is remarkable.
SEC under COX was a disaster - July 6, 2007, SEC - Christopher Cox - short sale price test under the Securities Exchange Act of 1934, the 'tick test rule' is repealed.
November 15, 2007 – FASB 157 “Fair Value Measurements”, mark-to-market, Financial Accounting Standards Board interpretation of July 30, 2002 - Sarbanes-Oxley Act.
- Personally, I think Congress needs to write news laws regarding what mortgages GSEs can buy. Congress needs to review 1933, 1934 and 1940. See the current fixes: www.jcbcapital.com/2008panic.htm
Deregulation of mortgages occurred in 1994 - Henry Cisneros HUD (Housing and Urban Development) loosened mortgage restrictions so first-time buyers could qualify for loans they could never get before. And 1995 - Henry Cisneros HUD, Fannie Mae and Freddie Mac began receiving affordable housing credit for purchasing mortgage backed securities which included loans to low income borrowers. This resulted in the agencies purchasing subprime securities.
December 21, 2000, signed by Clinton - Commodity Futures Modernization Act of 2000 – deregulated credit default swaps the "Enron loophole".
Currently, hedge funds of $100+ million must only report their short selling positions to the SEC. Otherwise, submitting to regulation is voluntary.
Lastly, Congress is responsible for oversight of laws and US agencies created by law. Congress is then beholden to US voters.
- OTC derivatives (most importantly CDSs) need to be cleared through a regulated exchange and monitored (Nasdaq OMX Group started clearing over-the-counter interest-rate swap contracts, over $458 trillion market - 1/2009).
- ICE US Trust LLC, Intercontinental Exchange's entity, started clearing contracts on March 9, 2009 - before the CME Group (NYSE Euronext), Eurex AG and LCH.Clearnet Group Limited - $27 trillion (notional value/gross exposure) of credit-default swaps.
- SEC need to be reinvented - Cox was a disaster - why Donaldson (founder of DLJ was forced out I will never know).
- Hedge funds should be forced to register when managing over ($100 million?).
- Exchanges should have circuit breakers for short-selling just as they do for program trading.
JC Brandon
Links:
http://www.JCBCapital.com
Hi All -
ReplyDeleteMy response is terse, but I think encases the complexity of my thinking: yes, he is being scapegoated, and he should also be held responsible for his decisions, actions, and influence. Both are true.
I think most individuals need symbols to relate to very complex, systemic problems. Libby is our man in black of the economic collapse (along with Cramer, etc.). They're taking the heat for many irresponsible parties, but also have assisted greatly in our current situation. They aren't only to blame, but they've also done certain kinds of wrongs (even if they weren't legally wrong).
I'm a part of this crisis. I've interacted in this system of credit, loan, and capital my whole life (I was born into this). I don't think I am at fault to the degree that Libby is, but I am also a part of this problem.
Bottom line: we all need to change, and some need to be held responsible.
Kris Nelson
AIG and the bonuses is a big smokescreen topic. The last thing that any working individual should ask for is government regulation on bonuses. Taxing or rescinding the bonuses at AIG is the entryway for government to begin taxing all bonuses in all corporations.
ReplyDeleteA bonus is only attained when a predetermined milestone written into a contract is achieved. There is no conversation to be had on the bonus pay out.
The government should take back every penny that was given out to every corporation. A free market capitalistic economy is set upon the ideals that corporations can grow as big and die without the say so of the government. Where has it ever been written that the government is responsible for corporate growth?
The economy may fall for a few years, but a rapid decline will lead to a rapid rise. This government intrusion will only prolong the downward spiral and impede progress.
-Gabe Andrews
As I understand it, it was the mortgages that sunk AIG. There could have been other factors. There is also a successful company called IBM. IBM was known for selling off unprofitable divisions, well before the point of danger, so that it would not sink the whole company. How come AIG and Ford and Chrysler couldn't see the writing on the wall for years? How come they didn't make the necessary changes to keep their companies afloat? How come they couldn't see a trainwreck coming?
ReplyDeleteI believe a bailout was a bad idea, because now it prolonged the chapter 11. Now the companies are filing bankruptsy. Bankruptsy doesn't mean they are going out of business, it just gives them a chance to re-organize and help the company re-emerge.
In other words, these companies needed to reorganize BEFORE they took any money and show a return on investment and satisfy risk managers, so they could get a loan....does that make any sense?
The companies are not profitable and are going into chapter 11 and loosing money - high risk. I don't know of any bank who would lend to them with those odds.
When Iacoccoa led Chrysler out of bankruptcy many years ago, he took a $1 a year salary until the company was profitable again. He took government money and turned the company around sooner than expected.
Business is risk. There are some things you can scale back on and some that you can not. If your advertising budget is not working (no return on investment) or any part of it, you can cut it. If there are initiatives that are working well for you, you would want to do more of them.