President Obama has slammed the huge insurance company AIG, which announced that it was planning to pay out $165 million in executive bonuses after having received a total of $170 billion in taxpayer-funded bailout money from the federal government.
Obama said: "All across the country, there are people who work hard and meet their responsibilities every day, without the benefit of government bailouts or multimillion-dollar bonuses. And all they ask is that everyone, from Main Street to Wall Street to Washington, play by the same rules." (MSNBC.com) (You tell 'em, Barack, baby!)
Congressman Barney Frank said that paying bonuses to the people whose mismanagement led to the company's near-collapse is "rewarding incompetence". (Go, Barney!)
And New York State Attorney General Andrew Cuomo has issued subpoenas to obtain the names of AIG employees who are set to receive the bonuses. He says that "his office will investigate whether the employees were involved in the insurance giant’s near-collapse and whether the $165 million in bonus payments are fraudulent under state law". (That a boy, Andrew!)
I understand that AIG is contractually obligated to pay out these bonuses regardless of the financial standing of the company. Failing to do so could subject them to lawsuits, which is the last thing they need right now. What I don't understand is why these executive contracts failed to tie bonus pay to performance in the first place. There is no other industry that awards company leaders regardless of whether they succeed or fail at their jobs. I just hope that this backlash signals the end of this outrageous fleecing of company shareholders (and now, of taxpayers too.)
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