Dear A.I.G., I Quit!

[Daradon]

Originally Posted by Titan

I hear what you are saying but don't think the analysis holds up. If the homebuilder has a contract with the roofing supply company and the housebuilder goes under the contract is gone. But if another company buys the housebuilder, they have to honor the contract. The fed is the company that buys the housebuilder, or perhaps more accurately, the finance company that offers a line of credit to keep the housebuilder in business. Another difference though is that AIG has tons of assets and would not just disappear. They would declare bankruptcy and the process would in fact protect the employees, to a certain extent. The fact the feds put no conditions on the bailout is where the blame lies. The electricity company will still want to be paid. As will the landlord for their offices and the leasing company that supplies the computers. All based on contracts.

Well see this I understand better. I guess it all depends on how well the employees would be protected. Not knowing US bankruptcy law, I have no clue, yet I have a little trouble believing he would receive anywhere close to what he was promised contractually. I could obviously be wrong though and I admit that. I would assume though, that especially being an international finance company, they would have far greater obligations to other firms, countries, banks, companies and would probably not be able to pay bonuses on top of employment income.

I do agree, and have said this already, that the government screwed it up by placing no conditions or restrictions on the bailout and should also be responsible. (Course the government never is) And this gentleman is right, he should feel betrayed by his company for not sticking up for him and at least letting congress know the difference.

But it all comes back to the responsibility of AIG. Not the the taxpayers. And while this whole mess isn't this guys fault, his COMPANY does have a large role to play. And that unfortunately does make it a problem of his. Is it fair? Probably not. But stuff like this is happening to people all over the country and world right now. (I know there aren't many bills directed at a subsection of workers like this recent one, but stuff like this is happening to other people, and in ways just as unjust)

This guy will land on his feet though and probably get a very lucretive job elsewhere, which is more than many others can say. I understand why he would be mad at AIG, but I can also understand the vitriol directed at his company.

[Tron_fdc]

Originally Posted by Daradon

Obviously you've never been screwed on a contract.

If the person owing you can't pay, it don't matter. If AIG had not received the bailout, they wouldn't be able to pay. The fact that the were bailed out changes everything on the books at that point because if they weren't, there wouldn't even be books, jobs, bonuses to discuss.

That's sorta the point though. The government decided to bail them out with no restrictions, so they fulfilled their contractual obligations to their employees. The person owing, in this case, COULD pay. But now that people have seen the huge compensation amounts, they're outraged, but not at the right people IMO.

Sure hindsight is always 20/20, but before a bailout was paid they (the US govt) should have renegotiated their compensation structure or let them die. They didn't, and now it's the executives fault the company fulfilled their contracts?

[Daradon]

Originally Posted by Tron_fdc

That's sorta the point though. The government decided to bail them out with no restrictions, so they fulfilled their contractual obligations to their employees. The person owing, in this case, COULD pay. But now that people have seen the huge compensation amounts, they're outraged, but not at the right people IMO.

Sure hindsight is always 20/20, but before a bailout was paid they (the US govt) should have renegotiated their compensation structure or let them die. They didn't, and now it's the executives fault the company fulfilled their contracts?

I do understand that, and as you can see I posted just above you in regards to most of that. I guess all I will add is that people have to understand if their company has to cut corners in extreme situations, sometimes even renegotiating things. (Contract renegotiations DO happen) If they believe in the company they have to stay and accept the new terms. If they don't, they can leave. Which is what he is doing.

The government screwed up in dealing with AIG, but AIG kinda also screwed up and forced the governments hand by not renegotiating and restructuring well enough, especially in the areas that ARE responsible.

I understand the guys outrage, but for me it would be more well placed at his own company, not at the government or taxpayer.

[flylock shox]

Most interesting thread of the past couple of weeks IMO.

I have to admit, I haven't taken much of an interest in the bailout and the AIG debacle in particular.

To me, the whole situation (and the various points of view in this thread) shows just what a precarious balance the entire financial system is in. It seems to go something like this:

The Government can't afford to let AIG fail because it's so important to the US financial system, and therefore has to use taxpayer dollars to prop it up.

AIG, in trying to survive, must retain its qualified employees but cannot do so given their virtual bankruptcy, and so must rely on the Government for a bailout in order to continue operating.

AIG employees, or at least those in this individual's position, are watching the partial collapse of their industry and the potential loss of their jobs. They could leave AIG, but to go where? I doubt there's a lot of hiring going on in the financial sector right now. So, they agree to work essentially for free in the hopes that the company can get back on track and they can maintain their employment, but they only do so with AIG's assurance that they will be paid in the future. They take a calculated risk that AIG will not collapse.

The Government then bails out AIG, allowing AIG to make good on its promises with its employees - which is important, because if AIG can't do so it will lose its employees, no longer be able to operate, and will go out of business regardless of the bailout it receives from Government.

Taxpayers are then annoyed by the fact that AIG is using their money to pay its employees "bonuses," which isn't surprising given the size of the "bonuses" and the hardships your everyman taxpayer is experiencing.

The Government then responds to the complaints of the taxpayer, and attempts to force AIG employees to give up their bonuses.

As a result of the Government's actions, employees leave AIG, AIG's position becomes even more precarious, and AIG may collapse even with the bailout money - not because it's insolvent, but because it can no longer operate as a viable company.

So, if I've got this right, does this mean the blame lies partly on the media for mischaracterizing the AIG "bonuses" as being payments on top of AIG employees' regular salary, thus inflaming the taxpayers and resulting in ill-considered Government action? Does blame also lie partly on the Government for failing to specify the uses to which the bailout money could be put? And does blame lie on AIG for making promises to its employees which were excessive in the circumstances and, therefore, bad business?

Finally, does blame lie partly on the AIG employees who may be partially responsible for AIG's collapse and who, in any event, could have left AIG when they saw the headlights coming, but instead stayed around hoping that it would all work out in the end, and hoping they'd get the bonuses they were promised?

Oddly, it looks to me that the whole system is doing exactly what we might expect it to do in the circumstances. And it's hurting everyone in the process.

[Azure]

Originally Posted by Daradon

Obviously you've never been screwed on a contract.

If the person owing you can't pay, it don't matter. If AIG had not received the bailout, they wouldn't be able to pay. The fact that the were bailed out changes everything on the books at that point because if they weren't, there wouldn't even be books, jobs, bonuses to discuss.

So, they would have declared bankruptcy, and different investors would have come in and bought the company.

I don't know if the contracts would have still been upheld. I would imagine not. But that is a different situation than what we're talking about here.

Those contracts are still in place by LAW. And need to be fulfilled, as required by US Federal Contract Law.

[Azure]

Originally Posted by Igottago

Thats usually the case with any company that goes under.

And yet the Obama administration has turned the mistakes THEY made into hatred for those people.

Public protests outside of the homes of AIG employees? Death threats?

[MarchHare]

Those contracts are still in place by LAW. And need to be fulfilled, as required by US Federal Contract Law.

And they are being fulfilled. AIG is still paying the bonuses in full, and the goverment is planning to tax 90% of the bonuses back. No contracts are being broken. I don't get furious with my employer when they agree to pay me $X but I only receive $X-Y where Y is the amount that is taxed by the goverment.

[Daradon]

Originally Posted by Azure

So, they would have declared bankruptcy, and different investors would have come in and bought the company.

I don't know if the contracts would have still been upheld. I would imagine not. But that is a different situation than what we're talking about here.

Those contracts are still in place by LAW. And need to be fulfilled, as required by US Federal Contract Law.

Contracts can be renegotiated or voided due to bad performance or unfulfilled obligations.

If AIG had done that to the areas responsible (in which I think they'd have fairly good legal reasons to) maybe they could prevented a lot of this mess and not looked so bad as well as keeping employees like this guy.

I think that people are upset because it looks as though AIG has acted in bad faith with taxpayer money. Which I would have to agree with.

[Azure]

Originally Posted by MarchHare

And they are being fulfilled. AIG is still paying the bonuses in full, and the goverment is planning to tax 90% of the bonuses back. No contracts are being broken. I don't get furious with my employer when they agree to pay me $X but I only receive $X-Y where Y is the amount that is taxed by the goverment.

Like one of the posts above mentioned, there are people leaving by AIG is on extremely shaky ground.

Sure, the contracts did get fulfilled, but AIG has ran into massive problems as a result.

All because of the Government didn't do their job properly. Happens when you have a bunch of incompetent fools at the helm.

[Tron_fdc]

Originally Posted by Dion

This pretty much sums it up. You've got all this political grandstanding, whipping the public and media into a frenzy, and neither one has a clear grasp on how badly this bailout was handled in the first place. Rule #1 in business (at least where I work) is that throwing money against a problem carte blanche NEVER solves the root of the problem. This whole bailout is turning into a kneejerk solution Obama made, it's backfiring, and his administration is playing the blame game.

[Bobblehead]

Actually, I agree with the bailout. The only conditions I would have perhaps considered would be to give some money and they have regular audits to ensure that the money was being put towards rebuilding the company and not being siphoned off somehow (which is what I think the mislead public believes). Until this point, I think the gov't did fine.

I just don't like the knee jerk reaction to the bonuses and I think that the targeted persecution of the people who received them is short-sighted, will ham-string the companies future efforts at staffing and retention, and is overall vindictive and wrong.

[Daradon]

Originally Posted by Azure

And yet the Obama administration has turned the mistakes THEY made into hatred for those people.

Public protests outside of the homes of AIG employees? Death threats?

Whoa whoa, you're saying the public has no reason to be mad at AIG as a company? As a whole? And the it's the governments fault for the backlash?

Yeah a lot of the stuff happening is extreme and uncalled for, and all employees can't be painted with the same brush. But shoot, people from all walks of life get death threats from idiots and don't deserve them. Sports stars, journalists, doctors. Idiots protest and threaten all sorts of people. And the hatred was there far before the bailout.

The financial industry with it's bad business practices, greed, and general arrogance has brought this on it's employees far more than any other factor.

[Tron_fdc]

Originally Posted by Daradon

Whoa whoa, you're saying the public has no reason to be mad at AIG as a company? As a whole? And the it's the governments fault for the backlash?

Yeah a lot of the stuff happening is extreme and uncalled for, and all employees can't be painted with the same brush. But shoot, people from all walks of life get death threats from idiots and don't deserve them. Sports stars, journalists, doctors. Idiots protest and threaten all sorts of people. And the hatred was there far before the bailout.

The financial industry with it's bad business practices, greed, and general arrogance has brought this on it's employees far more than any other factor.

Did AIG screw over joe taxpayer by all their speculators and sub prime mortgage purchases? Sure. Should the public be mad as hell at them? Absolutely. But what they did wasn't illegal....it was allowed according to the system in place at the time. Pretty sure this is what Obama was talking about last night in his address; changing the system. I'm skeptical on that one though, because he's talking about regulating the financial industry, which RUNS the US economy. I'm not sure capitalist America is going to accept rules and regulations on making money.

Right now I'm kinda blaming the past government letting these jokers operate in the manner they did, and the current one for their patchwork bailouts that so far don't seem to be doing f-all except cost taxpayers A LOT of money.

[Azure]

Originally Posted by Daradon

Contracts can be renegotiated or voided due to bad performance or unfulfilled obligations.

If AIG had done that to the areas responsible (in which I think they'd have fairly good legal reasons to) maybe they could prevented a lot of this mess and not looked so bad as well as keeping employees like this guy.

I think that people are upset because it looks as though AIG has acted in bad faith with taxpayer money. Which I would have to agree with.

And I would say that AIG only fulfilled the contracts they were obligated by law to fulfill. If the government would have actually bothered to do their job, they could have restructured all the 'retention bonuses'....and walk away on top.

Except they didn't. So, they just blame people who aren't to blame for a problem the government created.

Really, think about this. AIG, or a sector of AIG makes some pretty massive mistakes, forcing the government to come in a bail them out. The government, instead of thinking for a second that there was a 'reason' these mistakes were made, provides AIG with a multi-billion dollar bailout, but in their ignorance, forgets to think about the fact that maybe some restrictions should be put into place to deal with the bailout money.

Its the stupid government attitude that it doesn't matter how the money is spent that creates the problem in the first place.

Or maybe there was some other reason the bonuses were allowed to stay in place, paticularily certain government officials that would benefit from them indirectly.

Like Sen. Dodd.

[Azure]

Originally Posted by Daradon

Whoa whoa, you're saying the public has no reason to be mad at AIG as a company? As a whole? And the it's the governments fault for the backlash?

Not really, because only a certain PART of the company is responsible for this mess.

The majority of the people at AIG had nothing to do with it. And yet the public is angry with them. Mislead? Almost certainly.

Blame the media too.

[Daradon]

Originally Posted by Azure

All because of the Government didn't do their job properly. Happens when you have a bunch of incompetent fools at the helm.

I agree the government didn't do it's job properly. But it's still not the number one entity to blame.

If AIG had acted in good faith with the bailout money we might not be in this discussion right now. And by acting in good faith I mean targeting the areas that were responsible and renegotiating or voiding bonuses there. Firing people. There would be ample legal reasons to I'm sure. All this 'contracts are contracts under law' is bs when one side doesn't fulfill it's contractual obligations. (obviously I am not talking about this specific case here)

As well, they obviously should have canceled corporate retreats and other 'perks'.

People are mad because AIG has NOT acted in good faith with the bailout money. They have treated it like some sort of entitlement. And that has been apparent in their behaviour from the beginning.

Now a lot of the blame is falling on people who don't deserve it, I will admit that. New employees, or employees in different departments. But to blame it on people outside of AIG (even the government) is even sillier.

The government wouldn't have had to deal with any of this if AIG had not made bad decisions to begin with, and then acted so poorly after it received it's bailout. Yes I agree the government did not research or do it's job properly, and definitely could have handled it better. And they should be judged on their perforance as well.

But to say this is the governments fault? Very laughable.

[Daradon]

Originally Posted by Azure

Not really, because only a certain PART of the company is responsible for this mess.

The majority of the people at AIG had nothing to do with it. And yet the public is angry with them. Mislead? Almost certainly.

Blame the media too.

Regardless of which part it is, the company is responsible for all parts. If your getting labeled as part of that it's unfortunate, but not hard to imagine.

It certainly makes the company more responsible than the government or media.

If both were doing their job better, they might explain this to the public, yes. But it doesn't make them more responsible than AIG, nor does it take away the the public's right to be angry. Or at least decide who they think is at fault.

As for the idiots taking to to extremes, there are always some of those. You can't base an argument on them.

[Azure]

Originally Posted by Daradon

I agree the government didn't do it's job properly. But it's still not the number one entity to blame.

If AIG had acted in good faith with the bailout money we might not be in this discussion right now.

And how exactly would they have done that? Not fulfilling contracts they are required by law to honor?

Really not getting what you mean here. Sure, they could have handled a lot of other things differently, like the mistakes that were made to put us into this position, but bailout money is bailout money. And if given to a company to any company, WITHOUT restrictions, they will have stuff like this happen.

[Azure]

I mean, what do you expect GM will do with the $22 billion they would get, should the government decide to help them out some more? Part of THAT money will almost certainly be going towards contracts, bonuses, etc, etc....just to keep the company operating.

Which is why you let them go bankrupt, and restructure everything in the end.

[Daradon]

Originally Posted by Azure

And how exactly would they have done that? Not fulfilling contracts they are required by law to honor?

Really not getting what you mean here. Sure, they could have handled a lot of other things differently, like the mistakes that were made to put us into this position, but bailout money is bailout money. And if given to a company to any company, WITHOUT restrictions, they will have stuff like this happen.

Maybe you've missed it, but I've written it twice already including in the post you partially quoted.

Contracts can be renegotiated and voided when not fulfilled by one party. You make it sound like a contract is set in stone, unbreakable. They're not. They can be, and regularly are, renegotiated and voided when one party does not fulfill it's obligations under the contract. And they should be in situations like this. While I am not arguing against this example, I'm sure there are many examples within the company that fall under this umbrella. If they had done this with the responsible people and departments there might not be this backlash.

The fact that they did not, coupled with their continued spending on other perks as stories broke early on, show there are (or at least were) many fat cats up at the top that just didn't get it and acted as it if were entitled to them.

They acted in bad faith with taxpayer money. They should be expecting backlash. The fact that it's hitting people within the company not responsible is unfortunate, but understandable.