Saturday, March 14, 2009
AIG bonuses demonstrate what's wrong with Wall Street
Even with Saturday's agreement to rework its system for paying bonuses to employees, American International Group still stands as a trillion-dollar example of corporate greed gone wrong. The giant insurer caused widespread outrage this week when its plans were revealed to pay hundreds of millions of dollars in bonuses despite getting $180 billion in bailouts from taxpayers. Since appointing a new chairman late last year, when news of its faltering financial situation was revealed, AIG has cut executive salaries and plans more cuts in its AIG Financial Products divisions, where the massive investments in default swaps and below-prime mortgages that nearly sank the company originated, according to the Cable News Network (CNN). But AIG still committed to pay hundreds of millions of dollars in bonuses to its executives, including $165 million due Sunday. The new company chairman, Edward Liddy, told Treasury Secretary Timothy Geithner in a letter that 2008 bonuses would be recalculated and that 2009 bonuses would be reduced by 30 percent. The Obama administration as sharply criticized AIG for agreeing to pay bonuses after taking bailout funds from the federal government. But imagine how much the executives would have gotten had their company actually been making a profit!