AIG pays contractually obligated bonuses - hilarity ensues

There was much wailing and gnashing of teeth yesterday following AIG's disbursement of retention bonuses yesterday. And while there may be an argument that AIG has a politically tone-deaf ear, much of the government's consternation appears to be selective. Bear in mind that these in question amount to $165 million (or just less than 0.1% of the $170 billion the company has received from the feds).

As Barney Frank and President Teleprompter rail about corporate greed, there is little mention that Goldman Sachs and European banks received over $90 billion of the bailout funds as noted in this Reuters' article.

Nor do they seem to care that the bonuses were contractually mandated. Now the administration takes the position that they will do everything possible under the law to recoup that cash. Funny how the UAW contracts are sacrosanct and re-structuring those contracts can not even be considered as a viable alternative as GM slowly circles the drain.

But what is most hilarious is that these are protected by provisions, so reviled by the Democrats, were written into the stimulus bill by Chris Dodd (who also just happens to be the single largest beneficiary of political contributions from AIG). And, of course, this was signed into law by The Obama.

As noted in this FOXBusiness piece:

While the Senate was constructing the $787 billion stimulus last month, Dodd added an executive-compensation restriction to the bill. That amendment provides an “exception for contractually obligated bonuses agreed on before Feb. 11, 2009” -- which exempts the very AIG bonuses Dodd and others are now seeking to tax.

Finally, it should also be noted that none of these bonuses are even a surprise. To the contrary, Jim VandeHei outlines:

AIG disclosed its retention-bonus program more than a year ago, including bonuses directed to those handling the exotic derivatives that got the company and the country into this mess.

The bonuses were essentially a nonissue when AIG got its initial bailout money, almost $150 billion under President Bush in the two months surrounding the presidential election. Joe Biden, then the vice presidential nominee, came out strongly against the bailout. Obama did not.

Timothy Geithner, then at the New York branch of the Federal Reserve, was a huge proponent and architect of the AIG bailout. So if Obama had strong private opposition to the idea it did not affect his pick for the person who would oversee all bailouts.

The bonuses were again a nonissue when Obama himself increased the bailout to $173 billion last month.

Good thing team Obama is on top of things.