The dust is still settling after the explosion caused when AIG awarded certain employees bonuses while living off the government’s dime. Sharp-tongued criticisms flew from Washington to Wall Street as lawmakers demanded the employees return their financial incentives.

Yet, it’s puzzling how, and why, our lawmakers were so insulted by these contractually-promised bonuses, especially when just months earlier most of them rewarded their subordinates with a year-end “thank you” during one of the worst recession in decades: Read the rest of this entry »

The New York Times reports that Goldman Sachs is planning to repay their $10 billion in TARP money far sooner than expected — perhaps even as soon as next month. Whether you believe the AIG bonuses were irresponsible and unethical, or that the government merely created a dog-and-pony show to distract taxpayers from Congress’ mass spending, the firm’s bonuses have certainly stirred up a lot of adverse reactions.

Bottom line, the extreme reaction by the government to the salary restrictions has a lot of firms thinking they’d be better off alone: Read the rest of this entry »

President Obama’s much-touted ’stimulus’ plan promises to put about $8 per week into most Americans’ paychecks starting in April, which, it is hoped, will help to stimulate the economy.

Wal-Mart, however, has a different idea of stimulus:

Wal-Mart Stores Inc. handed out $933.6 million in bonuses to its rank-and-file U.S. workers on Thursday, an increase of 46.7% compared to last year.

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It’s been a chaotic week of outrage and finger-pointing over the AIG bonuses. Depending upon your view, the bonuses — which were put in place last year and known to the Obama administration since at least early March, if not earlier — are either a necessary evil to keep the employees who know how to unravel the Gordian knot that other, long-gone employees put into place…

The handful of souls who championed the firm’s now-infamous credit-default swaps are, by nearly every account, long since departed. Those left behind to clean up the mess, the majority of whom never lost a dime for AIG, now feel they have been sold out by their Congress and their president. …

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Senator Chris Dodd admitted that he was in fact involved in changing the language to the final version of the stimulus bill that some say protected AIG’s controversial bonuses. Without naming names, Dodd said yesterday that Treasury officials asked him to modify the bill to cap executive bonuses:

On Tuesday, Dodd said he agreed to makes changes in the final version of the federal stimulus bill. This represented an about-face in his explanation, only one day after he said that he was not a member of the conference committee that crafted the final compromise bill and pointed out the exception had not been in the bill as he drafted it.

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Even as Congress finds itself getting into the punish-AIG frenzy, it seems that the AIG bonuses are protected by law:

While the Senate was constructing the $787 billion stimulus last month, [Connecticut Senator Chris] Dodd added an executive-compensation restriction to the bill. The provision, now called “the Dodd Amendment” by the Obama Administration 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. …

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As officials have informed the White House that there is little they can do to legally block AIG’s latest round of bonuses, Treasury officials said they will restructure the insurer’s latest Federal bailout to ensure taxpayers are “made whole”:

The Treasury is finalizing the terms of its latest rescue package for AIG, announced on March 2, and will attach new provisions to it, the official said.

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