March 18, 2009

AIG BONUSES

Everyone seems to be talking about the AIG bonuses. The freakiest quote I've heard so far?

"We've created this mess. Everyone's responsible for allowing executives to receive these bonuses," said George Ayoub of Toronto, Canada, an American who was visiting Los Angeles. "Probably every company needs to be nationalized, and the government will own the corporations instead of the corporations owning the government."

Wow.

Guard Wife has a good post explaining contract law. And Glenn Beck got in the game and showed just how inconsequential this $165M is in the grand scheme of things.

And this is the problem with government meddling in business:

Experts in corporate law said the Obama administration has an important advantage in the controversy. In return for the bailout, the government now owns 80 percent of the company. "They're the big dog in the room now and can put some leverage on AIG to straighten this out," said attorney Jim Ervin, a partner at Benesch, Friedlander, Coplan & Aronoff Llp in Ohio.

Now that Obama owns you, he can force you to break contracts, which, according to my understanding of Boortz today, means an even bigger payout:

Here's something I'm guessing you don't know. The Financial Services Division of AIG is headquartered in Wilton, Conn. In Connecticut they have a little gem called the "Wage Act." This law says that if an employee has to sue for wages payable pursuant to a contract they recover twice the amount that is contractually owed. That would have meant $330 million instead of $165 million. Add some attorney's fees on top of that. So ... you're running AIG. What would YOU do?

So tell me how getting worked up over this makes any sense!

Posted by: Sarah at 11:41 AM | No Comments | Add Comment
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