Anyone else think these recent so-called bonuses were actually "payoffs" for keeping quiet?

[Lex]

I haven't seen this raised, but I'm wondering about the following: when AIG knew the excrement was hitting the fan, these last-ditch bonuses with tax-payer money were to make sure the execs keep quiet or leave the company altogether.

Final payment for their silence when the investigations as to what happened would invariably start.

[closeupready]

1. I don't know, but I'm curious why the bonuses were guaranteed regardless of performance?

I mean, what, you could provoke fistfights with colleagues and still get a bonus?

[Enrique]

2. no theories necessary

they took the money because that's what these people do. They take money, as much as they can.

[terisan]

3. Seems plausible. When did AIG first figure the big bailout would be sought and to whom

in government did they put out the first feelers?

[BlooInBloo]

4. In at least one case, the "retention bonus" was for a person who had ALREADY LEFT aig.....

http://www.talkingpointsmemo.com/archives/2009/03/retroactive_retention.php

[TahitiNut]

6. Let's be clear, a "retention bonus" isn't designed to keep people AFTER the bonus is paid.

It's designed to postpone compensation to the end of some period DURING which the person is retained. In other words, it's paid in December to ensure the person doesn't leave in October. At least that's how it was described to me. It's a "normal" thing on Wall Street where the 'churn' of 'top talent' (rainmakers) among various firms is very rapid.

[closeupready]

8. Well then they agreed to assume a risk that they would get their bonus.

Unfortunately for them, turns out that the risk was higher than they now wish it had been. That's the way it goes.

[Laelth]

5. Treasury wanted to insure that AIG participated in the bailout.

Executives said they would not participate if their bonuses were capped. They blackmailed us. The Federal Government can't let these banks (nor AIG which insured the credit default swaps) fail, because if it did, foreign banks would lose confidence in the U.S. and would not loan the government the $1.5 trillion it needs to keep the government running. Foreign banks finance the U.S. national debt, and AIG insures those banks against losses. AIG held a gun to our head and said, effectively, give us our bonuses or the whole Federal Government collapses because no bank will be willing to lend the U.S. money.

So, Treasury insisted that the bonuses be allowed, and the restriction against them (that Dodd had insisted upon) was removed.

That's what I think happened.

:dem:

-Laelth

[RB TexLa]

7. No, retention bonuses and bonuses in general are a large part of pay in the

financial services sector. Many "bonuses" are paid x amount bonus for every year with the company.

[Lex]

9. Well I know that. But these bonuses were paid *after* the company was in trouble.

Paid with tax-payer money.

And after knowing the company effectively couldn't afford to pay the bonuses.