aig insanity

I can't even process the whole banking bailout anymore. This is nuts. $160 million in bonuses to "retain key employees" and then this:

Twenty-two people received more than $2 million, and 73 received more than $1 million. And even though the bonuses were aimed at retaining key employees, at least 11 are no longer with the company.

Even the "retention" farce doesn't pass the laugh test! These bonuses aren't meant to keep people around; they're meant to keep paying people at the outrageous levels they were being paid during the bubble they created!

The Administration's reaction, to fine AIG the amount in bonuses and to reduce their $30 billion bailout package by the same amount doesn't hold water. $330 million is 1% of the money AIG is receiving. Where's the incentive for them to change their ways, when there's still no oversight whatsoever into how this money is being spent? Note that most of the money is just being funneled through AIG to pay off the speculators that invested in them, and there are no rules at all for those speculators to not use this taxpayer money to pay out ridiculous bonuses. Where AIG money is going, in case you hadn't heard, is a trade secret. Blargh.

So it's just 1% of the money, right? But it's still $160 million, and this is about rewarding people who didn't just run their own business terribly, but took down the whole economy with them. The fact that they have jobs at all is an outrage. Are you telling me that there is no one sane and talented to run these companies, no one willing to actually work to make banks act like banks and not a drunken guy at the racetrack?

Related, Sen. Chris Dodd (D-CT) may lose his Senate seat over this, and at the end of the day, he might not be the only one. Consider that Democrats had figured that something like this might happen, but Dodd stripped it out of the bailout bill in conference committee:

Before the AIG payouts became known, Congress had taken steps toward taxing bonuses, but pulled back. The Senate adopted an amendment to the economic stimulus bill that would have required recipients of bailout funds to repay bonuses above $100,000 or face a 35% excise tax.

The provision was dropped in conference negotiations with the House and replaced with a watered-down provision from Sen. Christopher J. Dodd (D-Conn.) that exempted bonuses in contracts signed before Feb. 11. The AIG contracts were signed early last year.

Dodd received $280,238 in campaign contributions from AIG and its employees from 1989 to 2008, more than any other member of Congress, according to the nonpartisan Center for Responsive Politics. A spokeswoman for Dodd said he was unaware of the AIG bonuses at the time of the conference committee talks.

[Montana Democratic Sen. Max] Baucus, who was one of the negotiators on the stimulus bill, said Tuesday that he was not aware the provision had been dropped from the legislation. "That should have passed, but it didn't," he said.

Great. Our Senators don't know what they're voting on and passing.

Not change we can believe in.

update: Apparently I wasn't paying attention and we do know the counterparties now:



update 2: Firedoglake reports that Treasury Secretary Geithner is being dishonest in trying to scapegoat Dodd for the change in final TARP language, and that it was actually the Administration's doing that the compensation provision was watered down.