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Taxpayers Fund AIG Lawsuit Against US

ScuttleMonkey posted more than 5 years ago | from the should-have-let-them-die-when-we-had-the-chance dept.

The Courts 784

AIG, now infamous for their executive bonuses, has decided that the $200 billion they received from the government is not nearly enough and is suing the government for the return of $306 million in tax payments. "AIG is effectively suing its majority owner, the government, which has an 80 percent stake and has poured nearly $200 billion into the insurer in a bid to avert its collapse and avoid troubling the global financial markets. The company is in effect asking for even more money, in the form of tax refunds. The suit also suggests that AIG. is spending taxpayer money to pursue its case, something it is legally entitled to do. Its initial claim was denied by the Internal Revenue Service last year."

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Is anyone surprised? (5, Insightful)

seanadams.com (463190) | more than 5 years ago | (#27271515)

Obama says "blame me", which is political-speak for "screw you, it's done, get over it". He won't be saying "blame me" when the honeymoon is over and this escalates to a full scale popular revolt.

We KNEW AIG were crooks long before we gave them this money. Why did they do it? Where the fuck was the outrage when these bailouts were first suggested? I've been outraged since the beginning, because the whole game plan has been obvious to me since they robbed us of that first $700B. And yet polls suggest that Americans STILL think this is going to work somehow.

These people: the Congress, the President, AIG, are all just a bunch of god damned frat boys, scratching each other's backs and doling out our tax money to each other in such staggering volumes that it WILL be the end of this country if we don't stop right now.

Did you all catch Chris Dodd saying he had nothing to do with the change in the bailout legislation to allow these bonuses, then the next day saying oops, that was me. "Somebody should have caught it sooner" - yeah, right, if the bill had any chance of being reviewed by the legislators themselves, let alone the public, before if slipped past Obama's desk quicker than a greased turd. What happened to those 5 days, huh?

Seriously people, at what point do we get off the couch and take back this country? Obama can stimulate my ass.

Re:Is anyone surprised? (5, Insightful)

homer_s (799572) | more than 5 years ago | (#27271673)

It is funny how people focus on the $165 million, but not on the $173 BILLION that was essentially paid to AIG's gambling clients. And one of those, Goldman, has a lot of their people in the treasury - Henry Paulson being one example.

I think the problem is that all big numbers pretty much look alike to most people & it is easy to create mass outrage at something people understand (bonuses to AIG execs) than something that people don't get (payments to AIG's counterparties).

Re:Is anyone surprised? (5, Insightful)

SBrach (1073190) | more than 5 years ago | (#27271811)

Oblig. linky [xkcd.com]

Re:Is anyone surprised? (1)

Narpak (961733) | more than 5 years ago | (#27271837)

I guess the paranoid mind could be forgiven for thinking that it looks like the leaders of AIG want to buy some major goodwill among their "high-end" employees. Perhaps so they will join them when they create a new company a little bit down the road.

Re:Is anyone surprised? (2, Insightful)

Toonol (1057698) | more than 5 years ago | (#27271859)

It's hard not to think the huge furor about the bonuses is being whipped up as some sort of distraction, or maybe to fuel outrage to get some other obnoxious bill passed.

The bonuses are unseemly, true, but they seem to be guaranteed by the employee contracts, and so all the yelling in the world by unhinged congressmen are not going to change anything. Plus, financially, they're an insignificant part of the bailout moneys. I wouldn't mind businesses reeling in the bonus amounts in the future, because of public wrath, but I fear that congress is preparing the public to ram through something like even more punitive taxes.

Re:Is anyone surprised? (0, Troll)

Anonymous Coward | more than 5 years ago | (#27272109)

You're right, obviously. Democrats aren't happy with mere bailouts. Now they'll create outrage how the present management used the bailouts, to create even more control of the government.

Then we'll only have fannie and freddie banks left, with the government in control.

But even that is only half the way Obama and the democrats want to take america. After all mere government control of companies is fascism. That's only half of it. They want full blown communism.

Re:Is anyone surprised? (3, Interesting)

rastilin (752802) | more than 5 years ago | (#27272143)

The bonuses are unseemly, true, but they seem to be guaranteed by the employee contracts, and so all the yelling in the world by unhinged congressmen are not going to change anything. Plus, financially, they're an insignificant part of the bailout moneys. I wouldn't mind businesses reeling in the bonus amounts in the future, because of public wrath, but I fear that congress is preparing the public to ram through something like even more punitive taxes.

Then is it just me that noticed a 90% tax rate bill actually get passed just a while ago; 90%, specifically to tax these bonuses. It looks like their anger is changing quite a bit.

Re:Is anyone surprised? (1, Troll)

spirality (188417) | more than 5 years ago | (#27271901)

Yeah, I second that one. $165 million is chump change compared to what AIG has taken from the government. They should have been allowed to fail, claim chapter 11 or chapter 7 if it came to that.

But again, Paulson was looking out for his buddies.

Welcome to the Fascist States of America

Re:Is anyone surprised? (1, Troll)

Stele (9443) | more than 5 years ago | (#27272147)

Welcome to the Fascist States of America

You say that like we're just arriving there...

Re:Is anyone surprised? (5, Interesting)

fropenn (1116699) | more than 5 years ago | (#27272103)

You are right - it reminds me of when folks were rejecting the entire budget because it was 2% earmarks. 2%.

In any case, this lawsuit seems very strange. If AIG "wins" the lawsuit, then the IRS pays AIG - but since AIG is 80% owned by the government, then 80% of that money would essentially go to support the government's investment in AIG (and could conceivably be used to pay dividends back to the entity from which the money was taken!).

I suspect that the lawsuit is really about specific business practices that AIG would like to continue using in the future (assuming AIG continues to operate in the future) and would like to establish the tax-free status of those practices.

Re:Is anyone surprised? (4, Insightful)

MattW (97290) | more than 5 years ago | (#27272133)

AIG's counterparties were hardly gambling. They were buying CDS contracts from AIG effectively as insurance, believing AIG was big enough and creditworthy enough that this rendered their default risk close to zero.

AIG was certainly gambling, although the "risk" was the risk of a systemic collapse in housing prices. (Check.)

The counterparties believed they had insurance on their CDOs from a very reputable institution (AIG).

My, how different the world looks with hindsight.

Re:Is anyone surprised? (0)

Anonymous Coward | more than 5 years ago | (#27271703)

I think it is because both Kang and Kodoss were in favor of bailouts for corporate fatcats.

Re:Is anyone surprised? (4, Funny)

jollyreaper (513215) | more than 5 years ago | (#27271755)

Seriously people, at what point do we get off the couch and take back this country? Obama can stimulate my ass.

That might make your prostate happy but what about the rest of us?

Re:Is anyone surprised? (5, Insightful)

truthsearch (249536) | more than 5 years ago | (#27271757)

"blame me", which is political-speak for "screw you, it's done, get over it".

No, it's political speak for "the buck stops with me." In other words, something may be the fault of his staff, but the ultimate responsibility is with him. He's saying he won't simply throw someone else under the bus like previous presidents.

We KNEW AIG were crooks long before we gave them this money. Why did they do it?

My personal, uneducated opinion is that Obama felt it necessary to continue the plan that started under the last administration. During an emergency it would be very unnerving for the plan to drastically change. My guess is the hope to restore general confidence overcame the desire to fix this bungle. Also at play is the "Wall Street insiders" who laid out the last plan and continue to work for the Treasury and Fed.

Re:Is anyone surprised? (2, Insightful)

Jane Q. Public (1010737) | more than 5 years ago | (#27271857)

But we already saw that this wasn't working BEFORE the inauguration... so that's no excuse. If you see that something is not working (and it never would have... it was simply a taxpayer ripoff), then you DON'T just throw more money at it. That's the stupidest thing you can do.

And for someobody who is supposed to be as smart as he is, I have seen him do a LOT of stupid things, in his very short time in office.

Re:Is anyone surprised? (4, Funny)

Shakes268 (856460) | more than 5 years ago | (#27271773)

I am stunned that you can speak of the Chosen One in such a manner. Your punishment is that you are forever required to speak on from a teleprompter.

Re:Is anyone surprised? (-1, Offtopic)

Anonymous Coward | more than 5 years ago | (#27271883)

Why was this marked -1?

It's deliciously sarcastic... oh, wait. It's about -Obama-. Scratch that, delete the above account altogether *Snicker*

Re:Is anyone surprised? (0)

Anonymous Coward | more than 5 years ago | (#27272071)

Because Shakes268 has negative karma and thus the post starts at -1.

Re:Is anyone surprised? (0)

Anonymous Coward | more than 5 years ago | (#27272127)

Wow, you fail so freakin' hard. Look at GP's comment history - he/she/it posts at -1.

Re:Is anyone surprised? (3, Funny)

pieisgood (841871) | more than 5 years ago | (#27271797)

Keynesian economics, as an idea, is very infectious. Why? Because, I guess, at some level people THINK this kind of action will work. Of course they aren't exactly following why the government is doing this (to prevent deflation). The problem is that now... it will cause massive inflation... or so I think. It's really not me thinking either, I just take Peter Schiffs word for it... if only because he demonstrated that he really is a professional in his field.

Re:Is anyone surprised? (1)

qoncept (599709) | more than 5 years ago | (#27271805)

That's a whole lot of angry words without even a bit of content. Everyone hates AIG, why are you making such a long winded post to convince us? If you have solutions, offer them. Otherwise you might want to hang out at a barbershop and bitch with the other old men.

Re:Is anyone surprised? (1)

hansamurai (907719) | more than 5 years ago | (#27271933)

If you actually read his post, you would know it's more about the incompetence of the government than AIG.

Re:Is anyone surprised? (0)

Anonymous Coward | more than 5 years ago | (#27271839)

You mention outrage and Obama, but I am outraged as well and have been ever since the bailing out started in the last presidency. its utterly ridiculous, but hardly something that only occurred in the past 60 days.

Re:Is anyone surprised? (1)

bentcd (690786) | more than 5 years ago | (#27271845)

These people: the Congress, the President, AIG, are all just a bunch of god damned frat boys, scratching each other's backs and doling out our tax money to each other in such staggering volumes that it WILL be the end of this country if we don't stop right now.

Not just your tax money (doling out your tax money is /so/ last year): with the recent $300B+ "quantitative easing" they're also doling out your savings by generally diluting the value of everyone's dollars. On the plus side, I suppose, the Chinese are very unhappy about this so perhaps it's good for /something/.

I'm just happy I don't actually own any dollars, or any assets that are valued in dollars. Or British pounds. Or Japanese yen. Or Swiss francs. Or any other helicopter currency I suppose :-)

Re:Is anyone surprised? (0)

Anonymous Coward | more than 5 years ago | (#27271849)

...Obama can stimulate my ass.

Incidently, funny you should say that...

Re:Is anyone surprised? (5, Insightful)

castironpigeon (1056188) | more than 5 years ago | (#27271861)

C'mon, now. Revolt? Public outrage? That's so last century. America's too fat and happy to get off its lazy ass and do anything about this.

Re:Is anyone surprised? (5, Interesting)

pehrs (690959) | more than 5 years ago | (#27271865)

I don't think you understand the term "systematic danger". Lets do it in computer science speak:

You have a run away critical process somewhere in your critical system. It is eating memory like mad. It will take down the whole system when you run out of memory. Do you

1: Try to expand the memory for it, even at the cost of less critical applications, while you sort out the problem.

2: Do nothing and wait for the whole thing to come crashing down.

3: Begin looking for who ever wrote the crap to take away his bonus for successfully completing the project last year.

Basicly, letting AIG fail would not just crash the American economy. It would crash the world economy. As in NO MONEY IN THE ATM crash. As in NO FUEL FOR YOUR CAR crash. It might cost billions, but the alternative is far worse. Think Zimbawe. They have been allowed to grow too large to fail, and there is no way out of it except to keep them alive until they can be split up and sold.

What you should be asking is why the Republican party is still against nationalization of banks... Because currently, the taxpayers get to enjoy all the risk, while the owners of the banks gets the profits. And that is not a matter of a few million dollars to the executives. That's a matter of many billions. Being too large to fail is very very profitable.

Look at the Swedish bank crash of 1992. Notice that the Swedish taxpayers actually came out of it with a profit, after nationalizing several failing banks. But that is not what the US is doing. While you are busy arguing about a few millions billions are being pulled from under you.

Please stop being a sheep.

Re:Is anyone surprised? (1)

bytesex (112972) | more than 5 years ago | (#27272007)

I would expand memory for it, until I was sure that I could safely kill it, and then I'd pull its plug.

Re:Is anyone surprised? (2, Insightful)

pehrs (690959) | more than 5 years ago | (#27272111)

Which is more or less exactly what the US government is doing with smaller banks. They take over, give them the resources needed and then shuts the banks down.

Re:Is anyone surprised? (1)

foobsr (693224) | more than 5 years ago | (#27271903)

doling out our tax money to each other in such staggering volumes that it WILL be the end of this country

You are not alone

The end of the world as we know it

Not to come up with a conspiracy theory (I prefer to think of system intrinsics that 'force' developments along a set of preferred paths), but how would you think one organizes a worldwide cash transfer of ~2*10^12$ (most likely even more) from the tax payer (aka consumer) in days of staggering markets?

CC.

Re:Is anyone surprised? (1, Insightful)

Anonymous Coward | more than 5 years ago | (#27271921)

Obama says "blame me", which is political-speak for "screw you, it's done, get over it". He won't be saying "blame me" when the honeymoon is over and this escalates to a full scale popular revolt.

FYI, this was a done deal before Obama got elected.

You could blame the previous regime for treating the bailout like a handout, but they were in a jam over this too. The contracts were already in place, so the administration's choices were -

a) give them the money anyway

b) refuse to give them the money

c) ask them to renegotiate the contracts

(b) was out because AIG was "too big to fail".

(c) was out because the administration didn't have any bargaining power. The guys getting the bonuses knew the feds weren't going to withhold the money, because if they weren't "too big to fail" the feds wouldn't have come around in the first place.

So we got stuck with (a). And we're still stuck with it; the Congress's silly trick won't stand up in court.

But why are we up in arms over this to begin with? $160,000,000 is pocket change compared to what the previous administration has been throwing around without accountability. The falsely motivated Iraq war is going to cost us two trillion dollars. (Even if you're part of the minority who still thinks the war was a good idea, we've lost track of billions of dollars that was sent over.)

Yeah, we're getting screwed. novem continuas fututiones. But this isn't in the top ten.

Re:Is anyone surprised? (4, Insightful)

rastilin (752802) | more than 5 years ago | (#27271935)

We KNEW AIG were crooks long before we gave them this money. Why did they do it? Where the fuck was the outrage when these bailouts were first suggested? I've been outraged since the beginning, because the whole game plan has been obvious to me since they robbed us of that first $700B. And yet polls suggest that Americans STILL think this is going to work somehow.

Were you high? The outrage was EVERYWHERE, eventually however people decided that the possibility of losing their bank accounts was worth the massive irritation in bailing out these losers. We've had this debate before and others, including myself; collectively decided to grit our teeth and do it because it was necessary. Remember the bailout was actually shot down the first time it was proposed.

These people: the Congress, the President, AIG, are all just a bunch of god damned frat boys, scratching each other's backs and doling out our tax money to each other in such staggering volumes that it WILL be the end of this country if we don't stop right now.

Wow, all of them; congratulations you've opened my eyes to the MASSIVE CONSPIRACY AGAINST YOU. Even the guy who wasn't around till 49 days or so earlier; he's in it too. Me I prefer the far more sane explanation, he and the rest of the cabinet are trying to prop up a bunch of retards determined to decimate themselves by any means possible. Really any sort of conspiracy would basically require the participants to be intelligent and wise; the idea that this bunch of idiots are actually part of anything more complicated than feeding and using the toilets is pretty far-fetched.

Re:Is anyone surprised? (0)

Anonymous Coward | more than 5 years ago | (#27271955)

Not to nitpick (ok, I guess I am nitpicking) but wasn't the AIG bailout in 2008, BEFORE Obama became president? I'm with you on the outrage though. For some reason, I think this is all theater and everyone involved is laughing as they pocket OUR money.

Hello, "friend"! (1)

macraig (621737) | more than 5 years ago | (#27271959)

Based on nothing more than this rant, you've made yourself a friend and fan today. Let's call it a movement, nay, a revolution!

Nope, I'm not joking.

Re:Is anyone surprised? (1)

MindStalker (22827) | more than 5 years ago | (#27271963)

While I dislike Chris Dodd in general, blaming him for this is a complete misinterpretation of his Amendment.
Dodd added an amendment to the bailout limiting bonuses, an exception was added for anything contracted before the bill became law.
If it wasn't for Dodd's amendment the bonuses would have been legal anyways, the exception was kinda stupid but if you think about it not having the exception would be a bit illigal as it would be an attempt to change contract law, exactly what we are doing right now.

Re:Is anyone surprised? (5, Insightful)

nelsonal (549144) | more than 5 years ago | (#27272027)

We gave them money because if AIG fails, two huge things go down with them. First, Europe's big banks all of them (who used AIG to get cheap insurance--they'd suddenly need new equity on the order of 30-50 billion). Second, money market funds who would be facing much larger losses then they did with Lehman after all of AIG's derivative counterparties get first cut unsecured lenders would take huge haircuts, likely leading to several funds "breaking the buck" and a run on their virtual banks. Since sending $200 billion to AIG is much cheaper than dealing with the carnage those events would cause, the government holds its nose and hopes for the best.

Look on the bright side, with this method, the governments of the world (led by the US) would be paying for the losses anyway (both the businesses mentioned above are too big to fail) so by leaving AIG intact they get to capture the cashflows from the life, P&C and other solid insurance businesses.

Best soapbox momement yet (0, Flamebait)

Shivetya (243324) | more than 5 years ago | (#27272141)

http://www.breitbart.tv/html/301543.html [breitbart.tv]

Dishonest doesn't even begin to adequately label the President and Congress. We know have a group in Washington who not only has no problem inciting mob rule, violence even (there are people stalking AIG employees who are not even executives.. let alone responsible), and getting away with it. All Americans should be very afraid of our own law makers, for if you become a political liability, you fall out of favor with the political class, they will use the power of law to take your property. They will use their power to get free exposure in the press and on tv and goad other's to harass you , shame you, and hate you.

We have a US President going on a comedy show and disingenuously declaring shock over an event he knew was coming. Geitner was quizzed in public (look it up on cspan) panel discussions in Congress by a Democrat!

Yeah, Bush was annoying, but these guys just went beyond the pale. They are inciting people. Worse the President is joining in. All against people who broke now law, people who were LAWFULLY owed the money. People who Congressmen who by signing the stimulus bill declared were legally owed the money!

WTF?

AIG is just the vehicle that these guys are using to trounce all our rights. We now have a political class who shows no fear of abusing the power vested in them to threaten, cajole, and steal, from those who they think they can get away with.

Re:Is anyone surprised? (0)

Anonymous Coward | more than 5 years ago | (#27272167)

Here's your cookie for being the FIRST to notice this.

It's taxpayer money no matter how you look at it (1)

qoncept (599709) | more than 5 years ago | (#27271531)

Whether they are spending money directly from the bailout or spending capital they already had (and thus spending bailout money elsewhere), the tax payers are funding it.

New tag (1)

Shadyman (939863) | more than 5 years ago | (#27271533)

May I suggest the "GTFO" tag?

today's xkcd (5, Insightful)

mattdm (1931) | more than 5 years ago | (#27271545)

Today's XKCD [xkcd.com] seems particularly relevant. There's bigger things to worry about right now. This is a silly distraction -- like the whole "earmarks" thing.

Re:today's xkcd (5, Funny)

Reality Master 201 (578873) | more than 5 years ago | (#27271573)

How dare you consider using perspective and logic? This is about anger and screaming and smashing stuff!

Re:today's xkcd (1)

SlipperHat (1185737) | more than 5 years ago | (#27271777)

Dude, it's the silence before the storm! (The part that makes the bad guys gulp and shit in their pants simultaneously). Once they know that there is no escape, then you and the rest of the angry mob lay down the holy smack down.

Re:today's xkcd (5, Insightful)

qbzzt (11136) | more than 5 years ago | (#27271715)

There are bigger issues, but letting future company managers know they can:

1. Make their company more money in good times by taking economically unjustified risks.

2. Get the tax payer to bail out the company when the unjustified risks backfire.

and

3. Personally profit either way.

Is a really bad idea. To pick an extreme example, if the same managers knew that their companies will be bailed out, but that they personally would spend the rest of their lives in jail, they would take a lot less risks.

We need to motivate managers to be prudent in the future. Letting them reward themselves does not accomplish that.

Re:today's xkcd (4, Insightful)

seanadams.com (463190) | more than 5 years ago | (#27271769)

Actually, you and XKCD are missing the point.

This issue is that we are rewarding the people in power for fucking us over. What we need to get the bad guys out and provide proper incentives for a new team to replace them. Instead what we're doing is paying them a handsome sum to keep doing what they're doing. Indeed, the cost to us is much larger than these individuals' compensation!

Re:today's xkcd (0)

Reality Master 201 (578873) | more than 5 years ago | (#27272063)

Actually, I think you're missing the point made in the XKCD cartoon.

The cartoon is pointing out that focusing on the bonuses, which is what everything you've heard about AIG for the past couple weeks has focused on, is like focusing on the damage to the Titanic's paint job that the iceberg did. If anything, I think you might be in agreement - the cost to US is far larger than the compensation paid to individuals at AIG.

Re:today's xkcd (1)

seanadams.com (463190) | more than 5 years ago | (#27272105)

We are in violent agreement then!

Re:today's xkcd (1)

AvitarX (172628) | more than 5 years ago | (#27271829)

Let's see.

AIGs biggest loan, 177,000 million
AIGs payouts 165 million

My biggest Loan aound 200,000
I would still look at 200 as more than chump change, and I am cash flow positive, AIG is not.

Re:today's xkcd (1)

Seakip18 (1106315) | more than 5 years ago | (#27271899)

I dunno....While we're still at a little less than 1% of the entire bailout, what % is set aside for people and how much of THAT is going to these bonuses? After the assets and other stuff, what's left BETTER DAMN WELL not go to people who managed to fuck us in our drugged-slumber. I"m tired of my ass hurting in the morning.

Complacency dooms you and me. (1)

CorporateSuit (1319461) | more than 5 years ago | (#27271951)

I hardly consider hundreds of millions of lost dollars to be "distractions." They are smoking guns in the middle of a warzone. Men are being murdered, but since there is death everywhere, there is no crime being committed? Wrong. Sloshing their poison in with the water does not make any of it right. Politicians and CEOs are stealing hundreds of millions of dollars and they are not in prison right now. If I stole half a million from a bank, I'd be in irons. These men should be locked up for life, not simply laughed about and told "no no!" because their horrific (yes, "HORRIFIC") crimes against our society are drown out in as much noise as they can muster around it.

wrong - small amounts matter (1)

cinnamon colbert (732724) | more than 5 years ago | (#27271957)

Mathwise, u r right that 100 million is a minor distraction. However, you miss the big picture. The economic mess was caused not by lazy americans maxing on the credit card, but the cowboy behaviour (if not crimminal)of aig execs (and their counterparts at other financial firms)
what will help the economy is to change this culture, and part of that is changing the compensation culture on wall street ; the point is that the bonus are undeserved and un necessary (these guys wanna walk, go for it - lots of unemployed people we can pickup cheaP) and that the bonuses are part of this culture.

Re:wrong - small amounts matter (1)

nelsonal (549144) | more than 5 years ago | (#27272145)

You might want to look harder. All of AIG's losses directly as a result of consumers and home owners who stopped (or are soon expected to stop) paying their bills. AIG was dumb to insure that consumers would pay their bills (home bills were vastly too high) but if everyone continued to pay back what they'd promised AIG would have profitable if illiquid contracts.

Re:today's xkcd (5, Insightful)

The Moof (859402) | more than 5 years ago | (#27271969)

When AIG lays off some people, remember this:
  • Bonuses are not required pay. They're rewards for performance.
  • $165 million dollars could keep 2200 people employed for a year (figuring salary + benefits is $75k/yr).

So yea, a large amount of money next to an obscenely large amount of money is a small percentage, but it's still a large amount of money.

This is Completely PROPER!! (4, Funny)

kwandar (733439) | more than 5 years ago | (#27271547)

What as stupid article!!

The US government, although the largest shareholder is not the ONLY shareholder. Minority shareholders have rights and a successful lawsuit benefits them too.

I wish people would give their heads a shake!

Re:This is Completely PROPER!! (4, Informative)

MightyMartian (840721) | more than 5 years ago | (#27271593)

Since the only reason these minority shareholders even hold stock right now that isn't simply fancy-looking toilet paper is because of the Government's involvement. I'd say to the minority shareholders "You have 35 seconds to stop this lawsuit or we're going to let you lose your miserable little shirts."

As it is, I think the more we understand about AIG's role in the collapse, the more I'm thinking that it should simply be dismembered.

Re:dismemberment (2, Informative)

maxume (22995) | more than 5 years ago | (#27271833)

That's essentially what is happening. The holders of AIGs debts are the real beneficiaries of the bailout. Instead of bankruptcy where they would fight for the scraps of the carcass, they are receiving 100% payoffs, some from the bailout dollars, and some from the ongoing liquidation of AIG assets.

Re:This is Completely PROPER!! (1)

hesaigo999ca (786966) | more than 5 years ago | (#27271763)

They could still pass it to a vote amongst the shareholders and being that the US now holds something like 75% of the votes, could vote against the lawsuit and kill this before it starts.

Re:This is Completely PROPER!! (1)

haggus71 (1051238) | more than 5 years ago | (#27271855)

I wish you would take your own advice. What part of "government owned" isn't getting through your head? Ideas like yours and the arrogant actions of AIG are why people are so enraged as to call for these guys to be "strung up by piano wire". Obviously, you are living in a nice enough cocoon to act like a lawyer regarding this subject. As far as being "not the only shareholder", as said by MightyMartian, the only reason their stocks aren't worth about as much as Confederate dollars is through the investment of the majority owner...US! It's like these idiots don't want government control, yet are arrogant and egotistic enough to force the government's hand. Don't forget: all the government has to say to do something to these megalomaniacs is say, "In the public interest..." and you can shove that lawsuit where the sun don't shine!

Re:This is Completely PROPER!! (0)

Anonymous Coward | more than 5 years ago | (#27272081)

The US government, although the largest shareholder is not the ONLY shareholder. Minority shareholders have rights and a successful lawsuit benefits them too.

Unless the past 30 years of business-friendly legislation has neutered the power of shareholder lawsuits, whatever is left of AIG is going to get forked over really hard for giving out that kind of bonus in a year when their stocks went skydiving without a parachute.

WTF (5, Interesting)

MightyMartian (840721) | more than 5 years ago | (#27271549)

Are these guys intentionally trying to force Congress to shut them down? Too much more of this, and economy or no economy, lawmakers are just going to say "Fuck you, die die die" and let the international banking system take a nosedive.

I have been (somewhat) onside for giving Wall Street a helping hand, but between the sheer incompetence of the Democrats and the sense of entitlement of these guys, I think it's time to say "Screw it", let them all sink, and then rebuild it properly, with laws requiring all bonuses be voted on by shareholders, all executives and managers be forced to convert their stock to non-voting, requiring complete replacement of any company's board and senior executives the second they take a single penny of taxpayer money, and putting their legal departments under direct Treasury control.

Re:WTF (-1, Flamebait)

Anonymous Coward | more than 5 years ago | (#27271961)

Get over your Dem hatred, the "bonuses" were part of the deal Bush set up last year when the financial fallout was starting, and pre-dates the existing CEO's start date. The payments have only recently been made, so dip-shits think this is something that has just been done. Buy hey, don't let reality get in the way of your digg level rant.

Re:WTF (4, Insightful)

0123456 (636235) | more than 5 years ago | (#27272161)

"Get over your Dem hatred, the "bonuses" were part of the deal Bush set up last year when the financial fallout was starting"

Hint: Bush did not give them the money, Congress did.

And Congress is and was controlled by... Democrats.

Most of the people I saw opposing the bailouts were Republicans: the Democrats in Congress were more than eager to hand over any amount of money so they could avoid taking the blame for pushing big financial companies into bankruptcy.

No matter what Bush wanted, the bailout would not have happened with Democrat votes.

Re:WTF (1)

Duradin (1261418) | more than 5 years ago | (#27272099)

Look at it from the corporate side. Corporations exist for the quick buck. Free money from the government is the ultimate quick buck. Now that the government has sunk so much money into AIG the government has acquired a case of sunk costs syndrome. They will not let AIG go now, no matter the cost. A cost which AIG itself can manipulate. So what's the only route a responsible corporation can take to fulfill its lawful duty to act only in the interest of proift? Soak the government for every penny it can.

In other news... (5, Funny)

non-registered (639880) | more than 5 years ago | (#27271565)

Tru-Value states there has been a run on pitchforks.

Half-way measures (1)

oldhack (1037484) | more than 5 years ago | (#27271567)

I'm not in finance, but this half-ass measure of injecting money into AIG seems, well, half-assed. We should either have let it fall, or nationalize it outright and sell it off piece-meal (or whole). Grab a (semi)patriotic Gordon Gecko and put him to work - we don't lack Gordon Geckos, do we?

Maybe?

Re:Half-way measures (1)

Narpak (961733) | more than 5 years ago | (#27271683)

I say to either let them die outright, or nationalize it for a period to reorganize the company; then sell it back to the private sector. Perhaps keep a large minority share until the company is firmly under rational control (if that is possible).

Great Article (5, Informative)

EllisDees (268037) | more than 5 years ago | (#27271577)

There was a great article in Rolling Stone [rollingstone.com] today that lays out exactly what has happened at AIG in terms most people can understand. It makes my blood boil!

Like Rolling Stone is honest... (0)

Anonymous Coward | more than 5 years ago | (#27271651)

They are as politically biased as anyone.

What's happening now is that AIG is basically a way for the USA to shovel money into foreign banks.

Re:Like Rolling Stone is honest... (2, Insightful)

Xtravar (725372) | more than 5 years ago | (#27271709)

Sometimes bias is better than trying to be objective about something completely ridiculous. Call a spade a spade and get it over with.

Hubris (1)

javacowboy (222023) | more than 5 years ago | (#27271579)

First the bonus payments and now this. Do these people think that taxpayer money grows on trees?

Re:Hubris (1)

ChefInnocent (667809) | more than 5 years ago | (#27271801)

I'm sure they do. Money is green; trees are green. Money is printed on paper, paper is a byproduct of wood, wood comes from trees; ergo money grows on trees. Plus the feds ship forests of this stuff to them, and they didn't have to work for it.

Re:Hubris (1)

maxume (22995) | more than 5 years ago | (#27271925)

Increasingly, yes. Of course, it really grows on cotton and flax plants.

Re:Hubris (1)

Vectronic (1221470) | more than 5 years ago | (#27272101)

Yes.

Replace "trees" with some inhuman word like "constituents", or "population", or just ignore the human aspect entirely, and refer to it only in legalese.

Kinda like (many, but not all) in the military, they aren't humans, with families, hopes, dreams, etc., they are targets, the opposition, the enemy.

The "constituents" of this country, will continue to "reproduce", and eventually they flower, open of their pocketbooks and let the bureaucrabees pollinate.

WTF indeed (1)

MoFoQ (584566) | more than 5 years ago | (#27271587)

no good deed goes unpunished....or in this case, no bad deed isn't followed by more bad deeds.

I wonder if it's a bit too late to do a "stop payment" on that 200 billion dollar check...(not to say that the majority of the big banks can afford even that).

what does this have to do with tech? (-1, Troll)

Trepidity (597) | more than 5 years ago | (#27271591)

So I've been around long enough (insert UID bragging here) to know that Slashdot has a fairly wide definition of "tech news", which is fine. Tech influences lots of things, and vice versa. Plenty of political news is relevant to a tech-news site, from DMCA-related things, to voting machines, to internet-speech restrictions (or just speech restrictions that touch online speech). Discussing that here seems fine.

But really, how does this fit in even if you squint? A tax dispute between AIG and the US government, tangled up with a financial bailout package. A mess, sure, but not an even-slightly-tech-related one.

Re:what does this have to do with tech? (1)

MightyMartian (840721) | more than 5 years ago | (#27271685)

But really, how does this fit in even if you squint? A tax dispute between AIG and the US government, tangled up with a financial bailout package. A mess, sure, but not an even-slightly-tech-related one.

Say that as you're getting your pink slip.

Re:what does this have to do with tech? (3, Insightful)

compro01 (777531) | more than 5 years ago | (#27271717)

It's Stuff That Matters. I would presume that most of the people here to pay taxes, so I would presume they have a vested interest.

but that's everything (1, Insightful)

Trepidity (597) | more than 5 years ago | (#27271841)

Perhaps we should discuss rising income inequality in the US? Or the wars in Darfur? Lots of stuff is worth discussing, but I think having some focus on forums tends to make them a bit better.

Re:what does this have to do with tech? (0)

Anonymous Coward | more than 5 years ago | (#27271741)

News for nerds. Stuff that matters.

Re:what does this have to do with tech? (1)

Narpak (961733) | more than 5 years ago | (#27271761)

Slashdot have a relatively behaved and intelligent average poster (at least compared to most other public forums); and this is a subject of great personal interest. Further more the forum structure maintained by Slashdot is good at ensuring the debate not get filled with rubbish (much). So all in all I say I find these types of "non-tech" news refreshing and stimulating. :)

Re:what does this have to do with tech? (1)

SirGarlon (845873) | more than 5 years ago | (#27271953)

I'm with parent. If I had mod points, the "flamebait" mods would be flowing like water...

Re:what does this have to do with tech? (2, Interesting)

haggus71 (1051238) | more than 5 years ago | (#27271975)

How are you going to support tech, without the money tied up in these banks? When these companies went belly-up, so did the stocks of IBM(tech), Dell(tech), Cisco(tech)... Tech can't innovate without investment; and there can't be investment without money. Also, many IT's have lost their jobs, or suffered cuts in salary, due to this mess and the fact that their tech companies' investments were wrapped up in this debacle. This problem is so huge, you could talk about it on epicurious.com and be justified.

Re:what does this have to do with tech? (1)

db32 (862117) | more than 5 years ago | (#27272041)

Because a bunch of slashdotters are wondering why they can't buy any new tech at work (if they have a job still) or at home. No money, No Job, No Tech.

Re:what does this have to do with tech? (2, Informative)

Leuf (918654) | more than 5 years ago | (#27272117)

Because we desperately need something to fill the time between now and the BSG finale.

Garbage in garbage out (3, Interesting)

nroets (1463881) | more than 5 years ago | (#27271611)

The income tax system has become so complex with so many loop holes the not even the Treasury Secretary could master it. The problem of tax loss selling in particular is set to explode. Time to replace it with something much simpler like Fair Tax.

AIG has mastered BAD press (1)

olddotter (638430) | more than 5 years ago | (#27271631)

AID has mastered bad press. If it were really true that "no press is bad press" then they have gotten a bargain. No way they could buy this coverage for a few $100 Million. All I have heard this week is AIG this and AIG that.

Sad thing is I think this is one time when bad press is REALLY bad.

I cannot believe the hubris... (1)

Jaysyn (203771) | more than 5 years ago | (#27271645)

If there has ever been a time for a corporate death penalty, it's right the fuck now.

Re:I cannot believe the hubris... (1)

vijayiyer (728590) | more than 5 years ago | (#27271909)

No, it was when they failed. Our politicians poured money into a coffin.

New rule (4, Insightful)

edivad (1186799) | more than 5 years ago | (#27271659)

We should set a new rule. When a company asks for .gov money to be bailed out, the top 5 layers of the company should be fired. No exceptions.

This is just beyond belief.

Why is this on slashdot? (3, Insightful)

DamienRBlack (1165691) | more than 5 years ago | (#27271663)

It shouldn't be. I was just thinking earlier that I was glad that media storms like AIG blow over slashdot, and I can get different news here then the stuff everyone else is talking about.

This has absolutely nothing to do with tech or nerdiness, and in the grand scheme of things, it isn't that important. I can see no redeeming value, and I hope in the future that /. manages to avoid being run over by "big" stories like this.

Physics problem (1)

maxume (22995) | more than 5 years ago | (#27271707)

Really, this all boils down to a physics problem. If we could see what would have actually happened had AIG been allowed to fail, we could either just let them fail, or point out how horribly terrible that world would be. As it is, we get to experience all this fun.

The real fun begins when someone makes a clear statement of where the billions went. As it is, AIG benefits from attention getting focused on a million here and a million there (it doesn't make the millions any less galling, but damn it, they are tiny problems compared to the rest of the money involved).

Why is this on Slashdot? (-1, Redundant)

Anonymous Coward | more than 5 years ago | (#27271713)

It's not tech related and it's not earth shattering, and there are already enough general and financial news sites that are discussing the issue.

Can't They Stop The Lawsuit? (1)

The Faywood Assassin (542375) | more than 5 years ago | (#27271719)

If the government is the majority shareholder, can't they vote to stop the lawsuit?

It sounds as if the government is suing itself!

Beny

ROMAN JUSTICE (1)

noshellswill (598066) | more than 5 years ago | (#27271775)

Enough ... more than enough. The viperous "financial" industry needs an example. Time to apply ROMAN JUSTICE to AIG management and BOD . 0) strip them bare of all property 1) flog them 'round-the-street 3) decimate those surviving 3) sell wives and daughters to Saudi whorehouses Thus done, it will take another 50-y for a new crop of vipers to mature.

Not AIG's fault (4, Insightful)

vijayiyer (728590) | more than 5 years ago | (#27271875)

Don't blame AIG for trying to get their tax money back (perhaps the only money here that is rightfully theirs), or for paying their employees what is contractually due to them. Blame our politicians for bailing them out instead of allowing their failure.

calm yer asses down (1)

youngdev (1238812) | more than 5 years ago | (#27271893)

OMG I am sick to death of hearing about this stupid company. Ok for you rabid anti capitalists out there, here's facts:
1) The executive bonuses were contractual obligations made by AIG to the employees long before any talk of a bailout started.
2) Government infusion of cash does not nullify pay contracts previously and privately made between employer and employee.
3) Even if an agreement between AIG Accountants and US Treasury officials could retroactively nullify the bonus agreements, it was never stipulated as a condition of the bailout.

How would you feel if you made an agreement to work for company A for a salary of X provided you were eligible for a bonus each year of Y if you performed L,M and N. Then you performed L, M and N and were told by yer boss, "Hey I'm sorry. We can't pay you the bonus we agreed on because the government thinks its too much" or "We need ed money so we took a loan from the government and part of our agreement with the government was that you would forfeit your bonus."

If I were told the above, my next phone call would be my attorney and I would bring a suit against Company A for breach of contract.

We as citizens should be at torch and pitchfork mindset over the government inserting its own judgment on private employment contracts rather than how much AIG pays its executives. If you don't want tax dollars to fund AIG's contractual employment obligations, DON'T GIVE LET THE GOVERNMENT GIVE THEM OUR MONEY. When they go belly up, the executives won't get paid and we can all be happy and get on with our lives.

Re:calm yer asses down (1)

CompMD (522020) | more than 5 years ago | (#27272075)

The problem I have with bonuses is that they are given to people who helped AIG fail. What kind of sane employment contract allows failure to be financially rewarded?

Aesop's Tales (5, Insightful)

Dr. Eggman (932300) | more than 5 years ago | (#27271931)

Sounds like a classic case of the Aesop: The Farmer and the Snake.

During the fridge winter months, a farmer happened upon a snake frozen upon his grounds. Taking pity on the creature, he took it into his home to warm it by the fireside. Perhaps he realized they eat the rodents who would dig up his crops, and thus provided a dire function. Perhaps it was just the plain goodness in his heart. As the snake warmed itself and became animate, it leapt to forth and bit the farmer. As the farmer lay in pain (perhaps poisoned) he cried out, "Why have you bitten me, snake?!" I do believe the obvious answer was "Duh, I'm a snake."

Hello Capitalism?? (0)

SectoidRandom (87023) | more than 5 years ago | (#27271941)

Err hello, yes AIG is largely owned by the Govt, but does that mean it now must STOP being a responsible company?

If you worked for the IRS and your accountants told you that you the IRS owed you $10k on your tax refund would you stop and say, "oh no I couldn't claim that?" of course not, and you shouldn't! That is why we have tax refunds. I'm not saying that this AIG case is a similar refund case but the principle applies.

Yes I know everyone is pissed off about the bonuses (In particular imagine all those mom and pops who lost tens of thousands from their retirement funds for example!), but a bail-out like this does not *yet* equal socialism! Hopefully one day everyone will calm down a bit and remember that.

Re:Hello Capitalism?? (1, Insightful)

Anonymous Coward | more than 5 years ago | (#27272097)

Err hello, yes AIG is largely owned by the Govt, but does that mean it now must STOP being a responsible company?

You mean they were responsible up till this moment? Ok.

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