03-18-2009, 10:12 AM
THE CLOWN SHOW CONTINUES (http://boortz.com/nealz_nuze/2009/03/the-clown-show-continues.htm)

Neal Boortz
@ March 18, 2009 8:20 AM Permalink | Comments (27) | TrackBacks (0)

Today in Washington we are going to have a Congressional beat down of AIG CEO Edward Liddy. He is going to appear in front of a House financial services subcommittee. And I think we can safely say that he is going to get a less than pleasant welcome. Liddy is going to have to defend the concept of abiding by the terms of your contracts with your employees. Look for Maxine Waters ask Liddy some questions ..

"What is a contract?" would be a good start. Mensa Maxine is so darn good at this sort of stuff. We'll also be treated to some posturing from the man most responsible for this mess ... and that would be Barney Frank.

So it turns out that AIG paid bonuses of $1 million or more to 73 of its employees. Eleven of those bonuses went to former employees. The contracts were written in March 2008, and they guaranteed 100% of their 2007 pay for 2008. They were not based on performance. Apparently the top individual bonus was more than $6.4 million, and the top seven received more than $4 million each. Did these people really earn this money? Possibly not. But they were parties to a contract .. and if the money had not been paid they would have most certainly sued for it.

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?


03-18-2009, 11:01 AM
Given that the question comes down to two choices, pay the bonuses or get the government involved with renegotiating contracts, I'd choose to pay the bonuses. The government tinkering with contracts makes me very, very uneasy.

I kind of depends on how the contracts were written. If there's a contractural out, use it. If not, watch the store next time.