The much maligned AIG company, who many credit as key to the economic crisis and subsequent meltdown, appears to be under fire for its bonuses. The Obama Administration’s pay czar said on Wednesday that the bailed out institution’s $100 billion worth of bonuses to executives was “outrageous”. Bank of America is also defying odds by handing out bonuses to its bankers. Geithner urges new fees to recoup AIG Bonuses and the Street.
The practice of giving ridiculously large sums of money to executives and higher-ups is practically a birth-right on Wall St. Money makes Wall St. run, after all, and Wall St. likes to keep its star players happy and satisfied. CEOs always make the big bucks. It’s a tradition that Wall St. is finding hard to break.
Despite President Obama’s promise to seek out all and any method to stop big bonuses, bonuses were still handed out and continue to be handed out. The government simply could not stop the practice because it is in fact a legally binding clause. The bonuses are part of employment contracts and thus cannot be prosecuted.
AIG’s current $100 billion payout will go to its financial products division. Ken Feinberg, a special master for TARP executive compensation, says that though the money is excessive, the move is legal. It affects employees who agreed to take a pay cut in the wake of the financial crisis.
AIG was given over $180 billion in bailout funds. Bank of America took billions as well. Bank of America just announced that it would give its employees over $4 billion in bonuses. This amounts to $300,000 -$500,000 on average for investors and bankers. This comes after the companies former CEO Ken Lewis announced that he would step down as head in January.
Bank of America has repaid its TARP money, allowing itself to maneuver freely without the government restrictions to worry about. Although, the bonuses have drawn fierce criticism and lament in Washington, banks are turning a blind eye - they don’t want to lose their best talent.
The AIG and Bank of America bonuses should not affect taxpayers. However, Congress is already furious and the defiance by banks does not put the Obama administration in a good light.
Written by Lani Shadduck
HULIQ.com
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