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Taxpayers Fund AIG Lawsuit Against US 784

Posted by ScuttleMonkey
from the should-have-let-them-die-when-we-had-the-chance dept.
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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Taxpayers Fund AIG Lawsuit Against US

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  • by seanadams.com (463190) * on Friday March 20, 2009 @02:25PM (#27271515) Homepage

    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.

    • by homer_s (799572) on Friday March 20, 2009 @02:36PM (#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).
      • by SBrach (1073190) on Friday March 20, 2009 @02:42PM (#27271811)
        Oblig. linky [xkcd.com]
        • by Shin-LaC (1333529) on Friday March 20, 2009 @03:38PM (#27272671)
          World GDP: $65,000,000 million
          Bailout: $170,000 million
          Bonuses: $165 million

          There: even more context and even more comparison. Surely this is even more insightful!

          The fact of the matter is that:
          1) $165 million is still a lot of money
          2) At least the bailout was ostensibly aimed at preventing a financial meltdown that would have wrecked the economy even more. Giving bonuses to the people who caused this mess in the first place is just a big, open "fuck you" to the American taxpayers.
          3) xkcd isn't a such a good comic. Yes, I get the references, but merely referencing things your audience is familiar with is a cheap excuse for humor.
          • by dc29A (636871) * on Friday March 20, 2009 @03:54PM (#27272915)

            At least the bailout was ostensibly aimed at preventing a financial meltdown that would have wrecked the speculators.

            There I fixed it for you. The whole "systemic risk" crap we hear is nothing more than fear mongering. Fear so that the old "governing" elite stays in power at all cost. Had the US let AIG, Citi, JPG, GS, BoA and others drown in their own cesspool it wouldn't have changed much. There are plenty of very solid and well capitalized banks in the US, who could take over the clients of the current zombified giants. However, Paulson, ex CEO of GS managed to proxy bailout GS and keep GS as the top bank.

            • by geekoid (135745) <dadinportland@ya ... m minus math_god> on Friday March 20, 2009 @05:14PM (#27274051) Homepage Journal

              Incorrect.

              No homeloans, no loans for shipping(which exist on loans), no small business loans, no large business loans, no spending and then we ahve all the secondary markets drying up.

              There is no bank in the US big enough to handle AIG assetes as a whole.

              I think if the just absolved the toxic assets we would be better off.
              The value of these companies would diminish, a lot but they would continue to exist and be able to make loans to the remaining good providers.
              The business and people that suddenly have more money every month; which they would spend helping business and strengthening the economy.

              Then put proper regulation into place to prevent this kind of lending market, and cap the size business like this.

              You can argue 'fair' that people not paying there loans getting off the hook, but that is a different issue. I mean, we're going to pay the money one way or another, why not choose a way that puts money immediatly and directly into the hands of consumers? Money moves bottom up, not top down.

              I thought the same thing you have, but when something big happens I delve into it. I have talked(emailed mostly) several economic experts. By that I mean people who study and look at economies, not some jack ass on tv telling you when to buy and sell.

              AS much as we despise them, AIG broke no law.

            • Re: (Score:3, Insightful)

              by jlarocco (851450)

              Had the US let AIG, Citi, JPG, GS, BoA and others drown in their own cesspool it wouldn't have changed much.

              I agree with this, but I don't think you took it far enough. The government (via Fannie Mae and Freddie Mac) shouldn't have been encouraging bad loans in the first place. That would make it far easier to tell them to fuck off when they came around asking for money.

          • by commodore64_love (1445365) on Friday March 20, 2009 @04:27PM (#27273421) Journal

            I'm not buying your reasoning. Yes 0.2 billion in bonuses is annoying, but it's mere pennies compared to the 170 billion given as a "gift" to save their asses, ~60 billion of which is being given to foreign nationals. (Why are U.S. taxes being handing money to foreigners???)

            Furthermore, Congress has spent more time arguing about this 0.2 billion, then they spent debating the 700 billion TARP Bailout bill or the 800 billion Stimulus Bill. Congress is quibbling over mere pennies, and yet they spend billions of dollars with barely any consideration. It's like Benjamin Franklin said: "Penny wise; pound foolish."

      • by fropenn (1116699) on Friday March 20, 2009 @02:58PM (#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.
      • by MattW (97290) <matt@ender.com> on Friday March 20, 2009 @03:00PM (#27272133) Homepage

        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.

        • by homer_s (799572) on Friday March 20, 2009 @03:43PM (#27272765)
          AIG's counterparties were hardly gambling.

          When you make an investment with an uncertain outcome, it is gambling - which is to say, all investment is gambling. I have nothing against companies who bought/sold CDSs, CDOs, MBSs, etc - it was their money and they had the right to do whatever they wanted with it.

          The problem I have is that when their bets went wrong - one of the bets being that AIG was a good counterparty - they should eat the losses. They sure as hell were not going to give you a share of the profits - why should you protect them from their losses?

          Gambling is ok - as long as you can take the losses.
          • Re: (Score:3, Informative)

            by xenocide2 (231786)

            They won't eat their losses; Berkshire Hathaway underwrote a number of 2nd payment CDS. I.e., if your bond defaulted, and your primary CDS defaulted, Berkshire would cover it. If you can buy a bond and insure it several ways over and still earn more than a treasury, it seems less like gambling and more like arbitrage investing.

            The people who were really gambling here was AIG. Normal counterparties are limited by the amount of capital they can raise to collateralize the insurance agreement, but as an AAA com

      • Re: (Score:3, Funny)

        Totally agree. I found it ironic that people are so OUTRAGED that *gasp* AIG paid ~$165 million in bonuses to AIG execs (I'm not saying it was good or morally right or whatever, of course), and yet the billions and billions being spent on this, that, and the other thing, including bailouts (what is it now, somewhere around $1.7 billion? at least?) doesn't cause much outrage. It's "necessary spending." "Good for the economy." "Get us back on track." People are outraged that they lost $165 million to AIG
      • by b4upoo (166390) on Friday March 20, 2009 @03:23PM (#27272443)

        Thank God the Obama administration is trying to do something about our economic mess. I understand that very few people have any real grasp of economics and they also don't have any grasp of just what can happen when an economy deflates. We were on the edge of a real doomsday in this situation. It seems that the cash infusion has already caused a bit of an upturn.

      • by Thaelon (250687) on Friday March 20, 2009 @03:40PM (#27272695)

        I think you're misunderstanding the outrage.

        It's due to the fact that the very people in charge of messing up so badly they needed government help - are getting bonuses as though they had done exceptionally well.

        It's an expression of the injustice that all of us grunts feel when the executives get all the credit when things go well, and the grunts get laid off when things go poorly.

        Only in this case the overpaid executives are being rewarded as though they had done extremely well when in fact they've done so poorly they should be fired if not hanged.

        Personally, I'd like to know how I could score a contract that will reward me with multi million dollar bonuses when things go horribly even after I'm no longer even employed by them. That sounds like about the sweetest gig imaginable.

    • by jollyreaper (513215) on Friday March 20, 2009 @02:40PM (#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?

    • by truthsearch (249536) on Friday March 20, 2009 @02:40PM (#27271757) Homepage Journal

      "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.

      • by pete-classic (75983) <hutnick@gmail.com> on Friday March 20, 2009 @03:04PM (#27272211) Homepage Journal

        Obama felt it necessary to continue the plan that started under the last administration.

        Oh, brave new world! Where "change" means "keep doing the same fucking thing"!

        -Peter

      • Responsibility (Score:3, Insightful)

        by jayveekay (735967)

        "President Obama said Wednesday he'll "take responsibility" for AIG executives receiving controversial bonuses while the company took $173 billion in government bailouts."

        I'm sure that since he has taken responsibility for the bonuses, Obama will personally repay the American taxpayer the $160+ million dollars.

        Oh wait, this more like that other type of responsibility that Rumsfeld took for the crimes committed at Abu Ghraib, where the guy responsible doesn't face any consequences. Rumsfeld didn't do jail ti

    • Re: (Score:3, Funny)

      by pieisgood (841871)
      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.
    • by castironpigeon (1056188) on Friday March 20, 2009 @02:45PM (#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.
    • by pehrs (690959) on Friday March 20, 2009 @02:45PM (#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.

      • by Reality Master 201 (578873) on Friday March 20, 2009 @03:01PM (#27272165) Journal

        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.

        Bu..buh.. but nationalizing banks, why thats... that's socialism! Having everyone but the responsible parties foot the bill for the excesses of the rich and privileged is just the American way - we're keeping the free market going!

        • Re: (Score:3, Insightful)

          by arth1 (260657)

          Bu..buh.. but nationalizing banks, why thats... that's socialism!

          It's not even near socialism. In a true socialist society, you can't have banks at all, government operated or not. If you need a new house built, you don't borrow money for it, you petition for why you need it, and get the land, materials and work assigned. Or declined, if your need is less than society's ability to provide it.

          That said, social capitalism (as formerly practiced in the Scandinavian countries with success) could very well be

    • by rastilin (752802) on Friday March 20, 2009 @02:49PM (#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.

    • by nelsonal (549144) on Friday March 20, 2009 @02:54PM (#27272027) Journal
      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.
    • Re: (Score:3, Interesting)

      by iron-kurton (891451)

      Why did they do it? Obama received a lot of campaign contributions from AIG for his presidential campaign.

      ABC news [go.com]

      • by Manchot (847225) on Friday March 20, 2009 @05:08PM (#27273979)
        This is so disingenuous it's not even funny. Yes, Obama received a total of $130,000 from AIG's 116,000 employees. But he also received $600 million from the 300 million Americans. In other words, the average AIG employee gave about half what the average American gave. Unfortunately, the fact that Obama raised record funding means that every time a scandal pops up in the next four years involving a big company, we're going to get dumb comments like the parents' claiming favoritism, when the truth is that any company with a lot of employees will (by definition) have given his campaign a lot of money.
    • Re: (Score:3, Funny)

      by Jurily (900488)

      Seriously people, at what point do we get off the couch and take back this country?

      Are you crazy? American Idol is on.

  • 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.
  • today's xkcd (Score:5, Insightful)

    by mattdm (1931) on Friday March 20, 2009 @02:28PM (#27271545) Homepage
    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.
    • by Reality Master 201 (578873) on Friday March 20, 2009 @02:30PM (#27271573) Journal

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

    • Re:today's xkcd (Score:5, Insightful)

      by qbzzt (11136) on Friday March 20, 2009 @02:38PM (#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 (Score:5, Insightful)

      by seanadams.com (463190) * on Friday March 20, 2009 @02:40PM (#27271769) Homepage

      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 (Score:5, Insightful)

      by The Moof (859402) on Friday March 20, 2009 @02:51PM (#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.

      • Re:today's xkcd (Score:5, Informative)

        by DamienRBlack (1165691) on Friday March 20, 2009 @03:30PM (#27272551)

        Actually, these bonuses are required pay and they were not performance based. Why are people calling them bonuses then? I have absolutely no idea.

        You see, back in 2007 when the CDO market started to bottom out, several of their top traders were considering leaving AIG because they were paid almost entirely basic on a bonus which was a percentage of their earnings for the company. AIG wanted them to stay to help unwind the problem and cut their losses. If they'd known what was going to happen to the entire industry they might have taken another route, but AIG didn't know and they thought these traders were worth keeping.

        So AIG struck a deal, that they would continue to get the bonuses they received in 2005/2006 until 2012, as long as they stayed with the company to help cut their losses.

        These "bonuses" are basically their pay, and are the only reason they are working there. I don't see how it could possibly be the government's right to take the agreed upon pay away from these people.

        Can we complain about this whole deal? Yes. Can we complain about the state of the economy? Yes. Can we complain about inflated pay? Yes. Can we complain about bonuses and all the incentive based connotations that go with it? No. Yet that is what most people are doing.

        Once and for all people, these weren't bonuses the way most people think of bonuses. Management didn't decide to reward then, it was pre-agreed upon payment. And it would be horribly immoral for us to take them away from said recipients.

        • Re:today's xkcd (Score:5, Insightful)

          by Anonymous Coward on Friday March 20, 2009 @04:02PM (#27273041)

          These "bonuses" are basically their pay, and are the only reason they are working there. I don't see how it could possibly be the government's right to take the agreed upon pay away from these people.

          It's simple. The company that agreed to pay them that can't afford to pay them that. A new entity (the government) came in which is not bound by those contracts. The people who obviously do not deserve any pay should consider themselves very lucky that they aren't stripped of every asset they own and then tossed out in the streets. That would be fair and just, but not many people are even suggesting it.

          Once and for all people, these weren't bonuses the way most people think of bonuses. Management didn't decide to reward then, it was pre-agreed upon payment. And it would be horribly immoral for us to take them away from said recipients.

          It would be perfectly moral and justified. Their employer does not have the money to pay them with. What they are paying them with is *my* money. That is fucking immoral. If you run a company into the ground, then you do not deserve anything. If you run a company into the ground and then demand that I be robbed to pay you for doing so, then...well the very idea that you're attempting to frame a moral debate with those thieves and failures as the moral entities doesn't speak well to your sanity or ethics.

        • Re:today's xkcd (Score:5, Insightful)

          by mabhatter654 (561290) on Friday March 20, 2009 @04:35PM (#27273543)

          These are "bonuses" like the Union pensions and health care automakers are required to cut... you know legally and fairly negotiated years ago, right.

          IF it was good enough to demand retired auto workers give up their contracted benefits, (actually worse because the current workers cut off their former union brothers) it's good enough for AIG people making million dollar salaries.. don-cha think?

    • Re:today's xkcd (Score:4, Insightful)

      by MozeeToby (1163751) on Friday March 20, 2009 @03:21PM (#27272419)

      The government wants to tap our phones, we rally against it. On principle as much as anything; the odds are highly against it affecting us individually.

      A company patent trolls and sues big name companies without warning, and we advocate patent reform. On principle as much as anything; the companies being sued are usually big enough to protect themselves and absorb losses even if they lose the case.

      Why shouldn't we object to this kind of thing on principle too? When senators want to spend money directly on their electorate (essentially buying their votes) instead of for the good of the nation as a whole, why shouldn't we complain? When we give companies billions of dollars to fix their mistakes and they turn around and sue the IRS to recover 300 million on taxes, using our money to pay the court costs, why shouldn't we complain?

      Maybe it isn't the major issue, maybe it isn't even a real issue at all (hell, if they were incorrectly taxed why shouldn't they get the money back?) but we fight on principle every day. If we don't stand up and be pissed off about this today, if we don't demand that companies receiving bailouts act for the good of the nation instead of the good of their pocket books, things will only get worse in the future. Yeah, it's .1% of the bailout money we're talking about, but I bet less than .1% of Americans had their phones illegally tapped and less than .1% of patents are held by trolls.

  • by kwandar (733439) on Friday March 20, 2009 @02:28PM (#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!

    • by MightyMartian (840721) on Friday March 20, 2009 @02:30PM (#27271593) Journal

      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.

  • WTF (Score:5, Interesting)

    by MightyMartian (840721) on Friday March 20, 2009 @02:28PM (#27271549) Journal

    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.

  • by non-registered (639880) on Friday March 20, 2009 @02:29PM (#27271565) Homepage
    Tru-Value states there has been a run on pitchforks.
  • Great Article (Score:5, Informative)

    by EllisDees (268037) on Friday March 20, 2009 @02:30PM (#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!

    • Re: (Score:3, Informative)

      by Trifthen (40989)

      I'd moderate this up, but it's already +5. So I'll just concur. The article is indeed excellent, and even if it's only half true, I don't even know where to begin on the implications. I'd say it's bad enough that the only way to crawl out would be to immediately disband the guilty corporations, disperse their assets to smaller community banks, declare the FED illegal and oust it, all while restarting the dollar from scratch.

      Of course, doing that would instantly render so many worldwide investments worthless

    • Re: (Score:3, Funny)

      by MozeeToby (1163751)

      From the article you linked...

      "These people need their trips to Baja, their spa treatments, their hand jobs," says an official involved in the AIG bailout,...

      Wait... what was that? That must be a misquote or something...

      ..., a serious look on his face, apparently not even half-kidding. "They don't function well without them."

      I guess not.

    • Re: (Score:3, Insightful)

      by afabbro (33948)
      If you took away the over-amped adjectives, that article would be about 30 words long. How can you take someone seriously who refers to people as "bald-headed Frankensteinian goon"? Then again, what do you really expect from Rolling Stone...
  • by nroets (1463881) on Friday March 20, 2009 @02:32PM (#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.
  • New rule (Score:4, Insightful)

    by edivad (1186799) on Friday March 20, 2009 @02:35PM (#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.
  • by DamienRBlack (1165691) on Friday March 20, 2009 @02:35PM (#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.

  • Not AIG's fault (Score:5, Insightful)

    by vijayiyer (728590) on Friday March 20, 2009 @02:46PM (#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.

    • Re: (Score:3, Interesting)

      by hattig (47930)

      If they had failed, a dozen other companies would have risen to offer the same services, but in competition with each other. There would have been a short period of pain - the birds that nest in the tree would have been put out, the apes that ate its fruit would have to look elsewhere, etc, but it would have been okay.

      Sometimes the old trees in the forest get rotten and need to fall, so that the new saplings can flourish.

      Hey, at least it's not a car analogy.

  • Aesop's Tales (Score:5, Insightful)

    by Dr. Eggman (932300) on Friday March 20, 2009 @02:49PM (#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."
    • by Anonymous Coward on Friday March 20, 2009 @03:53PM (#27272913)

      It's just like the story of the grasshopper and the octopus.

      All year long, the grasshopper kept burying acorns for winter, while the octopus mooched off his girlfriend and watched TV.

      But then the winter came, and the grasshopper died, and the octopus ate all his acorns. Also, he got a race car.

      Is any of this getting through to you?

  • They weren't bonuses (Score:3, Informative)

    by mrgrey (319015) on Friday March 20, 2009 @03:02PM (#27272185) Homepage Journal

    They weren't bonuses - they were retention contracts. AIG didn't want everyone to jump ship so they offered retention contracts to key people. It's a VERY normal thing to do. The dollar amount may have been crazy - but they were NOT bonuses.

  • Bad will (Score:4, Interesting)

    by SeePage87 (923251) on Friday March 20, 2009 @03:03PM (#27272195)
    I'm curious how damage is being done to the company in loss of good will. I certainly wouldn't be surprised if the outrage caused by this lawsuit alone didn't cost them much more than $300M. I'm not sure whether the whole fiasco will cost them more than $200B, probably not, but I know many people who won't do business with AIG ever again if they can help it. Sometimes money grubbing is a bad business move.
  • 80% Owned (Score:5, Insightful)

    by afabbro (33948) on Friday March 20, 2009 @03:11PM (#27272291) Homepage

    So the gov't calls a shareholder meeting, replaces the board, and the new board quashes the lawsuit. They own 80% of the equity in the company. The government can do whatever it wants with AIG because it owns them.

    Why is this lawsuit a big deal? Or rather, why does it still exist?

    • somewhat tricky (Score:3, Insightful)

      by Trepidity (597)

      Majority owners can't actually do "whatever they want" unless they actually own 100% of the company. The trouble here is that the 20% minority owners are something of an annoying fiction--- the company is by rights bankrupt and the shares worthless, but the government has unwound this mess somewhat ineptly and as a result on paper the company still exists and has value, and 20% of that value is owned in the private sector by people who technically the company has a fiduciary duty to.

  • Solution (Score:5, Insightful)

    by Animats (122034) on Friday March 20, 2009 @03:38PM (#27272661) Homepage

    There's a known solution to this problem. In the 1980s S&L collapse, the Office of Thrift Supervision established the rule that S&Ls taken over by the Government couldn't sue each other or the Government. It just burned up legal fees, since the money came out of the same pocket. Congress needs to enact something like that this time.

  • by digital photo (635872) on Friday March 20, 2009 @03:47PM (#27272815) Homepage Journal

    Seriously, if you have a sick and injured animal, you try to help it recover. But if that animal is deemed unfit to coexist with people and other animals... like food aggression, attacking people, or literally biting the hand that feeds it...

    Well, that animal needs to be put to sleep.

    It's irrelevant what the $$ amount is, if the sole purpose of the company now is to keep sucking money into it's expenditure hole and apparently tossing back up this kind of behaviour.

    Even if the company survives the economic issues we're living in, would the company itself be viable as a service company, given the kind of image/pr suicide it's been committing?

    Forget about too big to fail. Let's start looking at companies that are too tained/corrupted to be allowed to succeed.

  • by ShooterNeo (555040) on Friday March 20, 2009 @04:47PM (#27273713)

    Perhaps I don't understand what "ownership" means. If I "own" an 80% share in a gas station, and the gas station is suing someone, I have the right to call up the station and say "drop the lawsuit, and fire whoever thought of the lawsuit". By the same logic, a representative of the Federal government should be able to personally order the person who is responsible for this suit fired immediately.

    By a similar reasoning, if I own 80% of the business, and there is some question over whether an employee is owed a large bonus, as owner I can say "nope, don't pay the bonus". Even if my order violates a written contract, the employee would have to sue to get their money. And there's unlikely to be a single jury in the United States that would allow AIG execs to collect a few million dollars in return for making financial decisions that have destroyed the savings of millions of people.

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