Taxpayers Fund AIG Lawsuit Against US 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."
WTF (Score:5, Interesting)
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.
Garbage in garbage out (Score:3, Interesting)
Re:Is anyone surprised? (Score:5, Interesting)
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:what does this have to do with tech? (Score:2, Interesting)
Re:Is anyone surprised? (Score:5, Interesting)
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? (Score:4, Interesting)
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:Not AIG's fault (Score:3, Interesting)
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.
Bad will (Score:4, Interesting)
Re:Is anyone surprised? (Score:5, Interesting)
Or about 20 bridges to nowhere
Re:Is anyone surprised? (Score:3, Interesting)
Why did they do it? Obama received a lot of campaign contributions from AIG for his presidential campaign.
ABC news [go.com]
If a dog bites the hand that feeds it... (Score:4, Interesting)
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.
Re:Is anyone surprised? (Score:5, Interesting)
>>>Which will either head off deflation (never in history been successful) or cause hyperinflation
I wish economists would call this phenomenon with a better description. If a government starts printing tons of paper money, it doesn't cause inflation of prices. It causes *devaluation* of the paper until soon people are walking around with wheelbarrows to buy a loaf of bread.
To use the word "inflation" is akin to a doctor claiming illness is caused by a runny nose. No, the nose and the price inflation is the symptom. The cause is the bacteria and the devaluation of the paper, respectively.
Re:Best soapbox momement yet (Score:2, Interesting)
What is this modded +5 insightful?
I've read the parent post a dozen times now, and it makes less and less sense every time I read it.
The president and congress have no problem inciting mob rule and violence? WTF? You honestly believe that? Exaggerate much?
We have a president going on a comedy show, doing town hall meetings, because he is continually trying to stay in communication with the people... you know... that mob that SHOULD rule the country.
About "disingenuously declaring shock"... he has to for political reasons of course... but if people were being intelligent about this, we wouldn't care.
170 million is a drop in the bucket, is standard business practice, without the bonuses AIG despite having money would cease to function, as its employees would leave.
I keep hearing "why are we giving bonuses to people that caused the mess". AIG's employees caused the mess? Really? They were doing what everyone else was doing, and what was working very well for a very long time. If they didn't do "what caused the mess" they would have been fired.
This is very similar to the IT sayings like "no one every got fired for choosing IBM" "or microsoft", etc.. it was standard business practice to do what they were doing in almost every major financial institution.
Is it risky to base your entire IT structure on one vendor controlled platform? Sure. Do people do it anyway and stay succesful? Yup.
It is hard to pickup all the nuances of your post, due to your limited language skills, so I doubt I understand most of your ranting...
Re:Is anyone surprised? (Score:2, Interesting)
I disagree about the foreign nationals thing - to me, that's the same issue as giving out bonuses - AIG had obligations, the fed bailout didn't have any strings attached, now they're trying to retro-actively attach them, which is NOT a power we really want politicians to have
And purely out of curiosity, I'm wondering how much money congress's time spent trying to recover this bailout bonus money is worth (ie, how much it cost the taxpayer, not how much it should have cost the taxpayer
Re:Is anyone surprised? (Score:3, Interesting)
You're not losing your job or your house.
Right, so that's the rub. We aren't talking about people losing their houses. The houses belong to the banks until the lien is off of the title and they've been paid off. When you say things like that, you are being the problem.
The problem is our credit-hungry economy. It's simply not "their house" if they can be foreclosed on. And the job belongs to the employer, to be quite honest.
Tell me people are on the streets, you get my sympathy. Tell me they bought a house they couldn't afford and then consequences caught up with them and you make me feel like the world is just. Admittedly, people in this situation likely did this because Clinton and Freddie Mac, et al encouraged them to make idiotic decisions.
But also, think of the other side for a minute. What about people, low-income people, that didn't make idiotic mistakes and get themselves upside down in a mortgage because they believed money was free. For them, houses are now cheap. Houses were more expensive than they needed to be, and now they've swung far too far in the cheap direction, but they WILL stabilize if we stop fucking with the market.
Err, summary: we all like to think we're richer than we are, and we all let the banks leverage too far because that's the only way to do so. We're the problem.