AIG, the company that has received more bailout billions than any other institution ($140 billion and the meter is still running), is forging ahead with its plan to dole out over $700 million in bonuses and “retention pay” to the “indispensable” people in charge of its financial products operation.
Despite a reported angry phone call from Treasury Secretary Timothy Geithner, AIG CEO Edward Liddy claims that his hands are tied lest his top talent leave the firm in search of better offers.
“I do not like these arrangements and find it distasteful and difficult to recommend to you that we must proceed with them,” Liddy wrote in a letter to Geithner, as reported in the Washington Post. “Our competitors understand how valuable our top executives are, and we are acutely aware that they would like to siphon off our most talented leaders,” he continued.
Apparently the prospect of AIG geniuses finding work at other financial institutions deemed “too big to fail” (read “will demand taxpayer bailout after looting ceases”) convinced Geithner to forget the whole thing.
Incidentally, the Post notes that if the Treasury had decided to properly nationalize the company instead of just taking on an 80% stake as a silent partner, the government could have canceled all such payments and unilaterally rewritten the the company’s employment contracts.