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The Difference between AIG Small Businesses

Written by: Brian Moran

Article Overview: Random thoughts on life and entrepreneurship.

The Difference between AIG Small Businesses

"If you owe the bank $100, that’s your problem. If you owe the bank $100 million, that’s the bank’s problem.” ~ J.P. Getty

Last week, AIG Chairman Edward Liddy announced that the struggling insurance & financial services company will pay out $165 million in “retention” bonuses to executives as part of a contractual agreement. This announcement comes on the heels of yet another loan by the federal government, bringing the total bailout to just under $180 billion given to AIG in the last 6-8 months.

In defending the payments, Chairman Liddy stated: “We cannot attract the best and brightest talent to lead and staff the AIG businesses…if employees believe their compensation is subject to continued and arbitrary adjustment.” He added that AIG was contractually obligated to make the payments and would face a mountain of lawsuits if they didn’t do so.

What Chairman Liddy failed to point out is that these “best & brightest” lost approximately $60 billion in the 4th quarter alone last year. No typo there—that was Billion—with a “b”. The same people who should have been tossed to the curb for the largest quarterly loss by any company in U.S. history are instead sharing $165 million of our hard-earned tax dollars.

The backlash by the American people has been loud, harsh and consistent. Personally, I hope this is the straw that breaks the camel’s back. I would rather see the government order AIG not to make the payments and have these executives sue the company. At least then we’d get to see their faces and have pictures to post on bulletin (dart) boards at unemployment offices. In addition, where are these financial wizards going if they pack up their AIG bags? Did the company really need to offer them $165 million in “retention” bonuses?

We can’t just blame the greedy executives at AIG. Heck, all they did was figure out a way to beat the system. More of the blame should fall on the oversight committee that missed the contractual agreement while going through AIG’s report BEFORE they started lending the company all this money. Someone did go through their books…yes? Someone had to know that these contractual payments were coming due, didn’t they? And, if someone knew this time bomb was ticking, why weren’t these contracts voided before the first dollar was given to AIG?

Why am I so angry? Well, apparently, when you’re a small business and lose $100,000 in one quarter, that’s your problem. But if you’re AIG and you lose $60 billion in the same quarter, it’s the government’s problem.

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Article Tags: 100 million, 4th quarter, aig, backlash, bailout, camel, contractual agreement, dart boards, earned tax dollars, edward liddy, financial wizards, getty, heck, insurance financial services, lawsuits, oversight committee, quarterly loss, retention bonuses, typo, unemployment offices



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