Thoughts from a Yellow Dog Democrat living in Olympia, in the great BLUE state of Washington

I am a liberal because it is the political philosophy of freedom and equality. And I am a progressive because it is the political path to a better future. And I am a Democrat because it is the political party that believes in freedom, equality and progress. -- Digby

Tuesday, March 17, 2009

More AIG Handling Rants

First of all the Republithugs are WRONG to blame this mess on Obama and the Democrats. AIG got their bailout from Paulson back in November 10, 2008. Obama was a little busy that day trying to get elected so he had nothing to do with it. This was all Henry (Hank) Paulson and George W Bush.

So why didn't Hank Paulson see this bonus fiasco coming? Well first let's look at Hank Paulson. His Wikipedia bio says:
He joined Goldman Sachs in 1974, working in the firm's Chicago office. He became a partner in 1982. From 1983 until 1988, Paulson led the Investment Banking group for the Midwest Region, and became managing partner of the Chicago office in 1988. From 1990 to November 1994, he was co-head of Investment Banking, then, Chief Operating Officer from December 1994 to June 1998; eventually as its chief executive. His compensation package, according to reports, was US $37 million in 2005, and US $16.4 million projected for 2006. His net worth has been estimated at over US $700 million.
So is this a guy who is in touch with how the rest of us live or get compensated? We know George Bush wasn't -- all of his primary imcome came from his Daddy's friends.

AIG has a long history of what we would consider compensation abuse. Here's an article in the NYT from 2005:
June 28, 2005
A.I.G. Provides Details of Executive Compensation
The American International Group, the global insurance giant, spelled out yesterday the details of an unusual and secretive executive compensation plan that had for years been overseen and controlled by Maurice R. Greenberg, A.I.G.'s former chief executive.

Many details of the payments, which were made through two separate but related companies called Starr International and C. V. Starr, have not been disclosed in previous filings.

They were described in A.I.G.'s proxy statement, which was filed late yesterday in advance of its annual meeting on Aug. 11. It outlines the compensation paid in 2004 and two previous years to A.I.G.'s top executives, including Mr. Greenberg, who was ousted by the company in March.

The company, which is under investigation by federal and state prosecutors, disclosed extensive accounting irregularities this year and said in May that its earnings for the past five years would have to be restated by almost $4 billion.

By far the largest figure in the compensation tallies are the amounts earned by the executives under the long-term incentive plan operated by Starr International, a private company registered in Panama.
For example, Martin J. Sullivan, the chief executive and successor to Mr. Greenberg, received a salary of $775,000 and a bonus of $830,000 last year from A.I.G. His long-term pay under the Starr International plan was an additional $4.2 million.

The proxy also noted that Mr. Sullivan would receive a $4.9 million transition payment in cash for assuming the top job at A.I.G. this year. That payment would be in addition to his salary of $1 million.

Under the Starr International long-term pay plan, Mr. Greenberg received $10.1 million in 2004; that came on top of $1 million in salary and a bonus of $8 million from A.I.G.

...A.I.G.'s 11 top executives were allocated $42.4 million in shares under the Starr International plan last year.

...The filing also disclosed the total amounts that the A.I.G. executives have accumulated under the Starr International incentive plan over the years. At the end of last year, Mr. Greenberg had accrued shares worth $202 million based on current prices, while Mr. Sullivan had accumulated stock worth $10.6 million.
The company's executives have also earned significant amounts, the proxy noted, by investing in C. V. Starr, a private company that sells specialized insurance policies for A.I.G. The liquidation value of Mr. Greenberg's shares in C. V. Starr was $121 million as of last January; the shares also generated $2.8 million in dividends last year.

The value of Mr. Sullivan's shares in C. V. Starr was $10.1 million in January, the proxy said. His C. V. Starr dividends came to almost $400,000 in 2004.
Here we see AIG -- 4 YEARS AGO!! Under Paulson and Bush's watch -- under investigation, having to re-state their statements, and they are paying millions and millions to both the CEO they ousted as well as the the new CEO. They were also using Enron style off shore companies to hide this stuff. How did Paulson think this was going to turn out? Did he think that they were all of a sudden going to get responsible?

As my Momma used to say -- If you lie down with dogs expect some fleas. In this case I'd say we let a couple dogs with fleas of their own put us in a bed with a dog with mange! As Rachel Maddow says -- Scrub, rince and repeat!

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