AIG bonuses
While listening to WBUR this morning I heard Massachusetts' own Barney Frank railing against the bonuses that AIG is paying to a bunch of current and former employees. I was a bit surprised that the Congress that was perfectly capable of re-negotiating union contracts as part of the automakers bailout is seemingly incapable of re-negotiating executive contracts as part of the bank bailout. So I did a little digging:
The stimulus bill, named the American Recovery and Reinvestment Act of 2009, is available online in a conveniently searchable format. So I searched for "executive compensation". It turns out that there's a whole section devoted to it. From the bill:
During the period in which any obligation arising from financial assistance provided under the TARP remains outstanding, each TARP recipient shall be subject to the standards established by the Secretary under this section.
That looks promising.
The standards established under paragraph (2) shall include the following: ... (D)(i)A prohibition on such TARP recipient paying or accruing any bonus, retention award, or incentive compensation during the period in which any obligation arising from financial assistance provided under the TARP remains outstanding...
Congress was smart enough to write in a provision prohibiting the sort of bonuses that AIG is paying out.
The prohibition required under clause (i) shall not be construed to prohibit any bonus payment required to be paid pursuant to a written employment contract executed on or before February 11, 2009...
Except that they then specifically exempted anything prior to passage of the bill. So the next time you hear someone who voted for or signed this bill complaining about AIG bonuses, remember that one of two things is true:
Either they were too lazy to read it or too dumb to understand it
or
they're betting that you are.
The stimulus bill, named the American Recovery and Reinvestment Act of 2009, is available online in a conveniently searchable format. So I searched for "executive compensation". It turns out that there's a whole section devoted to it. From the bill:
During the period in which any obligation arising from financial assistance provided under the TARP remains outstanding, each TARP recipient shall be subject to the standards established by the Secretary under this section.
That looks promising.
The standards established under paragraph (2) shall include the following: ... (D)(i)A prohibition on such TARP recipient paying or accruing any bonus, retention award, or incentive compensation during the period in which any obligation arising from financial assistance provided under the TARP remains outstanding...
Congress was smart enough to write in a provision prohibiting the sort of bonuses that AIG is paying out.
The prohibition required under clause (i) shall not be construed to prohibit any bonus payment required to be paid pursuant to a written employment contract executed on or before February 11, 2009...
Except that they then specifically exempted anything prior to passage of the bill. So the next time you hear someone who voted for or signed this bill complaining about AIG bonuses, remember that one of two things is true:
Either they were too lazy to read it or too dumb to understand it
or
they're betting that you are.