AIG is in a lot of trouble right now.  Despite borrowing billions from the Federal Government (making them 80% Government owned), the company paid out $165 million dollars in bonuses, mostly to employees who were responsible for the collapse of the company.  This is just the tip of the iceberg.  Total bonuses for the financial unit could reach up to $450 million.  The total bonuses for the company itself is projected to be as high as 1.2 billion.

The response of the U.S. Government was swift.  Today they passed legislation taxing 90% of these bonuses to employees making $250,000 per year who work for any company that has received over five billion in bailout money.

While I applaud the action, I do not agree with the methodology used.  Last month, a provision banning all bonuses was stripped out of the stimulus bill by the Democrats.  Why did they do this, then when the public backlash over the AIG bonuses reached their lofty ears they rushed this bill through?  Sadly, this is another example of partisan politics currently being played in the Government.  This economic crisis is the worst since the Great Depression and everyone has to work together for the benefit of the country.

The current CEO of AIG, Edward Liddy, is working at the behest of the Government for $1.00 per year.  This is commendable, but he was brought in to change the corporate culture at AIG as much as to turn the struggling company around.  His credentials are impressive.  He is the former president, CEO and Chairman of Allstate Insurance.  Unfortunately, he is old-school blood and know only how things were done, not necessarily how things should be done.

In October 2008, he defended a $440,000 corporate retreat by stating to Congress that these retreats “are standard practice in our industry.”  He also defended the bonuses prior to asking the recipients to return them by saying that the employees are entilted to them and AIG could face legal reprecussions should they not honor their contractual obligations.  Fair enough, but when a company loses 61.7 billion dollars in a quarter, how do you justify a bonus payment to anybody?

To quote the late Owen Hart, “Enough is enough and it’s time for a change!”