So what's the fuss?

American International Group, Inc. (AIG) is poised to give out $165 million in bonuses to executives. 73 company employees will receive $1 million or more. It's common practice for large corporations give big bonuses. Most of these bonuses in particular are retention bonuses, meaning that AIG is contractually obligated to pay them. So what's the fuss?

Wait a minute... Is this the same AIG that the Fed took over and dumped in over $170 billion of taxpayer money? So in reality it's the taxpayer paying out the $165 million in bonuses to executives that have run their company in to the ground and posted a $61 billion loss last quarter? WOW! Now that's a job I'd like to have. But the taxpayer footing the bill on that $165 million is tough to swallow. In fact, it's an outrage. However, I rest easy knowing that Washington will have a solution.

Senate Banking Committee Chairman Chris Dodd (D-Conn.) has assured the American public that he'll do whatever is necessary to recoup that $165 million spent on bonuses. It is somewhat ironic that Dodd would get so upset. It was his idea, known as the 'Dodd Amendment', that provides an “exception for contractually obligated bonuses agreed on before Feb. 11, 2009” which exempts the very AIG bonuses Dodd and others are now desperately trying to recoup. Senator Charles Grassley (R-Iowa) took a slightly different approach in suggesting that AIG executives should take a Japanese approach toward accepting responsibility for their role in the collapse by resigning or killing themselves. This guy may be onto something.

After doing a little more digging, I fell into some more "interesting" AIG payouts. Now it's important that you keep in mind that Washington (me and you) now owns AIG. It turns out that AIG is using taxpayer money to payoff obligations it made insuring bad debt from a lot of US banks (many who have received TARP bailout money as well).

• Goldman Sachs - $12.9 billion
• Merrill Lynch - $6.8 billion
• Bank of America - $5.2 billion
• Citigroup - $2.3 billion
• Wachovia - $1.5 billion

Another Google search later and not only are US banks being bailed out by AIG, but so are European Banks. Check out some of the largest payouts courtesy of me and you.

• Societe Generale - $11.9 billion
• Deutsche Bank - $11.8 billion
• Barclays - $8.5 billion

So while Washington is ready to add assisted suicide to it's list of public services in light of $165 million in contractually obligated bonuses, AIG has paid out over $60 billion to failed banks... $32 billion of that to EUROPEAN banks.

Call me crazy, but it seems like the 'fuss' is pointed in the wrong direction. I agree that paying bonuses to executives that failed sucks, but paying them to failed European banks really chaps my... well, you know. It might just be me, but it sure seems that 'the fuss' being made by Washington over the bonuses is just a distraction from the real fuss.