Bonuses are obviously (or so I thought) REWARDS for doing well, or extra compensation when the company is doing extraordinarily well. I do not understand when bonuses got to be "entitlements".

Why are entitlements a conservative whipping boy, when a welfare mom wants adequate health care or elderly person needs affordable prescriptions -- but for yuppie billionaires, it's OBVIOUSLY part of their "contract" -- must be an extraordinary contract and I am dying to read it, especially the part where it describes how you get bonuses EVEN WHEN THE COMPANY IS IN FORECLOSURE, even when they are taken over by the government, even when the very business method and industry has failed at epic historical levels.

But yuppie scum have bills to pay, nannies, multi-million dollar co-op apartments and vacations to the Caymans where they hide away what they can. You can't expect them to have to take the heat for abject failure! All through school, all through work, they were promised vast riches for little work and much posturing -- IT IS IN THE CONTRACT! the inviolable contract!

No one can answer for me why employees of such incredible incompetence and dishonesty (not one ever came forward to say, "umm, it's all about to collapse, boss") need to be RETAINED. I'd think AIG CEO Libby would be chomping at the bit to fire the whole sorry lot of them, let alone RETAIN THEM. If they left, so what? They go to AIG's competitors (if any are left) and poison and destroy THOSE companies....isn't that a good thing? Destroy the competition?

It is flabbergasting after all that has transpired the last six months, that the PEOPLE IN CHARGE (whether Libby or Congress or Geithner) are so utterly clueless -- and damn, these are the guys sailing the ship!! -- that they can for a single second think the most incompetent employees in the world who lost TRILLIONS OF DOLLARS can actually be so desirable that they must be RETAINED!

I'd say: forget bonuses, fire the whole sorry lot and replace them with any hundred or so people chosen at absolute random from the closest unemployment line. Those folks will be overjoyed to work for minimum wage, no benefits, and as long and hard hours as you like. Just random chance ensures they will be smarter and more honest that your "so-called valuable employees". ONE employee bonus -- just one -- would be enough to pay for all of them for ten years.

I am continually reminded of the line from Mel Brook's Blazing Saddles -- one of those lines that actually explains the entire universe, and definitely the whole financial breakdown --

"We've got to protect our phony baloney jobs, Gentlemen!"

Ive been reading up on this a bit and it appears that there is a danger that the departing traders could turn around and profit from their inside knowledge of a 1 Trillion plus book.

Elydog: congrats for figuring out in advance that the derivative market was toxic (as Buffett also said.) But I don't see how preventing foreclosures is going to help: am I wrong in thinking that the problem was that these derivatives are either of little value, or perhaps not even quantitfiable at all. How is "undwinding" going to give a value which is not determinate? Or is it that the financial geniuses just want the taxpayers to redeem them at a high pre-crash level, ask no questions, and amuse themselves by fulminating against "Bonuses"? I wouldn't be surprised if the whole bonus scheme was cooked up by AIG to conceal that the taxpayers are paying good money for "Toxic" (valueless) assets. disigny

No, it isn't implied, not one bit. Read what Liddy said, forget where he said it, i.e. sitting in front of a bunch of grandstanding politicians trying to make it all about the bonuses. In the words of John Maynard Keynes, who was talking about bankers but could just as well have been talking about politicians, namely that they: "...regard it as more consonant with their cloth, and also as economizing on thought, to shift public discussion of financial topics off the logical onto an alleged moral plane, which means a realm of thought where vested interest can be triumphant over the common good without further debate." The politicians are the ones focusing on the morality issue in this case, because it's one where they can foam and sputter without having to know what the hell they're talking about; Liddy knows what's gone wrong and is trying to tell us that whatever the moral issues -- some of which he feels about the same as the rest of us -- there is a very complex process under way which, if it should fail, will put all these high-blown moral proclamations into a cocked hat.

So AIG employees might not stay with the company if they return their bonuses. Only THEN would they realize that the economy is in the shitter and they can't get a job. Sounds like a whole ship full of irony to go around there at AIG.

that one has been bugging me a lot too- I've asked over and over here on Salon and none of the 'we need to retain the talent' bonus apologists is willing to explain exactly where all of this talent will go....

I think there is at least some logic to the contractual thing- though on the other hand if the companies like AIG were sincere and acting in good faith they could have forced their employees to renegotiate their contracts so that they only get bonuses - for reward or retention-- if they perform and deserved to be rewarded or retained. (I have never seen a contract that could not be voided for cause- apologists should also explain how the masters of the universe could not incorporate such a simple clause.)

Let is crash and burn, the whole thing. Let's go back to the 18th century.

...is it necessary to pay big retention bonuses when the job market is tanking? Retention bonuses are for situations where:

1) You [hypothetically conscientious management] really do think people are doing a good job, and

2) They really can get a better deal elsewhere.

This rationale is absurd on its face in the current business climate.

Moreover, since the company was saved from oblivion by a massive public bailout, my reading leads me to believe that the contractual obligation angle is also hooey.

Let them sue.