Opinion in AIG bonus

There are many newspaper articles talk about AIG bonus, and 99% of articles conclude that AIG’s action was totally wrong. I read a Dwayne’s article(http://dwang9.blogspot.com/2009/03/aig-bonuses.html) about AIG bonus that AIG’s action was wrong. I partially agree with Dwayne, but I am writing this journal to advocate AIG. When I read the article about AIG, I knew that there were reasons why AIG pays bonus with bailout money.

The first reason was that the AIG had to perform its contract that says $55 million should be paid in last December, and 165 million should be paid on March 13, 2009. Thus, if AIG is able to pay bonus even if the money was bailout money, the 400 employees had a right on their bonus, and wanted to get those. Some employees might sue AIG if AIG did not perform the contracts.

The second reason is that if AIG pays salaries with bailout money, nobody would complain about that. This is the point that once the bonus is officially stated in the contract, the bonus should be considered as salary.

Last, a lack of regulation on bailout money makes the AIG use bailout money whatever AIG wants. When the U.S government supports AIG with bailout money, which is our taxes, the U.S should have regulated with that money, and asked AIG to disclose everything that related with the bailout money. However, the U.S government’s action was too late. Now, the new bill, which is 90% of bonus would be taxable to the federal and the rest of 10% would be taxable to the state, passed from the U.S Congress. Even though the U.S government owned 80% of shares of AIG, the lack of concern and regulation made AIG to waste that bailout money on paying bonus.

In conclusion, before people criticize about AIG I recommend them to think about why the AIG has to take that action. Then, people would not take an action emotionally, and they would not be one-sided. Thus, their critique would be more accurate.

http://www.nuwireinvestor.com/blogs/investorcentric/2009/03/niceaig-is-paying-165-million-to-people.html

http://thecaucus.blogs.nytimes.com/2009/03/16/rep-frank-joins-chorus-on-aig-bonus-outrage/

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