For purposes of clarity, know that Kenneth Feinberg is Treasury's Special Master for TARP Executive Compensation, as appointed by the Obama Administration. Allen has defined Feinberg's responsibilities here. Barofsky, on the other hand, is the Special Treasury Department Inspector General who oversees the whole of how TARP is administered.It hit the news cycle across the board Tuesday that Feinberg, in reviewing AIG's compensation plans for close of 2009, has asked the company to reduce bonuses slated to be paid to it's trading unit (the unit largely creditted with AIG's less-than-stellar 2008 performance). Problem: those bonuses were promised and contracted for prior to AIG's receipt and engagement of TARP provisions (Fed and Treasury monies). Big threat on the table? Feinberg has threatened to reduce the pay of other executives if the bonuses of the trading unit are not reduced. How's that for compromise?
Relatedly, an audit of the of the $165 million paid out in retention bonuses in March (also contractually agreed to preceding the federal bailout) show that not only did the payments not work to keep everyone on staff, but some people who are not necessarily indispensable to AIG's business line received money ($7,700 for a kitchen assistant, $7,000 for a mailroom assistant, and $700 for a file administrator) (as a related aside: it will take me three months of full-time work as a young attorney to net $7,700).
What was the reason AIG needed a bailout in the first place? Why didn't we let them fold like the true capitalist society we are? How can a bankrupt corporation be held liable for agreements prior to bankruptcy? Are there laws against fraud? Why aren't the criminals being prosecuted? How is the value of a corporate executive determined? Why are they worth so much? Does stock value contribute to job performance evaluation?
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