AIG is totally aware how all actions of their are being closesly monitored. Lilly wud have known for sure, millions being paid as bonuses will definitely not go unnoticed for a corporate that has got maximum bail out especially after the Obama announcement and given that it was the very arm that got everyone in trouble. Totally agree that it was paid out in the best interest of the company. Point am trying to make is the whole grilling session was never going to be of any use. It is a sort of Gov grilling itself kind of act.

This is a great article by Simon Johnson and James Kwak which talks about why the bankers have a vested interest in claiming that only they possess the skills to unwind these contracts and how it has happened time and time again.

http://www.nytimes.com/2009/03/20/opinion/20johnson.html?_r=1

I say that simply because of the skills required to carry out a job.

I am sure it is easier to replace elementary school teachers than it is to replace heart surgeons. It takes a lot more to become heart surgeon than it does to become an elementary school teacher and hence the difference in pay.

@A Friend of Urs: Mr. Liddy did state in his testimony that Mr. Bernanke knew about the details of the bonus. They did seek legal opinion and the opinion that they got was if the employees sued them for payment of bonuses — they would surely win.

I don’t think this is such a big conspiracy. Rather, Mr. Liddy would have thought its just 0.1% of the whole bailout amount so its too small to raise any hue and cry. He might have under-estimated the kind of reaction that was generated.

As I understand, AIG currently is almost a US Gov run entity after the bailout.It would be interesting to think about what would have happened if AIG board had consulted Gov on the decision of paying out the bonuses. Especially whether AIG could survive impacts of the Lawsuits that would be filed if the retention bonuses were not paid as agreed in 2008 and the collapse of the Financial products arm thereof. Given that US Gov has spent mammoth amounts in bailing out AIG, it would have to ensure AIG continues to function until such time that the interdependency of AIG to the Financial system and the economy is understood. I would presume, US Gov would have been in the same dilemma and would have probably gone along the same lines as what Ed Lilly did. Having said that, It is difficult to believe that a decision of this magnitude would have been taken without consulting the Gov. The only way out of this mess for AIG and the Gov was for AIG to payout the bonsues as a corporate decision…followed by an expected outrage from tax payers..followed by a grilling session where US Gov expresses public sentiments as well as offer Lilly to explain the rationale for the payouts and why that was important..concluded by Gov passing bills to assure the US taxpayer that such incidence would not be entertained in the future. What better way to do that then pass a 90% surcharge bill. In the end, neither AIG board nor the goverment nor the employees who received retention bonuses are held accountable and Everyone wins!!!