Generally didn't happen, despite the common perception. The bailouts saved the banks, they generally did not care to save the owners or executives of the banks.
Bonuses (owed under preexisting agreements) were an unfortunate necessity. The USG effectively nationalized AIG because it was determined to be too systemically important to be allowed to chaotically fail. So, the new owners needed to retain the employees necessary to continue its operations. To do so, they had to honor employee compensation agreements.
This turned out to be a wise move as the American taxpayer ended up turning a profit on the AIG bailout.
And it wasn’t as though the bonuses were uncontroversial. They were possible bc of loopholes in the bailout legislation. But the government was furious and, alongside public outrage, pressured the executives to give the back bonuses. The house of representatives even passed a bill to tax the bonuses at 90%. Many did voluntarily give them back.
Generally didn't happen, despite the common perception. The bailouts saved the banks, they generally did not care to save the owners or executives of the banks.
AIG famously continued to pay out huge bonuses the year after they were bailed out.
You’re withholding important context.
Bonuses (owed under preexisting agreements) were an unfortunate necessity. The USG effectively nationalized AIG because it was determined to be too systemically important to be allowed to chaotically fail. So, the new owners needed to retain the employees necessary to continue its operations. To do so, they had to honor employee compensation agreements.
This turned out to be a wise move as the American taxpayer ended up turning a profit on the AIG bailout.
And it wasn’t as though the bonuses were uncontroversial. They were possible bc of loopholes in the bailout legislation. But the government was furious and, alongside public outrage, pressured the executives to give the back bonuses. The house of representatives even passed a bill to tax the bonuses at 90%. Many did voluntarily give them back.
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