165 million dollars...

[ROXRAN]

...In bonuses to AIG. What the heck...If you are going to ask for 170 billion from taxpayers to be rescued, then "fulfill" contractual obligations of this obscene payout to executives...I got a problem with that.

It pisses me off when my wife's management job has halted raises. I am getting the maximum raise at my job. I demonstrated outstanding performance...O btw, it has been cut this year indefinitely to a max of 2.5 %

Yes,...I should be happy about having a job. I agree in these times, but I can't fathom a company being so much on the edge of collapse to commit to bonuses...

4 words apply: "willful breach of contract",..hey it happens, and if anytime it applies with moral distinction, now is the time....and if Executives have a problem with it. Let them deal with it.

I don't think this is a partisan issue, but a common sense issue.

Maybe AIG deserves to go under...Maybe that bunker and stockpiling wasn't such a bad idea... ;)

[ymc]

Well, AIG is a front set-up to pump money indirectly to Goldman Sachs and the like. So it is natural that their execs should get some money for this service provided.

Now that Goldman Sachs gets enough money and want to repay us back with our money, I predict AIG will soon be history. :cool:

[ymc]

A breakdown for the 170B

$12.9B Goldman Sachs (2.5/5.6/4.8)
$5.2B Bank of America (0.2/0.5/4.5)
$6.8B Merrill Lynch (6.8/1.8/3.1)
$11.9B Societe Generale (4.1/6.9/0.9)
$11.8B Deutsche Bank (2.6/2.8/6.4)
$8.5B Barclays (0.9/0.6/7.0)
$5.0B UBS (0.8/2.5/1.7)
$4.9B BNP Paribas (0.0/0.0/4.9)
$3.5B HSBC Bank (0.2/0.0/3.3)
$3.3B Calyon (1.1/1.2/0.0)
$2.3B Citigroup (0.0/0.0/2.3)
$2.2B Dresdner Kleinwort (0.0/0.0/2.2)
$1.6B JPMorgan/Morgman Stanley (0.6/0.0/1.0)
$0.4B JPMorgan (0.4/0.0/0.0)
$1.2B Morgan Stanley (0.2/0.0/1.0)
$1.5B Wachovia (0.7/0.8/0.0)
$1.5B ING (0.0/0.0/1.5)
$1.1B Bank of Montreal (0.2/0.9/0.0)
$1.0B Deutsche Zentral-Genossenschaftsbank (0.0/1.0/0.0)
$0.8B Rabobank (0.5/0.3/0.0)
$0.7B Royal Bank of Scotland (0.2/0.5/0.0)
$0.7B DZ Bank (0.7/0.0/0.0)
$0.5B KFW (0.5/0.0/0.)
$0.3B Banco Santander
$0.4B Dresdner Bank AG (0.0/0.4/0.0)
$0.4B Credit Suisse (0.0/0.0/0.4)
$0.2B Citidel (0.0/0.0/0.2)

$38.8B US Banks
$50.2B Foreign Banks
$12.0B Municipal Bonds
$84.0B Unaccounted for

[Sweet Lou 4 2]

If I understand correctly, these bonuses are for the sales people who HIT their targets.

They shouldn't blame for those who screwed up the company. They did their job. They had a contract stating if they sold x or y - they get a bonus locked in.

That's pretty much how sales work.

[Air Langhi]

If I understand correctly, these bonuses are for the sales people who HIT their targets.

They shouldn't blame for those who screwed up the company. They did their job. They had a contract stating if they sold x or y - they get a bonus locked in.

That's pretty much how sales work.

Well in all honesty he entire company should be BK and no one should get anything so even people who hit their targets should be happy to have a job.

[pgabriel]

Well in all honesty he entire company should be BK and no one should get anything so even people who hit their targets should be happy to have a job.


exactly. there are all kinds of ways to look at this. if i was in sales i'd be upset if i didnt' get a bonus but i would for damn sure be happy the government saved my company and therefore my job.

[SamFisher]

You guys are confusing a few things, the total bailout money to AIG (in the billions) or the amounts in bonuses paid to AIGFP employees (in the milllions).

both of these numbers are disgusting, in particular though the bonsues being paid to the AIGFP unit, which destroyed the company and cost taxpayers hundreds of billions, is despicable (by the way, lots of these guys are british, which is where that unit was headquartered).

The supposed rationale is that they have to keep them on so that they can help them unwind all of AIG's ****ty trades, or that they're contractually obligated - but honestly I want the governmetn to pull out all legal stops to keep these ass clowns at AIGFP from getting another single cent.

Those f-kers basically wrecked people's lives, destroyed hundreds of billions of people's hard earned money, and now we are paying for it, and we are paying them extoritonate money as a reward because they took the company so far up sh-t creekk that only they know the way back.. It's just wrong. They should all be absolutely ashamed of themselves. To the extent they insist on receiveing these bonuses, they reallly should have to identify themselves and then be blackballed for life.

[rimrocker]

You guys are confusing a few things, the total bailout money to AIG (in the billions) or the amounts in bonuses paid to AIGFP employees (in the milllions).

both of these numbers are disgusting, in particular though the bonsues being paid to the AIGFP unit, which destroyed the company and cost taxpayers hundreds of billions, is despicable (by the way, lots of these guys are british, which is where that unit was headquartered).

The supposed rationale is that they have to keep them on so that they can help them unwind all of AIG's ****ty trades, or that they're contractually obligated - but honestly I want the governmetn to pull out all legal stops to keep these ass clowns at AIGFP from getting another single cent.

Those f-kers basically wrecked people's lives, destroyed hundreds of billions of people's hard earned money, and now we are paying for it, and we are paying them extoritonate money as a reward because they took the company so far up sh-t creekk that only they know the way back.. It's just wrong. They should all be absolutely ashamed of themselves. To the extent they insist on receiveing these bonuses, they reallly should have to identify themselves and then be blackballed for life.

Populist outrage from Sam. rimrocker like.

[JuanValdez]

exactly. there are all kinds of ways to look at this. if i was in sales i'd be upset if i didnt' get a bonus but i would for damn sure be happy the government saved my company and therefore my job.

Really? Salespeople live on the bonuses, the salary is often far below the employee's value. If I were a salesperson living on the commissions of my sales, I would rather lose my job so I can go somewhere else and earn money than bust my ass all month/quarter/year only to find out that the company wasn't going to give me the money they owed me. What's the point of working if they don't pay you?

[glynch]

Populist outrage from Sam. rimrocker like.

I was impressed, too. Looks like all the depositions and memos about boring biz law issues have not yet taken it all out of old Sam.

[insane man]

Really? Salespeople live on the bonuses, the salary is often far below the employee's value. If I were a salesperson living on the commissions of my sales, I would rather lose my job so I can go somewhere else and earn money than bust my ass all month/quarter/year only to find out that the company wasn't going to give me the money they owed me. What's the point of working if they don't pay you?

while i sympathize with compensation structures that label general income as bonuses, i doubt many of these people were the hard working salespersons living on commission.

secondly, there aren't any jobs around. so this threat that they will leave, certainly the case in certain situations, isn't that compelling. plus there are thousands of former lawyers and bankers who are recently unemployed and sufficiently talented to take these jobs, without the bonuses.

[ima_drummer2k]

When I first saw this headline over the weekend, I assumed it was completely misreported like the whole executive spa nonsense last year. Maybe people were getting bonuses in a division that was still profitable. You know, like every other division of the company BESIDES the FP division. I can’t believe it’s the FP guys getting paid to unwind all their crappy deals that, for all intentional purposes, bankrupted the entire company.

[JuanValdez]

while i sympathize with compensation structures that label general income as bonuses, i doubt many of these people were the hard working salespersons living on commission.

I'm trying to find an article that says more specifically who it is. Obama says it is derivative traders -- from whom I would make the same argument.

secondly, there aren't any jobs around. so this threat that they will leave, certainly the case in certain situations, isn't that compelling. plus there are thousands of former lawyers and bankers who are recently unemployed and sufficiently talented to take these jobs, without the bonuses.

I didn't make an argument about them potentially leaving. I was making an argument about why AIG has a moral obligation to pay these bonuses. And, if they were not going to pay these bonuses, they should have fired those guys a long time ago instead of stealing their labor. The salespeople/traders would be screwed about the same financially, but at least they could watch daytime soaps if they were fired.

[weslinder]

While this sucks, and I'd much rather give the bastards three squares and a hard cot while they worked on a chain gang than millions in bonuses, it offends me much less than the tens of billions that went straight through AIG to European and Asian banks.

[luckystrikes]

Let's see.

These guys (for years) ran the company into the ground. Losing money left and right...............making bad investments for a long while. Yet they STILL manage to convince the government of the United States to give them money? I say they deserve that bonus.

[SamFisher]

While this sucks, and I'd much rather give the bastards three squares and a hard cot while they worked on a chain gang than millions in bonuses, it offends me much less than the tens of billions that went straight through AIG to European and Asian banks.

That part makes logical sense though - AIG was basically offering insurance against certain credit events, and hence it had to pay out against them. If it didn't do so, a cascading chain of failures would have probably continued around the globe and Dow 6500 would be a distant memory. It sucks, but its what we said we had to do, and why we did it.

Paying the jackasses who were directly responsible for setting up this time bomb is the part that doesn't make any sense to me.

[pgabriel]

That part makes logical sense though - AIG was basically offering insurance against certain credit events, and hence it had to pay out against them.


exactly, its the whole purpose of the bailout, they are deemed to big too fail, if they fail and their obligations aren't met, then the resulting catostrophe would be ginormous

[ima_drummer2k]

Paying the jackasses who were directly responsible for setting up this time bomb is the part that doesn't make any sense to me.
Exactly. And the fact that they are being paid to unwind their own idiotic bets makes it all the more nonsensicle.

These guys got millions for selling these CDS's. Now they're getting paid again to unwind them. They got paid to set the time bomb, now they're getting paid again to try and disarm it. After it's already blown up.

Keep in mind, AIG doesn't want to pay these bonuses. They are contractually obligated to do it.

Serious question: What would happen if they just flat out refused to pay them? The FP guys would sue for breach of contract? Is that it?

[SamFisher]

Serious question: What would happen if they just flat out refused to pay them? The FP guys would sue for breach of contract? Is that it?
I think so. Like I said though, I think the gov't should explore every legal argument possible to void these contracts, it all depends on the terms. This is apparently what the current plan is, btw. Cuomo also requested copies of all the contracts today.

THe ironic part is, had the governmetn let AIG fail, these guys contracts would have been automatically voided (or at least they would have just joined the line of creditors in Chapter 11). But simply because these guys did such a bad job that bankruptcy is not an option, they get to profit from it. This screams out for some sort of equitable remedy to the contract. (unconscionability is what first came to mind in this instance)

[Invisible Fan]

Make their names and addresses public and let the mob handle them.

[mleahy999]

Make their names and addresses public and let the mob handle them.

That doesn't even put fear in anyone. These people are called out by the press and scolded by the freakin' President. Yet it keeps repeating itself. There is no doubt that when faced with a choice of greed or embarrassment, embarrassed always gets the silver. I think we need Bauer on this.

[weslinder]

That doesn't even put fear in anyone. These people are called out by the press and scolded by the freakin' President. Yet it keeps repeating itself. There is no doubt that when faced with a choice of greed or embarrassment, embarrassed always gets the silver. I think we need Bauer on this.

http://en.wikipedia.org/wiki/Tarring_and_feathering

[Invisible Fan]

I want them drawn and quartered.

[deepblue]

That part makes logical sense though - AIG was basically offering insurance against certain credit events, and hence it had to pay out against them. If it didn't do so, a cascading chain of failures would have probably continued around the globe and Dow 6500 would be a distant memory. It sucks, but its what we said we had to do, and why we did it.

Paying the jackasses who were directly responsible for setting up this time bomb is the part that doesn't make any sense to me.

This time bomb was started long before AIG got into CDS trades, not that they are not jackasses. They really didn't have much choice other than not have entered the market at all.

[SamFisher]

This time bomb was started long before AIG got into CDS trades, not that they are not jackasses. They really didn't have much choice other than not have entered the market at all.
LOL - who forced AIG at gunpoint to enter the market and write trilions of dollars worth of coverage that it didn't understand? AIGFP wasn't an old line unit, it just started in 1987 and was pretty much singlehandedly built up by Joseph Cassano (who had a great pedigree, I mean Drexel Burnham! you couldn't make that stuff up). It was a small unit with about 300 employees. Pretty hard fo them to wash their hands of it.

It's not as hard to assign blame here as you are making it out to be.

[wakkoman]

Is there anywhere that has provided which divisions these bonuses are being paid in?

[SamFisher]

Is there anywhere that has provided which divisions these bonuses are being paid in?
It was the lead story in Sunday's NYT - $165 mm to AIGFP.

[deepblue]

LOL - who forced AIG at gunpoint to enter the market and write trilions of dollars worth of coverage that it didn't understand? AIGFP wasn't an old line unit, it just started in 1987 and was pretty much singlehandedly built up by Joseph Cassano. It was a small unit with about 300 employees.

It's not as hard to assign blame here as you are making it out to be.

Nobody understood the market, that was the problem. They were not the only ones in the CDS, you paid the market price for playing the game, see ABX. Frankly, the idiots at S&P and Moody's were much more at fault than these guys.

[SamFisher]

Nobody understood the market, that was the problem. They were not the only ones in the CDS, you paid the market price for playing the game, see ABX.

Again, I say so? :confused: All the more reason that they should not get a bonus. Actually, also a good reason to see if we can clawback bonuses in prior years if it is as you say.



Frankly, the idiots at S&P and Moody's were much more at fault than these guys.

Good. Deny them bonuses too.

[Invisible Fan]

I wonder why fallout from the ratings agencies is miniscule, but reading about 10 cubed (http://online.wsj.com/article/SB123380106666350625.html) makes me think the anger over AIG Financial is more than justified.

[deepblue]

Again, I say so? :confused: All the more reason that they should not get a bonus. Actually, also a good reason to see if we can clawback bonuses in prior years if it is as you say.




Good. Deny them bonuses too.

Then they should just make it so no bonus can be given out for everyone receives bail out money.

[michecon]

No bonus would be there were it not for the bail out, performed or not. If you think you'd be better off working for another company, there's no stopping you. End of story.

[glynch]

Then they should just make it so no bonus can be given out for everyone receives bail out money.

This sounds good.

Too bad they can't come up with some criminal charges and as a condition of probation they have to work without bonuses till they help us find the dead bodies and exhume them.

From an interesting article by Robert Reich.

********
AIG's arguments are absurd on their face. Had AIG gone into chapter 11 bankruptcy or been liquidated, as it would have without government aid, no bonuses would ever be paid; indeed, AIG's executives would have long ago been on the street. And any mention of the word "talent" in the same sentence as "AIG" or "credit default swaps" would be laughable if it laughing weren't already so expensive.

Apart from AIG's sophistry is a much larger point. This sordid story of government helplessness in the face of massive taxpayer commitments illustrates better than anything to date why the government should take over any institution that's "too big to fail" and which has cost taxpayers dearly. Such institutions are no longer within the capitalist system because they are no longer accountable to the market. So to whom should they be accountable? When taxpayers have put up, and essentially own, a large portion of their assets, AIG and other behemoths should be accountable to taxpayers. When our very own Secretary of the Treasury cannot make stick his decision that AIG's bonuses should not be paid, only one conclusion can be drawn: AIG is accountable to no one. Our democracy is seriously broken

http://www.huffingtonpost.com/robert-reich/the-real-scandal-of-aig_b_175105.html

[insane man]

so why can't we pass legislation that says that the federal government will declare null and avoid any contractual obligation for wages above X amount (or bonuses or whatever) for employees of companies that were insolvent and bailed out by the federal government/fed reserve.

[BetterThanEver]

While this sucks, and I'd much rather give the bastards three squares and a hard cot while they worked on a chain gang than millions in bonuses, it offends me much less than the tens of billions that went straight through AIG to European and Asian banks.

I can't believe you are agreeing with the lefties on this. If they got a contract that pays out the bonuses, I think they should pay it. If AIG didn't include clawbacks in there, then the employees have every right to it.

[ghettocheeze]

What's the point of keeping people employed if they will not work hard anymore? Take away the bonus and most employees will just DO their job and nothing more. So this year everyone at AIG will go to work with no real incentive to work other than base salary and job security. Sounds like a sinking ship no matter what the government does.

[insane man]

What's the point of keeping people employed if they will not work hard anymore? Take away the bonus and most employees will just DO their job and nothing more. So this year everyone at AIG will go to work with no real incentive to work other than base salary and job security. Sounds like a sinking ship no matter what the government does.

are you serious?

you do realize AIG is a sunk ship right?

[weslinder]

I can't believe you are agreeing with the lefties on this. If they got a contract that pays out the bonuses, I think they should pay it. If AIG didn't include clawbacks in there, then the employees have every right to it.
I think that if any company is suckling the taxpayer teat, the taxpayer's representatives should be able to control their business. Had there been no bailout, or had the bailout been 1/2 of its size, the employees that remained would be behind a whole bunch of other people trying to get a judge to award them some scraps at a Chapter 11 proceeding. Finally, a whole lot of those employees contractually obligated bonuses committed fraud to get us in this mess. Hang 'em high.

[pouhe]

Really? Salespeople live on the bonuses, the salary is often far below the employee's value. If I were a salesperson living on the commissions of my sales, I would rather lose my job so I can go somewhere else and earn money than bust my ass all month/quarter/year only to find out that the company wasn't going to give me the money they owed me. What's the point of working if they don't pay you?

If these people were the ones selling the CDSs, then their commissions and/or bonuses are ill-earned. If they didn't properly communicate the risks the sales are fraudulent, and if they didn't know the risks then they shouldn't be the ones selling the products.

[Trader_Jorge]

This story is a total sham. The bonuses are a distraction. A distraction intended to do several things:

1) Whip up populist sentiment to fuel additional redistributive tax policies
2) Deflect attention away from the failed policies of Obama and on to 'greedy' Wall Street managers
3) Deflect attention from the fact that over half of the AIG bailout cash went to Goldman and European banks


You people need to realize that Obama's game is all about subterfuge. How else could someone with absolutely no accomplishments in life parade around like Julius Caesar and not get called out on it? Every story is intended to manage people's reaction. Every story is intended to mask more controversial actions. Every story is an attempt to manipulate. Every story is meant to deceive. This guy is so managed by his handlers that it's not even funny.

[BetterThanEver]

This story is a total sham. The bonuses are a distraction. A distraction intended to do several things:

1) Whip up populist sentiment to fuel additional redistributive tax policies
2) Deflect attention away from the failed policies of Obama and on to 'greedy' Wall Street managers
3) Deflect attention from the fact that over half of the AIG bailout cash went to Goldman and European banks


You people need to realize that Obama's game is all about subterfuge. How else could someone with absolutely no accomplishments in life parade around like Julius Caesar and not get called out on it? Every story is intended to manage people's reaction. Every story is intended to mask more controversial actions. Every story is an attempt to manipulate. Every story is meant to deceive. This guy is so managed by his handlers that it's not even funny.


He is the head of the Illuminati.

[csnerd84]

I am totally oppose to the bonuses as any other person. I don't think government can do much about this issue. The problem is that it was signed in their contract that they would get the bonus so if the company doesn't pay then they are going to get sued. I suppose you can try to withdraw aid money from AIG and let the bank fail so that the bonuses are not paid (I think bonuses have already been paid so this is not possible.) I think even better solution might have been that you give them a proposal that says if you are going to give bonuses according to your contract agreement then the aid money will be withdrawn from them, so in effect the employees getting the bonuses have to decide whether they want to see AIG fail or they want to keep their jobs and forfeit the bonuses.

[SamFisher]

I am totally oppose to the bonuses as any other person. I don't think government can do much about this issue. The problem is that it was signed in their contract that they would get the bonus so if the company doesn't pay then they are going to get sued. I suppose you can try to withdraw aid money from AIG and let the bank fail so that the bonuses are not paid (I think bonuses have already been paid so this is not possible.) I think even better solution might have been that you give them a proposal that says if you are going to give bonuses according to your contract agreement then the aid money will be withdrawn from them, so in effect the employees getting the bonuses have to decide whether they want to see AIG fail or they want to keep their jobs and forfeit the bonuses.
I can think of many legal tricks the government can pull to keep these guys from getting them, from contesting the contract to restructuring AIG corporate entities to get around this, also I read they could argue that the contract itself is void as a fraudulent transfer - I think basically they should try them all in order to raise these guys costs of recovering the $165 mm.

The government has a lot of smart lawyers - it's time to use them.

[TL]

I can think of many legal tricks the government can pull to keep these guys from getting them, from contesting the contract to restructuring AIG corporate entities to get around this, also I read they could argue that the contract itself is void as a fraudulent transfer - I think basically they should try them all in order to raise these guys costs of recovering the $165 mm.

The government has a lot of smart lawyers - it's time to use them.

There's an article on CNN right now saying that Dodd wants to apply a "specific" tax to get the money back. I think I read elsewhere and in here (possibly by you) that many of the people were in London. If they live in London and are employed by a London AIG sub....how can Dodd tax them out of their bonus?

Does anyone know how many of these people that are getting bonuses are the original people that entered into the original contracts versus people that were specifically hired to unwind the contracts?

[SamFisher]

There's an article on CNN right now saying that Dodd wants to apply a "specific" tax to get the money back. I think I read elsewhere and in here (possibly by you) that many of the people were in London. If they live in London and are employed by a London AIG sub....how can Dodd tax them out of their bonus?

Supposedly the agreement in question is governed by Connecticut law, according to something I read earlier.

[ima_drummer2k]

I wonder why fallout from the ratings agencies is miniscule, but reading about 10 cubed (http://online.wsj.com/article/SB123380106666350625.html) makes me think the anger over AIG Financial is more than justified.
Any chance you can paste that? You have to subscribe to read the entire article.

[ghettocheeze]

The media whores continue to focus all eyes on Wall Street and run their preconceived "greedy corporations" propaganda while government entities like Fannie and Freddie kept throwing money at their executives all under the supervision of the big boys in DC.

Don't think for a minute I am defending the robber barons at AIG. They deserve to be bankrupt and out of business. But the insanity of the government bailing them out and rewarding failure, and then somehow believing these companies will magically become responsible in their practices is sheer stupidity.

These bailouts were flawed from the start and the reality is now sinking in that we need to drop all these dead bodies from the lifeboat in order to save the few survivors left.

[Invisible Fan]

Any chance you can paste that? You have to subscribe to read the entire article.

An AIG Unit's Quest to Juice Profit (http://online.wsj.com/article/SB123380106666350625.html)
Securities-Lending Business Made Risky Bets. They Backfired on Insurer

By SERENA NG (http://online.wsj.com/search/search_center.html?KEYWORDS=SERENA+NG&ARTICLESEARCHQUERY_PARSER=bylineAND) and LIAM PLEVEN (http://online.wsj.com/search/search_center.html?KEYWORDS=LIAM+PLEVEN&ARTICLESEARCHQUERY_PARSER=bylineAND)

Inside American International Group (http://online.wsj.com/public/quotes/main.html?type=djn&symbol=aig) Inc., executives called the goal "10-cubed."

It was shorthand for producing 1,000 million dollars -- $1 billion in annual profit -- from the insurer's AIG Investments unit, which managed money for AIG's own insurance companies and outside investors. In its pursuit of that goal over the past few years, said current and former employees, the unit took on additional risks in a sideline business known as securities lending, traditionally a way for insurers to squeeze a few extra pennies from their investment portfolios.

Accounts of AIG's near collapse have largely focused on soured trades entered into by the company's Financial Products division. But a close look at the 2,000-employee AIG Investments unit shows how this part of the conglomerate made gambles that helped cripple the firm.

Securities Lending

In running the securities-lending business, AIG Investments bought tens of billions of dollars in subprime-mortgage bonds. That turned out to be a riskier approach than some rivals', who parked cash from securities lending mostly in low-risk or short-term investments such as Treasury securities and commercial paper, according to analysts.

The idea behind securities lending is to take advantage of large numbers. Insurers like AIG accumulate large quantities of long-term corporate bonds and other securities, earmarked to pay claims down the road. They can goose that return by lending out the securities to banks and brokers in exchange for cash collateral. The insurers then invest that cash to squeeze out a bit more yield for themselves and the securities borrowers.

They usually achieve this by parking the cash in other fixed-income investments, such as Treasury bonds or short-term corporate debt.
The extra profits can be just hundredths of a percentage point. But when applied to tens of billions of dollars of securities, the returns can be significant.

http://i43.tinypic.com/whnqki.gif

At one point, AIG Investments was putting about $70 billion into subprime-mortgage bonds and other higher-risk assets, said people familiar with the matter. These choices helped AIG squeeze an additional 0.2 percentage point in yield, or roughly $150 million in revenue. AIG's spokeswoman said the firm "invested counterparty cash in highly liquid, floating rate, triple-A-rated" residential mortgage-backed securities.

The approach backfired, exacerbating the liquidity crunch that forced the U.S. government's initial $85 billion bailout of AIG in September. The losses didn't stop then: Besides a $60 billion credit line to AIG, the Federal Reserve last December provided $19 billion to wall off losses purchased by AIG Investments' securities-lending program. In all, the total rescue package now sits at $150 billion.

U.S. taxpayers are shouldering much of the burden of AIG Investments' troubled mortgage assets. If the securities, currently valued at about half their original value, are hit by defaults in the coming years, taxpayers could lose out. But if they bounce back, taxpayers could log gains. An AIG spokeswoman said its securities-lending portfolio "came under pressure due to extreme market liquidity issues," adding that "it is our expectation that taxpayers could realize material benefits on their investment in this portfolio."

The idea of "10-cubed" was the inspiration of 59-year-old Win Neuger, who joined AIG in the mid-1990s. As chairman and chief executive of the unit, he brought together the investment functions of AIG's global insurance subsidiaries and started a third-party asset-management business within the unit, getting pension funds and other institutions to invest money alongside AIG's. By September 2008, the unit was managing $565 billion in assets for AIG's insurance subsidiaries and $111 billion for external clients. Those numbers have since declined.

In late 2005, Mr. Neuger set the $1 billion profit target, noting in an internal presentation that the unit was "one of the fastest-growing profit contributors" to parent AIG.

Mr. Neuger, who was also AIG's chief investment officer up until last month, was the group's fourth-highest-paid executive with compensation of nearly $7.8 million in 2007, according to an AIG filing with the Securities and Exchange Commission. Much of that compensation was linked to AIG stock, which plunged in value last year, though more than $2.1 million was in salary and bonuses. He declined to comment.

The bulk of AIG Investments' profits came from fees it received for managing money. Another area Mr. Neuger identified for growth was AIG's securities-lending business, said people familiar with the matter. From $1 billion in 1999, AIG's securities-lending portfolio ballooned to $30 billion in 2003 and $60 billion in June 2005, according to an internal presentation to employees in December 2005. Much of that growth came from lending out corporate bonds owned by AIG's large life-insurance and retirement-services subsidiaries, according to the presentation.

In December 2005, executives from AIG Investments proposed to AIG's credit-risk managers a set of guidelines for the securities-lending business. One was to invest up to 75% of the cash collateral it received in "asset-backed securities," according to people familiar with the matter. These securities are backed by loans including subprime mortgages and credit-card debt, and pay more interest than corporate bonds with similar credit ratings.

Mr. Neuger and Kevin McGinn, who has been AIG's chief credit officer since 2004, signed off on the proposal, agreeing in a memo that the guidelines didn't subject the portfolio to undue risk, according to people familiar with the matter. Around that same time, worries about loose lending standards in the subprime market led managers of a separate AIG division -- AIG Financial Products -- to stop committing to writing credit derivatives on securities backed by subprime collateral.

Following the new guidelines, money managers at AIG Investments ramped up purchases of subprime-mortgage bonds in 2006 and 2007, as the securities-lending portfolio expanded to $94 billion in mid-2007. The additional yield from investing the cash collateral helped boost profits at AIG Investments, which earned pretax profit of $466 million in 2007, up 30% from the previous year.

The securities-lending division was obligated to repay or roll over most of its loans every 30 days. AIG Investments placed much of the cash in subprime debt that matured in two to five years. It didn't have to liquidate the positions, as long as other banks and dealers were willing to place more cash with AIG, according to people familiar with the matter.

Starting in mid-2007, prices of many subprime-mortgage bonds plummeted as loan delinquencies increased and credit markets froze.

In a November 2007 note to AIG Investments' staff, Mr. McGinn wrote, "Senior management was clearly caught off guard by the size of [AIG Investments'] subprime, first-lien [residential mortgage-backed securities] portfolio despite the portfolio's high ratings and credit quality."

As scrutiny over AIG's exposure to the subprime market increased in late 2007, AIG's risk managers instructed the investment unit to start paring its lending portfolio. An AIG spokeswoman said that, starting in the summer of 2007, it became "increasingly difficult for AIG to meet its liabilities without liquidating asset-backed securities at dislocated market prices."

The securities-lending portfolio had shrunk to roughly $70 billion by September 2008, when AIG's problems reached a critical point. Credit-rating services downgraded AIG's ratings, allowing trading partners on credit derivatives sold by its financial-products unit to demand billions more in collateral from the firm.

The problems in the securities-lending program weren't over. In early October, many dealers returned the securities they had loaned from AIG, demanding their cash back, further straining AIG's finances.

On Oct. 8, AIG announced a deal with the Fed to try to contain the securities-lending problems, a move that expanded the bailout to more than $122 billion. Then, in December, the Fed and AIG bought the distressed investments through an entity they jointly formed. AIG also said it would end its securities-lending program.

AIG is in the process of splitting up AIG Investments as it prepares to sell the business of investing third-party assets, which Mr. Neuger plans to continue overseeing when it is spun off.

Write to Serena Ng at serena.ng@wsj.com and Liam Pleven at liam.pleven@wsj.com
http://i40.tinypic.com/othhnc.gif

[basso]

Paying the jackasses who were directly responsible for setting up this time bomb is the part that doesn't make any sense to me.

That would be Obama and Geithner. the last round of bonuses was paid on March 2nd, 2009.

[SamFisher]

That would be Obama and Geithner. the last round of bonuses was paid on March 2nd, 2009.
Uh, no it would not be. Tabling the fact that Liddy is still the one making the calls, the AIGFP bonuses were revealed in a letter from Liddy dated March 14 to the treasury, which broke in the media on March 15 (which is when the first round of the payments were due, according to the letter, not the "last round", you dumbass. That's what happens when you get all your info from right wign blogs.).

Here is Liddy's letter:

In the first quarter of 2008, prior management took significant retention
steps at AIG Financial Products. These arrangements were designed at a time
when AIG Financial Products was expected to have a significant, ongoing role at AIG, and guaranteed a minimum level of pay for both 2008 and 2009. (Due to losses at AIG Financial Products, a senior manager will receive about 43% of his 2007 expected level for 2008.) Some of these payments are coming due on March 15, and, quite frankly, AIG’s hands are tied.

http://clipsandcomment.com/documents/liddy.pdf

Honestly, basso, if you just want to be your normal douchebag self, start a thread trying to blame Obama for this and post in it, please don't ruin this one. Thanks.

[DaDakota]

Should have let them go belly up, file for chapter 11 and come out a lean mean fighting machine.

DD

[SamFisher]

Should have let them go belly up, file for chapter 11 and come out a lean mean fighting machine.

DD

That would not and could not have happened.

[thumbs]

A breakdown for the 170B .....

$

$38.8B US Banks
$50.2B Foreign Banks
$12.0B Municipal Bonds
$84.0B Unaccounted for

Disgusting as the AIG bonus money is, the administration has blown this relative pittance out of proportion so both parties can smokescreen the missing $84 billion. We need to start bringing charges and jailing Wall Street thieves and their Washington accomplices.

[ima_drummer2k]

Stay classy, Senator! (http://www.forbes.com/feeds/reuters/2009/03/17/2009-03-17T133345Z_01_N17487483_RTRIDST_0_AIG-GRASSLEY.html) Thanks for turning 100,000+ employees of AIG who did nothing wrong into targets. :rolleyes:

Senator intimates AIG execs might consider suicide
03.17.09, 09:33 AM EDT


NEW YORK (Reuters) - A prominent U.S. senator has intimated that executives of the troubled insurer American International Group Inc might consider suicide, adopting what he called a Japanese approach to taking responsibility for their actions.

Senator Charles Grassley, the top Republican on the Senate Finance Committee, made his comments on the Cedar Rapids, Iowa, radio station WMT on Monday.

"The first thing that would make me feel a little bit better toward them (is) if they'd follow the Japanese example and come before the American people and take that deep bow and say, I'm sorry, and then either do one of two things: resign or go commit suicide," Grassley said.

"And in the case of the Japanese," he added, "they usually commit suicide before they make any apology."

President Barack Obama on Monday expressed "outrage" about some $165 million of bonuses paid to AIG employees, including some who worked in the unit primarily responsible for the company's troubles.

New York Attorney General Andrew Cuomo has said he will subpoena AIG for more information about the bonuses, including the names of the recipients.

Grassley's office did not immediately return a request for comment. A spokesman, Casey Mills, told the Associated Press that the senator "doesn't want U.S. executives" to commit suicide, but that executives who "make a mess of their companies should apologize, as Japanese executives do."

[DaDakota]

That would not and could not have happened.

Can you explain why not? I really do not have a handle on the financial issues, but I am in favor of letting companies fail and re-orging after the fact.

DD

[pgabriel]

Sen Grassley's playing the populist (http://bbs.clutchfans.net/showthread.php?t=164340&highlight=Grassley) card again

[SamFisher]

Can you explain why not? I really do not have a handle on the financial issues, but I am in favor of letting companies fail and re-orging after the fact.

DD
because they are the definition of too big to fail - they effecitively insured the entire financial system via derivative bets, once AIG went under, it would have set off a cascading chain of failures on the other sides of those bets because those banks would have to write off their bets as complete losses, probably dragging down the remnants of the US banking sector.

Think of them as a domino connected to a number of other chains of dominoes. AIG sold insurance on everybody else's bad bets (trillions of dollars worth). When AIG's insurance goes away, then the other companies have to write that off their bad bets, and then they too are in danger. The dominos fall.

Sorting these things out later in bankruptcy is almost impossible. For example the Lehman bankruptcy is giant sh-t show, and is not going well. This would have dwarfed that in size.

[insane man]

Can you explain why not? I really do not have a handle on the financial issues, but I am in favor of letting companies fail and re-orging after the fact.

because its an insurance company that insured stupid things for big banks. if it goes under, the other banks potentially go under. bailing out AIG is basically bailing out the entire banking sector.

it also insured everything for normal everyday people. do you want tens of millions of people to wake up and realize that they have no insurance and the money they paid for the insurance is gone?

secondly they would not have gotten any financing in bankruptcy. no one is getting DIP loans these days. even when firms do get DIP loans, they are
paying usurious rates. lyondell's loan was upwards of 15-20% interest and fees.

[DaDakota]

because they are the definition of too big to fail - they effecitively insured the entire financial system via derivative bets, once AIG went under, it would have set off a cascading chain of failures on the other sides of those bets because those banks would have to write off their bets as complete losses, probably dragging down the remnants of the US banking sector.

Think of them as a domino connected to a number of other chains of dominoes. AIG sold insurance on everybody else's bad bets (trillions of dollars worth). When AIG's insurance goes away, then the other companies have to write that off their bad bets, and then they too are in danger. The dominos fall.

Sorting these things out later in bankruptcy is almost impossible. For example the Lehman bankruptcy is giant sh-t show, and is not going well. This would have dwarfed that in size.

Ok, but how does not doing it work going forward, it sounds to me like that system is broken....is there a better way of fixing it or tweaking it, is that what we hope to accomplish?

DD

[pirc1]

Stay classy, Senator! (http://www.forbes.com/feeds/reuters/2009/03/17/2009-03-17T133345Z_01_N17487483_RTRIDST_0_AIG-GRASSLEY.html) Thanks for turning 100,000+ employees of AIG who did nothing wrong into targets. :rolleyes:

Senator intimates AIG execs might consider suicide
03.17.09, 09:33 AM EDT


NEW YORK (Reuters) - A prominent U.S. senator has intimated that executives of the troubled insurer American International Group Inc might consider suicide, adopting what he called a Japanese approach to taking responsibility for their actions.

Senator Charles Grassley, the top Republican on the Senate Finance Committee, made his comments on the Cedar Rapids, Iowa, radio station WMT on Monday.

"The first thing that would make me feel a little bit better toward them (is) if they'd follow the Japanese example and come before the American people and take that deep bow and say, I'm sorry, and then either do one of two things: resign or go commit suicide," Grassley said.

"And in the case of the Japanese," he added, "they usually commit suicide before they make any apology."

President Barack Obama on Monday expressed "outrage" about some $165 million of bonuses paid to AIG employees, including some who worked in the unit primarily responsible for the company's troubles.

New York Attorney General Andrew Cuomo has said he will subpoena AIG for more information about the bonuses, including the names of the recipients.

Grassley's office did not immediately return a request for comment. A spokesman, Casey Mills, told the Associated Press that the senator "doesn't want U.S. executives" to commit suicide, but that executives who "make a mess of their companies should apologize, as Japanese executives do."

That sounds like a great plan! seriously! While we are at it, we should execute a bunch of those wall street crooks starting with Madoff.

[SamFisher]

Ok, but how does not doing it work going forward, it sounds to me like that system is broken....is there a better way of fixing it or tweaking it, is that what we hope to accomplish?

DD

Yes - basically AIG found a loophole in the insurance business. Insurers are very highly regulated at the state level and required to keep large amounts of cash on hand as reserves to ensure that they don't go out and become "too big to fail" the way AIG did. AIG though used the unregulated derivatives market to write trillions of dollars worth of coverage that fell outside regulatory guidelines (which is extra-terrible because they did it by essentially collateralizing their own creditworthiness based on their core insurance businesses). They then banked the premiums and pretended like that day would never happen. When it did they were done. The key is to begin regulating these kinds of trades to prevent this kind of incredible over-exposure. Ths actually started last fall but I'm not sure where it has been left.

[JuanValdez]

If these people were the ones selling the CDSs, then their commissions and/or bonuses are ill-earned. If they didn't properly communicate the risks the sales are fraudulent, and if they didn't know the risks then they shouldn't be the ones selling the products.

If their previous commissions are ill-earned, the company would have legitimate cause to claw back those commissions. That would be more proper (accounting-wise and legally) than to arbitrarily refuse to honor a contract on a different set of transactions with a slightly different (I'm sure) population of people.

[bigtexxx]

Obama is really getting raking over the coals on this AIG bonus topic.

Today's WaPo

http://www.washingtonpost.com/wp-dyn/content/article/2009/03/16/AR2009031600640_pf.html

[pgabriel]

Obama is really getting raking over the coals on this AIG bonus topic.

Today's WaPo

http://www.washingtonpost.com/wp-dyn/content/article/2009/03/16/AR2009031600640_pf.html


you do understand the criticsim in this article is obama's inability to stop them from being paid?

[Groogrux]

you do understand the criticsim in this article is obama's inability to stop them from being paid?

the wingnuts don't care why someone is criticizing obama, they're just happy they are. see any basso thread.

[Fatty FatBastard]

because they are the definition of too big to fail - they effecitively insured the entire financial system via derivative bets, once AIG went under, it would have set off a cascading chain of failures on the other sides of those bets because those banks would have to write off their bets as complete losses, probably dragging down the remnants of the US banking sector.

Think of them as a domino connected to a number of other chains of dominoes. AIG sold insurance on everybody else's bad bets (trillions of dollars worth). When AIG's insurance goes away, then the other companies have to write that off their bad bets, and then they too are in danger. The dominos fall.

Sorting these things out later in bankruptcy is almost impossible. For example the Lehman bankruptcy is giant sh-t show, and is not going well. This would have dwarfed that in size.

Going to step out of ban for a sec.

Sam, you've been mostly accurate in this thread. But IMO, in hindsight, the Gov. should have let AIG fail, and provided the aid to the States to give to the other insurance companies that the burden fell to.

What the folks at AIGFP did was against anything you are supposed to do at an insurance company. And they should be criminally responsible for it. It was fraud.

[SamFisher]

Going to step out of ban for a sec.

Sam, you've been mostly accurate in this thread. But IMO, in hindsight, the Gov. should have let AIG fail, and provided the aid to the States to give to the other insurance companies that the burden fell to.

What the folks at AIGFP did was against anything you are supposed to do at an insurance company. And they should be criminally responsible for it. It was fraud.

2 things: 1. It's not a question of other insurers though, this isn't like a reinsurance policy that has lots of other insurance cos owning a portion of the backend risk via retrocessio and all that, rather this was AIG taking the other side of derivative bets to the tune of about 2 trillion dollars, so it's not really insurers on the other side, it's banks etc.

2. The counterparties here did get other aid, they are the prime beneficiaries of TARP. Ultimately they are not that sympathetic either. It should be noted again that most of AIG's bailout money isn't going to AIG, it's going to supposedly "responsible" institutions like GS who took out the other side of AIG's disastrous derivative bets as AIG has to post collateral for these deals as negative credit events occur.

[Dubious]

Aren't the guys subject to civil actions? for failing their fiduciary duties, fraud and misrepresentations?

[SamFisher]

wire story I just saw:

Amounts paid on 3-13-9

Top 7 guys at AIGFP = $28 million combined

Top 73 guys took home > $1 million each

11 guys no longer with company > $1 million each.

Sickening.

[ima_drummer2k]

An AIG Unit's Quest to Juice Profit (http://online.wsj.com/article/SB123380106666350625.html)
Securities-Lending Business Made Risky Bets. They Backfired on Insurer

Thanks. That article was interesting to say the least. Reading it brought to mind all those Enron books I've been reading over the years. Did this guy go to school with Andy Fastow?

[Mr. Clutch]

wire story I just saw:

Amounts paid on 3-13-9

Top 7 guys at AIGFP = $28 million combined

Top 73 guys took home > $1 million each

11 guys no longer with company > $1 million each.

Sickening.

I really want to know if these guys made money with their trades. I find it hard to believe that they did. I don't know what kind of contracts they have, but I guess they don't get a percentage of their book.

And even if they did, I don't think they should get the money. AIG would be bankrupt if not for the biggest bailout in history.

[insane man]

Aren't the guys subject to civil actions? for failing their fiduciary duties, fraud and misrepresentations?

i think fiduciary duty applies more for board of directors, not ordinary employees. any breach of fidelity arguments are basically defended relatively easily by saying good faith.

but there are probably state fraudulent conveyance arguments. company was insolvent, they didn't transfer reasonably equivalent value for the bonuses received.

[DonnyMost]

http://www.huffingtonpost.com/2009/03/17/santelli-sen-kyl-push-bac_n_175691.html

Did anybody else see this video?

Santelli is such a tool.

This is why Republican is a four letter word these days.

These guys just don't get it.

They are literally saying "let them eat cake" and talking to America like a bunch of 3rd graders who don't know the difference between being pissed on and it raining.

This whole mess is going to set back true conservative principles and values (not the TJ or texxx kind that changes according to whatever is political advantageous at the moment) a solid 20 years. Which is a damn shame.

[basso]

Uh, no it would not be. Tabling the fact that Liddy is still the one making the calls, the AIGFP bonuses were revealed in a letter from Liddy dated March 14 to the treasury, which broke in the media on March 15 (which is when the first round of the payments were due, according to the letter, not the "last round", you dumbass. That's what happens when you get all your info from right wign blogs.).

Here is Liddy's letter:



http://clipsandcomment.com/documents/liddy.pdf

Honestly, basso, if you just want to be your normal douchebag self, start a thread trying to blame Obama for this and post in it, please don't ruin this one. Thanks.

Heilige Douchbag, you're correct, is so far as i seem to have misread the "blogpost" in this noted wing nut forum. (http://www.nytimes.com/2009/03/03/business/03aig.html?_r=1&hp)

it wasn't 30 million, it's 30 Billion, and it wasn't the bonus money, but the last round of the bailout funds, that Obama approved and Geithner paid to AIG. so the facts are, uhm, actually worse for the Odmin.

i can only blame jetlag for my poor reading comprehension skills, but thank you for picking up the slack.

MG

[mateo]

Well, AIG is a front set-up to pump money indirectly to Goldman Sachs and the like. So it is natural that their execs should get some money for this service provided.

Now that Goldman Sachs gets enough money and want to repay us back with our money, I predict AIG will soon be history. :cool:

You should made the list, buddy.

[SamFisher]

Heilige Douchbag, you're correct, is so far as i seem to have misread the "blogpost" in this noted wing nut forum. (http://www.nytimes.com/2009/03/03/business/03aig.html?_r=1&hp)

it wasn't 30 million, it's 30 Billion, and it wasn't the bonus money, but the last round of the bailout funds, that Obama approved and Geithner paid to AIG. so the facts are, uhm, actually worse for the Odmin.

i can only blame jetlag for my poor reading comprehension skills, but thank you for picking up the slack.

MG

OK - so you're talking about something completely separate from what we are discussing. This thread (after some initial confusion, please see my first post) is primarily about the payments to AIGFP executives.

When you figure out what we're talking about, please feel free to re-enter the discussion.

[SamFisher]

i think fiduciary duty applies more for board of directors, not ordinary employees. any breach of fidelity arguments are basically defended relatively easily by saying good faith.

but there are probably state fraudulent conveyance arguments. company was insolvent, they didn't transfer reasonably equivalent value for the bonuses received.
I agree other than Cassano I don't know if any of them would qualify as a corporate officer.

[TL]

http://www.huffingtonpost.com/2009/03/17/santelli-sen-kyl-push-bac_n_175691.html

Did anybody else see this video?

Santelli is such a tool.

This is why Republican is a four letter word these days.

These guys just don't get it.



I don't get what is really so bad about what he said...maybe it's because I've seen him get pissed off about the original AIG bailout, about the TARP, about the housing plan, etc, etc, etc, but all he seems to be saying is that on a relative basis, this is nothing. He's more angry about the original bailout, so this doesn't register on his radar.

Now, that being said, I don't agree with him - I think the AIG bailout had to happen. And on the face of it, these bonuses are absolutely ridiculous, but, that's an entirely different issue. Context is important

[ymc]

A contrast for you ;)

http://www.easybourse.com/bourse-actualite/hsbc-holdings/bank-of-communications-senior-executives-agree-to-cut-GB0005405286-635856

Bank Of Communications: Senior Executives Agree To Cut 2008 Pay By 10%
Wednesday March 18th, 2009 / 11h44
HONG KONG -(Dow Jones)- Bank of Communications Co. (3328.HK), China's fifth-largest lender by assets, said Wednesday its top executives voluntarily agreed to retroactively cut their 2008 salaries by 10%.
"While the bank's results showed improvement which warranted a pay rise, it is necessary to shoulder some social responsibility. That's why we voluntarily accepted the pay cut," Chairman Hu Huaibang told reporters, without elaborating.
The salaries of managers at China's state-owned firms, especially in the financial industry, have been criticized by the media because they are often hundreds of times the average salary.
Beijing has told state-owned financial firms to limit increases in management salaries, as concerns over social unrest grow after widespread factory closures.
The bank, known as BoCom and 18.6%-owned by HSBC Holdings PLC, posted a 40% increase in its 2008 net profit to CNY28.39 billion.
-By Amy Or, Dow Jones Newswires; 8621 6120-1200;

[DonnyMost]

I don't get what is really so bad about what he said...


You don't tell a bunch of laid-off tax payers who just paid for this crap to shut up and quit whining.

http://www.simpsoncrazy.com/movie/promo-angry-mob.jpg

[weslinder]

You don't tell a bunch of laid-off tax payers who just paid for this crap to shut up and quit whining.

That's not what he's saying at all. He's saying, like I did on the first page, that the 0.1% bailout that goes to bonuses is much less offensive than the whole thing or the 30% or so that goes straight to foreign banks.

[ymc]

By the way, all those 165M is already paid. Some of the receipts are non-US nationals residing in London. So some of that 165M will not be recouped for sure. :cool:

[DonnyMost]

That's not what he's saying at all. He's saying, like I did on the first page, that the 0.1% bailout that goes to bonuses is much less offensive than the whole thing or the 30% or so that goes straight to foreign banks.

He's saying both things.

[ima_drummer2k]

wire story I just saw:

Amounts paid on 3-13-9

Top 7 guys at AIGFP = $28 million combined

Top 73 guys took home > $1 million each

11 guys no longer with company > $1 million each.

Sickening.
Sam, forgot to ask... where did you get this info? I can't seem to find it.

Also, what is the difference between AIGFP and AIG Investments? They sound the same, but they have different CEOs.

[SamFisher]

Sam, forgot to ask... where did you get this info? I can't seem to find it.

Also, what is the difference between AIGFP and AIG Investments? They sound the same, but they have different CEOs.

It is in Cuomo's letter yesterday:

http://www.oag.state.ny.us/media_center/2009/mar/House%20Committee%20Letter%203.17.09.pdf

AIGFP was the credit default swap trading unit run by Cassano based in UK and CT, mostly. They were operating as an outlaw insurer writing all these derivative bets.

AIG Alternative Investments is based in NYC, on park avenue I think - they ran a smorgasbord of different investment businesses in which they (badly) invested AIG"s free cash, such as their own private equity fund, their own hedge fund, etc.


Edit: sorry, AIG Investments is the parent of AIG Alternative Investments. AIG Investments basically operated as a mini investment bank to play with AIG's free cash.

[ima_drummer2k]

Hearing going on now.

http://www.cspan.org/Watch/C-SPAN3_wm.aspx

[ROXRAN]

Hearing going on now.

http://www.cspan.org/Watch/C-SPAN3_wm.aspx

I got off from work early to enjoy the sunshine and managed to watch some of Liddy getting grilled. Supposedly he did well, but the wrath was on.

I loved the "I can't believe it's not butter/insurance reference"...

[ima_drummer2k]

I got off from work early to enjoy the sunshine and managed to watch some of Liddy getting grilled. Supposedly he did well, but the wrath was on.

I loved the "I can't believe it's not butter/insurance reference"...
I thought Liddy did very well. Each congressman basically asked him the same questions. They all had to get their licks in…. He was calm cool and collected throughout.

Ironically, he’s not even the one that should have been getting “grilled” anyway. He was parachute dropped into all of this nonsense after the fact. Now he’s trying to right the ship and he’s got a bunch of bimbos in pink shirts with signs saying he needs to go to jail? These idiots probably can’t even name AIG’s previous 3 CEOs, much less figure out that everything happened under their watch, not Liddys.

SamFisher, Liddy seemed to imply that – without naming names – the employees in FP that were paid these bonuses were NOT the same employees that did all the CDS damage in the first place. He also said the ones that left the company only left because they were finished unwinding their assigned portfolio(s) and thus had earned their retention bonuses. I don’t know who to believe. What do you think?

[SamFisher]

SamFisher, Liddy seemed to imply that – without naming names – the employees in FP that were paid these bonuses were NOT the same employees that did all the CDS damage in the first place. He also said the ones that left the company only left because they were finished unwinding their assigned portfolio(s) and thus had earned their retention bonuses. I don’t know who to believe. What do you think?

I don't really know - it's possible that AIGFP had its hands in other pots, AIG hasn't exactly been forthcoming about who did what. But from what I've read and heard, trading credit derivatives was the whole reason for the group's existance. See article: http://www.nytimes.com/2008/09/28/business/28melt.html?_r=1

http://graphics8.nytimes.com/images/2008/09/27/business/0928-biz-MELT-web.jpg

But does that mean only Cassano and handful few others were responsible for writing 2 trillion worth of bad derivatives? Sounds kind of far-fetched to me.