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.
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.
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
the wingnuts don't care why someone is criticizing obama, they're just happy they are. see any basso thread.
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.
Aren't the guys subject to civil actions? for failing their fiduciary duties, fraud and misrepresentations?
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.
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?
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.
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.
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.
Heilige Douchbag, you're correct, is so far as i seem to have misread the "blogpost" in this noted wing nut forum. 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.
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
A contrast for you http://www.easybourse.com/bourse-ac...r-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;
You don't tell a bunch of laid-off tax payers who just paid for this crap to shut up and quit whining.
