AIG Caught with their hands in the cookie jarFollow

In the last five years, at least.

When I started selling insurance everyone knew AIG was insolvent. The only way I can fathom them being allowed to insure bad debts for so long is to assume government collusion.

I really think this is much ado about nothing. It's a distraction, really. The entire bonus pool is less than 1/10th of a percent of the entire amount we've paid in bailout money to the business. Complaining about this is like buying a car for 50,000 dollars and then whining that the guy who sold it to you took $50 more for his commission than you thought he should.

In the grand scheme of things, spending that pittance on bonuses, if it keeps people around who may be needed to fix the company (and I'm not making any judgment on that) is well worth it. Bonuses are a pretty critical component to compensation and reward. Presumably, not every single person in that division was a ***** up. It's kinda important to try to keep those people around and working hard.

The bigger issue is this though: The government made a choice to bail out AIG. Presumably, because the company was more valuable if left intact than not. Part of "intact" is the bonus pay contracts and compensation packages. I know we all love to bash people for their pay, especially executives, but those are just as much contracts as any other contract AIG held. It's somewhat silly to argue that we have to save it so that all those other business relationships stay intact, except for the ones we don't like.

Government's have a pretty horrid record of micromanaging business. How about we let the one group of people who perhaps know the most about who should or should not receive a bonus make that decision instead of tossing it out to public opinion? The government bails out the company, good and bad. The idea that they can change the agreement after the fact is dangerous, to say the least.

They're also terrible at contracting. HAI2U, Halliburton and friends!
Because the government now has a multi-billion-dollar stake in it, and so then do the people.

Wait... who would those people be? The same ones who ran the company into the ground?

Moot point. The government chose to bail them out. Part of that deal included removing some specifically at fault executives and replacing them with folks the government chose to be in charge. We can debate the decision, but it *is* predicated on the assumption that those remaining are the exact people most likely to fix the problem Joph.

I know it's funnier to say the other thing, but that's all it has going for it...

Pay yes...bonuses no. They should get their salary, but bonuses should be removed until such time as the company is again solvent...or dissolved.

I didn't say I agreed with the fact that we've shelled out 170B to bail out AIG. Don't assume that I'm ok with this at all. I actually think we should have let the company go bankrupt and allow the market to sort it out on it's own. But I didn't get to make that call, and heck, that may very well have been the wrong thing to do.

My point is that, having made that decision, it's silly to complain *only* about the compensation plan for their employees, when it's such a tiny fraction of what we've already paid.

I might think that making a 10,000 dollar side bet on a poker player at a tournament is a dumb idea, but having done that, I wouldn't then quibble if the guy asked me to buy him a sandwich while he's playing cause he doesn't play as well on an empty stomach...

Golly gee whiz, I wish I'd get a million dollar bonus as severence pay.

If it turns out that some of this money was being paid from AIG to fire these people, then all right. I wish I'd get money for being fired (GA is a right to work state, so if you're fired, no unemployment for you!). If they were being laid off because the company is on the rocks, okay sure. Give them an extra year salary to tide them over until they can work out a consulting gig, and call it a day. But not an extra million dollars.

What I'm wondering is, if AIG was "too big to fail" why didn't someone come along and trust-bust it before now?

Unless its the auto-industry, for example.

Its not about the money. Its about the differing sets of rules.

AIG didn't fail because of its bonus pay program. The problem isn't in any way related to how much employees were paid.

Whereas a significant reason why the US automakers are not competitive is exactly because of excessive union labor costs.


One is relevant. The other isn't. I know it's easier to just imply it's all about rich people versus working people, but it really really isn't.

I never said it did.


I never said it was.



And they make shit cars. Like AIG made shit business decisions.



No. They are both relevant.



Thats exactly what its about.

I was under the impression that AIG could risk being sued if they didn't honor their contracts. Obama needs to have solidarity with an outraged country who feels ripped off. And now here we have, AIG. The problem is that we're all suddenly aware of longtime business practices and it's a *****, isn't it. This American Life had something about the bailout--more specifically the banking one and one quote jumped out--if we let the banks fail (along with autoindustries and AIG), they wouldn't be talking about the Great Depression of 1933 anymore.

I think it's been so @#%^ed up for so long with unchecked corporations and relaxed regulations, this is why we are where we are.



Edited, Mar 17th 2009 6:26pm by Annabella

Except for the very next sentence where I said:

But I didn't get to make that call, and heck, that may very well have been the wrong thing to do.

C'mon smash. You deliberately chose to cut and past the center sentence out of a paragraph of three. You've taken selective quoting to a whole new artform-like level here...