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AIG: Will We Lose "Our" Investment?

Fern

Elite Member
Super Moderator
Sep 30, 2003
26,907
173
106
We, the US citizens, now own 80% of AIG.

It is said that we have $170 Billion in it, although apparently that amount includes some assets the government purchased from them. I heard Liddy (AIG CEO) claim the more accurate amount of our investment is $40 billion when not including those assets.

Obama et al started this furor Saturday when, unprompted, they disclosed the $165 million in bonuses, and their outrage, to the MSM at a press breifing.

$165M is less that even one-half of 1% of our investment. It's pitifully small.

Why did Obama start this furor and keep stoking it? He's been pumping it for days now, calling it all sorts of bad things getting everyone all riled up.

Why?

We now know these bonuses were well disclosed long ago to pretty much everyone (bailout meetings where Geithner was present, Congressional testimony, SEC filings etc).

Now they want to all act like they didn't know and berate these employees publicaly, impose conviscatory & punative taxes on them for their own political cover since this sh!t-storm was started (seemingly irrationally) by the Obama administration this weekend.

For all this rage over $165 million will lose our $40 Billion invetsment? The bonuses are less than .005 of our $40B investment, is that wise?

What happens if these employees leave? Will new people (if they can find anybody decent to work) be able to figure out what the others and did and unravel this mess? (Seems doubtful to me.)

Some Think Not and That We're Jepeordizing Our Investment .

(By ANDREW ROSS SORKIN of the NYT, in part)

So here is a sobering thought: Maybe we have to swallow hard and pay up, partly for our own good. I can hear the howls already, so let me explain.

But what about the commitment to taxpayers? Here is the second, perhaps more sobering thought: A.I.G. built this bomb, and it may be the only outfit that really knows how to defuse it.

A.I.G. employees concocted complex derivatives that then wormed their way through the global financial system. If they leave ? the buzz on Wall Street is that some have, and more are ready to ? they might simply turn around and trade against A.I.G.?s book. Why not? They know how bad it is. They built it.

So as unpalatable as it seems, taxpayers need to keep some of these brainiacs in their seats, if only to prevent them from turning against the company. In the end, we may actually be better off if they can figure out how to unwind these tricky investments.

Now we can debate why A.I.G. felt it necessary to guarantee seven executives at least $3 million apiece when the economy was clearly on shaky ground. Perhaps we will find out these contracts were a bit of sleight of hand to enrich executives who knew this financial Titanic had hit the iceberg. But another possible explanation is that A.I.G. knew it needed to keep its people.

That is the explanation offered by Edward M. Liddy, who was installed as A.I.G.?s chief executive when the government effectively nationalized the company last fall. (He is being paid $1 a year.)

?We cannot attract and retain the best and brightest talent to lead and staff? the company ?if employees believe that their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury,? he said.

There?s some truth to what Mr. Liddy is saying. Would you want to work at A.I.G.? Sure, maybe for $3 million. But not if you could go somewhere else for even more ? or even much less.

?The jobs are terrible,? said Robert M. Sedgwick, an executive compensation lawyer at Morrison Cohen who represents a number of employees of banks that have taken government money. ?You have to read about yourself in the paper every day. These people are leaving as soon as they can.?

Let them leave, you say. Where would they go, given the troubles in the financial industry? But the fact is, the real moneymakers in finance always have a place to go. You can bet that someone would scoop up the talent from A.I.G. and, quite possibly, put it to work ? against taxpayers? interests.

?The word on the street is that A.I.G. employees are being heavily recruited,? Ms. Meyer says.
I think it's a safe bet that the ones who get other (good) jobs and leave are not the ones who were 'losers'. As with every 'early retirement program' I've seen over 25-30 years, the only ones who take it and leave are the ones you really want to stay. the 'loser' employees can't find another job.

The ones who made money for AIG will get jobs, and IMO are being pushed away by all this recent fuss. Does that make sense considering our $40B investment? I think it's crazy stupid (that and possibly doing this bailout in the first place as politicians are not competent enough in business to handle it properly).

Liddy is the guy the federal government put in as CEO, he himselves has said the bonuses are needed to keep these good people and keep our investment safe. Why the h3ll did Obama start this crap over such a minuscle percentage of our investment?

Then they threw Dodd, one of their strong supporters, under the bus. Today's reports say that bonus protection clause was pushed on them by Geithner/Treasury.

People, such as Congresspersons, Geithner, and Obam are saying these bonuses are all 'news' to them and thus outraged. But it's now reported that these bonuses have been well known and publicized for a long time. Liddy has been testifying to Congress about them since the first bailout etc.

This looks like a clusterfvck of extreme proportions unleashed on the Obama Admin by themselves; will this screw up cost us taxpayers $40 Bill (low side amount)?

Is it too late to do anything about it?

The facts seem to changing day-by-day, and they're getting worse and worse as far as this admin and our policians are concerned. Financial catastrophe was predicted if AIG falls, now after putting in billions is Washington causing this to happen by way of their scramble to demonize AIG and it's employees for political cover?

Fern
 

frostedflakes

Diamond Member
Mar 1, 2005
7,925
1
0
I'm still trying to read up on exactly how this whole situation unfolded, but my understanding was that the administration approved of the bonuses. The Obama admin didn't start criticizing the bonuses until after the MSM started reporting on it and the public got ticked off, though. Basically they were for the bonuses until they became a political liability.

I really think it has been blown way out of proportion, though.
 

sandorski

No Lifer
Oct 10, 1999
68,525
3,634
126
To a large part this seems to be driven by Public Opinion. I think the fear is that the Public outrage will become so heated that any attempt to fix things is just going to piss off the Public even more. If that occurs, then the Economic situation will worsen and become much more difficult to deal with. It's kind of akin to NIMBYism, you absolutely Need something, but nobody wants it near them, so you end up going without.
 

Fern

Elite Member
Super Moderator
Sep 30, 2003
26,907
173
106
Originally posted by: frostedflakes
I'm still trying to read up on exactly how this whole situation unfolded, but my understanding was that the administration approved of the bonuses. The Obama admin didn't start criticizing the bonuses until after the MSM started reporting on it and the public got ticked off, though. Basically they were for the bonuses until they became a political liability.

I really think it has been blown way out of proportion, though.
Link to AP article

Unprompted, officials leaked news of the bonuses to select reporters late Saturday afternoon, highlighting what Geithner had done to try to restrain the payments. The story quickly became fodder for the Sunday news talk shows.

Then on Monday, the president himself came out strongly on the issue, calling the payments "an outrage" and publicly directing his team to look for ways to cancel the payments.
Sounds to me like they started it.

If today's reports are to be believed (By Dem Congresspersons or spokespersons, no less) Geithner and Treasury had the bill's clause changed to protect these Feb 11 bonuses ove Congressional objections.

Looks like a 'circular firing squad' to me.

Instead of "highigting what Geithner had done to retrain the payments" (whicjh is contrary to last night's and today's news reports), IMO they should have explained why they were necessary and pointed out the comparably small amount to compared to the bailout funds and our 80% investment.

Personally, I don't believe, for moral and other practical reasons, the government should be in the business of supporting violating of contracts, nor do I believe they can get away with imposing 100% tax them for Constitutional reasons. I heard a number of lawyers saying the latter on cable news last night, but haven't found yet found anything in print. I.e., I don't think they had any other good choice but to pay them.

Fern
 

tfcmasta97

Platinum Member
Feb 7, 2004
2,003
0
0
They were so talented that AIG couldnt hold their talent and it collapsed under the weight of their awesomeness.

I just wonder: what can these people receiving the bonuses do that 3,300 people actually doing their job cant do? [@ $50,000/year]
 

Fern

Elite Member
Super Moderator
Sep 30, 2003
26,907
173
106
Originally posted by: da loser
if they were so good why did it fail?
Is that really the important question now?

Nor even the question of why we bailed them out - that bus left the station long ago.

Now we're sitting here with an 80% ownership of the company to the tune of $40 billion (or much more).

IMO, the question is what in h3ll are these people thinking?

Edit: To clear, I'm not arguing that they should have been bailout. But now they've got our money our policians should not be jepeordizing that taxpayer investment.

Fern
 

sciwizam

Golden Member
Oct 22, 2004
1,953
0
0
Originally posted by: frostedflakes
I'm still trying to read up on exactly how this whole situation unfolded, but my understanding was that the administration approved of the bonuses. The Obama admin didn't start criticizing the bonuses until after the MSM started reporting on it and the public got ticked off, though. Basically they were for the bonuses until they became a political liability.

I really think it has been blown way out of proportion, though.
This might help.

 

boomerang

Lifer
Jun 19, 2000
18,890
639
126
A clusterfuck for sure.

Does the irreplaceable employee really exist? Personally, I think not.

Although concerns about the negative impact of letting arguably high caliber employees leave a company are certainly legitimate, I still subscribe to the theory that the same people that got you into trouble are not going to get you out of trouble. It's difficult to change this type of mind-set. I'm not buying for a second that they are needed to "unravel" these investments. (BTW, I really dislike the term unravel. It's been carefully chosen IMO) I'll go so far as to guess that AIG wants to retain them for reasons that are less than upstanding. When the smoke clears, they hope to return to business as usual.

Fern, you've brought up some very legitimate concerns. Yes, if these people leave and go elsewhere, what is to prevent these same people from devising yet more sinister means of investment? Jail time would go a long ways towards that goal. Improbable, impractical and with no laws to make it happen as far as I know.

Whether public outcry or some yet undecipherable agenda of the Obama administration led to this I suppose has yet to be seen or determined. Certainly, it's readily apparent that the public is and has been extremely unhappy with executive compensation. I think that the average Joe is often not given enough credit. I don't feel that the average Joe is totally against high compensation within a corporation that is doing well but he is resentful of high compensation when a corporation is being run into the ground. Especially when they are on the public dole. That resentment reaches a fever pitch when that corporation is arguably at the epicenter of the pain, suffering and misery that is ours today. People should not be rewarded for doing the wrong thing.

I've said this many times here with no reaction. How do you legislate against greed? I don't know the answer to that one.

One might argue that corporations have too much power in this land of ours. Is this just the mechanism for a correction?
 

JEDIYoda

Lifer
Jul 13, 2005
33,725
3,177
126
Originally posted by: frostedflakes
I'm still trying to read up on exactly how this whole situation unfolded, but my understanding was that the administration approved of the bonuses. The Obama admin didn't start criticizing the bonuses until after the MSM started reporting on it and the public got ticked off, though. Basically they were for the bonuses until they became a political liability.

I really think it has been blown way out of proportion, though.
yeah right,,,,,my understanding was that the administration approved of the bonuses
 

Hacp

Lifer
Jun 8, 2005
13,923
1
81
The bonuses are going to either people that don't work for AIG anymore, or people that came up with the fancy financial derivatives that got us into this mess. They should all be laid off. There are plenty of American workers who will take those jobs for 1/2 the pay.
 

miketheidiot

Lifer
Sep 3, 2004
11,062
1
0
Originally posted by: Hacp
The bonuses are going to either people that don't work for AIG anymore, or people that came up with the fancy financial derivatives that got us into this mess. They should all be laid off. There are plenty of American workers who will take those jobs for 1/2 the pay.
i did read that something like 1/4 of the people getting bonuses are no longer employed by aig.
 

EXman

Lifer
Jul 12, 2001
20,079
15
81
Originally posted by: tfcmasta97
They were so talented that AIG couldnt hold their talent and it collapsed under the weight of their awesomeness.

I just wonder: what can these people receiving the bonuses do that 3,300 people actually doing their job cant do? [@ $50,000/year]
Come up with something called a dirivatives, virtual assets, bigfoot, the loc nes monster, and the easter bunny. Basically stuff like that. Basically they make shit up and sell it. Even a shit sandwich with a cool name and a bow might get sold.

We are eating alot of Shit sandwiches right now and AIG is transferring those Billions to BNP HSBC and other douche banks that were retarded to do business with them in the first place.

We're fooked! It's a money pit and if they (congress) wanted to do something about bonuses maybe Barney and Chris should turn back time and see all the other douche companies do the same thing AIG just did.

Oh the outrage! Thanks Bush, Paulson, Bernake, Obama, Gietner, Chris Dodd, Pelosi, Queen Barney Fawank </lisp>, Republican pussies who wasted their time and handed the keys on a silver platter to a bunch of know-it-all neo-socialists who think they know what better to do with their money than you do. Yea right!

Hey thanks for my $13 bailout!!!

Fook y'all very much!
 

puffff

Platinum Member
Jun 25, 2004
2,374
0
0
Originally posted by: tfcmasta97
They were so talented that AIG couldnt hold their talent and it collapsed under the weight of their awesomeness.

I just wonder: what can these people receiving the bonuses do that 3,300 people actually doing their job cant do? [@ $50,000/year]
Some of these jobs can't simply be taught overnight. Experience in the "game" actually counts for something.

Think of them as professional gamblers. They're actually good at what they do. But it's not inconceivable that they may make a wrong bet and lose the house. At the end of the day though, I still want them playing for my team, rather than substituting amateurs, who know the rules but simply are not as good. Even worse if those people we threw out are now playing against us and knows the cards that we held.

Their greed is what made them good in the first place. The goal is to fix the system to prevent these traders from getting into too much risk with leverage. Not to throw them out the door...
 

sciwizam

Golden Member
Oct 22, 2004
1,953
0
0
Originally posted by: miketheidiot
Originally posted by: Hacp
The bonuses are going to either people that don't work for AIG anymore, or people that came up with the fancy financial derivatives that got us into this mess. They should all be laid off. There are plenty of American workers who will take those jobs for 1/2 the pay.
i did read that something like 1/4 of the people getting bonuses are no longer employed by aig.


I had an ear to the AIG hearing today and I'm recalling from my memory here.

According to AIG's CEO, the people that got these bonuses were not the ones that were involved with bringing down the company, they were not the ones that created the mess for AIG. He said they(the mess creators) were fired and no money was given to them. The bonus people were (are) more like accountants managing "the books" on some $1.2Trillion. So after the meltdown last year, AIG wanted to ramp down this risky wing of their business. As each one of these bonus recipients managed to "close the book", he/she was eligible to receive his bonus as per the contract. So the recipients did their part of the job and received the bonus. Some left after completing their task and are now being given the bonus.
 

sandorski

No Lifer
Oct 10, 1999
68,525
3,634
126
Originally posted by: boomerang
A clusterfuck for sure.

Does the irreplaceable employee really exist? Personally, I think not.

Although concerns about the negative impact of letting arguably high caliber employees leave a company are certainly legitimate, I still subscribe to the theory that the same people that got you into trouble are not going to get you out of trouble. It's difficult to change this type of mind-set. I'm not buying for a second that they are needed to "unravel" these investments. (BTW, I really dislike the term unravel. It's been carefully chosen IMO) I'll go so far as to guess that AIG wants to retain them for reasons that are less than upstanding. When the smoke clears, they hope to return to business as usual.

Fern, you've brought up some very legitimate concerns. Yes, if these people leave and go elsewhere, what is to prevent these same people from devising yet more sinister means of investment? Jail time would go a long ways towards that goal. Improbable, impractical and with no laws to make it happen as far as I know.

Whether public outcry or some yet undecipherable agenda of the Obama administration led to this I suppose has yet to be seen or determined. Certainly, it's readily apparent that the public is and has been extremely unhappy with executive compensation. I think that the average Joe is often not given enough credit. I don't feel that the average Joe is totally against high compensation within a corporation that is doing well but he is resentful of high compensation when a corporation is being run into the ground. Especially when they are on the public dole. That resentment reaches a fever pitch when that corporation is arguably at the epicenter of the pain, suffering and misery that is ours today. People should not be rewarded for doing the wrong thing.

I've said this many times here with no reaction. How do you legislate against greed? I don't know the answer to that one.

One might argue that corporations have too much power in this land of ours. Is this just the mechanism for a correction?
Sometimes. The US Military ran into a problem recently when trying to updat some Nukes. I don't recall the exact details, but some vital part couldn't be recreated from the written Specs and the few People who made it and understood how to make it were no longer alive. The article I read pointed out that there are a number of such Technologies at risk for the very same reason.

Of course that doesn't really apply to the larger Corporate world, at least as much, but some expertise is quite rare.
 

JEDIYoda

Lifer
Jul 13, 2005
33,725
3,177
126
Originally posted by: sciwizam
Originally posted by: miketheidiot
Originally posted by: Hacp
The bonuses are going to either people that don't work for AIG anymore, or people that came up with the fancy financial derivatives that got us into this mess. They should all be laid off. There are plenty of American workers who will take those jobs for 1/2 the pay.
i did read that something like 1/4 of the people getting bonuses are no longer employed by aig.


I had an ear to the AIG hearing today and I'm recalling from my memory here.

According to AIG's CEO, the people that got these bonuses were not the ones that were involved with bringing down the company, they were not the ones that created the mess for AIG. He said they(the mess creators) were fired and no money was given to them. The bonus people were (are) more like accountants managing "the books" on some $1.2Trillion. So after the meltdown last year, AIG wanted to ramp down this risky wing of their business. As each one of these bonus recipients managed to "close the book", he/she was eligible to receive his bonus as per the contract. So the recipients did their part of the job and received the bonus. Some left after completing their task and are now being given the bonus.

I also heard about the same thing....
 

sciwizam

Golden Member
Oct 22, 2004
1,953
0
0
Originally posted by: JEDIYoda
Originally posted by: sciwizam
Originally posted by: miketheidiot
Originally posted by: Hacp
The bonuses are going to either people that don't work for AIG anymore, or people that came up with the fancy financial derivatives that got us into this mess. They should all be laid off. There are plenty of American workers who will take those jobs for 1/2 the pay.
i did read that something like 1/4 of the people getting bonuses are no longer employed by aig.


I had an ear to the AIG hearing today and I'm recalling from my memory here.

According to AIG's CEO, the people that got these bonuses were not the ones that were involved with bringing down the company, they were not the ones that created the mess for AIG. He said they(the mess creators) were fired and no money was given to them. The bonus people were (are) more like accountants managing "the books" on some $1.2Trillion. So after the meltdown last year, AIG wanted to ramp down this risky wing of their business. As each one of these bonus recipients managed to "close the book", he/she was eligible to receive his bonus as per the contract. So the recipients did their part of the job and received the bonus. Some left after completing their task and are now being given the bonus.

I also heard about the same thing....
Don't know if this validates Liddy claim about the bonus recipients not being the mess creators, but according to this WSJ: Some will pay back AIG bonuses. article the highest recipient ($6.4 million) is the "executive vice president with responsibility for energy and infrastructure investments".

Among them was Douglas Poling, who received the richest payment of more than $6.4 million, according to a person familiar with the matter. Mr. Poling, the 48-year-old son of a former chief executive of Ford Motor Co., is an executive vice president with responsibility for energy and infrastructure investments. He is one of the roughly 418 current and former employees from AIG's financial-products unit who received bonus payments. Mr. Poling declined to comment.
 

AreaCode707

Lifer
Sep 21, 2001
18,425
45
91
Does anyone have any stats on how many people total are receiving these bonuses? How much the top and bottom bonuses are?
 

her209

No Lifer
Oct 11, 2000
56,352
9
0
Hopefully all this puts an end to golden parachutes but I'm not holding my breath.
 

JJChicken

Diamond Member
Apr 9, 2007
6,166
12
81
Originally posted by: JEDIYoda
Originally posted by: sciwizam
Originally posted by: miketheidiot
Originally posted by: Hacp
The bonuses are going to either people that don't work for AIG anymore, or people that came up with the fancy financial derivatives that got us into this mess. They should all be laid off. There are plenty of American workers who will take those jobs for 1/2 the pay.
i did read that something like 1/4 of the people getting bonuses are no longer employed by aig.


I had an ear to the AIG hearing today and I'm recalling from my memory here.

According to AIG's CEO, the people that got these bonuses were not the ones that were involved with bringing down the company, they were not the ones that created the mess for AIG. He said they(the mess creators) were fired and no money was given to them. The bonus people were (are) more like accountants managing "the books" on some $1.2Trillion. So after the meltdown last year, AIG wanted to ramp down this risky wing of their business. As each one of these bonus recipients managed to "close the book", he/she was eligible to receive his bonus as per the contract. So the recipients did their part of the job and received the bonus. Some left after completing their task and are now being given the bonus.

I also heard about the same thing....
If this is what is happening then they deserve their bonuses. Pretty slack for Obama to bully on them like this. But thats a very big IF.
 

Robor

Elite Member
Oct 9, 1999
16,979
0
0
Why does anyone in upper management at AIG deserve bonuses when the company is a disaster? How many businesses in this condition would hand out bonuses? Oh wait, I forgot about the good ole boys network. I've been laid off twice in the past 5 years and each time the CEO's that tanked the company walked away with upper 6 and low 7 digit severance packages while the working folks got 1-2 weeks per year of service. Fucking bullshit.
 

43st

Diamond Member
Nov 7, 2001
3,197
0
0
Originally posted by: sandorski
Originally posted by: boomerang
A clusterfuck for sure.

Does the irreplaceable employee really exist? Personally, I think not.

Although concerns about the negative impact of letting arguably high caliber employees leave a company are certainly legitimate, I still subscribe to the theory that the same people that got you into trouble are not going to get you out of trouble. It's difficult to change this type of mind-set. I'm not buying for a second that they are needed to "unravel" these investments. (BTW, I really dislike the term unravel. It's been carefully chosen IMO) I'll go so far as to guess that AIG wants to retain them for reasons that are less than upstanding. When the smoke clears, they hope to return to business as usual.

Fern, you've brought up some very legitimate concerns. Yes, if these people leave and go elsewhere, what is to prevent these same people from devising yet more sinister means of investment? Jail time would go a long ways towards that goal. Improbable, impractical and with no laws to make it happen as far as I know.

Whether public outcry or some yet undecipherable agenda of the Obama administration led to this I suppose has yet to be seen or determined. Certainly, it's readily apparent that the public is and has been extremely unhappy with executive compensation. I think that the average Joe is often not given enough credit. I don't feel that the average Joe is totally against high compensation within a corporation that is doing well but he is resentful of high compensation when a corporation is being run into the ground. Especially when they are on the public dole. That resentment reaches a fever pitch when that corporation is arguably at the epicenter of the pain, suffering and misery that is ours today. People should not be rewarded for doing the wrong thing.

I've said this many times here with no reaction. How do you legislate against greed? I don't know the answer to that one.

One might argue that corporations have too much power in this land of ours. Is this just the mechanism for a correction?
Sometimes. The US Military ran into a problem recently when trying to updat some Nukes. I don't recall the exact details, but some vital part couldn't be recreated from the written Specs and the few People who made it and understood how to make it were no longer alive. The article I read pointed out that there are a number of such Technologies at risk for the very same reason.

Of course that doesn't really apply to the larger Corporate world, at least as much, but some expertise is quite rare.
You are absolutely right.. some companies live and breath on there talent pool. Maybe if you're in janitorial services you can be easily replaced, but this isn't the case in the world at large.

There was a story about the Apollo missions and this effect a couple months ago.. basically we couldn't get to the moon now if we tried, the people that designed all those custom machined parts and solutions are dead now. Not to mention that a lot of the parts were made by small mom and pop machine shops who don't exist anymore.
 

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