Josh Marshall’s analysis here gets at why the situation with AIG bonuses is appalling:
We’re collectively taking our country’s future in our hands, spending vast sums of money to keep these companies from suffering the consequences of their own folly and (in many cases) criminality. And in return we’re receiving cavalier dictates about pay-outs and bonuses from executives who by any reasonable measure work for us — dictates we promptly accede to. There’s a beggars can’t be choosers problem there. And the disconnect is so mighty that it fuels the impression that the whole enterprise is not what it seems, not what we’ve been told, that in addition to picking up the tab we’re being played for fools.
Obviously, AIG and its ilk can’t be shamed, and aren’t at all worried about public perception or pressure. You know who should be more worried than they seem to be? The Obama Administration.  Their willingness to eat the shit sandwiches AIG keeps feeding them is nauseating.
Amit
agree. of course the bonuses paid by the govt to AIG will be blamed on the Free Market. they say they need the $165M in bonuses to retain talent. well who is going to hire someone who worked at AIG in the first place?
tx2vadem
Time to exercise those warrants and take them into receivership. Liddy was supposed to be selling off the company in chunks. And what progress has been made to dissolve mammoth AIG? Time for the Federal Reserve to take them over, borrow some FDIC folks, and start the process of clean-up, break-up, and sell-off.
To the comment above, sure employers would be willing to hire people from AIG. Just because they worked there doesn’t mean they aren’t good performers who wouldn’t be great employees somewhere else. Many of AIG’s plain vanilla operations were well run and made lots of money. It was a portion of management who opted to go down the road of collateralized debt obligations and credit default swaps. Insurance adjusters, sales folks, and actuaries working on regular insurance didn’t have anything to do with that as far as I know.
Amit
no doubt AIG like any institution has good and talented people, but with the economy the way it is, especially the banking sector, the stigma of having worked for Enron or AIG doesn’t help your chances but atleast the fat bonus does.
I totally agree the profitable portions of AIG should either be spun off or sold to other companies but I’m not sure I trust the Fed to do it properly.
MB
As opposed to, say, the brilliant private-sector minds that made the mess?
tx2vadem
Just a small defense of retention awards… Having worked at two places now that have shipped jobs overseas, it makes a lot of sense to do what needs to be done to keep the knowledgeable people in place during those transitions. Doing wind downs is highly stressful, demoralizing work. If you lose those critical people before the transition is complete, that can be a pretty serious barrier to success. The same I would gather to be true for AIG’s wind down.
Plus, in AIG’s business, its employees are the most valuable assets (I know every employer says that about their people). The rest is just paper and investments.
Mike@Blueweeds
I don’t understand the government blinking at the bonus contract issues. There are at least a thousand responses the government could make when threatened with a bonus agreement beat down … what a complete lack of balls.
If nothing else … there *no* jury which would ever award the full bonuses to AIG executives. None. Because they are unconscionable.
MB
TX2VA (dude, soon I’m going to need a name), how are those retention bonuses working out for the folks that have already left?
But seriously, that’s a fair general point. But in this specific case? Fuck ’em. All of them. Only the slowest didn’t understand what a fraud this was*, and you don’t want the slow ones anyway. Get out.
~
Mike, you and me both. The minute I heard “But it’s a contract! You can’t change it!” I knew what a charade the whole thing was.
~
*And really. We should all flip through our mental rolodexes of friends in the industry, and recall their (often drunken) pronouncements of what a fucking scam this has been. For years and years. We all knew it.
tx2vadem
LOL! More of this should be in the main post. =)
I imagine that working at AIG is pretty close to the lower levels of Hell at this point. Probably like that CareerBuilder commercial with that women screaming in her car and the daydreaming about punching a koala with glasses in the face.
Amit
MB, the private sector left to its own devices simply could not screw up this badly. Being leveraged 30-1 was only possible because of Fannie and Freddie. At a time when Americans had negative savings, which in a Free Market system would force high interest rates, the Federal Reserve artificially created low interest rates and cheap credit. It is easy to blame “greed” for the problem but unless we understand the perverse incentives created by govt intervention we are doomed to repeat this again.
MB
Always the government’s fault. Always. This would have us believe that the personal judgment and skill that lies at the core of the libertarian philosophy is powerless to resist the slightest temptation, when it is laid out by the government, no?
Amit
people and companies make bad decisions all the time. the difference is when they are held accountable for them versus when someone else has to deal with it. if I could eat candy all day and have abs of steel, I would. the problem we have on our hands is that while small and mid size businesses are held accountable for bad decisions and investments in the form of profit losses, big companies use their govt lobbying power to ensure success whether they produce the cars we want to drive or not.