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Posted by on Mar 16, 2009 in Economy, Miscellaneous | 5 comments

AIG’s Bonus Babies: Pay ‘Em & Fire ‘Em

This time they’ve gone too far. This time the spoiled, overpaid, toxic finance peddling crowd with its ferocious sense of entitlement and infinite capacity to avoid taking any responsibility for the horrors they have inflicted on their fellow citizens have just plain gone over the line.

The bonuses to the 400 dingbats who ruined the world’s largest insurer and stuck the U.S. taxpayer with a humongous new debt load have crossed the last barrier of public tolerance. It’s no longer enough for pubic officials to be “outraged.” It’s payback time.

If they have legally binding contracts to get their undeserved bonuses, fine. Pay ’em. Then fiire them. Then fire the people who negotiated these contracts. Then fire the entire board of AIG. Then fire its CEO, who thinks we have to keep paying these bonuses to keep “the best and brightest” in-house. The US government (us) owns 80 percent of the company. The golden rule applies here. He who provides the gold makes the rules. Out they go.

But, we are warned, these bonus babies are the only ones who really understand those horrid financial instruments, those kinky derivatives. We need them to unwind these deals so AIG can get well and the government can get its (our) money back.

Baloney. It happens I am something of an expert in this field. I am a former senior editor with Bloomberg Financial News’ flagship magazine, and one of my specialties there was editing pieces about exactly the kind of derivative products that landed us in this awful situation.

And I can therefore assure you that while I didn’t understand these cacamamie deals, neither did anyone else. They are simply high colonic mathematical constructs with little or no resemblance to real world risk management. The “quants” who developed these products didn’t know anything about markets and their output reflects that fact. The people who peddled them at AIG didn’t understand the math and didn’t care as long as it generated fat bonuses.

Their replacements at AIG after the firings would be people who get paid for reading the contractual arrangements that went with these hair-brained deals, and negotiating down payouts to counterparties entitled to get them. No previous experience actually selling derivatives required.

We didn’t let Bernie Madoff get away in return for identifying how and where he screwed the financial system. Why keep the AIG bunglers on the staff of a government-owned company for this same purpose?

Pay them their bonuses if we must. Then send them on their way. And do it pronto!

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Copyright 2009 The Moderate Voice
  • Silhouette

    Let’s skip the pay ’em part. We mustn’t pay ’em shite. Let’s go right to the fire ’em and liquidate the assets. That’s the part I like best. Fast forward.

  • AustinRoth

    Sil – you probably support this idea:

  • Mike_P

    AustinRoth, I can’t speak for Silhouette, but I certainly support that idea. But short of that reasonable standard of accountability for what these, ahem, executives have wrought, I’ll be at least temporarily mollified with the post title’s suggestion.

    Extreme rendition to any country that sees fit to prosecute them could come later, as long as we get first crack at selling their remaining viable organs for profit and the furtherance of more worthy lives here.

  • HemmD

    I wrote before, why can’t this whole thing be prosecuted for fraud? Start with the security ratings companies. It has been admitted that these AAA securities were not even checked. If your product is a rating, and you sell a rating without doing the investigation, that’s fraud.

    Whoever supplied that rating either acted illegally on his own or he was ordered to do it by his boss. Sweat em.

    If fraud is found, then any profits from that fraud is not subject to contracts. It’s like selling stolen goods. Were the sellers aware of the fake rating, if so, nail em. if not, no matter, they can’t profit from illegal activity. Follow the money and catch the crooks.

  • This is quite an interesting article, I just loved reading it, keep posting!

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