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!