A lot of people are fuming today about news that the 400 A.I.G. employees in the company’s London office—the folks who sold trillions of dollars worth of “swaps” that brought the company to ruin and could end up destroying the world economy—are in line to get $450 million in bonus payments.
The legal justification for this idiocy can’t be ignored. These employees have a contractual right to the money, and the contracts were signed before the government was forced to take an 80 percent ownership of A.I.G. . So legally, they probably have to get their money.
What is really infuriating here, however, are comments from the man who is now A.I.G.’s CEO. He stated that we have to keep paying bonuses to the London crowd in the future because to unwind the derivative deals they so egregiously and destructively generated and peddled, these “best and brightest” are needed to do the job.
In what universe does this man reside? His “best and brightest” to the world outside little pockets of a fast shrinking financial realm are now recognized as the dumb and dumbest—as people whose great talent was to produce short-term profits with horrendous longer term outcomes.
A.I.G. is an insurance company. The derivatives churned out by its London affiliate were a kind of alternative insurance for what turned out to be garbage investments. In other words, these “best and brightest” were in fact the worst insurance underwriters in history.
Continue to give them bonuses when the contractual need to do so expires? Why? Does anyone besides top A.I.G. and Treasury officials believe these derivative mavens will leave the company for better jobs if they don’t get mega-bonuses? Who would possible be interested in hiring people who failed so atrociously?
We may have to endure the mess these people and others like them have created. But please, please, please, never use the words “best and brightest” again to characterize this ilk. Too many truly better people have been driven into awful financial straits by their gaming for this woefully outdated terminology ever again to be applied so mistakenly and foolishly.