March 15, 2009

The huevos on some people

AIG last week said it was paying out some phat bonuses to the very people who put AIG (and taxpayers) in the position it's in today. Treasury said not so much. AIG CEO Liddy said he was doing it anyway...

A.I.G., nearly 80 percent of which is now owned by the government, defended its bonuses, arguing that they were promised last year before the crisis and cannot be legally canceled. In a letter to Mr. Geithner, Edward M. Liddy, the government-appointed chairman of A.I.G., said at least some bonuses were needed to keep the most skilled executives.

“We cannot attract and retain the best and the brightest talent to lead and staff the A.I.G. businesses — which are now being operated principally on behalf of American taxpayers — if employees believe their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury,” he wrote Mr. Geithner on Saturday.

Still, Mr. Liddy seemed stung by his talk with Mr. Geithner, calling their conversation last Wednesday “a difficult one for me” and noting that he receives no bonus himself. “Needless to say, in the current circumstances,” Mr. Liddy wrote, “I do not like these arrangements and find it distasteful and difficult to recommend to you that we must proceed with them.”

First off, while AIG is nominally an ongoing concern, it would be bankrupt were it not for taxpayers. That alone would have wiped out the bonuses because a BK judge would never have approved them. ESPECIALLY since 'the best and brightest' were the very folks who put the company in the position it's in now. And what did the best and brightest do? They wrote insurance policies on financial assets (CDS) at bargain basement prices and without adequate reserves against losses. That's it, boys and girls... that's what the best and brightest were up to.

These bonuses were based on illusory profits on fundamentally unprofitable business.

It's time to finish the wipeout of AIG and for the government to begin liquidating it totally. It's clear that current management is willing to be 'legally bound' to a contract that no one in their right mind would pay out. The company, on the whole, simply needs to be scrubbed out and the taxpayers need to be made whole. Enough with the half measures and bullshit.

Seriously, there are 100,000 people in the world who can do the unwind on the derivatives that these fucks are being paid to do. As an added bonus (no pun intended), most of them are now unemployed and would be willing to work for far less.

Posted by mcblogger at March 15, 2009 11:46 AM

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