Since we the taxpayers own approximately 80% of AIG, shouldn’t we have some say in their affairs? As 80% owners, should we approve payouts of $450 million in bonuses for employees in the unit that lost $40.5 billion last year? What happened to the idea of rewarding performance? This is reward for FAILURE! These employees were responsible for the virtual capitulation of AIG. Just think how logical this is. These people destroyed not only a company and all the lives of people dedicated to the company’s success but are now rewarded too.
The so called bright and clever were responsible for credit default swaps. The idea behind a credit default swap is when an investor (bank or Institution) takes on risky debt (Collateral Debt Obligations, Collateral Loan Obligations or any other toxic asset), in order to lower their risk they insure that risky debt by going to companies such as AIG to cover any potential losses. The risks they took on were exaggerated. I believe the amount of swaps floating currently is in the $62 trillion dollar range. There is a breakdown of counter party risk. How could the brightest be so blind? Have they never heard of the book by Nassim Taleb, ”The Black Swan”?
In short these people are being compensated at the taxpayers' expense.
This is nothing more than a ripoff or con job. AIG is paying out the executive bonuses to meet a Sunday deadline, but AIG has agreed to government requests to restrain future payments. The Treasury Department determined that the government did not have the legal authority to block the current payments by the company. AIG stated earlier this month that it had suffered a loss of $61.7 billion for the fourth quarter of last year, the largest corporate loss in history.
It is easy to be even more outraged. AIG is still not on solid ground and might need more money. Goldman Sachs (GS) is another question mark. Without being too negative, Citi (C) came out and stated they were profitable. What happened to their mountain of toxic paper? Where is that money supposed to come from? One guess… How is one to have any confidence when their money is wasted?
Is it any wonder that China came out last week and expressed concern over the stability of US Treasuries?
