If large government transfer payments to banks that have already received bailout money from the government aren't enough to raise your ire, there's always the bonus issue to fall back on. You see, even if you have been laid off, and watched your stock portfolio get creamed because you listened to your jackass broker from Merrill tell you that stocks were good for the long haul, you can always take comfort in the fact that some guy in AIG's Financial Products Group that was partially responsible for $40 billion in losses, is still getting a multi-million dollar bonus. AIG's CEO Mr. Liddy, in a letter to Tim Geithner, expressed dismay at being contractually obligated to pay out $170 million in bonuses to 370 employees of the financial products group this week. Apparently, these retention packages were put in place at the beginning of 2008, so that all of that purported talent didn't flee to greener pastures, and AIG supposedly legally has no choice but to pay them. I have an idea: Back in February of 2008, Pricewaterhouse Coopers found "material weakness" in AIG's reporting and forced the company to take a $9 billion write-down on its CDS portfolio. Before the auditor pointed out the weakness, there was a large discrepancy between where AIG was marking its CDS (i.e. mark to model and not reported in earnings) and where AIG's counterparties were marking the CDS (i.e. mark to market.) So cash was flowing out the door in the form of margin calls from counterparties but AIG was not reporting the hit to earnings because it claimed the losses were merely temporary. Pricewaterhouse pointed out its discomfort with the discrepancy and forced AIG to take a hit to earnings. My interpretation of this situation is that the retention packages were negotiated when managers in the Financial Products unit realized that they would have to take a big hit and probably wouldn't get paid if the unit showed a loss. So they negotiated guarantees with the boobs that were running the company at the time. What does this imply? I think it's called accounting fraud. Didn't we create laws after Enron, Worldcom and Tyco so we could clawback egregious compensation?
In any event, if nothing else, since AIG is now 80% government owned, the government should at least do its citizens the favor of providing a list of the names and addresses of all financial products employees that received a bonus in 2008. Then they can mail everyone in America a roll of toilet paper and we can take matters into our own hands.
2 comments:
I have one question - where exactly will all the "best and brightest" AIG execs flee to if they don't get their big fat bonuses..?
All I know is that it takes ALOT of talent to lose $99 billion, wipe out the shareholder's equity of the largest insurance company in the world, and extort $170 billion out of the US government in less than a year. Serious talent...
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