I suppose if Congress can get a raise, if the Detroit Lions got paid every week last season, then the AIG folks can get their bonuses. While auto workers are giving back more and more to their companies who are also getting federal money, and their execs are getting paid $1 year, the pigs on Wall Street just keep sucking it in.
From what I gather this is a no win situation: Apparently those execs have employment contracts that if AIG doesn't honor then they get sued and likely have no defense to not keeping up their end of the bargin. So AIG execs become the most villified of all execs in the country, and Obama can saber rattle all he wants but he can't break their contracts. It would be interesting to see how those contracts were written so that the execs earned bonuses even though the company was/is going down the tubes. But you know those execs have wives/kids/mistresses/boats/ferraris, etc to feed just like everybody else!!
:lol: ...actually, as I understand it, the pigs at AIG that were promised and received the retention bonuses were in the Financial Products Group derivative desk in London. I'm not sure they give a sh!t what the President of the United States says...... Gip, you're the attorney here.....apparently AIG and the Treasury Dept officials have concluded that it would actually be cheaper to pay the bonuses as they are obligated by contract than to not pay them and defend breach claims and likely damages.....what do you think?
Hold on there....I saw a news piece that explained how the AIG office in London is where all this mortgage mess began. I can tell you that when auto companies make money they pay bonuses and when they lose their ass they don't. Somehow wall street firms don't believe in being rewarded for being profitable.....they believe in being rewarded just for showing up. :roll: http://www.cnn.com/2009/POLITICS/03/16/AIG.bonuses/index.html See the poll on this link to CNN: http://www.cnn.com/ 93% of respondents think it is an outrage and agree with Obama.
First of all, it's my understanding that the derivative desk in London was where many of the toxic assets of AIG were written. If these are British citizens who have contracts in London with AIG the cases will be filed and tried in London. I guess that while stimulating the US economy Barack and company can also stimulate the British economy with AIG bailout money. If they could have gotten the case to an American jury in a part of the country where people pay and care about taxes, the government might have had a chance. And as I understand it, one of the companies that had derivative policies with AIG was Goldman Sachs. Ever wonder why Paulsen a former Goldman exec was in such a hurry to take care of AIG?
Seems to me that the problem is the contracts, you can take all the opinion polls you want and that doesn't affect the validity of the contracts no matter how odious the terms of them are at this time. It wouldn't be any different if Manny Rameriz hits 198 with 4 hr's and 45 RBI's this season for the Dodgers, they will still owe him 20+ million dollars and they won't be able to get out of the 2nd year either no matter how bad he plays. Dodger fans won't be happy, and his salary under those circumstances will hurt the team....but nobody will be able to break his contract as long as he shows up ready to play.
I found this, regarding Sen Dodd of Conn and his relationship to Wall Street and the bailout. Sen Dodd
This guy has some good ideas...... :twisted: " Republican Sen. Charles Grassley of Iowa didn't appear to be joking, however, when he spoke with Cedar Rapids, Iowa, radio station WMT. "I would suggest the first thing that would make me feel a little better toward them [AIG executives] is if they follow the Japanese example and come before the American people and take that deep bow and say, 'I am sorry,' and then either do one of two things: resign or go commit suicide," he said. "And in the case of the Japanese, they usually commit suicide."
Here they don't use knives or swords. They jump off high cliffs or buildings. Somehow those damn golden parachutes keeps softening the impact and they just walk away.
So the taxpayers get stuck with paying hundreds of millions in bonuses to retain the "talent" that ran this company into the ground. I wouldn't hire any of those clowns to clean my company's toilets.
I have no doubt about that Krebsie....however, and it may seem preposterous to you guys, but there are dozens of hedge funds, private equity firms, investment banks - small and large, foreign banks and insurers that are standing by patiently waiting to line these guys pockets with millions to come and sit at their trading desk. I promise you..... That is at the heart of the issue.....18 months or so ago, before the meltdown, it became clear to AIG and others that the CDS book was at risk given the rising defaults of subprime paper and the rapid decline in value of many mortgage backed assets. AIG had CDS inventory with a notional amount of $400 billion. AIG management began actions to reduce their risk by reducing and unwinding their CDS book. Given the complexity of these instruments, the guy that cleans Krebsie's toilets ain't the same guy that you want unwinding swap trades I wouldn't think....there is truly not alot of guys capable of getting this done in an orderly and efficient manner and many of them are working the trading desk in London. AIG management - rightly so imho - believed it critical to the success of the initiative to retain this core group to unwind the trades and offered them bonuses if they would stay around and wind down the book. $165 million is 0.04% of the notional amount that AIG stood to lose and a much smaller fraction of the systemic risk to the economy if CDS market melted as a result of a butchered liquidation.....it would seem a small price to pay to do a job properly that if done in a haphazard manner would risk the meltdown of the global credit markets. It may seem a heinous action to offer these guys $165 million retention bonus but it's sheer stupidity to risk the meltdown of the multi-trillion swap market and resulting effects on the global economy.
.....there is not a major bank, investment firm, insurance company or state and local government of any size and likely many major universities that did not have exposure to the CDS market and likely an AIG product.....not one. Paulsen did what Paulsen did because the downside of NOT acting was unthinkable......
....and that line of thinking is why there is no confidence right now in Wall Street. Until investor confidence returns there will be no progress.
That's not it....it has always been that way and will always be so. Let's not lay the credit crisis at the feet of the minds that designed these incredibly complex and sophisticated products and will go forward and design others.....their creation and imprudent application and administration no doubt played a role, but let's not forget that at the core of the problem is not the guys designing derivatives products, it's the guys that have borrowed somebody else's money and either cannot or will not pay it back.
It's intriguing to me the extent of which you place yourself on the side of the lender in just about every conversation like this. Balloon mortgages....abitrary predatory lending rates or rate increases...etc...have always fallen for you on the side of being tough luck for the borrower and he/she should have known better. I say...the lender in this situation is the expert and knows how to manipulate the system and take advantage of the borrower....not the other way around.
Listen Buckeye, I'm a free market conservative and pro business all the way. But, in my opinion, when you run your own business into the ground and then come to the taxpayers on your hands and knees begging for money to keep you afloat, then you forfeit certain rights. I'm just a small businessman and not nearly as smart as you when it comes to high finance. I'm an old school, bottom line type owner. I believe in making fair profits in exchange for a good value to my customers. Not as exciting as hedge fund management and short selling, I guess, but then I have always had this nagging problem with protecting my employees and my reputation. I've listened to Limbaugh and Beck in the last 48 hours say that the public oputcry over this $165,000,000 in bonuses to AIG failed execs is much ado about nothing; small potatoes in the grand scheme. ********! It speaks volumes about our casual nature regarding money. About our declining business and personal values. About the power of money and its corruption of the electorate. You speak of these AIG execs like they are some kind of valued commodity. If it weren't for the schmuck taxpayers these bums would be already infesting some other company. When does this nonsense stop?
That's not completely true. While I agree that the collective result of lenders' greed was extremely poor judgement and overly aggressive lending practices, the borrowers are not off the hook by any stretch. It's a sad sign of our times that people generally ignore personal responsibility for their bad decisions and choose instead to try to blame the other guy. This is what has happened on both sides of the issue. At the very least, both sides are equally to blame.
Yeah right! Just look at how many hedge funds there are out there just begging for folks to come work for theml http://www.finalternatives.com/node/5539
Arbitrary predatory lending practices are against the law and those found practicing such illegal lending activities should be prosecuted to the fullest extent of the law. Balloon mortgages and variable rate mortgages are useful products that can fill a valuable need for many borrowers and the federal disclosure requirements are such that anybody that contemplates entering in to such an obligation has more than ample data to review and make an informed judgement about the suitability of that product for their own unique, individual situation. It always amazes me that with you, it's always somebody else's fault. There is no personal responsibilty or accountability for one's own actions. People are responsible for their own decisions and it they are not or cannot, they should make sure to bring their caretaker/chaperone/trustee before entering into any meaningful contractual obligations. Bankers don't lend money to people they don't believe are going to pay them back at least 99.9% of the time - they have absolutely no incentive to do so....unless of course they are compelled by the federal government.
I don't know about the value of the AIG "execs", but I assure you that the guys that received the bonuses to stay on the desk and unwind the $400 billion dollars worth of exposure to safeguard the taxpayers money and the efficient and effective functioning of the world credit markets are, in fact, a valued commodity.