In defense of AIG bonus
Probably not a popular sentiment. And if it is the derivitive traders getting bonuses, I would get angry too. But this is a huge, probably too big corporation with multiple revenue streams. So the derivitive guys lost big, I am just saying that other depatments that made money should not fall under the same derision. Maybe a guy doing a good job trading in currency futures made what would have been a 10 billion loss into a 9 billion loss. Shouldnt he be compensated. And what about all the day to day claims and underwriters who have nothing to do with CDS, should they be penalized along with the risk takers in the swap department? This is a big company, and while it is in bad shape due to it's own poor risk management, not every department should suffer for the faults of a few. Top tier leadership, sure lets grill them over bonus money, but for rewarding the sectors in a floundering business that mitigate losses, or at least make losses in the range of "my god this is the end of the world" into losses in the range of " wow, that was really bad" suffer along with everyone else is foolish. We should demand a little justification of the bonus money, but it should not be outright banned, because some hard working exec in that company might have found a way to make AIG ask for 25 billion next month instead of 28 billion.
By the way, for all the faithful out there, lets hope there is not any big disasters this year. I got a feeling that if an F4 hurricane makes landfall, you will see a bunch of insurers go under.
Handing them bonuses in this environment, with taxpayers on the line for it is not right, especially 100% bonuses.
They could get a third of their bonuses, capped at maybe $75,000 or be asked to forego them. Or be given something once the company is broken up, sold off, or whatever is going to happen to it. You need to get real.
March 16, 2009 4:35 AM | Reply | Permalink
Let them take their pick have a job or have a bonus.
THIS COMPANY LOST 60 BILLION DOLLARS IN THE LAST QUARTER. NO BODY THERE DESERVES A BONUS.
March 16, 2009 8:27 AM | Reply | Permalink
I'm with face in the crowd! The company LOST money! Nobody int hat company deserves any bonus at all. Not one penny!
March 16, 2009 10:47 AM | Reply | Permalink
Oleeb,
Thanks! It's Monday morning and I needed that.
I'm still trying to figure out what to do about Orlando's video game question.
☺ ☺
March 16, 2009 11:15 AM | Reply | Permalink
Having run a company, I can say for sure that if we had to take a loan to stay afloat, no one (myself included) would be getting a bonus, a first-class flight, or even valet parking on the company dime.
AIG has received more government assistance than any other corporation. And, when I say "any other corporation", that means "in the history of the world."
For that company to pay any bonuses is absolutely ridiculous. For the Treasury - which effectively owns about 80% of the company - to say they're powerless to stop it is also absolutely ridiculous.
March 16, 2009 11:12 AM | Reply | Permalink
It's extortion if they're demanding it. And for goodness sakes, extortion is a crime.
My solution is: Publish the Names!
Every blog. Every paper. If they're so proud of deserving a "bonus" - let's give 'em publicity!
March 16, 2009 11:25 AM | Reply | Permalink
Absolutely. If it is alright to accept the bonuses, then people should be willing to do so publicly, or we (someone?) should see to it that they do.
March 16, 2009 2:14 PM | Reply | Permalink
We are in new territory here and the government -- read: Obama Administration -- does not seem to know how to proceed.
But, by virtue of the money they handed over to AIG, they are the ones who entered into this maelstrom to begin with. They as well as AIG are flying by the seat of their pants. Resorting to old legalities in a new situation (we can't do anything because there are "contracts") smacks of hesitancy, and the markets are watching.
This is high stakes poker, and Obama just flinched.
What matters now is who takes charge of the plane. At this point it looks like AIG has.
It will be interesting to see if Obama and his financial team have it in them to take over.
March 16, 2009 11:27 AM | Reply | Permalink
No - no one in the company should get a bonus and here is why. A company as a whole must rely on single marker of success on a macro level - that is the bottom line. For example, in the company in which I work in order EVEN HAVE A BONUS ON THE TABLE, sales goals must first be met. We work our tails off all year long on improving service, administrative cost reductions and keeping the lights on etc, but if the money is not in the kitty, tough cookies. This is hard-ball and it's tough, but I am not even in finance. I am in insurance. Goes to show the different psychology of our business from finance. A bonus is not assumed, it is earned. The guy that turned a 10 billion dollar loss in to a 9 billion dollar loss? GOODIE FOR HIM!!! He was doing his job.
March 16, 2009 1:21 PM | Reply | Permalink
What is missing in the argument above is the sense of team. If the company flounders everyone suffers. The big problem here is that these "leaders" do not feel they should suffer, that they are above the suffering. NOT!
March 16, 2009 2:40 PM | Reply | Permalink