EmmyJane
JoB- totally agree. I’m not going to mention the other institutions that the OTS “regulated” that collapsed in the last year. My point was simply that many people think there was no regulation of certain divisions of AIG.
I’m going to get attacked for this one…. but while I don’t agree with these bonuses idealogically, I believe they were probably necessary. Here is why: These were RETENTION bonuses (not performance bonuses) given to employees to remain with the company long enough to unwind the credit derivative swaps. I believe these bonuses were necessary to keep key employees around long enough to wind down the business. Would you stay with a company that you knew you had no future with and who was a liability on your resume without some incentive? In an ideal world these employees would have stayed on without the extra money because they had good ethics and believe they owed that much to the taxpayers, but this not an ideal world.
Another solution would have been to kick these losers to the curb and hire someone else to unwind the swaps. However these credit derivative swaps are incredibly complex and there are few who understand them enough to accomplish this. Therefore, I think the retention bonuses were necessary, although completely distasteful.
On a side note, it is my understanding that with a 80% stake in AIG, the federal reserve is overseeing their operations and a part of all major decisions/meetings. That means Bernanke was fully aware of the bonus payments and agreed to them, and now is coming out after the fact to speak out against them. Interesting…