- AIGFP is in the hole something like $100b, with potential losses much higher than that. Unwinding all their contracts is a bitch, and the people who already understand how best to do that are the current employees. Unwinding strange positions effectively is a giant mess even if you already understand all or most of them. I believe that having new employees step in would cost way more than the 10 bps they're paying to current employees.Personally, I'd really like it if we could bundle in some big future tax increases on business -- perhaps a securities transaction tax, an increase in capital gains rates, or a boost to corporate income taxes -- with whatever bailout legislation we pass. If you don't want it to kick in immediately for stimulus reasons or whatever, schedule it for 2011 or something. It's too late to get our money back from the people who created this catastrophe, and we're in the sad position where giving them more money ends up being the best way to save ourselves money. But if we're going to do that and create benefits for everybody by preventing total economic catastrophe, we might as well take back some share of the future benefits to Wall Street.
- Imagine you're a trader at AIGFP. You've done pretty well for yourself over the last decade, actually, and probably you've got enough savings to retire. Not in the kind of luxury you're accustomed to, maybe, but some. Certainly you can ride out the recession without changing your lifestyle. Do you really want to keep working at AIGFP for a small amount (to you) of money to minimize the cost of unwinding the thing? No reputation, no promotion, no head start on a new career of some kind, and the job itself will be no fun. Honestly, you've got lots of egg on your face, but why stay?
So sure, I have no desire to pay these idiots, but this is one of those things that you just suck up in a bad situation. If it helps retain staff at AIGFP (those bastards), that cash was probably money well spent.
Sunday, March 15, 2009
Why AIG Needs To Pay Out $100 Million In Bonuses
Here's part of an email from financial industry friend Ó Coileáin, explaining why we're paying AIG people $100 million in bonuses. Remember that unlike other bailout-involved firms, we own 80% of AIG now.