Close enough, lookout?

If you care you've probably already seen this, but here is the link to the NY Times article with the resignation letter from an AIG executive.

Resignation

Heh. That is crazy.

I'm shocked - not.

Jake DeSantis is angry because he and his cow orkers are being punished when they were not the ones that caused AIG's demise. I'm not so sure the people in the unemployment lines will have much pity for Jake DeSantis, as I doubt many of them feel they are the cause of their former employers problems. When the ship goes down, everybody gets wet.

So now the baby gets thrown out with the bathwater. Brilliant!
:rolleyes:

I wonder if all this outrage would have been as bad if the term used was "retention payment" instead of bonus." Would the public perception have been any different?

I seriously doubt DeSantis will land in an unemployment line but I hear what you are saying Bruce. From my perspective he doesn't sound angry at being punished for AIG's demise. THe company was to be split up and sold off - he and others stayed on to do that. Retention bonuses are the only way to get people to stick around and do the work when they know the end is near and their peers are out grabbing jobs. I think he is angry because he did his job expecting to get an agreed upon sum of money when the job was finished. Payday rolls around and not only does he hear he shouldn't be paid, he and his colleagues are villified and subject to abuse. I can understand his anger.

Political insanity. I completely understand the contracts and how DeSantis and other executives feel but what were they expecting? Every small business in the United States is cutting as many costs as possible and they would expect large businesses to do the same and from a public viewpoint, it doesn't seem that AIG is doing that.

They eliminated his whole business unit, which was profitable, to cut overall costs and raise money to keep the larger company running. Big companies like that don't have all their executives sitting in one building making decisions together. Top executives in one business unit may never even meet execs from another.

The bonuses became a political tool. He and his colleagues are pissed they are catching the shit for something they had nothing to do with.

Yes, but from the public viewpoint they seem to not be attempting to cut costs. I'm not saying that DeSantis didn't get screwed over or could/should have prevented this, just that you cannot be surprised to take flak when your company is being bailed out by the taxpayers and you get a large bonus. DeSantis will be fine. He can get other jobs. My old neighbor only has the option to hold onto his small business until it goes bankrupt. He may not be.

Maybe I am naive, but if I was running a struggling business, I would keep the profitable units and close down the unprofitable ones.
I just don't "get" business, sometimes.

Fuck DeSantis. The little bitch quits because he got his feelings hurt?

:biglaugha

No big loss.

They are an insurance company which means they must maintain a hefty cash reserve ratio. When things went down the shitter they had to raise capital quickly. Which do you think would be easier to get good value from, profitable business unit or one overflowing with toxic assets?

I'm not saying it makes sense but that is the way it is sometimes.

PH, the only difference between DeSantis and your neighbor is that you know your neighbor and he doesn't happen to be a much maligned industry at the moment. They're still two people trying to do their job regardless of their salary structure.

TGRR... let me guess, you've gone through life talking a lot shit but accomplishing little, right?

Depends ... does eliminated mean "shut down", "broken up", or "sold off" (or passed out via the anus")?

Sold off brings in money. Shut down doesn't. Broken up is DeSantis.

No, actually, I've done quite nicely for myself.

Let me guess, you're one of those Starbucks Libertarians that sits in the cafe by the college, ranting about "personal responsibility" while you swill lattes paid for with daddy's credit card, right?

Just what we need, even bigger banks, when the ones we have are already too big to fail.

*quote* "if they're too big to fail, shouldn't they be too big to exist?"

What's a cow orker? :D

My understanding is the particular division that caused all the trouble was so complicated, and the contracts were so convoluted, they had to "unwind" those contracts, and they apparently needed people who understood them to stick around to do. I didn't realize they eliminated healthy parts of the company though in order to do that.

As I said before, this could have been avoided if the company had just agreed to pay them the bonuses AFTER they paid back the taxpayers. It isn't right for that burden to fall on taxpayers, when they are themselves losing jobs and having to take cuts in pay, etc.

It's a Dilbert term, meaning the office grazers you are forced to work with.

Yup, they could have just hired a bunch of outside contractors from some temp agency to figure it all out - That would have been much cheaper, faster and more efficient - right?

And call them what they were - retention payments not bonuses.
If that word was not used this would never have been an issue to begin with.

Hey it's not polite to look up someone's IP and find their real identity. I'm telling my dad.

:corn:

So who the fuck wants to retain the useless bastards?

Many things could be avoided if the signed contracts which are the bounding fabric of a civilized society can be ignored or subverted on a whim. Life isn't fair; but the alternative to a rules-based system is a chaotic hellhole ruled by conflicting, crackpot mob mentalities, all shouting each other down to establish their 15 minutes of illogical dominance. You don't let two-year-olds have a cookie every time they want one--even if they throw a fit. ESPECIALLY not then. You're the parent, you BOUGHT that cookie. There was an agreement between you and the cashier at the grocery store, wherein you exchanged currency for baked goods. A screaming toddler demanding that cookie because they WANT IT doesn't change the facts.

What if you bought those cookies with money the child got from Grandma for his birthday?

These people were not involved in that particular department. They were chosen to due certain tasks and were promised payment to stay till the job was done. These people did as asked and the Gov't is basically reneging on the deal.

Furthermore this situation has led into other damaging issues as well including selective taxation, taxation as a punitive measure, the validity of a contract as Flint explains and more.

$169 million of the $208 million in bonuses were paid on the troubled financial services side of AIG.

11 people who received these so-called "retention bonuses" no longer work there.

http://www.sltrib.com/ci_11954328

Screw that. They had a deal with their employer. Their employer no longer works there, and they have a new boss.

Financial SIDE - keyword is side. They were not in that particular department. This is OLD news.

Because they already fulfilled their obligation to the contract.
85% ARE STILL WORKING THERE
This is a pittance of what AIG got. Remember that - 1/1000th.

Wanna bitch? Read your article...

I haven't looked into the specifics of the MS retention bonuses but if they are in fact retention bonuses for brokers this may be a very smart bit of business. The brokerage business is extremely cutthroat and loyalty is a foreign concept. That $3B divided by 6500 is only a bit more than $400K average on each. Some of those brokers are easily 8 figure annual producers. You pay retention bonuses to keep these guys around otherwise they go across the street, accept a 6-7 figure signing bonus and take 90% of their clients with them. A broker who has busted his but for 5 years can easily collect $5-700K signing bonus on their first firm to firm move.

Why? Because they make those firms money. Don't cut your nose off to spite your face. Keep your moneymakers happy so you can rehab the rest of your company.

There are still more bonuses owed at AIG, err, I mean AIU (haha), and they add up to a billion dollars. It isn't the taxpayers job to make sure ANY bonuses are paid out.

I know those people didn't work in that department, but IF WE had not injected all that taxpayer money into the company, NONE of them would have jobs. And, eveyone else in America is having their contracts renogotiated, and taking pay cuts, or losing their jobs. What makes AIG so fucking special?

In addition, these are NOT ordinary times. Even though those particular people didn't cause the crash at AIG, AIG was a huge part of the problem. The people who work there should just suck it up, like everyone else in this country, and agree to take the money AFTER the taxpayers are paid back. What is wrong with asking them to do that, especially since a bunch of those bonuses are over a million dollars? And there will be more coming. We have to stop it, NOW.

If this was a normal situation that would be fine. It isn't.

OK. Let's treat it as not normal and not pay the bonuses for the work they did. How healthy do you think the firm will be if the top 15% of producers accept 6-7 figure checks to move their practices over to a firm that understands the value of their moneymakers?

Them, too.

I have no patience whatsoever with these welfare queens and their bonuses. If they didn't get the bailout, the money simply wouldn't be there. Basically, what we've done is take our tax money, and give it to some bastards making half a million a year +, and given it to them to reward them for being a colossal failure.

I don't care if it's 1/1000 of the bailout. I would be pissed if it was $10.

Why should I care? Any firm that is dumb enough to hire them deserves what they get...and IF any real producers move, the wealth will move with them, and things will continue moving forward, just somewhere else.

Well gee, what about the automakers, and everyone else who is taking a pay cut? Why is it only the friggin' rich people that seem to matter? Holding us hostage is OK somehow?

In france, labor held a 3-M vice president hostage. :haha:

Another point lookout, maybe all that money is part of the problem. Maybe, since those people make so much money, they should be the FIRST to have to sacrifice until we are healthy again. Why is it the middle class and poor are always the first to have to sacrifice, no matter what the problem is? It's time those with money do some sacrificing. Maybe there should a wage freeze at the top until this thing blows over.

And that is why in France, the government is afraid of the people, not the other way around. And IMO, that's the way it should be. :D

They don't have power. In most situation, the more power you have, the less you will have to sacrifice.

Simply fire the people who created the mess and rehire those who originally created this derivative operation. The guys who created the operation that made risk predictions also did not always trust their own creation. Therefore they often rejected obligations that their own predictions recommended.

After Hank Greenberg left, these guys were let go for being too conservative and cautious. If these contracts are so complex, then AIG needs people who would have never made those obligations in the first place. Not the people who got ridiculous bonuses for creating the meltdown.

Meanwhile, a bottom line remains. AIG is dead. It is just not official yet. Any productive parts of AIG should be sold off. Government will never recover that money because when the George Jr administration made multiple commitments, nobody knew how much Enron accounting had hidden such vast losses.

More important is a message that must be sent to finance people. They are not geniuses. They are bureaucrats and salesmen. Their job is to create liquidity as a bank teller and loan officer does for you. To direct money flows so that productive people can do their work.

It's not derivatives that are a problem. Problem are people with too much belief that finance people can be innovative, and that their purpose is to make profits. Derivatives can be useful financial instruments to help productive industries alleviate financial problems such as cash flow.

Does you bank teller deserve a bonus only because you deposit or withdrawal more money? Of course not. They provide a service so that others can be innovative and therefore productive. Derivatives are supposed to be tool to help the economy's productive parts - not enrich finance people through money games.

AIG is dead. It will not be profitable no matter how many lies are spun about saving those employees with bonuses. When the entire company is losing money, nobody - especially any management in any division (even if productive) deserves a bonus. That's what a salary is for. You are expected to perform superbly. The bonus only happens if the company is also profitable. But not in the finance industry where profits rather than service are more important.

Not just the finance industry. Bonuses are common in many others as well. In this case they were retention payments, not bonuses. That buzzword created all this outrage over virtually nothing. There are many more and much larger payments scheduled in other organizations.
Everyone knew these were on the books. There were no surprises, just a bunch of bureaucrats covering their asses when the public got outraged.

Look to Barney Frank and Chris Dodd, both in charge of oversight on these matters. Certainly they have all the answers to the whys and hows of all this. After all, thats what we pay them for. If they pull their collective heads out of their asses long enough, just ask them.

Funny. I worked in many productive operations. Bonuses occur only when the entire company is productive. The message is out. Bonuses are not deserved only because the employee's salary is not high enough. It is not about what is common. It’s about people who are typically not productive (finance people) who then take massive rewards for being part of that non-productive operation.

But again, is the purpose of the company its profits - or being a productive entity in America? Obviously the latter.

So Nardelli who was running Home Depot into the ground took a $200 million bonus (or whatever you want to call it). Or Thain manipulates bonuses so that Merril Lynch employees get bonuses provided by Tarp money and before the BoA takeover. Clearly these employees and CEO who did so much harm to America deserved them. classicman tells us they deserve to be paid more than doctors, scientists, engineers, and farmers because ... he does not say. Soundbyte logic with a left right dichotomy that would instead blame Barney Franks.

Obviously tw has no idea what the purpose of these retention payments were.

Obviously classicman is so driven by left right dichotomy as to blame Barney Franks. classicman needs any excuse to post attacks rather than deal with the topic. But then extremists were never really known to understand anything but a political agenda. Clearly employees that subvert the American economy deserve bonuses when people who work in productive companies do not.

Or maybe we should post as classicman always does. Only someone dumb would not understand that thieve don’t deserve wealth. Rather complicated for one with extremist ethics.

Companies pay retention payments when someone cannot be replaced. That does not exist in those AIG divisions. But Limbaugh forgot to mention that part where the responsible people were fired for being too cautious.

TW: 1

CM: 0

Who cares what you call them?

TGRR and Sugarpop... just wow. Either you are willfully ignorant and choose not to look beyond the soundbyte fluff of the story or you truly do not understand even the first thing about profitability.

I may disagree with TW on nearly everything but he understands something the two of you cannot grasp. Profitable companies make a profit that people want and are willing to pay for. In order to maintain future profitability they must have processes established to make profitability likely. Part of the process is making sure that people who have done their job and have proven to be a net asset (moneymaker) must be compensated for the value they bring. If a broker brings $25,000,000 profit to a firm in a 12 month period it would certainly seem logical compensating him his expected $2,500,000 so that he will also do it next year and the year after. If you don't, they will go across the street, receive a $5,000,000 check, and take their business with them. Giving bonuses to the unproductive employee would be foolish but that isn't how brokerage operations work. Bonuses are based upon production numbers.

But wasn't that $25,000,000 profit all smoke and mirrors... a perceived increase in wealth, along with trillions more, that disappeared in a heartbeat when the wizard was exposed?

Much of that profit was created out of irrational exuberance caused by people believing phony spread sheets and worthless derivatives were creating wealth, when i fact it was setting the worldwide financial web up for a fall... except The Bank of North Dakota.

I understand all of that, CM. There's no need to be a condescending twat.

But I also understand that AIG, etc, are NOT profitable, and they are surviving on the public tit. As such, no "retention payments" are warranted in any case. You want them to have these "retention payments", take up a collection for the poor bastards. They don't need to take it out of my taxes.

Not you nor tw apparently, This common perception of the ill informed is that a "bonus" is based solely on increased revenue or sales.
That is not what these are/were. I am simply trying to be accurate. There are many people who STILL don't know what they are.

Should they stop paying every employees salary because they got tarp money? Should every institution who got money got tarp stop paying their employees because of it?

BTW - regarding the "no longer work for the company" group. Many of them worked for the period of time they were contracted for. Nothing new nor unusual here either. Say I contract you to work for 3 months at $xxx.xx. You also agree to defer payment for a period of time. This was a form of contract work - thats all.
The media and the politicians have you believing that this is some outlandish travesty - It isn't.

If you want to be upset about retention payments, then look at Merrill Lynch. Of the 10 Billion in TARP money they received, They paid out 3 BILLION which is about 30%. That is extreme.

Or just look at Chris Dodd. How can the man in charge of oversight do his job if the companies and corporations that he is supposed to oversee are paying him off? Ironic how he got money from AIG execs and their spouses (all of whom maxed out their contributions to him) Also the Countrywide situation is gonna come back to haunt him.

So, Classicman, tell me...You're happy about your taxes going to some half a million a year failure at ML, MS, and AIG?

At what point did I say that? EVER?

We're talking about the brokers. a.k.a. financial planners, advisors, shiny shoe whores. Brokers gather client assets, build financial plans, and invest according to those plans. They can either charge fees or commissions but not both. Those fees and commissions are what is termed production. If a broker (or team) had $25,000,000 in production but worked as an employee of the firm they would expect to receive the lion's share of that as compensation. If they didn't they would simply go independent and keep 90-95% of that $25,000,000 for themselves and their staff. The firm had damn well better make being an employee an attractive proposition to a guy like that.

Most successful brokers at a firm like that should be producing in the $600K to $2M range. These people make the money so you'd better keep them happy. Just like if you owned a high end trendy restaurant that was THE place to be because the chef is a major draw. Then you realize customers were leaving unhappy because the wait staff sucked. You don't fire the chef because you had a bad wait staff that screwed things up. You get rid of the crap and you do what it takes to keep that chef happy while you fix the rest of the business.

Well, you certainly seem desperate that they get these "retention payments" that would not have been possible in the slightest without the bailout.

Put simply, the only reason for the bailout was to give these bloodsucking bastards their money (and a big FUCK YOU to Bush and Obama).

I fail to see why I - being one of the new owners - am responsible for the foolish decisions made by the crooked fuckstick that used to run the joint. Let them chase him down for their retention bonuses.

LOL capitalism. It's like socialism for rich people.

Not true at all - Be very careful what you ASSUME.

AIG's original creators of that derivatives group got removed because they were not making sufficient profits. Instead they were being responsible. The employees who replaced them, who created the massive losses, and who were then getting bonuses were doing what is too common in financial markets. Promoting profits rather than doing their job. They operated as salesmen - not responsible analyst of risk. Mysteriously, spin says they still deserved bonuses for seeking higher profits rather than responsible contracts.

Your financial advisor is only a salesman. As so many critics note, the advisor rarely - almost never - tells you to get out when it was so obvious in October and November. Their interests do not correspond with clients. Their objective is only their own profits - not the job of serving clients. That is the problem and just another reason why financial markets require heavy regulation.

This ‘greed is good and screw the customer’ mentality works as long as markets go up.

Profits are objectives of the mafia and these finance people. We know mafiosi have no interest serving a customer. But that routine contempt that finance people have for their customers is appalling and is why finance markets can never be deregulated.

Responsible bonuses. Nobody gets them until four to ten years later when the spread sheets actually report an employee’s real achievements. But that is also contrary to myths so popular on Wall Street. Finance people foolishly believe work done this year appear on the spread sheets this year. Nonsense. One need only look at GM whose management (Rick Wagoner) sucked so bad that four years later, Wagoner set new world records for industry losses – even long before anyone heard of AIG. Massive losses even when the auto industry was setting new records for sales.

But Wagoner got big bonuses every year. According to classicman – retention bonuses because he was doing so much good for GM.

Companies that are doing so much better don’t have those big management bonuses. How curious. How to make a more productive company. Less (smaller and fewer) bonuses. Industries where contempt for America is highest also dish out massive and record numbers of bonuses even when they lose money and go running to government for protection.

In AIG, people who would not commit to so many of those risks (and could have averted much of this) were replaced for being responsible and cautious. Such attitudes are heresy on Wall Street this past decade where profits are more important than America.

If you have to bribe your employees to stay, then your company is fucked from the start.