AIG

[tw]

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.

[TGRR]

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