AIG

[classicman]

Originally Posted by sugarpop

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.

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.

[Flint]

Originally Posted by sugarpop

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.

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.

[tw]

Originally Posted by sugarpop

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.

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.

[piercehawkeye45]

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.

[ZenGum]

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

[xoxoxoBruce]

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

[Urbane Guerrilla]

[lookout123]

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.

[sugarpop]

Originally Posted by lookout123

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.

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

[lookout123]

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?

[TGRR]

Originally Posted by lookout123

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?

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.

[sugarpop]

Originally Posted by lookout123

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?

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?

[xoxoxoBruce]

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

[sugarpop]

Originally Posted by xoxoxoBruce

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

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.

[sugarpop]

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.