damj Posted March 20, 2009 Share Posted March 20, 2009 AIG Executives deserve those bonus checks ... NOT! Show how greedy and out of touch that industry has become ... Link to comment Share on other sites More sharing options...
damj Posted March 20, 2009 Author Share Posted March 20, 2009 I actually think this has been overblown. If you don't pay the executives bonuses, then they will leave. I'm sure most of them are desperately trying to jump off of that sinking ship; they need some incentive to stay. That said, AIG could have been more discreet and sensible about it--e.g., reducing and deferring bonus payments. I agree that they had a right to the money, but it's the perception issue ... you're right, they should have reduced and deferred the bonus payments until AIG was in better standing. It's like the other financial firm (whose name escapes me at the moment) who threw the retreat bash right after getting fed money ... I believe it was a different division that did not receive fed $$$ ... however it was the percepttion of it ... These execs are so out of touch that they can't see that. Aslo, the government is starting to get silly with their grandstanding over it. The saddest part is that the feds are quick to fan the flames here, but aren't trying to do much to ensure it (the whole crisis) doesn't happen again. Link to comment Share on other sites More sharing options...
Magox Posted March 20, 2009 Share Posted March 20, 2009 AIG Executives deserve those bonus checks ... NOT! Show how greedy and out of touch that industry has become ... I hear what your saying, but there is more to it than meets the eye. This story goes way back, way before this week. If your going to blame people. The first people you blame is Alan Greenspan and former president Bill Clinton. One of Greenspan’s first acts as Chairman of the Fed was to call for repeal of the Glass-Steagall Act, something which his old friends at J.P.Morgan and Citibank had ardently campaigned for. It wasn't until Nov. 1999, that Bill Clinton repealed the glass-steagal act, which basically paved the way to make it legal to trade OTC derivatives to understand what all this means, you have know what an OTC derivative is Over-the-counter (OTC, or direct buyer-to-seller) derivatives are contracts that are traded and privately negotiated between two parties. All OTC derivatives are unregulated, so the counterparty risk is the key factor: basically, when the contract terminates will one party stay solvent and reimburse the other without going bankrupt? According to the BIS, the total outstanding notional amount is $684 trillion as of June 2008. Of this total notional amount, 67% are interest rate contracts, 8% are credit default swaps (CDS), 9% are foreign currency exchange contracts, 2% are commodity contracts, 1% are equity contracts, and 13% are other assorted types. Just so you know, Warren Buffet refered to them back in 2003 as "financial instruments of mass destruction" These non regulated investments, in a nutshell are sidebets on interest rate contracts, credit default swaps (CDS), foreign exchange contracts, commodity contracts, 1% equity contracts, and 12% in an other category. It's basically a legal way of gambling, but at the highest of highest stakes of poker. So high, that it can bring the world to it's knees.And now the reason for Buffet's concern becomes clear. As the world's reserve currency, the majority of all derivatives are transacted in dollars. And these trillions of dollars of worthless fiat electrons truly dwarf the rest of the world. ~8 Trillion Total Monetary Supply of US Dollars, cash, coin, and banking accounts <$100K (Federal Reserve M2) 15 Trillion Total US 2008 GDP, or the market value of all goods and services by all American parties 50 Trillion Total world GDP in 2008 per US Global 75 Trillion Total value of the world's Real Estate per US Global 77 Trillion Total nominal value of world's ETD derivatives per BIS 100 Trillion Total value of the world's stock AND bond markets per US Global 684 Trillion Total nominal value of world's OTC derivatives per BIS So the whole point of this, is that these "financial instruments of mass destruction" when they go wrong, just the slightest % causes severe damage. Since AIG insured massive amounts of these sidebets, from companies like BearSterns, Lehman, Bank of America, J.P Morgan etc. etc. It was obvious that AIG was going to receive the majority of the losses because they are the insurer of these disastrous investment vehicles. So back to AIG, there is no doubt that they were wreckless, but this is well before Liddy took over, If we are to blame anyone from AIG it would be Maurice "Hank" Greenberg, Martin Sullivan and Robert Willumstad. Liddy inherited this mess. So here we are, You have 100's of derivative traders that are working for AIG. These guys did not create the mess, they are the one's trading these toxic assets that no one wants. So the retention bonuses are necessary. The reason why is a simple reason. These guys can decide to walk away and quit. Which I know many people here would say "fine, go ahead and quit". Well, that really would not be a wise move to make. They are handling massive amounts of money, it is critical to have them still in place. They have been in the trenches, they are familiar with these products. If you bring in new people to take over and manage these contracts, it could be even more disastrous. So Liddy, had communicated this with the Secretary of Treasury Geithner. Geithner then communicated this with Dodd, and the "loophole" was created. When Congress signed on to this, they did this well before the most recent outrage. If you are going to blame anyone about this bonus, it should be congress, they were the one's that signed onto it. Now what a sham. Now they want to make a populist decision and tax them %90 of the bonus. These guys are morons. They need to step back a second and realize the possible implications of doing this. Now every bank that is receiving tarp will want to pay back the money as quick as possible, so they don't fall under these restrictions. Which in turn will defeat the whole purpose of the TARP. Which btw, I think is a terrible strategy, but this is the strategy that they are going with. I believe the biggest mistake about this most recent situation, is that this needed to be communicated to the American Public, that these guys that are handling all these OTC contracts need to be retained. Remember, these traders of OTC contracts did not create the mess, it was created along time ago, and since then greed from Wall Street CEO's pushed the idea onto their employees. Link to comment Share on other sites More sharing options...
RkFast Posted March 20, 2009 Share Posted March 20, 2009 AIG Executives deserve those bonus checks ... NOT! Show how greedy and out of touch that industry has become ... Im sure if the McDonalds you work at started going under you would just hand over part of the minimum wage youre making becuase hey....you "dont deserve" that money anymore. Link to comment Share on other sites More sharing options...
damj Posted March 20, 2009 Author Share Posted March 20, 2009 Im sure if the McDonalds you work at started going under you would just hand over part of the minimum wage youre making becuase hey....you "dont deserve" that money anymore. Oh, so you want to make this personal?!? you, i'm not playing your game. If you have a real point to make, then make it, otherwise keep it to yourself and let people with a better than room temperature IQ discuss it ... Link to comment Share on other sites More sharing options...
mead107 Posted March 20, 2009 Share Posted March 20, 2009 Just wait till they come out with the next tax law that says if you have been to a football web site you are going to be taxed $500 . and $5.00 for every post . Link to comment Share on other sites More sharing options...
damj Posted March 20, 2009 Author Share Posted March 20, 2009 You know what? I think that might have been AIG too. You're right, it was AIG ... Link to comment Share on other sites More sharing options...
damj Posted March 20, 2009 Author Share Posted March 20, 2009 Just wait till they come out with the next tax law that says if you have been to a football web site you are going to be taxed $500 . and $5.00 for every post . LOL ... I think Paterson already put that in the budget. Link to comment Share on other sites More sharing options...
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