CreativeDominant
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quote:
ORIGINAL: Mercnbeth
Seeing Senator Frank and other talking heads pontificate and attempt to make themselves credible by castigating AIG for paying out these bonuses points out that you can "fool all of the people all of the time".
How many of you now incredulous at these payouts are also on the side of bailing out these failures? You should know, you can't be both for a 'bail-out' and against these pay outs. Fund the bail out and you guarantee that these contractually obligated bonus payouts will be paid. The only way not to pay them, would be to let the mismanaged failures - fail.
Does anyone know WHY AIG failed? The division that incurred the losses did not write one 'bad', under collateralized, no income verification, loan. What they did was provide 'insurance' in the event of a portfolio of these loans defaulting at a specific percentage, over a specific period of time, underwritten under specific terms unique to each program. Once the criteria was set, by actuaries living in the bowels of these companies, coverage was offered for it throughout the world. You can buy insurance for anything.
In the world of actuaries, it's all about probability. A 500 year flood may occur every other year, but historically and with modern preventative methods, it should only occur every 500 years based on mathematic and statistical models that far exceed my ability to totally understand. Except, unlike flood records going back centuries, these credit insurance instruments are new. Also, unlike floods, they aren't manipulated by "good intent" political agenda, seeking 100% homeownership including people who didn't qualify when the actuary tables were being written.
Based upon the actuarial analysis the insurance company prices the insurance based upon that probability and its sold through various levels from company President down to individual producers. These people have very little to no input on pricing or the actuarial analysis. They know one thing - if they sell it under their contract, they will be paid. If they reach certain levels of market penetration they will get bonuses.
Guess what - they sold the hell out of these policies; generating for AIG Billions in premium dollars. Guess what #2 - actuary statistics didn't account for a 500 year flood of default hitting last year. But it did and claims had to be contractually paid out. Since 'contingency' bonus have been virtually eliminated due to that great insurance 'god' from NY, Ex-Governor Spritzer (you know-the prostitute benefactor), you can't make bonuses contingent on claims so production bonuses are NOT impacted. Ergo - if you have a viable company you have to pay the claims, this is the money going to foreign banks from the bail-out; and the production bonuses. You want to eliminate it - let the company FAIL.
As a side bar; I think it incredible that Senator Frank can sit there on camera and claim ignorance to the basic facts I've presented. What explains a lot was hearing last night that our Federal Reserve Chairman Bernanke, never has been to Wall Street or inside a large Corporation. All his 'knowledge' comes from academia. He has no practical experience. Now his actions and all his "I hope..." statements make much more sense. He has only theory and academic modeling on his resume. Granted, he's smart and has a fantastic academic record, but if you had your choice of having the #1 graduating doctor from Harvard Med School deliver your baby on his graduation day or a emergency medical technician wearing a 'I Delivered 100 Babies' pin; who would you prefer? In a crisis, sometimes practical experience is more valued that theoretical knowledge.
Almost as incredible that people accept what Bernanke and Frank say as absolute and accurate. So, to all the apologists, were they stupid to approve the bail-out not knowing about the bonuses or were they complicit, knowing about the bonuses but saying nothing until they became public? Either way - why isn't any scrutiny being placed upon these representatives? I guess admitting up front that they only looked at it for "3 minutes" gets them off the hook - right? Then again, the religion of politics and political affiliation, and consideration of facts seem to be more and more distant each and every day. It's much easier to say; "It's Bush's fault!" - and the crowd goes wild...
quote:
As the bonus firestorm raged, AIG finally released the list of its trading partners, revealing that much of the bailout billions have gone to settle obligations to European banks.
French financial firm Societe Generale topped the list, receiving $4 billion, followed by Deutsche Bank and Goldman Sachs with about $2.5 billion each.
AIG owed billions because it had insured tons of risky transactions that all went sour.
The execs who made most of those risky bets are the same ones getting bonuses.
Source: BONUS - BAIL-OUT
Finally, a voice of reason...along with Orion's.
Anyone who believes that those responsible for the government bailout of AIG was not aware of what their company was going to be doing in the near future...i.e., pay bonuses that they were obligated contractually to pay...is either lying or did not take the time to find out. Either way, given that those elected to represent us chose one course or the other (lying or not finding out) and still chose to give AIG taxpayer money, tis a scary thing to consider.
Or, as asked already, is this Bush's fault too?
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RE: Your tax dollars at work - 
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