in deep existential crisis..

A Journal by Sara

AIG – to pay bonus to its top executives

 

You might read AIG as ‘American International Group Inc’, as they have stood for, else call ‘All Investments Gone’ as the reality calls for and read the title of this column.

Since few days, AIG has drawn lot of flak and public outrage, after the news poured in that AIG has paid its executives, bonuses amounting to $165 million. Obama has vowed that he would try every possible legal avenue to stop such bonuses being paid out.

AIG has 80% stakes of United States government, after receiving four bailouts totaling to $170 billion. AIG has been questioned on the transactions that were made with the tax payer’s money and finally it has listed the transactions with payee’s consent.

The largest single recipient was Goldman Sachs ($12.9 billion). Other recipients include 20 European banks that received a total of $58.8 billion and Merrill Lynch ($6.8 billion), Bank of America ($5.2 billion), Citigroup ($2.3 billion) and Wachovia ($1.5 billion).

Big foreign banks also received large sums from the rescue, including Société Générale of France and Deutsche Bank of Germany, which each received nearly $12 billion; Barclays of Britain ($8.5 billion); and UBS of Switzerland ($5 billion).

Altogether, the disclosures account for $107.8 billion in A.I.G. bailout money which leaves us wondering about the rest of the money. Another $30 billion was added to the A.I.G. bailout pot this month and must be accounted for as soon as it is spent. That leaves some $32 billion unaccounted for. Where did it go?

If you get a measure of how a certain $165 million spent out of that $32 billion, it sure does sting. A staggering $165 million handed out as bonuses for employees of a company that nearly took down the financial system. And heck, the taxpayers, own nearly 80 percent of A.I.G.

A senator was fuming hearing about the bonus payments,

——————————————————–

“A.I.G. has been trying to play the American people for fools by giving nearly $1 billion in bonuses by the name of retention payments,” Mr. Cummings said on Sunday. “These payments are nothing but a reward for obvious failure, and it is an egregious offense to have the American taxpayers foot the bill.”

——————————————————–

Obama On an interview,

The Fed chairman, Ben S. Bernanke, appearing on “60 Minutes” on CBS on Sunday night, said: “Of all the events and all of the things we’ve done in the last 18 months, the single one that makes me the angriest, that gives me the most angst, is the intervention with A.I.G.”

He went on: “Here was a company that made all kinds of unconscionable bets. Then, when those bets went wrong, they had a — we had a situation where the failure of that company would have brought down the financial system.”

In deciding to rescue A.I.G., the government worried that if it did not bail out the company, its collapse could lead to a cascading chain reaction of losses, jeopardizing the stability of the worldwide financial system.

The list released by A.I.G. on Sunday, detailing payments made between September and December of last year, could bolster that justification by illustrating the breadth of losses that might have occurred had A.I.G. been allowed to fail. Some of the companies, like Goldman Sachs and Société Générale, had exposure mainly through A.I.G.’s derivatives program. Others, though, like Barclays and Citigroup, stood to lose mainly because they were customers of A.I.G.’s securities-lending program, which does not involve derivatives.

——————————————————–

AIG is the source of global financial disorder, as viewed by most experts across the world, for their risky financial practices and short term target achievements. Indeed, as the system, says what is your worth for this financial quarter and as it evaluates you on YoY basis, even the executives have just seen the quarters ahead of the decades. Consequence, he gets a performance bonus for the fiscal quarter whereas the entire world goes bust on YoY basis.

Should not the top executives of the firm apologize in front of the people, pleading guilty for their unpardonable acts rather than filling their pockets with the abuse of the entire world?

May be, is he rewarded for meeting his previous quarter’s target, in fact exceeding by far miles. What could one do if he chose to say that he is only answerable to his firm and not to the world outside the firm? It sure does sting, and leads to the inevitable question of who is accountable to whom?

Suddenly capitalism looks down at its depth !

Advertisements

March 17, 2009 - Posted by | Business/Industries, Economics, Entrepreneurs, Finance/Markets, India, Infra Structure, Issues, Policy/Strategies

1 Comment »

  1. […] Original post:  AIG – to pay bonus to its top executives […]

    Pingback by AIG - to pay bonus to its top executives « Economics Projects | March 17, 2009 | Reply


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: