Bailout Nation: Freddie, Fannie, and more

[RedScare]

Man, AIG lost $61.7 Billion last quarter with the best and beightest executives. Can you imagine how much they would have lost with the worst and dimmest?

[20thStDad]

Yeah bonuses are typically tied to performance. No performance, no bonus. This should apply at all levels.

[TheNiche]

Man, AIG lost $61.7 Billion last quarter with the best and beightest executives. Can you imagine how much they would have lost with the worst and dimmest?

I'm not sure whether you're being sarcastic, but I agree with the (literal reading of the) statement in principle. I don't know any specifics about staffing in the financial products division, but I would assume that grossly negligent employees there have been replaced by now. But I'm less clear just how many people there were that really fit that description. There's no doubt in my mind that these guys were following the strategic directives coming down from corporate, and if they really were just good employees following bad orders, I really don't see why they ought to be punished. Moreover, if they're good at what they do, then they are desperately needed to prosecute the job of CDS damage control, which is an essential function to the long-term stabilization of AIG.

It is somewhat disturbing to me that this kind of a story is actually newsworthy--and it is, I don't contest that. No doubt, many in the Republican Party as well as those on the extreme left will use it as the basis for criticism of standing policies. But when it comes to executive compensation, including bonuses and perks...businesses have to do business, and in order to do that, they've got to be competitive with their competitors. How does a firm remain competitive by underpaying its staff?

[Mark F. Barnes]

[Subdude]

I'm not sure whether you're being sarcastic, but I agree with the (literal reading of the) statement in principle. I don't know any specifics about staffing in the financial products division, but I would assume that grossly negligent employees there have been replaced by now. But I'm less clear just how many people there were that really fit that description. There's no doubt in my mind that these guys were following the strategic directives coming down from corporate, and if they really were just good employees following bad orders, I really don't see why they ought to be punished. Moreover, if they're good at what they do, then they are desperately needed to prosecute the job of CDS damage control, which is an essential function to the long-term stabilization of AIG.

It is somewhat disturbing to me that this kind of a story is actually newsworthy--and it is, I don't contest that. No doubt, many in the Republican Party as well as those on the extreme left will use it as the basis for criticism of standing policies. But when it comes to executive compensation, including bonuses and perks...businesses have to do business, and in order to do that, they've got to be competitive with their competitors. How does a firm remain competitive by underpaying its staff?

AIG doesn't have to remain competitive with anyone. They've been nationalized.

Second, I would point out that the people who typically get the big bonuses are front office people doing deals. They are very likely not the ones needed to hang around for "CDS damage control". Most of the work for monitoring and unwinding CDS exposures is going to be done by the lowly grunts in legal and back office who aren't getting the mega-bonuses. I think anyone who has ever actually worked around the business would back me up on this one.

As for the "good employees following bad orders" line of thought, I suppose that's unfortunate. But it's not especially more unfortunate than the thousands of people who have lost their jobs due to the incompetence of others, or the millions who have seen their savings cut in half due to the collapse of the market. I fail to see why the employees of AIG are more deserving of sympathy and bonuses than the rest of the world. After all, they wouldn't even have jobs if it weren't out of the pockets of taxpayers, so sob stories on their behalf ring a little false.

Finally, while it may be unfair to the blameless employees of AIG, it is also important from a broader policy perspective to send a message about the impropriety of state employees awarding themselves giant bonuses, pour encourager les autres as they say.

[TheNiche]

AIG doesn't have to remain competitive with anyone. They've been nationalized.

The public owns a lot of AIG stock. The public should want for the stock price to go up. In order for AIG to stabilize and become a viable going concern that can be sold off at a profit, AIG will need to be able to be competitive within their industry.

Frankly, I think that the same kind of principle should be true of government services. They shouldn't undercapitalize their programs, undermining their efficacy. If they're going to do something, they should do it adequately. If they aren't going to do something adequately, they shouldn't do it.

Second, I would point out that the people who typically get the big bonuses are front office people doing deals. They are very likely not the ones needed to hang around for "CDS damage control". Most of the work for monitoring and unwinding CDS exposures is going to be done by the lowly grunts in legal and back office who aren't getting the mega-bonuses. I think anyone who has ever actually worked around the business would back me up on this one.

Compensation in the form of commissions or bonuses works well whenever production volume is a priority. That works for sales, but it also works well in situations like this one, where sales are being unwound one at a time, piecemeal.

Whoever are working the mid-level executive positions need to be compensated for overseeing the process as well as provided a performance incentive if they are able to do it more quickly than the time that was originally budgeted them. And certainly those in the trenches need to be similarly rewarded based upon performance.

I would suspect that there are more than just lawyers and grunts unwinding these deals. Are the teams of people that created them so completely useless at voiding them? I don't know specifically what the process is, but I would imagine that the functions include triage (or something analogous to triage where CDS's are prioritized by exposure and risk), analysis, renegotiation with stakeholders, and then possibly marketing and sale. I would imagine, also, that many of the lawyers that helped to originate CDS deals are still employees there, just with shifted roles, and are probably among those hoping to receive their contractually-agreed-to bonus.

Whether a bonus is just a regular bonus or is labeled a 'mega-bonus' really doesn't have much bearing on the principle that employees need to be paid competitively or they will leave. When there is turnover, there is also a massive cost not only to replace employees that have been lost but in terms of lost productivity. And those effects are magnified when there is mass turnover or when a company's reputation is so damaged that attracting new talent requires higher pay. And in this case, the employees that would stand to lose their bonuses would probably sue because AIG would have violated a contractual agreement about compensation. Remember, AIG is not in bankruptcy. Those lawsuits go right back to the bottom line, and as long as the government owns AIG stock, the legal expenses or court-mandated awards go right back to the Treasury. How is that in the public's interest!? The only winner is the legal industry.

As for the "good employees following bad orders" line of thought, I suppose that's unfortunate. But it's not especially more unfortunate than the thousands of people who have lost their jobs due to the incompetence of others, or the millions who have seen their savings cut in half due to the collapse of the market. I fail to see why the employees of AIG are more deserving of sympathy and bonuses than the rest of the world. After all, they wouldn't even have jobs if it weren't out of the pockets of taxpayers, so sob stories on their behalf ring a little false.

The unequal suffering of others is irrelevant; it is a sunk cost. We can't go back, we can't change it. We only exert influence over the future. You and I both want the fundamental problems solved, right? You and I both want to stop the bleeding, stabilize the patient, and rehab them so that they can walk on their own again, right?. Well the stabilization of AIG and other financial institutions needs to be the priority, then, and that isn't going to happen as quickly if these institutions underpay employees and induce lawsuits by violating contracts.

Finally, while it may be unfair to the blameless employees of AIG, it is also important from a broader policy perspective to send a message about the impropriety of state employees awarding themselves giant bonuses, pour encourager les autres as they say.

Who's awarding themselves a bonus? And seeing as how the bonuses in question were agreed upon before the government had any stake in AIG (that is, before they were state employees), why should the U.S. Treasury get to pick and choose which of AIG's liabilities it wants to honor and which ones it wants to blow off when it purchases the company's common stock? That's just now how it works.

[TheNiche]

...

Wow, I got about three and a half minutes into the first segment and was overwhelmed with sound bytes, most of them less than a second long. It has an amazing rhetorical effect, but I know for fact that not all of those players being quoted are coming at this from the same angle. The economists interviewed, in particular, are certain to have very strong and very different opinions. Economists always do. Neither side to the argument is a united front, as the piece would lead someone to believe.

I still have that first segment playing in the background and the producers are really taking it to an extreme.

Having said that, I generally do appreciate John Stossel's journalism. He's done a lot of very interesting pieces and is a good foil to the regular everyday excuses for journalism.

[crunchtastic]

There's really nothing I would add that hasn't been said, except that the idea of these operating units following orders from above (NY hq) is just not the case with regard to the financial unit in London. They were their own business. With the exception of its core commerical, property and casualty lines, AIG is decentralized in the extreme. The financial unit (like American General and countless other subsidiaries) sent their CEO to NY with a results powerpoint a few times a year, the money rolled up to the main balance sheet, sort of, and that's about the extent of it. Until it all broke.

What's funny is that I had my performance review on Friday. For all of the pressure and deadlines, it really does suck to be a high performer and get neither bonus nor raise for the first time in my 18 years in the business. But, I still have a paycheck, while many do not. It buys me time to work on a job change.

[Subdude]

The public owns a lot of AIG stock. The public should want for the stock price to go up. In order for AIG to stabilize and become a viable going concern that can be sold off at a profit, AIG will need to be able to be competitive within their industry.

Frankly, I think that the same kind of principle should be true of government services. They shouldn't undercapitalize their programs, undermining their efficacy. If they're going to do something, they should do it adequately. If they aren't going to do something adequately, they shouldn't do it.

Compensation in the form of commissions or bonuses works well whenever production volume is a priority. That works for sales, but it also works well in situations like this one, where sales are being unwound one at a time, piecemeal.

Whoever are working the mid-level executive positions need to be compensated for overseeing the process as well as provided a performance incentive if they are able to do it more quickly than the time that was originally budgeted them. And certainly those in the trenches need to be similarly rewarded based upon performance.

I would suspect that there are more than just lawyers and grunts unwinding these deals. Are the teams of people that created them so completely useless at voiding them? I don't know specifically what the process is, but I would imagine that the functions include triage (or something analogous to triage where CDS's are prioritized by exposure and risk), analysis, renegotiation with stakeholders, and then possibly marketing and sale. I would imagine, also, that many of the lawyers that helped to originate CDS deals are still employees there, just with shifted roles, and are probably among those hoping to receive their contractually-agreed-to bonus.

Whether a bonus is just a regular bonus or is labeled a 'mega-bonus' really doesn't have much bearing on the principle that employees need to be paid competitively or they will leave. When there is turnover, there is also a massive cost not only to replace employees that have been lost but in terms of lost productivity. And those effects are magnified when there is mass turnover or when a company's reputation is so damaged that attracting new talent requires higher pay. And in this case, the employees that would stand to lose their bonuses would probably sue because AIG would have violated a contractual agreement about compensation. Remember, AIG is not in bankruptcy. Those lawsuits go right back to the bottom line, and as long as the government owns AIG stock, the legal expenses or court-mandated awards go right back to the Treasury. How is that in the public's interest!? The only winner is the legal industry.

The unequal suffering of others is irrelevant; it is a sunk cost. We can't go back, we can't change it. We only exert influence over the future. You and I both want the fundamental problems solved, right? You and I both want to stop the bleeding, stabilize the patient, and rehab them so that they can walk on their own again, right?. Well the stabilization of AIG and other financial institutions needs to be the priority, then, and that isn't going to happen as quickly if these institutions underpay employees and induce lawsuits by violating contracts.

Who's awarding themselves a bonus? And seeing as how the bonuses in question were agreed upon before the government had any stake in AIG (that is, before they were state employees), why should the U.S. Treasury get to pick and choose which of AIG's liabilities it wants to honor and which ones it wants to blow off when it purchases the company's common stock? That's just now how it works.

First of all, it is pretty much guaranteed that the Financial Products group will be wound down. The US government has no interest in maintaining a credit swap insurer as a going concern, so it is irrelevant if it is competitive. The argument would be different for the insurance bits of the business, but they are not at issue here.

Second, AIG has already paid out bucketloads of retention bonuses to keep key employees around during the the winding-up period. These bonuses are simply more gravy on top.

Third, I haven't seen any evidence that the employees are underpaid. It is just AIG maintaining that, and not to put too fine a point on it but they're hardly the most credible bunch at the moment.

I agree that contracts should not be unilaterally abrogated, and this is why the payments are being made. By the same token, AIG has been paying out on their CDS obligations, not voiding them. AIG is not in bankruptcy, so the contracts continue to be honored. Thus the biggest chunk of the bailout money has gone to payments on CDS claims that AIG was unable to fund itself. This settlement process isn't handled by high roller front office employees, it is done by the back office functions who typically are miserably paid.

As for stabilizing the financial system, it is indeed a worthwhile goal, but one might argue that paying millions more to those who helped bring about the collapse is a curious way to achieve it.

[memebag]

But when it comes to executive compensation, including bonuses and perks...businesses have to do business, and in order to do that, they've got to be competitive with their competitors. How does a firm remain competitive by underpaying its staff?

If there are other firms chomping at the bit to hire away these AIG guys, then something is seriously wrong with the foundations of capitalism. They've taken insurance, which is a very well understood way to make money, and screwed it up. Are folks at other companies really thinking, "Hey, we're making a lot of dough, I ought to bring in some AIG execs and screw this up, too"?

In other words, I don't see how it's mathematically possible to underpay AIG executives, unless we're talking about fining them.

[TheNiche]

First of all, it is pretty much guaranteed that the Financial Products group will be wound down. The US government has no interest in maintaining a credit swap insurer as a going concern, so it is irrelevant if it is competitive. The argument would be different for the insurance bits of the business, but they are not at issue here.

Second, AIG has already paid out bucketloads of retention bonuses to keep key employees around during the the winding-up period. These bonuses are simply more gravy on top.

Yes, but winding down their financial products division is a little more complicated than someone coming over the PA system exclaiming "lights out", followed by a flick of a switch. AIG has not declared bankruptcy and agreements that were made previously are still in effect. Those individual employees that were involved with originating these deals are going to be valuable when renegotiating or divesting the CDS's. That is a critical function, and even (or perhaps especially) if it is a temporary function, AIG is going to need competent, experienced people in order to do this. And if you don't give them some kind of a meaningful incentive to stick around until the job is done, they're going to do just like crunchtastic is and preemptively look for employment elsewhere; nobody wants to be the last guy on a sinking ship. And if you have to replace them on this kind of a job, that's even worse. Not only would AIG end up paying a premium on highly-skilled temp labor, but they'd be bringing in people that aren't familiar with the business; that doesn't help anybody.

Third, I haven't seen any evidence that the employees are underpaid. It is just AIG maintaining that, and not to put too fine a point on it but they're hardly the most credible bunch at the moment.

I agree that contracts should not be unilaterally abrogated, and this is why the payments are being made. By the same token, AIG has been paying out on their CDS obligations, not voiding them. AIG is not in bankruptcy, so the contracts continue to be honored.

Guilty until proven innocent, eh? How do you know what sort of pay is adequate? How do you know that this is excessive? Besides which, I thought that the core of this issue was that AIG was honoring contracts that stipulated the payout of bonuses. If AIG doesn't pay out according to the contracts, they get sued. This should be a no-brainer. They have pre-existing liabilities; those liabilities have to be paid or else those liabilities just get transferred from one account to another on their balance sheet, then start incurring legal expenses. Why is this issue perceived as debatable?

Thus the biggest chunk of the bailout money has gone to payments on CDS claims that AIG was unable to fund itself. This settlement process isn't handled by high roller front office employees, it is done by the back office functions who typically are miserably paid.

Do you think that the back office employees manage themselves, whether strategically, as a matter of setting business policy, or from day-to-day? Is there no hierarchy? Are there no critical paths? Is there not a single person whose compensation should be at least in part based upon performance?

The bonuses at issue are as small as $1,000. Are you also telling me that for some reason bonuses in the amount of $1,000 are being contested in the court of public opinion because the employees set to receive it are big shots that are already excessively paid? Well if that's the case, then I must be a big shot. Hate me. Send a press team to interview and deride me. Send protesters to wave around signs in front of my one-bedroom domicile. Then try and convict me; send me to jail--I made incredibly too much bonus money last year. I must be scum.

As for stabilizing the financial system, it is indeed a worthwhile goal, but one might argue that paying millions more to those who helped bring about the collapse is a curious way to achieve it.

I would agree that certain executives should be held accountable (probably just a handful of people in total), but is there anybody more qualified to fix AIG than the people that followed the wrong orders competently? Serious question.

[TheNiche]

If there are other firms chomping at the bit to hire away these AIG guys, then something is seriously wrong with the foundations of capitalism. They've taken insurance, which is a very well understood way to make money, and screwed it up. Are folks at other companies really thinking, "Hey, we're making a lot of dough, I ought to bring in some AIG execs and screw this up, too"?

In other words, I don't see how it's mathematically possible to underpay AIG executives, unless we're talking about fining them.

That's right, all 400 of the people whose bonuses are being debated in the public forum are responsible for the undoing of capitalism, and none of them deserve any additional compensation for the very important work that (most of) them are now doing to fix and restore value to the AIG stock which the public owns. All of them ought to be punished, they all should be expected to quit, and they should be made to incur legal expenses as they file lawsuits that AIG couldn't possibly win...because the public is willing to spite them at the public's own expense.

Yeah, that makes a whole lot of sense.

[memebag]

That's right, all 400 of the people whose bonuses are being debated in the public forum are responsible for the undoing of capitalism, and none of them deserve any additional compensation for the very important work that (most of) them are now doing to fix and restore value to the AIG stock which the public owns. All of them ought to be punished, they all should be expected to quit, and they should be made to incur legal expenses as they file lawsuits that AIG couldn't possibly win...because the public is willing to spite them at the public's own expense.

Yeah, that makes a whole lot of sense.

It doesn't? Who are these AIG execs that need to be bonused? Can we find some individuals and point out their merit?

[RedScare]

Y'all shouldn't pick on Niche. He is simply parrotting the company line that executives have used for years to drive up these ridiculous salaries far beyond what the execs were worth in the first place. What Niche...and the execs...leave out, however, is that during a deep recession, where the unemployed and part-tme and marginally attached totals exceed 15% of the workforce, there are literally thousands of people who could do these jobs. As a defender of outsized compensation, Niche is attempting to make you believe that these execs are business superheroes, doing things no mere mortal could do. The problem is, the financial collapse showed that these people are NOT super-intelligent. They are simply well connected drunken fratboys getting salaries they don't deserve. AIG would lose nothing by cutting the bonuses and letting these losers at capitalism leave. There are plenty of unemployed financial execs who would work for far less...and do a better job.

Contractual bonuses are a different story of course, but that just points out how poorly these companies were run that a bonus is due without performance to justify it. I have to ask though, how funny is it to read the king of HAIF free marketers attempt to justify something as anti-competitive and anti-free market as guaranteed bonuses that are not tied to performance?

I made incredibly too much bonus money last year. I must be scum.

You are also now unemployed, proving that the size of the bonus bears no relation to the value of the employee.

Edited March 15, 2009 by RedScare

[TheNiche]

Y'all shouldn't pick on Niche. He is simply parrotting the company line that executives have used for years to drive up these ridiculous salaries far beyond what the execs were worth in the first place. What Niche...and the execs...leave out, however, is that during a deep recession, where the unemployed and part-tme and marginally attached totals exceed 15% of the workforce, there are literally thousands of people who could do these jobs. As a defender of outsized compensation, Niche is attempting to make you believe that these execs are business superheroes, doing things no mere mortal could do. The problem is, the financial collapse showed that these people are NOT super-intelligent. They are simply well connected drunken fratboys getting salaries they don't deserve. AIG would lose nothing by cutting the bonuses and letting these losers at capitalism leave. There are plenty of unemployed financial execs who would work for far less...and do a better job.

Contractual bonuses are a different story of course, but that just points out how poorly these companies were run that a bonus is due without performance to justify it.

What do you suppose is the unemployment rate among people with an intensive education in finance, or some other credential approximating that? They may not be superhuman, but would you think it the same as a ditch digger in Detroit? Are the two sorts of jobs really comparable? And out of the similarly-qualified, how many would be willing to work for a company as unstable as AIG on a temp job without some kind of special consideration as far as compensation goes? And would one of these newly unemployed people from other firms that have had to downsize be any less worthy of criticism than are the people they'd be replacing at AIG?

Incidentally, as someone who falls along that spectrum, I'd like to specifically rebuke Red's comment about people like me being "simply [a] well connected drunken fratboy getting [a] salary that don't deserve." I'd like to point out that I am 1) not simple by any meaning of the word, 2) I especially well-connected, 3) I had actually taken a significant cut in salary in order to work for a company where a large portion of my compensation was based on performance-based bonuses, and 4) if anybody has ever met me, they would immediately recognize that I am not--nor have I ever been--a frat boy. The free-flowing scotch and (infrequent) use of the corporate jet were well-deserved and sometimes very necessary perks. There were times for getting drunk, and there were times to get down to business; that's something you'd learn pretty quickly in such a job. No output, no bonus, no perks, and--ultimately--no job.

Seriously, guys, you can play the obstructionist blame game or you can accept that AIG has to honor its liabilities and not get sued in order to avoid a wave of lawsuits, ridiculous rates of turnover, and productivity interruptions, all of which ultimately cost you your own money. Take your pick.

I have to ask though, how funny is it to read the king of HAIF free marketers attempt to justify something as anti-competitive and anti-free market as guaranteed bonuses that are not tied to performance?

How funny is it to read the king of HAIF spin doctors to peg me as a free marketer? Not very. Not really at all, actually.

Free markets are anarchistic, and they ultimately compromise themselves by way of monopolistic corporatism, leading to something ugly and despotic. Clearly there have to be restraints, and clearly it is not enough to create them by law--they must also be administered competently. Anti-trust is a good example. AIG is too big to fail, and that is an issue that should fall under the umbrella of anti-trust laws, but that doesn't. I'd like to see it broken up. The same should be true of very large banks and investment banks. Economies of scale diminish at the extremes even as systematic risk grows geometrically.

There are approximately 400 different bonus plans under discussion. I don't know how they're set up. Who's to say that the amounts rewarded aren't reflecting performance in some form or another? At the very least, you should be demanding more information. There is plenty of room to grant a reasonable benefit of the doubt.

I'd make a snide personal attack on you right here--probably something having to do with the essential assumption comprising the foundation of Napoleonic Law--but I pride myself on substance above rhetoric. I will refrain.

It doesn't? Who are these AIG execs that need to be bonused? Can we find some individuals and point out their merit?

I can't. I don't have copies in my possession of all 400 contracts, much less a working knowledge of each person's performance. I'd suspect that you don't, either. Prove me wrong.

Edited March 15, 2009 by TheNiche

[RedScare]

I'd make a snide personal attack on you right here--probably something having to do with the essential assumption comprising the foundation of Napoleonic Law--but I pride myself on substance above rhetoric. I will refrain.

Not only would no one get the snide reference, but I'd merely remind you that since I do not practice law in Louisiana, I have no use for the Napoleonic Code.

BTW, I think you missed my statement about contractual obligations. I don't doubt that the bonuses are legally required to be paid, but in this environment, corporations could save a lot of money by making new contracts much tighter. Corporate execs have simply proven themselves not to be that bright. They just looked good in a bubble economy.

Edited March 15, 2009 by RedScare

[TheNiche]

Not only would no one get the snide reference, but I'd merely remind you that since I do not practice law in Louisiana, I have no use for the Napoleonic Code.

Do not discount the wisdom of those empowered by Google.

BTW, I think you missed my statement about contractual obligations. I don't doubt that the bonuses are legally required to be paid, but in this environment, corporations could save a lot of money by making new contracts much tighter. Corporate execs have simply proven themselves not to be that bright. They just looked good in a bubble economy.

Corporations should always save money by making new contracts as tight as they possibly can be. Though it may have been too large to fail, AIG's standing in the labor market was nevertheless as a price taker, not a price maker.

[memebag]

I can't. I don't have copies in my possession of all 400 contracts, much less a working knowledge of each person's performance. I'd suspect that you don't, either. Prove me wrong.

How can I prove you wrong? Is it even possible? Now that we're paying these bonuses, at least in part, shouldn't we be able to see why we're paying them?

And if you don't have any information about these executives, why are you so convinced they need bonuses to stay at AIG? Do you have some inside info?

[TheNiche]

How can I prove you wrong? Is it even possible? Now that we're paying these bonuses, at least in part, shouldn't we be able to see why we're paying them?

And if you don't have any information about these executives, why are you so convinced they need bonuses to stay at AIG? Do you have some inside info?

You can't. I've only established that it is plausible that AIG's compensation programs are not mismanaged. Neither you or I have the evidence to decisively argue whether it has been mismanaged or not. But that's my point. Businesses make decisions which plausibly could be either good or bad all the time and we never hear about them even when their impact on society could be many times the significance of this one. This one is no different, really, yet it generates noise among ill-informed people who are too quick to cast blame on others.

[memebag]

You can't. I've only established that it is plausible that AIG's compensation programs are not mismanaged. Neither you or I have the evidence to decisively argue whether it has been mismanaged or not.

I'm not arguing about management of AIG's compensation programs. I'm arguing about management of AIG. And I have some evidence that AIG was mismanaged. Which sort of changes the whole compensation program deal.

But that's my point. Businesses make decisions which plausibly could be either good or bad all the time and we never hear about them even when their impact on society could be many times the significance of this one. This one is no different, really, yet it generates noise among ill-informed people who are too quick to cast blame on others.

"Too quick to cast blame"? We should wait until when, exactly, before casting blame? I think the instant the government invested our money in AIG was a fine time to cast blame.

So, do you really believe that other firms are trying to steal AIG's best and brightest, and that these bonuses are all we can do to keep them? And that we can't let them leave and maybe find someone better and brighter at a company that isn't on the skids?

[TheNiche]

I'm not arguing about management of AIG's compensation programs. I'm arguing about management of AIG. And I have some evidence that AIG was mismanaged. Which sort of changes the whole compensation program deal.

OK, let's play the blame game for a moment (and hopefully only this moment more). Does it really change the whole situation? From the top down, indiscriminately, excluding nobody out of those 400 employees that are eligible? I could understand a few exceptions being made, and in fact, I fully expect that they will be. I have no doubt that out of those 400 people, somebody isn't performing or living up to their contract. F___'em. If there's any way at all around it, people like that shouldn't get paid. In fact I'm not clear whether the bottom line figure that has been cited by the AP includes AIG's total exposure to bonuses or whether it is adjusted to indicate only what is actually due to people based on their performance as employees. The whole thing could be getting managed just fine, but since you and I both lack specifics, neither of us would have any way of knowing with certainty. And that only furthers my previous point.

"Too quick to cast blame"? We should wait until when, exactly, before casting blame? I think the instant the government invested our money in AIG was a fine time to cast blame.

So, do you really believe that other firms are trying to steal AIG's best and brightest, and that these bonuses are all we can do to keep them? And that we can't let them leave and maybe find someone better and brighter at a company that isn't on the skids?

Really? I think that at that instant, the priority should've been figuring out how to fix AIG and divest it from the public accounts. Unless there's malicious intent or criminal negligence, I don't really believe that there's ever a good time for blame, especially when that process distracts from a forward-looking vision--which it is. But it's always a good time to make the future a better one. Sometimes making the future better involves replacing some key executives; nothing personal, it's just good business. People make mistakes, and even though Red seems to think that I think that corporate executives don't, he's wrong. They do and I know that they do. I make mistakes too. That in and of itself is not a crime and I refuse to get pissed off over it. I just want to fix it! Don't you agree?

[crunchtastic]

FWIW I can tell you that in the headhunting world there is already a perceivable anti-AIG bias for non-executives. Mid- and mid-high level professional and management is getting the skeevy eye. Despite the fact that I had thousan dollars to do with the meltdown, I had 2 phone interviews cancelled just last week. These were follow ups with companies who previously had expressed interest. Time to tough up on the job search.

Edited March 16, 2009 by crunchtastic

[TheNiche]

FWIW I can tell you that in the headhunting world there is already a perceivable anti-AIG bias for non-executives. Mid- and mid-high level professional and management is getting the skeevy eye. Despite the fact that I had thousan dollars to do with the meltdown, I had 2 phone interviews cancelled just last week. These were follow ups with companies who previously had expressed interest. Time to tough up on the job search.

Hmmm, is that a roundabout way of saying that you were one of the 400 folks with a politicized bonus coming to them?

I'm sure you'll find something. At least AIG's story isn't as bad as Enron...and that eventually shook out.

[memebag]

Really? I think that at that instant, the priority should've been figuring out how to fix AIG and divest it from the public accounts. Unless there's malicious intent or criminal negligence, I don't really believe that there's ever a good time for blame, especially when that process distracts from a forward-looking vision--which it is.

My jaw literally dropped. I can't believe these words are coming out of your mouth. You're saying that no matter how much they screw up, executives deserve their bonuses? You're saying that we can never blame anyone for anything?? Isn't that some kind of freakish parody of socialism?

Forward looking vision??? "Captain, we've hit an iceberg!" "No time for the blame game, full speed ahead! And where's my bonus?"

But it's always a good time to make the future a better one. Sometimes making the future better involves replacing some key executives; nothing personal, it's just good business. People make mistakes, and even though Red seems to think that I think that corporate executives don't, he's wrong. They do and I know that they do. I make mistakes too. That in and of itself is not a crime and I refuse to get pissed off over it. I just want to fix it! Don't you agree?

Sure, I want to fix it. But I also want to not waste tax money on bonuses for anyone involved in a company that lost money. Bonuses are supposed to be paid out of profit, and there is no profit, there's the opposite of profit. There's loss! No profits, no bonuses. If you're eligible for a bonus when there's extra money, you ought to be liable for a fine when there's not enough. Put some skin in the game, bootstraps, self determination, hard work, and all that capitalist noise.

[crunchtastic]

Hmmm, is that a roundabout way of saying that you were one of the 400 folks with a politicized bonus coming to them?

I'm sure you'll find something. At least AIG's story isn't as bad as Enron...and that eventually shook out.

ha, what I typed was "I had thousand dollarsall to do with" .............damn I thought I confused the censor!

[TheNiche]

My jaw literally dropped. I can't believe these words are coming out of your mouth. You're saying that no matter how much they screw up, executives deserve their bonuses? You're saying that we can never blame anyone for anything?? Isn't that some kind of freakish parody of socialism?

Forward looking vision??? "Captain, we've hit an iceberg!" "No time for the blame game, full speed ahead! And where's my bonus?"

Sure, I want to fix it. But I also want to not waste tax money on bonuses for anyone involved in a company that lost money. Bonuses are supposed to be paid out of profit, and there is no profit, there's the opposite of profit. There's loss! No profits, no bonuses. If you're eligible for a bonus when there's extra money, you ought to be liable for a fine when there's not enough. Put some skin in the game, bootstraps, self determination, hard work, and all that capitalist noise.

I did not say that. You've completely missed the point. Put down the bong, turn off Nickelodeon, and try again.

[memebag]

You said:

"Unless there's malicious intent or criminal negligence, I don't really believe that there's ever a good time for blame..."

So if someone didn't intend to screw it up, then we shouldn't blame them for screwing it up.

I don't really care about intentions. Someone broke a big company and jeopardized a bunch of jobs. I have no trouble blaming them.

Put down the bong, turn off Nickelodeon, and try again.

Oh, and please, no personal attacks.

[crunchtastic]

I did not say that. You've completely missed the point. Put down the bong, turn off Nickelodeon, and try again.

Are you talking about me? Because it ain't Meme.

And you have no idea how AIG is structured, nor how their management thinks.

[TheNiche]

You said:

"Unless there's malicious intent or criminal negligence, I don't really believe that there's ever a good time for blame..."

So if someone didn't intend to screw it up, then we shouldn't blame them for screwing it up.

I don't really care about intentions. Someone broke a big company and jeopardized a bunch of jobs. I have no trouble blaming them.

The problem with trying to affix blame to every little error is threefold:

1) Randomness of error. Even well-meaning very intelligent people make errors from time to time, and that doesn't mean that they're in the wrong job. They know they messed up, and everybody accountable for that person knows they messed up. They probably feel really bad about it.

2) Function. If some third party makes it their business to rub a person's nose in their error, it's just overkill and it doesn't help anything. It distracts from them trying to continue on with their job, functioning effectively as an employee. As an aside, if anybody has a boss who does this, I've always found a resolution easily arrived at by taking immediate responsibility and apologizing, then snapping at them that they're wasting time that you need to spend fixing it when they come around for the second pass.

3) Accountability. Is the person who made the error responsible for it, or is it the person who is their direct line manager for not providing adequate oversight? Maybe it was two managerial levels up, where they made the hiring decision for that person; and if so, who hired the person that hired the person responsible for the error? And who hired them? Maybe there's a systematic problem with corporate culture that influenced hiring policy or even the individual's decision directly. Perhaps it is a subordinate that should've spoken up. One way or the other, I could argue that it all comes back to the shareholders voting for the board of directors...but that's not entirely reasonable, either. Usually people like you and I don't have enough information to figure out how errors occurred, and even if we did, blame gets spread around so easily that it's hard to pin down any one person that really is responsible for the event.

In light of all this, my take on the blame game is that it simply isn't in the public interest to bother with, the exceptions being when there is malicious intent or criminal negligence. Enron was a criminal matter. AIG was poor judgment; it doesn't really inherently matter how AIG got there--what matters is how they're going to proceed. Maybe their leadership needs to be tweaked. Maybe they need to be dramatically restructured. There are a lot of possibilities. You aren't qualified to comment, one way or the other. Neither am I (and I don't need to be reminded of it, crunch, because when you do, you're demonstrating that you've missed my point).

Oh, and please, no personal attacks.

EDIT: Oops. I remembered it being you that was discussing that with crunchtastic. It was Trae. My mistake. I assure you that the intent was a humorous effect coupled with a strong rhetorical message to emphasize just how greatly you'd missed my point. Instead, I inadvertently put myself in a compromising position analogous to those that are the subject of this post. Do you care, now, to spend time bugging me about it further, or can we stay on point and further our discussion?

Edited March 16, 2009 by TheNiche

[memebag]

EDIT: Oops. I remembered it being you that was discussing that with crunchtastic. It was Trae. My mistake. I assure you that the intent was a humorous effect coupled with a strong rhetorical message to emphasize just how greatly you'd missed my point. Instead, I inadvertently put myself in a compromising position analogous to those that are the subject of this post. Do you care, now, to spend time bugging me about it further, or can we stay on point and further our discussion?

I was only saying that because Editor said the same thing when I asked if someone else was high. Personally, I had no trouble with your post. Well, the part about bongs and Nickelodeon. The rest of it is so wacked I won't ever bother responding to it.