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View Full Version : AIG Executives Blow $440,000 After Getting Bailout



macgig
10-07-2008, 07:14 PM
AIG Executives Blow $440,000 After Getting Bailout - FOXBusiness.com (http://www.foxbusiness.com/story/markets/industries/finance/aig-executives-blow--getting-bailout/)


anyone mad yet?

baggss
10-07-2008, 07:27 PM
I say we form a lynch mob and go to work.

nukemm
10-07-2008, 07:30 PM
I'm a bit irritated at the fiscal irresponsibility of it all. Heck, a restructuring retreat would not be looked down upon, but $440,000 for just the top exec's? That's absurd.

xj6jaguar1985
10-07-2008, 11:09 PM
I give up. I'm writing in Ron Paul.

iWhat
10-07-2008, 11:25 PM
I'm glad it was highlighted in the debate Tuesday night. People need to know about this.

dabears34
10-08-2008, 12:09 AM
There is just not enough room to type how angry I am.

the8thark
10-08-2008, 06:07 AM
Even little kids are taught about not spending all of their money and saving some for a rainy day. And these people who are supposedly adults can not do this. Such a shame.

Kash
10-08-2008, 01:32 PM
Even little kids are taught about not spending all of their money and saving some for a rainy day. And these people who are supposedly adults can not do this. Such a shame.

Well, technically, that doesn't apply here. These execs DO know how to handle their own money, that's why they're so rich. Another reason they're rich is because that half million wasn't theirs, it was ours. So they have no problem spending other people's money.

D3v1L80Y
10-08-2008, 01:55 PM
These execs DO know how to swindle in order to get money, that's why they're so rich. Edited for clarification.

Zoolook
10-08-2008, 02:30 PM
Well at least the story wasn't spun to get maximum anger from the public, and at least that wasn't simply possible because the whole 'bail out' package is not understood by anyone, thanks to the media keeping everyone dumb so they can be made angry by non-events like this...

... oh wait!

Firstly, does anyone know what the 'bail out' actually is, and how it works? Does anyone know why it won't make a difference at all to anyone, except a few banks? Hands up those who think that basically companies are getting huge blank checks (cheques) to spend on their executives and pay off shareholders... hmmm, most of you. Gee, what's going on?

[/sarcasm]

Here goes...

The commercial lending sector is dead. Not just dead, actually positively mouldy... starting to smell a little kind-of-dead. This 'bail-out' has done only two things.

Firstly, it allows the fed to guarantee loans, to banks. This sounds like a nice new radical plan to save the day, but in fact, this is the Fed's job. The Fed has ALWAYS done this, and always will. Freddie and Fannie became huge, because of this. All the Fed did was even the playing field... the BoE, ECB and others have done the same thing in other countries. The AIG bailout was a line of credit, to continue operations. It didn't cost the tax-payers a dime. because it's not real money collected, it wasn't going to be spent elsewhere and was 'taken away'. Most of this money, is borrowed 'overnight' to guarantee positions and secure client money (15c33).

Secondly, the $700Bn 'bail-out' has been used to remove certain assets from certain bank's books. The reason is that in the US, banks must report a full balance sheet and can only borrow a certain percentage of their capital base, which is effectively the balance sheet. If you had Real Estate Mortgage backed Securities (RMBS) you thought were worth a billion dollars, you could borrow 8x that amount to conduct your business and investments, on behalf of 401(k)s, IRAs, corporate finance etc. If suddenly you find thise assets are only valued at $200 million, then suddenly your working capital is slashed, you cannot make payments, the market does a run on you, your capital base collapses and so does your shareprice, and then it's... ciao! Either that, or JP Morgan buys you for $3

The problem with the assets is not that they're worthless; they're not. Not all mortgages have failed, and the sub-prime actually makes up (in fiscal terms) a teeny-weeny percentage of the market... probably less than 5%. The issue is that the assets cannot be valued, because there has been so much packaging and repackaging of these assets. So, the government is buying them at a price that allows them to be removed from balance sheets without causing losses, until they can be evaluated correctly.

What the AIG execs did was stupid; they should all be fired. However, the frothing at the mouth anger aimed at this sector is largely baseless.

Just to declare my colours a little, I work on Wall St. Take this as you wish... however, the information splashed all over CNN is dumbed down so far, you're just not even being given a chance to understand what's gone on.

Sorry for the rant...

Dysfunction
10-08-2008, 02:39 PM
For starters, the frothing at the mouth about this issue is understandable. Especially with these idiots running around (AIG). It won't effect anything, and is largely misdirected, but it's understandable.




What the AIG execs did was stupid; they should all be fired.


Personally, I think they should not only be fired but should be charged.

louishen
10-08-2008, 02:50 PM
So Zoolook, is what you are saying, is the real problem may not be that serious. The real economy is largely the same as it was months ago, after all, there are not half as many cows in the fields and mass unemployment has not hit (yet).

It is all about the confidence of men and women in international markets, not a sober assessment of the real economy but some sort of herd mentality panic not based on any real understanding or evidence

Kash
10-08-2008, 04:00 PM
Investors in the stock market are all of the herd mentality. They see a small dip, they all go nuts and pull their money out. When it bottoms out, they all go nuts again and pour money back in. The vast majority of investors are idiots, just look at the $4 billion loss Apple took in a matter of hours on a false rumor last year that the iPhone was going to be delayed.

Zoolook
10-08-2008, 04:21 PM
For starters, the frothing at the mouth about this issue is understandable. Especially with these idiots running around (AIG). It won't effect anything, and is largely misdirected, but it's understandable.

Personally, I think they should not only be fired but should be charged.

Charged with what? Charged with using their expense accounts in the same way they have for years, when no one gave it a second thought, as long as the shareholders got their cut?


So Zoolook, is what you are saying, is the real problem may not be that serious. The real economy is largely the same as it was months ago, after all, there are not half as many cows in the fields and mass unemployment has not hit (yet).

It is all about the confidence of men and women in international markets, not a sober assessment of the real economy but some sort of herd mentality panic not based on any real understanding or evidence

There are very serious issues, but they're not the issues making the seven o'clock news. Also, there are issues that are being linked, that should not be.

Does anyone really honestly think the blame for (excuse the bullets)

- 10 trillion dollars of debt
- 9 years of borrowing Chinese money
- 30 years of declining industrial output
- 10 years of constant outsourcing of working class white-collar jobs
- Student debt averaging $20,000
- A society that says ' have it now, pay later '

can all be blamed on a handful of CEOs? This country is drowing in debt, and yet still thinking nothing of spending half a trillion dollars a year on its military (30x the next biggest spender). When was the last ime you bought anything that was made in the USA? I see old gits in hardware shops complaining that a hammer costs $7, and so buy the $4 one made in ZangZhou.

It's short term thinking greedy thickos who have contributed to this, so they can save 50 cents on a t-shirt, and get a bigger hdd in their iPOd. And the reason why so many people are stupid? Because they fill their brains will commercially backed news, or read blogs and opinions rather than doing any reasearch for themselves.

Basically, the crap we're in now, is the result of practices that have been hailed so far, voted for and even fought for, and yet no one can see it. Suddenly Wall St is greedy and out of touch. Suddenly we care about people who cannot afford their motgages (but 2 years ago, they were just losers). Gee, next we'll be caring about the car workers and steal workers that companies have been crapping all over for the last 35 years...

The sooner people realise we've been mortgaging our future for the last 30 years, the sooner they might be able to influence a change, rather than cheering cheesey soundbites about corruption and change.

Dysfunction
10-08-2008, 04:25 PM
Nope, I think that utilizing their expense accounts while we're bailing out their failed company should amount to fraud. Once you've accepted public money you should accept different standards of practice, period. These practices would not be acceptable for federal employees and they shouldn't be from any company accepting federal bailout funds.

Zoolook
10-08-2008, 04:43 PM
Nope, I think that utilizing their expense accounts while we're bailing out their failed company should amount to fraud. Once you've accepted public money you should accept different standards of practice, period. These practices would not be acceptable for federal employees and they shouldn't be from any company accepting federal bailout funds.

OK, so you don't think that anyone who works for publicly funded institutions, blow stupid amounts of money on these kinds of things? Interesting. You want to explain why spending 2 minutes with a nurse at any hospital costs $800? Can you tell me how much public money went to cattle farmers this year, just to prevent imported meat being cheaper than American meat? Can you tell me how much public money went to the oil companies, and how many banquets they had, thanks to a few $Bn in rebates last year?

The AIG parent company has a line of credit with the Fed... no money has been 'given' to AIG, and the company who had this banquet for its execs, was actually a subsidery and had no credit issue or any need to borrow money. It's only a bizzare quirk of regulation that prevented AIG from raising capital from it's subsideries in the 1st place.

I still think what they did was disgusting, but I would have thought that 12 months ago as a shareholder...

harryb2448
10-08-2008, 05:14 PM
Give the same CEO more money and what else do you think will happen? Everywhere is the same and they just do not learn the public purse is not bottomless.

lifeafter2am
10-08-2008, 09:15 PM
It's short term thinking greedy thickos who have contributed to this, so they can save 50 cents on a t-shirt, and get a bigger hdd in their iPOd. And the reason why so many people are stupid? Because they fill their brains will commercially backed news, or read blogs and opinions rather than doing any reasearch for themselves.

Basically, the crap we're in now, is the result of practices that have been hailed so far, voted for and even fought for, and yet no one can see it. Suddenly Wall St is greedy and out of touch. Suddenly we care about people who cannot afford their motgages (but 2 years ago, they were just losers). Gee, next we'll be caring about the car workers and steal workers that companies have been crapping all over for the last 35 years...

The sooner people realise we've been mortgaging our future for the last 30 years, the sooner they might be able to influence a change, rather than cheering cheesey soundbites about corruption and change.

There is not a single thing that you have said that I have not found out through my own research and digging into this problem. Thank you for confirming both my own ideas and research that led to them!

I especially like you points about the American meat, as sooooo few people know about that.

D3v1L80Y
10-08-2008, 09:54 PM
It's short term thinking greedy thickos who have contributed to this, so they can save 50 cents on a t-shirt, and get a bigger hdd in their iPOd. ...

Basically, the crap we're in now, is the result of practices that have been hailed so far, voted for and even fought for, and yet no one can see it.I've seen this for quite a while now.
I swear I'm going to write a book about it one day.

Where we are today is due in great part to what I call:

The Microwave Mentality of the Burger King Generation's Priceline/Price Match Plus Slacker Brigade

So, what does that mean exactly?
Let's break it down:

Microwave Mentality
People have no patience anymore.
None.
At all.
They want things fast and they want them NOW.
Gone are the days of saving up for something, looking around for a better deal, taking the time to earn something... just "give it to me NOW".

Burger King Generation
What's BK's motto?
"Have it YOUR way"
People don't want to compromise about things. They don't want to accept that sometimes they can't always have things the way the would like them to be. It must always be done to their exacting standards.
Heaven forbid you say "No" to anyone... it must always be done their way.

Priceline/Price Match
People don't want to accept that they cannot afford some things... but that doesn't stop some people.
What's priceline.com's motto?
"Name your OWN price"
Hunting for a bargain is one thing, but throwing all logic out the window and having companies allow the customer set the price is exactly what many consumers expect. So if they can't afford it, they feel that they are entitled to name their own price and have the company accept the offer graciously.
Also, people also don't want to accept that some places charge more for similar items. They want any and all companies to sell it for less than their competitor.
To Hades with actually taking the time and making the effort to purchase something from a competitor, just "gimme, gimme, gimme at the lowest price imaginable from YOUR store". This ideology leads into the next point...

Slacker Brigade
People are lazy. They have no desire to make one iota of effort to get what they want. It must all be done for them.

All of this leaves us with consumers who:
Want things as fast as possible, in the exact manner they dictate, at the cheapest price they dictate and without putting forth any work on their behalf.

It is extremely one-sided.
Sad thing is, this has been accommodated in many respects.
The fact of the matter is that things simply cannot work in that manner... at least not indefinitely.
When this type of behavior is allowed to happen, eventually something breaks... as it did.

But of course, it isn't the consumer's fault.
Which is the final nail in modern society's coffin:

People lack the ability to assume responsibility for their own actions.

There is always an excuse or someone else to blame.
It's the oil companies, the Wall Street crowd, the government, the education system, "false" advertising, the "fine" print, "nobody told me", it's inflation, it's China's/Katrina's/Iraq's/Afghanistan's fault, it's video games, the media, they guy that makes more money than I do, the kid down the street... etc... etc... etc..

the8thark
10-09-2008, 06:14 AM
yes admitting that you (who ever it may be) is the part of the problem is the hardest step. As nothing can be fixed if people don't accept responsibility for their actions.

harryb2448
10-09-2008, 05:51 PM
If you are NOT part of the problem - you MUST be part of the solution.

rogerinlondon
10-10-2008, 05:10 AM
It's only a bizzare quirk of regulation that prevented AIG from raising capital from it's subsideries in the 1st place.

Thank god for that "bizarre quirk", otherwise the real insurance companies within AIG and their policyholders might have been at risk by now as well! AIG will cease to exist with the insurance operations being sold off since no-one wants to renew their policies with them right now. Even if the problems were only within their financial products division, who would risk using them again when there are other insurers around? AIG is dead.

It is right that they have not gotten any cash from the government so far, but I would have thought that no-one can say what the final losses will be when the financial products division has been wound up. It could very well be that the 80 billion will not be enough by far......

Zoolook
10-10-2008, 01:18 PM
Thank god for that "bizarre quirk", otherwise the real insurance companies within AIG and their policyholders might have been at risk by now as well! AIG will cease to exist with the insurance operations being sold off since no-one wants to renew their policies with them right now. Even if the problems were only within their financial products division, who would risk using them again when there are other insurers around? AIG is dead.

Well the reality is, AIG had enough assets to cover its losses, and so should not have needed a handout from the fed. Most holding companies can raise cash from subsidiaries, but not in the insurance world. The real reason AIG did not get the green light to sell off assets (including subsidiaries), was because it's trillion dollar real estate portfolio being dumped on the market in a fire-sale, would have but further pressure on RMBS held by other institutions (like banks). In other words, AIG was pulled down to prevent the spread of the fire - but the irony is, they've now had to draw down on $70bn from the fed AND sell their assets, so whichever moron decided to hold AIG to the wall (Paulson) really has a lot to answer for.



It is right that they have not gotten any cash from the government so far, but I would have thought that no-one can say what the final losses will be when the financial products division has been wound up. It could very well be that the 80 billion will not be enough by far......

It's hard to say now, but AIG still have net equity of more than $75bn (more than a trillion in assets and 970bn in liabilities). In theory, they're still solvent.

rogerinlondon
10-11-2008, 01:10 AM
Well the reality is, AIG had enough assets to cover its losses, and so should not have needed a handout from the fed. Most holding companies can raise cash from subsidiaries, but not in the insurance world. The real reason AIG did not get the green light to sell off assets (including subsidiaries), was because it's trillion dollar real estate portfolio being dumped on the market in a fire-sale, would have but further pressure on RMBS held by other institutions (like banks). In other words, AIG was pulled down to prevent the spread of the fire - but the irony is, they've now had to draw down on $70bn from the fed AND sell their assets, so whichever moron decided to hold AIG to the wall (Paulson) really has a lot to answer for.



It's hard to say now, but AIG still have net equity of more than $75bn (more than a trillion in assets and 970bn in liabilities). In theory, they're still solvent.

I wold agree to 100% if we were talking about a normal company and not an insurer. The assets in the subs are there to cover the uncertain, long term liabilities to pay future claims and they should stay there. If Joe Cassano and his mates would have had access to those as well, the seriousity of the current sitaution would have been mulitplied.

As for the net assets, their liabilities are really just guesstimates of how much that might be needed to pay claims in the future, as it is in any insurer so it is really hard to say today what that amount is.

lakerider
10-12-2008, 06:39 PM
Charged with what? Charged with using their expense accounts in the same way they have for years, when no one gave it a second thought, as long as the shareholders got their cut?



There are very serious issues, but they're not the issues making the seven o'clock news. Also, there are issues that are being linked, that should not be.

Does anyone really honestly think the blame for (excuse the bullets)

- 10 trillion dollars of debt
- 9 years of borrowing Chinese money
- 30 years of declining industrial output
- 10 years of constant outsourcing of working class white-collar jobs
- Student debt averaging $20,000
- A society that says ' have it now, pay later '

can all be blamed on a handful of CEOs? This country is drowing in debt, and yet still thinking nothing of spending half a trillion dollars a year on its military (30x the next biggest spender). When was the last ime you bought anything that was made in the USA? I see old gits in hardware shops complaining that a hammer costs $7, and so buy the $4 one made in ZangZhou.

It's short term thinking greedy thickos who have contributed to this, so they can save 50 cents on a t-shirt, and get a bigger hdd in their iPOd. And the reason why so many people are stupid? Because they fill their brains will commercially backed news, or read blogs and opinions rather than doing any reasearch for themselves.

Basically, the crap we're in now, is the result of practices that have been hailed so far, voted for and even fought for, and yet no one can see it. Suddenly Wall St is greedy and out of touch. Suddenly we care about people who cannot afford their motgages (but 2 years ago, they were just losers). Gee, next we'll be caring about the car workers and steal workers that companies have been crapping all over for the last 35 years...

The sooner people realise we've been mortgaging our future for the last 30 years, the sooner they might be able to influence a change, rather than cheering cheesey soundbites about corruption and change.


This is good stuff Zoolook, I appreciate your candor. It really is much more complicated than we tend to make it. We're always trying to find fault when as all we have to do is look in the mirror, each and every one of us.

lakerider