AIG Employees Not Too Happy With Persistent Death Threats

Interesting summation of the AIG populist anger from an employee's point of view. AIG's Financial Products office at 50 Danbury Road, in Wilton, CT is not a happy place. Inside "death threats and angry letters flooded e-mail inboxes. Irate callers lit up the phone lines. Senior managers submitted their resignations. Some employees didn't show up at all." And as more employees leave(as soon as the bonus hits their bank account of course) and join the witness protection program, and nobody who understands the complexity of AIG FP's trades remains, the outcome can only be a horrendous one:

"It's going to blow up," said a senior Financial Products manager, who spoke on condition of anonymity because he was not authorized to speak for the company. "I have a horrible, horrible, horrible feeling that this is going to end badly."

When you have insiders telling you they are bracing for armageddon, it kinda takes away from the President's and Bernanke's message that all is well and that America will be back to its merry uberleveraged ways by the end of 2009 at the latest.

But back to the compensation issue. Apparently the recent anger at AIG bonuses should not be news:

Beginning in the first quarter of 2008, AIG disclosed the plan to offer retention awards at Financial Products. The unit had already begun to hemorrhage money, a problem that would later grow exponentially. The unit's executives, fearing they might lose valuable employees in the tumultuous months to come, successfully negotiated more than $400 million for their workers, to be paid this month and again next year.

At the Federal Reserve Bank of New York, which has directly overseen AIG since its federal takeover in September, officials have studied the possibility of rescinding or delaying the bonuses. They even brought in outside lawyers for advice. The conclusion: If the bonuses weren't paid, the AIG staffers would be able to sue the company and probably would win, not just what they were owed but also punitive damages that would make the ultimate cost perhaps two to three times as high as the bonuses themselves.

Who exactly did they negotiate with, and why were Tim Geithner, the Treasury and all those screaming for AIG execs to commit seppuku not notified? Could this have to do with the fact that nobody really knows what is going on in the economy in general and in AIG in particular, until the New York Times or some other media outlet brings the problem to the front page? This is an appalling state of the information flow at Too Big To Fail institutions. Are we going to read that some financial neutron bomb has gone off at Goldman or Met Life on Page 6? This form of reactive information populism is great for politicians' ratings but terminal for any pretense of stability in the financial system. In the meantime, another 11 execs have resigned in the past few minutes, leaving likely a janitor and a chimp to supervise AIG's nuclear briefcase. In fact, here is the distribution of bonuses and departures (hat tip Paul Kedrosky):

• The top recipient received more than $6.4 million;
• The top seven bonus recipients received more than $4 million each;
• The top ten bonus recipients received a combined $42 million;
• 22 individuals received bonuses of $2 million or more, and combined they received more than $72 million;
• 73 individuals received bonuses of $1 million or more;
• Eleven of the individuals who received "retention" bonuses of $1 million or more are no longer working at AIG, including one who received $4.6 million.

Zero Hedge still cannot fathom how the SEC did not regulate Joseph Cassano's activities much more closely, especially as he already had a criminal record, as ZH posted previously.


cassano - Free Legal Forms Sphere: Related Content

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