Wednesday, 18 March 2009

AIG Bonuses Debacle

I can't say I fully comprehend the intricate details of the financial crisis, who started it and how. But what I do know is AIG is seriously taking the piss. Excuse my language, bas enno, seriously? US$165 million in bonus pay, after receiving US$170 million bailout money from the government? I fail to understand. This is absurd.

And now CBS tells me it's actually US$200 million in bonus pay. I wonder how these people sleep at night. But the answer is probably with a million bucks inside their pillows.

In an article in the Washington Post today, AIG CEO Edward Liddy asks American taxpayers to be patient, and that this money is going to be paid back. So why pay it out in the first place?

But here's an interesting question. If a similar situation were to arise in an Arab country, where the state of business transparency and regulation is what it is, how much of this would we see in our media?

2 comments:

  1. I have some sympathy for some of the recipients of those bonuses.

    A lot of them have relatively modest salaries for the toll taken on their lives by the work they do, and the bonuses are the industry's way of compensating them adequately for their efforts, and also for the risks and responsibilities they shoulder.

    Now, if it was me in their position and I had met my targets, worked my guts out to make money for the company and had not been in any way responsible for the losses of the whole ... well then why shouldn't I get my bonus?

    I think it is unfair to punish those who have done the work and deserve the reward. Most of the financial crisis appears to be centred around mortgage lending, but banks are made up of far more than that. Currency trading for example, has little to do with real estate.

    I'm all for credit where credit is due, and the same goes for punishment. If I screw up, sure I deserve the consequences. I agree that the executives of such organisations should wear the brunt of the blame - the reason they get paid so much is in large part because of this, the risks involved in the decisions they make because the repercussions can be so devestating.

    I think that's the real problem, the fact that the people responsible are not standing forth to take the consequences. I haven't been listening that hard but I don't think any bank bosses have stood up and said "We screwed up". In fact I'm not sure any of them have stood up at all? They seem to be hiding.

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  2. See the thing is I'm not sure this is really about being fair or unfair. It's logic, common sense, and the greater good. But that's in a non-existent utopian place somewhere next to Neptune probably.

    And now some of the execs have been threatened to give them back: http://tinyurl.com/c4d6a9. That's a sick tactic, but I don't expect this mess to get any cleaner any time soon.

    You're right, no one is going to stand up and say "I screwed up". Not even George W. did that, considering his blatant mistakes.

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