MacroScope

Need a job? Try AIG.

March 18, 2009

Need a job? AIG needs workers and the money is good.

American International Group CEO Edward Liddy was under the klieg lights Wednesday for paying $165 million dollars in retention bonuses to employees who are “winding down” the company’s notorious Financial Products division, known as AIG FP.

Liddy said he knew the company would be attacked for paying the bonuses, but he decided it would be better to pay them because the firm needed workers who understood the complex transactions on AIG FP’s “book” to make sure the contracts could be closed out.

Many lawmakers wanted AIG to fire everybody working for AIG FP and hire new ones to close the AIG FP unit.  But Liddy said it wasn’t that easy.

“People don’t want to work at AIG. They are not cheap if you try to get them,” Liddy told the outraged members of Congress.

So Liddy decided to keep the existing employees and pay them extra money for staying at the firm instead of walking out the door.

“If we keep those people, we have a higher probabilty of running this book down and not costing the American taxpayer more” than the $78 billion already dispensed to AIG from Uncle Sam, Liddy told the panel.

The pols weren’t buying it.

“Can you understand the American people might think you paid way too much to get that bargain?” one lawmaker asked incredulously.

 (Reuters photo by Kevin Lamarque)

Comments
4 comments so far | RSS Comments RSS

I think the corruption going on at these firms is criminal. The common man expects bonuses when his company is making a profit not a loss. These people need a wake-up call, HELLO, your company is in the hole, stop making the hole deeper.

Posted by Shane Toponce | Report as abusive
 

Corbett,

I think everybody is making a scapegoat of Ed Liddy now.

Try posting a vacancy for 300 Finance analysts and corresponding numbers of managers who can manage 1.5$ trillion worth of complex derivatives. Find out how much they will be asking for. Either the truth will dawn upon you or you will have a proven case study where Ed Liddy is wrong. You win in both cases !! Try it.

Posted by Jim | Report as abusive
 

I am one of the people who actually has the quantitative, risk analysis, and product background. And I am a former banking regulator too. I checked the job ads on the web to see if AIG had any ads for such high-powered experienced individuals for their Financial Products group. I found none.

Posted by interested_party | Report as abusive
 

AIG is not the only bail out company that has paid or promissed incentives to keep their executives(The same executives that made the decisions that created this situation. Amoral and unethical behavior should be punished not rewarded.

Posted by Tom | Report as abusive
 

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