Word: aig
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...AIG is turning out to be the most cumbersome and embarrassing of the government's neighborhood improvement projects. Word made it out recently that employees in the division that caused most of AIG's losses would be getting $450 million in bonuses. Some of the media put the number lower than that, but Congress and The White House have already complained loudly that any amount of money paid to an operation that helped undermine AIG's viability should get nothing. Edward Libby, the feckless former head of Allstate (ALL) who was brought in to turn AIG around, apparently...
...AIG, under pressure from Congress and the press, also released the number of the counterparties to many of its credit default swaps. AIG had decided to insure the value of certain paper owned by the likes of Goldman Sachs (GS), Morgan Stanly (MS), and Deustsche Bank (DB). When the value of that paper fell, AIG was on the hook to pay off the "insurance" which kept the likes of Goldman from having to book large write downs. Those write downs might have pushed Goldman into a difficult financial situation. The same holds true for a number of the other companies...
...Congress will do what it believes is its job. It will question AIG, its employees, and the firms that benefited from getting money from AIG's bailout pool...
...that even in a republic fools could end up in control of the government. That might be the sort of elected officials who would chase issues that may be popular but are ultimately almost worthless in terms of helping the country, and, in the present case, the economy. Whether AIG employees got large bonuses, especially since they probably had contracts to guarantee the compensation, is irrelevant in the overall effort to turn the course of the recession...
...Read a TIME story on why the government won't let AIG fail...