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Mar
26

The last word on AIG

Congress’ political grandstanding and completely misdirected public outrage over the AIG bonuses brought back memories of the Terry Schiavo tragedy, where members of Congress embarrassed themselves and the nation by intervening in a family matter (Schiavo was in a persistent vegetative state and her husband wanted to take her off life support).
Hopefully the last word in this fiasco was published yesterday in the New York Times. You may already have seen the letter circulating from Jake DeSantis, a former AIG Financial Products exec who recently left the company after the public pillorying of everything AIG.
Congress’ public outrage was beneath that body, misdirected, and counter-productive – and awful to watch. deSantis and his colleagues at AIGFP were (mostly) working diligently to unwind the bad investments entered into by their predecessors. Few, if any, of the idiots who caused the implosion of AIG are still with the company.
Yet the President and Congress (both Ds and Rs) took it upon themselves to publicly humiliate the very people who were trying to fix the problem. As did the attorneys general from Connecticut and New York as they sought political advantage from public outrage.
I said last week:
“Every minute we spend screaming about AIG’s bonus plan is a minute not spent on fixing the company up to sell off assets. Every ounce of energy spent on this is wasted.
I don’t know the details of the plan or how execs who left could still be paid or what the restructuring of the plan looks like (other than pushing half the payouts off and subjecting them to performance metrics). I do know the execs primarily responsible for the disaster are long gone and bonuses are being paid to those trying to clean up their mess.
I am quite sure everything possible is being done – within the law – to ensure our dollars are not used unless there is no other option.
Passing punitive legislation, faulting Geithner, citing changes in AIG’s condition, all miss the point. That point is we need to fix AIG so we can sell off AIU holdings, Alico, the auto business, and the rest and thereby recoup taxpayer dollars. To expect a Treasury Secretary dealing with the greatest financial crisis in eighty years to know every detail about the bonus plan at one division at one company is ludicrous. Trying to tax these bonuses when most are paid to people that don’t even live in the US is political grandstanding of the worst kind. Trying to weasel out of the contracts using tenuous arguments will do nothing but tie up AIG in litigation for years, likely extending the time it takes to wind down this operation and get our tax dollars repaid. ”
What does this mean for you?
Our officials have done the nation and the good people of AIG a tremendous disservice.


2 thoughts on “The last word on AIG”

  1. Hi Joe, I agree that the shouting about the bonuses is misdirected and the chief sleaze ball – Joe Cassano is gone – but not without a recent bonus of 38 mil. There were four hundred people under Cassano when the damage was done. My concern is that many of them are still there and the culture of rip and run is still present.

  2. Umm, without the bailout nobody there would have a job. Why do they deserve bonuses too? I’m sorry their sr. management team screwed up but everyone else in the same position (with the exception of Freddie Mac and Fannie May) simply are out of work. No salary, no bonus, no benefits. Also, bonuses are paid AFTER the result is achieved. Their task is not even close to being completed yet…

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Joe Paduda is the principal of Health Strategy Associates

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