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Sounds like chaos at AIG. A whole bunch of wild stuff going down.
Hope they can unwind those derivatives. It's a big sinkhole for the American taxpayer -- running at $170 billion of capital that the feds have "invested" so far.
It took Berkshire Hathaway a half-dozen years to unwind the relatively small number of derivatives at General Re once it bought the company. I can see why Warren Buffett calls these things "financial weapons of mass destruction" and wonder how many other companies are in deep on this stuff.
An excerpt from the WaPo article...
Hope they can unwind those derivatives. It's a big sinkhole for the American taxpayer -- running at $170 billion of capital that the feds have "invested" so far.
It took Berkshire Hathaway a half-dozen years to unwind the relatively small number of derivatives at General Re once it bought the company. I can see why Warren Buffett calls these things "financial weapons of mass destruction" and wonder how many other companies are in deep on this stuff.
An excerpt from the WaPo article...
Rage at AIG Swells As Bonuses Go Out
Fed Decided Payouts Couldn't Be Stopped
By Brady Dennis and David Cho
Washington Post Staff Writers
Tuesday, March 17, 2009; A01
A tidal wave of public outrage over bonus payments swamped American International Group yesterday. Hired guards stood watch outside the suburban Connecticut offices of AIG Financial Products, the division whose exotic derivatives brought the insurance giant to the brink of collapse last year. 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.
"It's a mob effect," one senior executive said. "It's putting people's lives in danger."
Politicians and the public spent yesterday demanding that AIG rescind payouts that they said rewarded recklessness and greed at a company being bailed out with $170 billion in taxpayer funds. But company officials contend that the uproar is scaring away the very employees who understand AIG Financial Products' complex trades and who are trying to dismantle the division before it further endangers the world's economy.
"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."
Fed Decided Payouts Couldn't Be Stopped
By Brady Dennis and David Cho
Washington Post Staff Writers
Tuesday, March 17, 2009; A01
A tidal wave of public outrage over bonus payments swamped American International Group yesterday. Hired guards stood watch outside the suburban Connecticut offices of AIG Financial Products, the division whose exotic derivatives brought the insurance giant to the brink of collapse last year. 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.
"It's a mob effect," one senior executive said. "It's putting people's lives in danger."
Politicians and the public spent yesterday demanding that AIG rescind payouts that they said rewarded recklessness and greed at a company being bailed out with $170 billion in taxpayer funds. But company officials contend that the uproar is scaring away the very employees who understand AIG Financial Products' complex trades and who are trying to dismantle the division before it further endangers the world's economy.
"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."
That's funny. Probably not acceptable for a senator to say out loud, but funny.
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