Dear A.I.G., I Quit
nytimes.com
nytimes.com
Well, maybe a little, if your claims about being tarred unfairly with the CDS debacle are true.
But stop whining. All over the USA, people who work hard, who get great reviews from bosses, customers and peers, who were promised bonuses and profit sharing, are seeing instead slashed pay and benefits. That is, if they are lucky, and not getting RIFed.
Your company is in the crapper, and being propped up by taxpayers both explicitly by government bailout, and implicitly by the Fed.
If you worked anywhere besides the financial industry at a company in AIG's shape, you wouldn't be getting a bonus, not because of politics, but because there wouldn't be any money to pay one.
Spare me the false charity as well. People in your line of work compensated themselves as if they were founders and early investors in F500 companies, while holding positions that would barely command six figure salaries in other industries. I'm sure most readers here on HN would like to be in the position to write a 750k check to charity in the face of a depression.
That $100 million a year in equity and commodity trading? How much of that was on the back of the tech and housing bubble, and exploding oil prices? Sans the games the guys down the hall were playing with CDS and CDOs, would your returns even have been so high?
Perhaps you'd feel differently if your boss asked you to work for the next year, promised you a big lump sum, but then at the end of the year said 'sorry, but the money we borrowed from the gov't means it's not politically expedient for us to honor our agreement'.
Emotions aside, it sounds like he's getting a raw deal (and it doesn't matter if he's already worth millions - his net worth should have no bearing on whether or not the contract should have been honored).
Most of them are not the subject of congressional investigations. > If you worked anywhere besides the financial industry at a company in AIG's shape, you wouldn't be getting a bonus, not because of politics, but because there wouldn't be any money to pay one.
No, but he'd get a salary. Which he did not at AIG (according to his account).
> People in your line of work compensated themselves as if they were founders and early investors in F500 companies, while holding positions that would barely command six figure salaries in other industries.
Yes, that's more or less what he said in the article.
> I'm sure most readers here on HN would like to be in the position to write a 750k check to charity in the face of a depression.
Yes, that's more or less what he said in the article.
> That $100 million a year in equity and commodity trading? How much of that was on the back of the tech and housing bubble, and exploding oil prices? Sans the games the guys down the hall were playing with CDS and CDOs, would your returns even have been so high?
Perhaps your job also depends on the bubble economy. We'll know by this time next year.
Commodities and equities were leveraged as well at AIG. Leveraging that the CDS business provided capital to finance. It's all connected. I think this guy is choosing facts to put himself and his team in the best light. There are probably a lot of people over there dressing down the CDS guys for being incredibly irresponsible, and the CDS guys were, I'm not trying to deny that. That said, the other business lines were more than willing to leverage off of that irresponsibility when the bets were going the right way.
I think it is time for ALL of us to admit our complicity in the current disaster. Wall Street was incredibly irresponsible. Regulators didn't regulate. And WE the American people, bought a lot of stuff we could not afford, and didn't save nearly as much as we should. Consider this, do you work for a company that exists solely due to the presence of investment capital? If so, do you feel a burning need to leave your position and go to work for a company that actually sells real things, to real people or companies, for real money?
I am not denigrating anyone here. My only point is that the sooner everyone owns up to their part, the sooner we can do what we need to move on. We should stop trying to hang it all on Bush, or regulators, or bankers, or Republican Congressmen like Phil Gramm, or Democratic Congressmen like Chris Dodd. Or on the guy down the hall, as the guy in the article is trying to do. They all played a role, but it was a team effort.
We all contributed to this crisis. Now it is true that some contributed more than others. But for a guy who works at AIGFP to claim to be blameless, is fanciful if counter productive at best, and potentially divisive in the style of Marie Antoinette at worst. Probably somewhere in between like most of these things.
I take issue with this. I certainly didn't contribute to the crisis - I'm a student and have been since kindergarten. The vast majority of Americans didn't contribute to the crisis. I'd say that even the majority of people on Wall St. didn't contribute to the crisis. Those who are responsible should own up, but playing the "everyone say sorry" game is pointless if not disingenuous.
What percentage of Americans bought greatly over valued homes and have excessive credit card debt? The net savings rate has been 0 in the recent past.
I will take at face value that you, personally, have not contributed to this crisis. But a large number of Americans have.
All I see is some guy who took no salary for a year on the promise that he'd get a bonus at the end
The situation became politicized, so his bonus was rescinded. For all those people accusing him of whining, I hope you never complain about politics at your workplace.
Your comment sounds like demagogy.
Profit and loss exists for a reason, they finetune the allocation of resource to ones we find most efficent. If we don't allow the bust to run the course, than we will be less prosperous in the long run.
Beside, this is not the end of the world. We suffered worser recession like the recession of 1921.(Yes, worser than the Great Depression) Then the 1920s became the roaring 20s.
Last but not least: the financial world in the 1920s was completely different than what it is today. Unfortunately, in Economics experiments are not exactly reproducible. For one reason they call it the dismal science, right?
i) their own interests are clouding their judgement.
ii) they don't all have the same data.
iii) their "expertise" is greatly overrated.
In the last few months there has been so much irrationality and lack of transparency, that I now truly find it hard to believe anything I read on this topic.
Most companies that go bankrupt do have some divisions that performed well and didn't "destroy the company". Weak argument.
What we are witnessing is collective schadenfreude. Most people are happy to see these giant institutions fall. Unfortunately, most people know zero of Economics and Finance and fail to realize that if some institutions collapse, we might end up in an even worse situation.
You asked a series of rhetorical questions of the form " Do you realize blah". That isn't "argument" or reasoning. Do you expect people to automatically agree to anything you say just because you say "do you realize.."?
"Since you did not get the idea, I assume that Finance is not your forte."
A better assumption is that you didn't make your point well ;-)
I don't know what you do in your professional life and I would be lying if I said I care. Before coming to grad school I worked at a hedge fund and I realized I know practically zero of Finance. I strongly believe that discussing the details is what matters, and no one on HN is qualified to discuss the details on the AIG debacle. Let's face it. These financial discussions here on HN are usually enormous displays of ignorance (there are rare exceptions). This community's forte is coding. No one around here knows what's on AIG's books. I bet no one around here is a great bankruptcy lawyer. Even those who know Finance only know a few instruments, and AIG was trading a lot of instruments. It would take decades for one to learn all it takes to REALLY understand what's going on in Wall Street.
Knowledge is not a matter of consensus. Some comments are written by clueless people. Many of these comments are upvoted by even more clueless people. I make no claims that I know what is going on, but I see a lot of pompous fools on HN who believe they know it all. I say, let us go back to coding because we all suck at Finance. I only happen to suck less than most because I worked in the field.
I fail to see the difference.I would have thought the best way to counter someone's argument is to make a logical, coherent counter point.
I am not questioning your background. I am sure you have many valuable points to make and I look forward to hearing them. My background is irrelevant as regards how well you are expressing yourself.
Our disagreement (such as it is) revolves around your use of such terms as "pompous fools on HN who believe they know it all".
I'd much rather assume that someone on this board is intelligent (taking out the "fools" part) and has put some thought into what he/ she is saying (removing the "pompous" part). He could still be mistaken though. That doesn't make him a "fool" or "pompous".
It is very possible that you have more knowledge of finance and what happened at AIG than the hacking centric folks on this board. This is a good thing.
What I find less than optimal is your hurried/ill thought out arguments (" do you realize .. ") and your constant "attack the person vs the argument" style.
If you would use your knowledge of finance to illuminate the errors made by others (vs calling them names) with solid reasoning and argument that would be very valuable. That kind of high quality conversation is what HN was set up for.
I'm done with this thread and will let you have the last word if you so wish it. :-)
I am not a United States taxpayer and have no stake in the whole AIG debacle at all. Peace.
"I would have thought the best way to counter someone's argument is to make a logical, coherent counter point."
True. The problem, you see, is that I don't know what is happening at AIG! What I do know is that I know close to zero on that topic. What I do know is that many people try to paint things with a very broad brush and go for simplistic and superficial analyses.
You are right that my writing style is a bit too aggressive. I get downvoted all the time because of that. I should remind myself that I am no longer in the jungle-like financial world. And though I am not a U.S. citizen, unfortunately I am a U.S. tax-payer :-( Peace.
I was very surprised to learn that some of the senior management is only taking a salary of one dollar. Bonuses are probably warranted in this case.
I am not quite sure why Mr. Libby thought he could definitely honor those bonuses though, especially since AIG had said it wouldn't pay performance bonuses to senior executives in 2008. He promised the employees three times in October that their bonuses would be honored. The bailout of AIG was starting to turn into a witch hunt by then.
You got paid $740k for what? Does this guy realizes that his profession is a lot less valuable right now, and that he shouldn't/can't expect the same amount of money (taxpayer money), even during the bust.
"I know that because of hard work I have benefited more than most during the economic boom and have saved enough that my family is unlikely to suffer devastating losses during the current bust. Some might argue that members of myprofession have been overpaid, and I wouldn’t disagree. "
The loopholes found and exploited by these guys, for the institutionalized purpose of making a killing, sometimes have nasty side effects like destroying good companies and draining the pension funds of average workers.
All in the name of profit, which is great by the AIG yardstick, but not so great for the rest of us.
The point was more along the line of being an answer to the implied question "why should my huge bonus be effected when it was just my employer that was acting nutty". He got more than 700k after taxes. Would this have been possible without the other bogiosity that was going on at AIG? Should he still just be paid this even though his company has entered a type of receivership to the US taxpayer because it basically completely failed? Was the very idea of a > $1M bonus for what he did there part of the flood? I was thinking yes.
(ps - I think you mean commensurate?)
attributing (bad) motives to others does not help make a strong argument, and you are probably wrong anyway. No one here has said they were "bashing" anyone because he made a tonne of money. When taxpayer dollars are put into a company that crashed and burned , there is a valid argument that they have some say on how their money is(or is not) spent. You think if a professional investor (say Warren Buffet) put his money into AIG, he would have no strings attached? (There are valid counter arguments to all these points but implying objectors are jealous/envious/evil is counterproductive).
"On a board that purports to attract entrepreneurs"
Entrepreneurs are fine with the idea that if their company crashes and burns they get nothing, so your juxtaposition is invalid.
I didn't say that tax payers shouldn't have a say on how the money is spent. But that doesn't excuse Libby from breaking his promise to his senior staff.
I could promise you a gold plated Mercedes for making me a sandwich. The difference is that I haven't got one, and once I've eaten the sandwich, I can't just show up and ask Congress to spot me one to give you.
Your comment seems somewhat tangential to the argument. Are you saying that the financial crisis was in no way caused by consumer attitudes towards real estate?
Sure, he can afford it, and he was a senior vp at AIG, so I am sure there is a lot more he could have done. But he played an ancillary role in this crisis. And this is basically turning into a witch hunt. If he had been at some other bank, this wouldn't be happening to him.I would see some cases where I agree with him losing his bonuses, but not in this one.
It seems to me like the government is going after AIG only because of all the public outrage. I would like to see more signs criminal investigations starting, and system wide changes, I don't want the government to focus on just one company.
Being a vice-president at a financial institution does not mean one has much executive power. For instance, a couple of years ago Goldman Sachs had over 300 vice-presidents. I don't know if AIG has the same hierarchy as Wall Street banks have (or had, since some have gone bust), but if such is the case, then a VP is not exactly a top dog, so to say.
"This is basically turning into a witch hunt"
It sure is! The politicians (mainly the democrats but also the republicans) have realized that the American people's sentiment is, all of a sudden, strongly against the financial institutions, and they're positioning themselves so they can profit politically from other people's misery. Politicians have no values, only re-election dreams.
This is very true. Honestly, I'd go so far as to call it a lack of leadership by Obama.
I already knew that ridiculously overpaid jobs exist and that you usually get them by being born into the right family - or with an unusual amount of luck. I don't like that part of reality but I can't change it.
So, this guy has one of these jobs. Fine, someone has to do the dirty work after all!
But is there really a need to whine in public about his bonus troubles?
Especially in the current situation where many people reading his drivel have slightly bigger problems than figuring out whether to invest or donate their next million?
I don't know what he was trying to achieve with that letter - for me it's just a disgusting testament to how money can detach people from reality.
I have no idea why they would have structured the compensation that way though...the result is kind of predictable.
He obviously made a poor decision.
It's hard to manage a giant company with some runaway losses/liabilities and other profits/assets. It can't be done by op-ed, radio call-in show, or congressional hearing.