Now the Government is to Save AIG

[shropshire 0]

Except they are an INSURANCE company, they should KNOW how to evaluate and mage risk - it's their job and core business.

(.)Y(.)
Chivalry is not dead; it only sleeps for want of work to do. - Jerome K Jerome

[Darius11 12]

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Don't worry, be happy!
Obama The Great will make all things rosie again!

Are you high?

I am trying to see how you’re negative post about Obama has any thing to do with yet another government bail out for the CEOs? You do know that the past 8 years have been run by the republican’s right?



I don’t get how they can just decide to give our tax money away to privet companies? I don’t remember getting a check when they were making a profit.


Can we do anything as citizens?

I'd rather be hated for who I am, than loved for who I am not." - Kurt Cobain

[Misternatural 0]

>>The first is that the Feds are playing the stock market - buying up bargain stocks.

Are there any legal problems with that? we probably agree that its great that the Govt. invest in Equities- nothing like having skin in the game to keep you on your toes, but that has to be a conflict of some sort.

>>The other thought is - this is socialism.

True, and it is an election year and the administration needs to bend the rules to save face...both sides of the isle play that game if they have to- it's pure political strategy IMOP.

As you know true Capitalism is a tough sport- no safety net, it's like abiding by the laws of nature- you make a bad judgement call or slip up in the woods- you die, it's that simple.

in this case your company fails you loose your job and your kids suffer as a result, I don't think most people could handle a truly capitalistic world.

Beware of the collateralizing and monetization of your desires.
D S #3.1415

[kallend 2,147]

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>>The first is that the Feds are playing the stock market - buying up bargain stocks.

Are there any legal problems with that? we probably agree that its great that the Govt. invest in Equities- nothing like having skin in the game to keep you on your toes, but that has to be a conflict of some sort.

>>The other thought is - this is socialism.

True, and it is an election year and the administration needs to bend the rules to save face...both sides of the isle play that game if they have to- it's pure political strategy IMOP.

As you know true Capitalism is a tough sport- no safety net, it's like abiding by the laws of nature- you make a bad judgement call or slip up in the woods- you die, it's that simple.

in this case your company fails you loose your job and your kids suffer as a result, I don't think most people could handle a truly capitalistic world.

It's wierd how the right is against things like extending unemployment benefits for lowly workers laid off because their company's in bad shape, but all in favor of bailing out the CEOs who made the bad decisions.

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The only sure way to survive a canopy collision is not to have one.

[simplyputsi 0]

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>AIG would've gone the way of Leyman if the fed didn't step.

Agreed.

And so the next time a company like AIG decides whether or not to take a huge risk in a certain market, they will think "worst case, government bails us out" as opposed to "we lose the company, our stock and our jobs." Think that will increase or decrease the likelihood of them taking huge risks?

Sometimes you have to let them make bad decisions and then live with the consequences. It's a great way to promote better decision-making.

I'm not saying your wrong bill. But, there is a lot more to it than that. I agree you should let them suffer the consequences of their actions. Doing so would make many many people suffer who really had nothing to do with it. People who worked hard everyday would all the sudden have no job and in this economy no place to find a new one. AIG going under would have started a collapse that no one wants to see.

If these companies that are pulling in Billions of dollars a year can't seem to make ends meet, then I say let the government take em over. They are the only ones stupid enough to do so. Lucky for us.

Skymama's #2 stalker -

[kallend 2,147]

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Except they are an INSURANCE company, they should KNOW how to evaluate and mage risk - it's their job and core business.

This entire crisis is due to having separated those making decisions from those assuming the risks.

In the old days when you took out a mortgage, your bank/S&L kept the paper and assumed risk. Consequently the bank or S&L paid serious attention to the ability of the home buyer to repay the loan.

Then some financial whiz kids found a way to package the debts and sell them to companies like Countrywide, helped by inflated ratings making them look safer than they were. So the brokers had no incentive to check the creditworthiness of the homebuyers since they made their money on commissions and had nothing at risk. Once this happened, incredibly stupid things like NINA loans became inevitable.

...

The only sure way to survive a canopy collision is not to have one.

[Darius11 12]

Also a lot of people took out huge loans on their existing homes. Just think how many people you know or maybe even one of them who took out a 2nd or 3rdmortgage on their home. I know so many people who purchased a home for 200K within a few years it was worth near 400K and they took a huge loan on that to live the way they wanted. Nice vacation, new car, whatever.


Great they made the decision they should be paying for it not me. Again I don’t remember any one sending me a check so how can any one justify a bail out?

To me this is no different then stealing.

I'd rather be hated for who I am, than loved for who I am not." - Kurt Cobain

[Misternatural 0]

>>but all in favor of bailing out the CEOs who made the bad decisions.

Well to be fair The bailout would save the entire company and it's employees- but as a stock holder you ARE playing my tune...I don't particularly like the fact that CEO's live so high on the food chain but they are a necessary evil in a corporate world.

Beware of the collateralizing and monetization of your desires.
D S #3.1415

[idrankwhat 0]

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The architects of this fiasco, if still employed by AIG, just lost a shitload of money in their stocks. Most of these cats gets their salaries in stocks. If the company does well, the stocks do well, so they do well.

The numbers for AIG CEO Martin J. Sullivan in 2005:
Salary $701,000
Bonus $730,000
Other $249,000
Stock $452,000
Executive Paywatch has him raking in a total of$14,330,736 in 2007. After a couple of quarters resulting in $13 Billion in losses this year he was given a severance package $47 million and replaced by Robert Willumstad.
Willumstad's base salary is $1 million.
His target annual bonus is $ 8 million. His minimum annual bonus is $4 million (deferred). And there's ten$ of million$ in stocks and options. Of course now he's unemployed. I have no idea what his severance package looks like.

[idrankwhat 0]

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>>but all in favor of bailing out the CEOs who made the bad decisions.

Well to be fair The bailout would save the entire company and it's employees- but as a stock holder you ARE playing my tune...I don't particularly like the fact that CEO's live so high on the food chain but they are a necessary evil in a corporate world.

Average compensation in the early 80's for a CEO was 40 times that of the average worker. Now it's closer to 400 times that of the average worker. In addition, there's absolutely no accountability or consequence for driving the company into the ground. I find that completely unnecessary.

[Darius11 12]

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severance package $47 million

Poor guy....where can i send him a check

I'd rather be hated for who I am, than loved for who I am not." - Kurt Cobain

[idrankwhat 0]

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severance package $47 million

Poor guy....where can i send him a check

If only I could be that big of a failure....we'd have a new fleet of planes at the DZ tomorrow!

[Darius11 12]

It is kind of odd that CEOs of huge companies do not need to do a good job right? as a matter of fact they can fail miserably and still get bonuses.

I need to become a CEO of a major company talk about no stress, do well you get money, destroy the stock and fail you get money. Win Win baby all the way.

Now try to run a small business. Not only does the government State/Fed try to fuck and nickel and dime you every step on the way, if you fail your fucked.

I'd rather be hated for who I am, than loved for who I am not." - Kurt Cobain

[billvon 3,111]

> Doing so would make many many people suffer who really had nothing
> to do with it.

a) Most employees have something to do with how well their company does. Even if it's just the guy who checks spreadsheets, they all play a part.

b) If companies DO fail, declare bankruptcy and lay everyone off, people will think twice about working for them. You can bet that traders will be wary of the next Enron. But the next AIG? Why not work there? Lower risk, since the government will bail them out.

>If these companies that are pulling in Billions of dollars a year can't
>seem to make ends meet, then I say let the government take em over.

The government pulls in trillions a year and still spends far more than it takes in. So it's not like they can figure it out either.

[Misternatural 0]

>>if you fail your fucked.

I believe in capitalism.. and I have a small business- in the real estate game no less... Capitalism is great when times are good but it sure sucks when you're on the loosing end of it- but thats the game, and most of us have to scrounge now so to be fair the CEO's should suffer as well- that has not been the case of late and that needs to change!

Beware of the collateralizing and monetization of your desires.
D S #3.1415

[jcd11235 0]

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Except they are an INSURANCE company, they should KNOW how to evaluate and mage risk - it's their job and core business.

Agreed. Unfortunately, it's not that simple. If they purchased securities with good ratings (representing low risk), but those ratings were not correctly assigned, then the securities were misrepresented. If such was the case (which is very likely), then the rating organization is more responsible than AIG.

For the record, I don't like insurance companies. However, I'd prefer to look at what happened objectively, rather than reflexively blame AIG because they are an insurance company.

Math tutoring available. Only $6! per hour! First lesson: Factorials!

[nerdgirl 0]

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Damn skippy. Why are the architects of this fiasco not in jail?

I can't help but wonder how the mortgage backed securities were represented when sold to AIG. Were they sold as high risk securities, or were they sold as low risk (i.e. not sub-prime) investments? If the latter is the case, then AIG are essentially victims of fraud.

Except they are an INSURANCE company, they should KNOW how to evaluate and mage risk - it's their job and core business.

Those are all interesting questions, imo -- how have the incentives and disincentives (1) to risk, (2) to shifting risk, and/or (3) to not revealing/intentionally hiding risk in the mortgage & insurance sector changed? Why? If the information on which an insurance company assesses risk is incomplete or in error how is liability distributed? Who has benefited?

VR/Marg

Act as if everything you do matters, while laughing at yourself for thinking anything you do matters.
Tibetan Buddhist saying

[lawrocket 3]

Thank you for posting that pay info.

My wife is hotter than your wife.

[kallend 2,147]

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Who has benefited?

VR/Marg

A bunch of twentysomething "whiz kids" who made huge commissions pushing NINA loans, and a bunch of "master of the universe" CEOs who took home huge bonuses.

...

The only sure way to survive a canopy collision is not to have one.

[billvon 3,111]

>Sweet Jesus. What a fucking goat rope.

Indeed.

Yesterday I commented on how the demographics and governmental goals of both parties are changing, and this is a further example of a change. The SEC (led by Bush appointees) have just effectively socialized a major US company, a move that 20 years ago would have been abhorrent to the GOP leadership.

Will the GOP's new embrace of socialism extend to the rest of their politics? It already is, to some degree. GOP lawmakers are calling for greater regulation of markets, and they now favor things like "economic stimulus packages" which are effectively ways to get people spending government-furnished money.

The next few years will be interesting. Will AIG's profits now go to the US treasury? Will the US's 80% share in the company effectively mean that the US (in this case, the SEC) will dictate policy for AIG? Will a bad year for AIG mean that the US loses money through AIG?

In some ways the worst case is that this succeeds spectacularly - AIG is saved, Wall Street gets a boost, the US makes a little cash through AIG's profits, everyone admires the geniuses at the SEC. What effect do you think that will have the next time a company is in trouble? The GOP socialists ride to the rescue again!

[mnealtx 0]

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It's wierd how the right is against things like extending unemployment benefits for lowly workers laid off because their company's in bad shape, but all in favor of bailing out the CEOs who made the bad decisions.

I've been reading about the bailout in several places today, and, oddly enough, nothing is mentioned about "bailing out the CEOs". Maybe you should consider dialing down the rhetoric a tad.

Oh, wait... can't bash the Repubs that way, can you?

Mike
I love you, Shannon and Jim.
POPS 9708 , SCR 14706

[Gawain 0]

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The SEC (led by Bush appointees) have just effectively socialized a major US company, a move that 20 years ago would have been abhorrent to the GOP leadership.

The SEC did no such thing. The Federal Reserve did.

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Will the GOP's new embrace of socialism extend to the rest of their politics? It already is, to some degree. GOP lawmakers are calling for greater regulation of markets, and they now favor things like "economic stimulus packages" which are effectively ways to get people spending government-furnished money.

The next few years will be interesting. Will AIG's profits now go to the US treasury? Will the US's 80% share in the company effectively mean that the US (in this case, the SEC) will dictate policy for AIG? Will a bad year for AIG mean that the US loses money through AIG?

In some ways the worst case is that this succeeds spectacularly - AIG is saved, Wall Street gets a boost, the US makes a little cash through AIG's profits, everyone admires the geniuses at the SEC. What effect do you think that will have the next time a company is in trouble? The GOP socialists ride to the rescue again!

More details came out today, apparently this is a two-year loan and AIG will pay back with interest. The company's assets are collateral against the loan. I still don't like it, but it's a better situation than what we're on the hook for with Fannie/Freddie...

So I try and I scream and I beg and I sigh
Just to prove I'm alive, and it's alright
'Cause tonight there's a way I'll make light of my treacherous life
Make light!

[SkyDekker 1,465]

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All the regulation in the world cannot stop management from making bad decisions and driving a company into the ground. I am just pissed they use tax dollars to save them before they go splat!

Not true. Better regulation could have avoided this mess. At best setting minimum standards for mortgages would have prevented a lot of this.

Basic capitalism doesn't allow for that though. Since in simplistic terms people think that poor decisions by stupid people only effect those stupid people. Such is just not the case.

The demise of AIG would have cost a lot more than just some jobs on Wal Street. It would have likely caused many banks throughout the world to collapse. AIG does not solely carry the risk of those bundled mortgage debts. AIG played a central role in the opaque credit markets in which all major financial institutions find risk sharing partners in their investment vehicles. A liquidation of AIG would have had catastrophic effects on the world finanicial market.

Now here is another sideplay. Anybody remember Hank Greenberg? He was the Chief Executive of AIG, until he got canned about 3 years ago. Surprisingly , it was due to an accounting scandal. Well, good ol Hank has now hinted that he may just make a bid for the company as the largest individual share holder. Incidentally, prior to last nights developments, he saw his personal wealth reduced by $6 billion on the AIG share plmuge alone.......

[simplyputsi 0]

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>If these companies that are pulling in Billions of dollars a year can't
>seem to make ends meet, then I say let the government take em over.

The government pulls in trillions a year and still spends far more than it takes in. So it's not like they can figure it out either.

I know. I should of said they are just trying to save a sinking ship by putting more water in it.

Skymama's #2 stalker -

[billvon 3,111]

>The SEC did no such thing. The Federal Reserve did.

You are correct; my typo.

>More details came out today, apparently this is a two-year loan and
>AIG will pay back with interest.

That is indeed a better way to go about it - provided that works out and they are able to repay the loan. Let's hope they don't see the Fed's buyout as a sign that they will be given a lot of latitude.