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Let's Get This Straight: AIG Execs Got Bailout Bonuses, but Pensioners Get Cuts
http://www.commondreams.org/view/2013/12/10
City of Detroit pensioner Donald Smith sits across the street from the Federal Court House, to protest cuts in city workers' pensions. (Photo: Rebecca Cook/Reuters)
As we passed the fifth anniversary of the peak of the financial crisis this fall, the giant insurance company AIG was prominently featured in the retrospectives. AIG had issued hundreds of billions of dollars of credit default swaps (CDS) on subprime mortgage backed securities. When these mortgage-backed securities failed en masse, AIG didn't have the money to back them up.
This would have forced AIG into bankruptcy. However Lehman had declared bankruptcy the day before and the world was still engulfed in the aftershocks. The Bush administration and the Federal Reserve board decided that they would stop the cascade of failing financial institutions and bail out AIG. As a result, the government agreed to honor all the CDS issued by AIG and effectively became the owner of the company.
Chicago has been in the news recently because its mayor, Rahm Emanuel, seems intent on cutting the pensions that its current and retired employees have earned. Emanuel insists that the city can't afford these pensions and therefore workers and retirees will simply have to accept reduced benefits.
If the connection with AIG isn't immediately apparent, then you have to look a bit deeper. Folks may recall that AIG paid out $170m in bonuses to its employees in March 2009 with its top executives receiving bonuses in the hundreds of thousands of dollars.
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http://takingnote.blogs.nytimes.com/2013/09/24/no-comment-necessary-of-bonuses-and-lynching/?ref=americaninternationalgroup
Readers will recall that the federal government bailed out American International Group in the depths of the financial crisis — and that there was an uproar after AIG employees received hefty bonuses.
In an interview with The Wall Street Journal, Robert Benmosche, AIG’s chief executive, compared that uproar with lynchings during the civil-rights era.
Via The Wall Street Journal
“Now you have these bright young people [in the financial-products unit] who had nothing to do with [the bad bets that hurt the company.] … They understand the derivatives very well; they understand the complexity. … They’re all scared. They [had made] good livings. They probably lived beyond their means. …They aren’t going to stay there for nothing.
The uproar over bonuses “was intended to stir public anger, to get everybody out there with their pitch forks and their hangman nooses, and all that–sort of like what we did in the Deep South [decades ago]. And I think it was just as bad and just as wrong.”
Readers will recall that the federal government bailed out American International Group in the depths of the financial crisis — and that there was an uproar after AIG employees received hefty bonuses.
In an interview with The Wall Street Journal, Robert Benmosche, AIG’s chief executive, compared that uproar with lynchings during the civil-rights era.
Via The Wall Street Journal
“Now you have these bright young people [in the financial-products unit] who had nothing to do with [the bad bets that hurt the company.] … They understand the derivatives very well; they understand the complexity. … They’re all scared. They [had made] good livings. They probably lived beyond their means. …They aren’t going to stay there for nothing.
The uproar over bonuses “was intended to stir public anger, to get everybody out there with their pitch forks and their hangman nooses, and all that–sort of like what we did in the Deep South [decades ago]. And I think it was just as bad and just as wrong.”