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Tuesday, March 17, 2009


AIGFP hollowing out

populist rage over bonuses paid to AIG's financial products division -- the credit protection seller of last resort on the street, as ft's gillian tett tells it -- has spilled over to the point of presidential tirades from the bully pulpit. as AIG itself claims that non-payment could constitute an event of default triggering a debt bomb over western civilization, new york attorney general andrew cuomo rants on CNBC as he subpoenas the company for its bonus schedule.

as zero hedge relays, the result of waves of political grandstanding -- all conveniently ignoring the government's own complicity in deregulating wall street and refusing to offer any real oversight as the lobbyist money came rolling in -- has been armed guards at AIGFP's office and floods of death threats, following on the model of an implied honorable suicide from a sitting united states senator. the second order effect is a mass post-bonus-payment exodus of all knowledgeable management from AIGFP, who have rightly decided that this just isn't worth any conceivable compensation package. and what does that leave as a third-order effect?

"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 peachy.

UPDATE: more speculation on internal conditions at AIG via zero hedge.

UPDATE: AIG CEO edward liddy before congress:

"I am trying to desperately prevent an uncontrolled collapse of the business," said Liddy, who was brought out of retirement six months ago to run AIG.

"There is still risk that that could blow up," said Liddy, and it was clear from his expression that the prospect was not a rhetorical exercise.

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Nice work done.

Invitation letter

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