AIG has acted with all the dignity you would expect from a company that just destroyed the market. NY AG Andrew Cuomo discovered that the “retention bonuses” were not only ineffective for guaranteeing performance, they weren’t even good at guaranteeing retention. Can Obama hire Scott Boras to be the Assistant Secretary of Not Getting Screwed?
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Perhaps even more outrageous is the white paper AIG sent to Timothy Geithner (PDF). As Marcy Wheeler describes, AIG makes a complicated argument that if they don’t generously compensate AIG’s financial products division, members of the French subsidiary Banque AIG might walk, which would force French bank regulators to take control, which would be a “default event,” which would blow up a bunch of agreements. She calls it the Semtex in the retention contracts.
In this current environment, any perceived disruption in AIGFP’s ability to conduct business, such as one that would result from the departure of a number of key employees, could also cause parties to limit or cease trading with AIGFP. Obviously, this would adversely affect its ability to continue to cost-effectively hedge its positions.
And then they ask you to continue to pay them lots of money to unfuck your house.
