Decius wrote:

In the first quarter of 2008, prior management took significant retention steps at AIG Financial Products. ... Some of these payments are coming due on March 15, and, quite frankly, AIG's hands are tied.

They knew the ship was sinking and the rats decided to leave unless millions more were paid to them - and so these millions were offered and now that the government has bailed out the company the millions must still be paid. Basically, they set up the system in advance so that it would continue to enrich them after it failed.

Outside counsel has advised that these are legal, binding obligations of AIG, and there are serious legal, as well as business, consequences for not paying.

Best argument yet for nationalization. Large government bailouts should, at least, require filing some kind of bankruptcy where a court can come in an make contracts void.

I think you have to be very careful how this gets handled. You don't want to swing the pendulum the other way and overshoot. You want the best and brightest to be compensated, with really, no limit. I think everyone would agree on that spirit. It's what motivates the West, and certainly is the American Dream - work hard. reap reward.

It's not that these guys stole (because yes, that's what they did. Unfettered looting. And indictments should be coming. The public should demand it.) but how their incentive packages were structured. Short term gains were overwhelming. So that incited behavior to loot. It's much harder to steal over the long haul, although I'm certain that it can be done and would be. But if you combine proper incentives with transparency, you should be able to squelch out the bad behavior. Which is good, because a smaller pool with a larger pot is far more attractive.

I think the government stepping in and capping things is a recipe for disaster. It doesn't solve the problem. It just moves the ball under the shells without you knowing where it went.

RE: Looting AIG