Friday, March 20, 2009

Who is Working at AIG? It Seems to Be the Clean-up Crew

At least you get a sense that the people getting the bonuses aren't a bunch of greedy derivative traders but people trying the clean up the mess before it *really* blows up.

In actuality, he said, nearly all the troublesome sectors of the business -- namely, the risky credit derivatives written on mortgage-backed securities -- are now out of the equation, as are the people who worked on them. That leaves a small number of employees to untangle the remaining trades in four main areas: commodities, interest rates, currency and equities -- most of which were fully hedged and have caused little problem. The effort also requires a sizable number of "back office" staff, such as systems, computing, accounting, human resources and legal teams.

"Everybody, including my secretary and including the guy down the hall that serves lunch, gets a payment," said Pasciucco, who added that he received no retention payment and has no contract.

Also it seems if Congress does pass its "stick it to AIG" tax we might have the law of unintended consequences to deal with. These guys may walk and harm the firm.

But it would be impractical at best, dangerous at worst, to get rid of everyone at Financial Products, according to AIG officials. If everyone leaves, Pasciucco said, "you don't have people that really, truly understand the book [of business]. We're still big enough that that matters."

If they did walk out the door, who would volunteer to work at the Chernobyl of the financial world? And what would become of the mammoth portfolio that remains?

"It would become the biggest naked position on Wall Street," one longtime Financial Products executive said, "and everybody would exploit it."

Yup these guys that Congress wants to tax so badly will simply walk out and join Goldman or whomever and exploit the knowledge of the company that sold them down the river. It's sad to think that a little populist lynch mob has the potential to bring down the entire world economy.

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