The blogs are simply ablaze over bonuses, who allowed it, finger pointing and outrage. To that effect, I thought putting the focus on a fairly detailed and informative Congressional hearing is in order.
Firstly one might read the Government Accountability Office testimony. It's quite a mixed bag and one must really be concerned in AIG taking years to rid itself of the London Financial unit, referred to as AIGFP. Later in the testimony, Liddy himself says this is the problem and it needs to be wound down quickly. Quickly is assuredly not years.
The biggest thing you should get from the GAO testimony is the evidence that the GAO cannot repay it's loans.
AIG's ability to repay its obligations to the federal government also has been impaired by its deteriorating operations, its inability to sell its assets and by further declines in its assets
Now I personally do not believe they cannot find more than willing people who need a job with the skills to wind down these mortgage backed securities and other issues which are at the windstorm of bonuses. Considering the layoffs and other problems, there are a hell of a lot of people with PhDs, MBAs and financial sector backgrounds who would love a good job right now and that is minus a $1 million dollar bonus.
Next one might read the oopsy of the Office of Thrift Supervision. Many of the recommendations are issues we have been discussing but it doesn't quite come out clearly to state fictional finance derivatives should be outright banned and models themselves should be stringently evaluated before being allowed as an investment product. CDS standardization is mentioned but there are other derivatives in the market place clearly based on the same flawed financial mathematics.
I recommend watching this entire hearing with the AIG CEO Edward Liddy.
The links with corresponding videos are below but hit the pause buttons on each immediately to stop them from auto playing. This is a hack since CSPAN quite hasn't gotten the idea of web 2.0 yet and their player isn't responding to some video controls.