Derivatives. You know that shadow banking system that is considered the main cause of the financial meltdown?
You know those not even understood financial vehicles which have caused billions in write downs?
Well, AIG wants to pay the people who create and trade these vehicles $450 million to retain them.
American International Group Inc., the insurer that nearly collapsed because of losses on credit- default swaps, offered about $450 million in retention pay to employees of the unit that sold the derivatives, according to two people familiar with the situation.
About 400 workers at the financial products unit may get the money in two installments, said the people, who declined to be named because the payments were confidential. The business was responsible for about $34 billion in writedowns since 2007 as the market value of swaps AIG sold to banks plunged amid the subprime mortgage market collapse.
The payments bring to more than $1 billion the amount AIG has committed to keep its employees from leaving. The New York- based insurer took a federal bailout in September to avoid bankruptcy and is selling units to repay the government. AIG disclosed the existence of the unit’s retention program in regulatory filings, including a quarterly report in August.
This is just astounding for these very financial products are the identified instrument which caused the AIG Collapse.