AIG Rewards Derivatives Employees $450 Million Even Though Derivatives Brought Down AIG

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.

For more background on derivatives, read What the Hell Just Happened, When Wall Street Alchemy Failed, AIG Unloads $16 billion in CDSes on Fed.

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Great catch! Thanks! n/t

Great catch! Thanks! n/t

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thx midtowng

I linked to a good 3 posts by midtowng where he was watch dogging AIG.

Here's something from the geek world. I was told internally it was the most FUBAR company and they also fired all of their I.T., forced them to train H-1B guest workers and in terms of pure project management, it was instead of cream rising to the top, pure incompetence was continually rewarded.

That's an issue for another day....the erosion of competency within corporations and also the rise of corporate culture which to me takes lessons from psychological torture, warfare and other psychological abuse techniques.

We are the Borg and if you say the Emperor has no cloths thou shalt be banned from the social order!

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