News

i think the statement

that bonuses were needed to retain top employees is DISGUSTING.  if this isn't the most absolute, most critical time to show just how american you are... screw you.  as an american i will be the first in line to be critical of that bullshit excuse.  those "experts" should be standing in line VOLUNTEERING their expertise to add in this crisis that they participated in.  i don't give a rat's ass if it wasn't all their fault or not.  i have never hear anything more repugnant than that in all my life.  those guys should be happy they HAVE a job.  i can't imagine anyone else who would want them. 

they're selling their souls, not their "intimate knowledge". 

update

WASHINGTON, March 19 (Reuters) - Moving with unusual speed,
the Democratic-controlled U.S. House of Representatives on
Thursday passed legislation to recoup most of the $165 million
in retention bonuses paid to American International Group Inc
(AIG.N) employees.

Responding quickly to public outrage over the bonuses after
the giant insurer received government bailouts of up to $180
billion, the House voted 328-93 to approve a 90 percent tax on
bonuses for some executives at companies getting federal aid.

//www.reuters.com/article/americasRegulatoryN...

-YT

slow down baba...:-)

you're taking a very narrow approach to all this.  are you planning to stand guard over freddie and fannies participation forever?  you know there is more to it than that but you're staying so fixed on certain aspects of this shitty mess.  there's a whole lot inbetween "stupid and incompetent" and a "dengerate liar".  you know damn well that he can't and won't know everything about everything.  that package very well may have been executed over a year ago but was it DISCLOSED?  i personally think the shenigans have come from AIG with regard to disclosing certain aspects.

as far as the legality of the contracts, i say let them sue.  you make it sound like due diligence is optional or not the responsibility of AIG.  "what they had to work with...."????  that's the whole point of due diligence... to find out WHAT that "what they had to work with" IS!!!!

you say congress was "pushing" lenders.  i say bullshit.  at best i'll agree with they permitted or allowed.  those lenders were eyeing those mortgages like a wolf eyeing a downed deer.  they weren't pushed into a damn thing.  i worked at a gated water-front community in beaufort for 8 years... we had a "garage sale" event and lenders were chomping at the bit to finance 100% to people.  ain't NOBODY pushed them into anything.  THEY worked with local appraisers to get the properties appraised over average.  i watched and listened and shook my head knowing those appraisals were going to fall and fall they did... HARD.  please don't tell me anyone was forcing lenders to do anything.  no way... no how.

peace out!

Kaveh

Mr.Obama knew, so did Secretary Geithner, and Congress.

You know that I a registered Dem. but I have written to moveon.org and White House and expressed my disappointment and you should too.

They keep telling people that LEGALLY there was nothing they could do to stop it. To that I say BULL SH!T. Tax them 100% if they do not want to return the money and FIRE the AIG top brass for being an incompetent fool and ineffective executive.

-YT

This is insane

If Obama didn't know until last week, then it makes him look stupid and incompetent, and it contradicts the concepts of his administration that he's been very intent on selling to the public.

If he did know, then he's a degenerate liar who thinks everyone else is stupid and will buy everything at face value.

I just find it odd that last week all the talk in the news was about the billions and billions of dollars being pissed away in these budget bills and the "scamming us" package, and now someone pulls AIG out their ass to draw attention to a compensation package that was executed over a year ago.

Funny thing is, if AIG didn't pay, they could have been sued for breaching the terms of the contract. And they would probably have lost. If AIG were allowed to get out of paying these bonuses then it would set a precedent where any employer can renege on a compensation agreement, even one that was supposedly a "legally binding contract" like AIG's. They pay, and now Barney Frank wants to sue them. Either way you look at it, AIG is made out to be the villain.

I'm not saying that they have clean hands, but villains? For what? Insuring and paying claims on mortgage bundles that were far riskier than originally presented? Granted, they could have done a much better job of performing due dilligence, but this is what they had to work with.

What about these miserable SOBs in Congress who were pushing lenders to completely disregard recognized and accepted standards and practices in lending?

They orchestrated this from the get-go, and now here they are proclaiming their innocence in this and feigning outrage over the Frankenstein monster they created.

What pisses me off is how they effectively bamboozle the public into buying their processed, packaged BS.

a PHD in BS

that's "piled higher and deeper in bullshit".

//consumerist.com/5098812/aig-no-bonuses-for-top-executives-this-year//consumerist.com

this isn't really conclusive but points in that direction. i know i saw something more current.  i also understood that obama did NOT know of this until a week ago.  evidently geitner did and did not tell him.  fact or fiction?  depends on which side of the fence you're sitting on.  i personally don't believe he did.

//www.huffingtonpost.com/jane-hamsher/obamas-aig-comments-raise_b_175444.html

the excuse that they need to keep this wonderful "talent" to keep AIG solvant is bullshit.  like these guys could get a job anywhere else?  come on.  or like they are really going to risk going to court by suing to get their bonuses as everyone is saying.  more bullshit.  there isn't a jury in the world who would give these guys this money. 

i say "screw 'em... let them sue". 

kaveh.  i do agree that most borrowers were aware of what they were doing.  no doubt.  but i'm just not going to say that they should carry a substantial burden of the responsibility.  didn't you say that the doctor in the octomom case bore the responsibility for implanting embroyos in an obviously unsuitable recipient?  now i know i know... it's not exactly the same thing.  but very few people are going to say "no" to a golden opportunity. 

it's just a colossal f'up no matter how you look at it.  bastards.

:-)

Kaveh

Yes, for the most part they are retention bonuses.  But really, where are all of these guys going to go?  Most of the executives I talk to are worried about keeping their jobs and are afraid to accept a bonus.  Some of the new people who have come in are awesome.  I keep asking them if they have FBI badges, talking shoes and shooting pens.  

I think AIG needs to realize that no matter how much knowledge someone has, no one is indispensible.  Having said that, I know of some guys who left and took millions of dollars of business with them and went to other insurance companies so it is hard to say.  So there is some risk in not trying to retain them.  But AIG should probably bite the bullet, risk the fallout by not paying the bonuses and move on. 

Fish

I thought I heard something about that too, but I can't seem to find anything on it.

I wonder, if these are retention bonuses, then why are they being given to 11 people who have left?

I wonder why the government waits until after the checks were mailed to start having a cow? They claim to be watching AIG like a hawk, but the hawk must need LASIK.

If AIG re-structured this so that the bonuses would be paid after the company got out of this mess, and by not paying retention money to people who aren't retained, it would go a long way, public-image-wise.

And if the government stopped acting all shocked and upset that the company in which they own a majority stake is doing this after boasting so proudly that there will be "oversight" and "transparency" and everything will be "straightforward" and "upfront", my bullshit detector would not be screaming as loudly as it is. It's so obvious that Congress is trying to cover its ass.

AIG ain't gettin' MY sympathy vote

i don't care HOW you want to spin it or WHO you want to blame.

//www.reuters.com/article/topNews/idUSN1548789520090316?feedType=RSS&feedName=topNews

plus... i think i heard somewhere that AIG had promised new york AG cuomo that they would NOT pay out bonuses.  so... did AIG renege on an agreement?  please correct me if i'm wrong... i'm going by vaguely remembering reading something about it. 

And Another Thing

It's absolutely laughable that Congress is having a hissy fit over AIG's bonuses, bonuses that were known about for over a year.

The government OWNS 80% of AIG! When Congress gave them the initial bailout money, an ownership stake was part of the deal. 

 So was increased government "oversight".

If there was indeed oversight, then the issue of bonuses would have been dealt with several months back when AIG was given these funds, would it not?

Or maybe the Congress is making such a Mexican soap opera about this in order to mind-f**k the average person into believing that the government is really on the ball.

Either way, it's a bad joke, with 300 million people being the punchline.

Reply to Kevah

Yes, there have only been one or two borrowers I have actually believed when they go through the song and dance blaming the broker.  Are you doing loan mods?

Yachov

From one person in the mortgage loan business to another, one of the first things you should know is how to tell when a client is lying.

The answer: Whenever their lips are moving.

Countrywide indeed wrote many loans. They were the largest company in the wholesale and retail mortgage industry. Their loans consisted of everything, from A paper on down to the shakiest, scariest, most laughable stuff I've ever seen on 1003.

As much as brokers, loan officers, escrow personnel, appraisers, and underwriters are to blame, an equal measure of accountability must be placed upon the client. They weren't children, and many of them knew exactly what they were doing, even though they are now vehemently claiming ignorance and saying they were duped.

A few were duped. But the majority are essentially co-conspirators.

They just wanted the keys first, and would worry about the details (like how to pay for the house) later on. With all of the emphasis being placed upon the greed of those in the industry, the greed of the consumer has been shamefully ignored.

You're seeing a lot of people with Countrywide mortgages, as do I, not just because of the number of loans they have underwritten and serviced, but because unlike some other lenders and servicers, Countrywide has initially been less than reasonable with respect to the possibility of modifying loans. I'm practically on a first name basis with these people from being in contact with them as often as I am.

Thanks Capt'n!

That's a great video clip! so useful for people liek me who have no idea about the financial market and all the terms and dealings of it.

Sooooo  it's all because of the greed of the people who are being paid millions in bonuses now...

IRANdokht

Crises in Layman's Language

In layman's language, this is how it happened:

//crisisofcredit.com/

Just click on the link and watch the animated video. Its cool

-YT

Most Foreclosures

The vast majority of borrowers in default, that I see based upon subprime loans, are with Countrywide.  I generally counsel about 10 families per week on foreclosure options and I would estimate that about 60% of the loans were written by Countrywide.  Invariably they involve ARMS and stated income loans with highly inflated income.  They always say the same thing.  "The mortgage broker told me not to worry about the details just sign the loan documents."   They were told they only had a few minutes to sign because the broker or escrow officer had another meeting he had to get to and they could read it later.   Of course, no one ever did and they didn't find out their income was inflated by 500% until they were in my office looking at the loan documents for the first time as I was telling the that they had committed loan fraud and could actually be incarcerated.  Such perpetrators of loan from have ranged from judges in the California courts to rock stars to school teachers, real estate brokers and doctors.   They all claim that they trusted their mortgage broker who was raking in the cash.         

Captain

Fannie and Freddie are just part of the problem. Key players, but not the whole thing. BUt you also need to remember that Fannie and Freddie jointly own or guarantee half of all mortgage debt, including subprime/non-prime loans.

Subprime is known to be the biggest culprit, but the reality is that it was merely a tool that was misused and abused in a loose, unregulated, and reckless lending envirionment that was ripe for exploitation at the expense of people who had no idea that they were being led to financial slaughter.

And no matter how much you want to bang your (or my) head against the wall and convince me otherwise, the evidence clearly shows that the Democrats running the Housing and Finance Committees fought regulations proposed by the GOP tooth and nail as far back as 2001.

Initially, subprime was the niche product of a small group of lenders and investors. Fannie and Freddie's entrance into that segment of the market didn't occur until later.

The purpose of subprime was to help first time homebuyers get in the front door. Once they had established a 6-12 month track record for on-time payments they would be able to refinance into a more conventional loan product, with the equity that had built allowing them to fall within the loan to value (LTV) guidelines set forth by "A-Paper" lenders.

In the case of Fannie and Freddie, given the size and scope of their business, their status as GSEs and the fact that they jacked the numbers, and no one was the wiser until it was too late, AIG was sold a bill of goods also.

Insurers of course are in the business of risk. But in this case, they were duped and suckered into insuring a lie.

I don't agree with these bonus payouts, by the way. Make these bonuses contingent upon getting the company out of this, and I think that would look better to the public, and give these execs an incentive to be proactive rather than passive. That public perception would go along way in restoring public confidence. And with that increased confidence, AIG stock would become more desirable by investors, minimizing or even eliminating the need for government bailout money.

The US Economy :Images

//www.webtek.no/titanic/Images/titanic6.jpg

Kaveh

Come on dude, you keep beating the Fannie and Freddie horse and blaming the crisis on those two.

They did have a role in it undoubtedly, but sub-prime is known to be the biggest culprit on the mess.Unless you want to say that those two entities were the only mortgage companies who issued notes?

-YT

I signed

I have signed the petition and allow me to bring this update for you guys.

//money.cnn.com/news/newsfeeds/articles/djf50...

-YT

Here is a pretty good summary of how AIG got where they are

Here is a pretty good summary of how AIG got to where they are though it was written before the more recent developments. 

//www.contrarianprofits.com/articles/the-inside-story-of-the-collapse-of-aig/5641

AIG

became the mess that it is now as a result of paying out claims on all of the non-performing mortgages they insured. Mortgages that would not have ever been underwritten to begin with, had Barney Frank and his gang of thieves been stopped from pushing lenders to write mortgages to just about anyone with a pulse.

I'm certain many people have noticed that some of the homes in their respective neighborhoods have been vacant for a while. These bank-owned properties are saddled with a non-performing debt that is some cases are almost double the actual value of the home.

These lenders know that they have absolutely zero chance of recovering that money by selling the property immediately. The only way they can mitigate their losses somehow is to sit on the house, so to speak, and collect the insurance claim each month to offset the non-performance of the loan that was written against the property.

And who writes those insurance claim checks? AIG.

AIG could have denied payment to these lenders and investors, citing malpractice in underwriting. Of course, they would in turn be sued, their stock would plummet to the point that they would make shares of Citibank look expensive at $1.03, and there would be a disastrous ripple effect thoughout the global economy, one that makes this current economy pale in comparison.

AIG did not contribute to this crisis. They didn't underwrite any mortgage loans. A significant percentage of the loans that AIG has insured are through Fannie Mae and Freddie Mac, two entities that knowingly cooked the books to deliberately create a false impression that they were both solid, viable entities. 

it's not complicated!

"Under no circumstances should the AIG executives who helped create the financial crisis receive bonuses. That's our money and you should do whatever it takes to get it back."

I just signed it!

IRANdokht

AIG

I wasn't aware that there is an argument.  I am addressing the facts.  Interestingly, some of the people in the federal government who are complaining the loudest about AIG are the very ones who got AIG in this mess in the first place.  The primary cause of AIG's demise was in investment in mortgage backed securities.  Those securities are next to worthless today because so many people are foreclosing on their loans.  And the reason so many people are foreclosing on their loans is that Congress deregulated the banking and mortgage lending industry which allowed millions of people to get into subprime loans that they could not possibly afford.  That is the reason I was at the AIG headquarters addressing the foreclosure market and how it was going to impact AIG which proved true several months later.  No one should really be surprised yet it seems that everyone in Washington is. 

Yachov

Are you presenting both sides of argument all by yourself? in one breath you're telling me that saving AIG is crucial for preventing the collapse of the world economy, and then showing how even the Fed Res Chairman is angry about the intervention with AIG!
Isn't that exactly what the title was: "sick of AIG"?

Also Sunday, CBS' "60 Minutes" aired an interview with Federal Reserve Chairman Ben Bernanke, who said the AIG bailout rankled him.  "Of all the events and all of the things we've done in the last 18 months, the single one that makes me the angriest, that gives me the most angst, is the intervention with AIG," Bernanke said."

IRANdokht

Disclosures

//www.cnn.com/2009/US/03/15/AIG.banks.list/index.html

AIG

These are complex issues.  It is important to understand that if AIG collapses the entire world's economy collapses (as if it has not already).  No matter how it is characterized, the reality is that AIG executives have intimate knowledge of issues without without which AIG could not function.  Last summer I was invited to their world headquarters in New York to teach a class on real estate foreclosures and how they might impact AIG.  While the high level  executives listened in earnest, the attorneys and claims examiners seemed more concerned with who was going to buy lunch, how they would entertain me that evening and which clubs we would attend.