The Washington Post did some actual journalism the other day, and took a look at AIG’s Financial Products subsidiary. Allow me to highlight a couple of key paragraphs from the story, written by Brady Dennis:
The handful of souls who championed the firm’s now-infamous credit-default swaps are, by nearly every account, long since departed. Those left behind to clean up the mess, the majority of whom never lost a dime for AIG, now feel they have been sold out by their Congress and their president….
They say what is missing from this week’s hysteria is perspective. The very handsome retention payments they received over the past week were set in motion early last year when the firm’s former president, Joe Cassano, was on his way out the door. Financial Products was already running into trouble on its risky credit bets, and the year ahead looked grim. People were weighing offers from other firms, and AIG executives feared that too many departures could lead to disaster.
So AIG stepped in with an offer to employees of Financial Products. Work through all of 2008, and you’d get a lump payment in March 2009. Stick around through 2009, and you’ll get paid through 2010. Almost all other forms of compensation — bonuses, deferred payments and the like — have vanished….
In actuality, (chief operating officer Gerry Pasciucco) 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.
Of course, you won’t hear those little tidbits from the thundering herd bound and determined to use this for their own political and socioeconomic ends. For those that can comprehend what the WaPo said, you can leave now and report to the JustOneMinute thread. For those that need a shorter and far-more-vulgar explanation, please flip to page 2.