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March 20, 2009
What can I say about the AIG compensation issue?
On the political front, this is exactly what the libertarian economists warned. The money would be wasted, it wasn't as needed as it seemed, if you wanted to give the money away it wasn't to the right people, and when you did give it away you would end up politicizing a larger number of business decisions.
In the particulars of the AIG compensation issue, I would note that some of those people receiving bonuses probably made a profit for AIG last year even if the division and firm did not.
I see no moral reason to deny people gave the firm some profitable trades deserve collective punishment for the firm's failure. Perhaps there are pragmatic or legal reasons not to do so, but not moral ones.
I think people underestimate how many people would have quit last year without these retention bonuses. It is hard to know, but given the political fallout for the senior staff who are rich, the firm could have easily lost many of its most experienced staff. That said, I second the calls to make these retention bonus in AIG stock or in the very distressed assets that they are unwinding for AIG.
Posted by OneEyedMan at March 20, 2009 9:10 AM
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