I find myself unable to identify with -- or muster any empathy whatsoever -- for an individual who received $742,006.40 (post-tax) and can readily afford to donate it to charity without concern for his family's well-being despite the current economic climate.
If said founder can sneeze at $700.000 dollars like that and write a whiney letter at the same time then nope, no difference to me. I have yet to see that, though.
I don't know what he was trying to achieve with that letter - for me it's just a disgusting testament to how money can detach people from reality.
I can't speak for ankhmoop, but what bothers me here is the whiney letter.
I already knew that ridiculously overpaid jobs exist and that you usually get them by being born into the right family - or with an unusual amount of luck. I don't like that part of reality but I can't change it.
So, this guy has one of these jobs. Fine, someone has to do the dirty work after all!
But is there really a need to whine in public about his bonus troubles?
Especially in the current situation where many people reading his drivel have slightly bigger problems than figuring out whether to invest or donate their next million?
What he's complaining about is that he's been made a scapegoat for something that isn't his fault, been pressured to return all his payment (but $1.00) for a year of hard work, and has state AGs threatening to announce his name publicly as one of the evil AIG execs. I think his being upset is pretty reasonable.
Poor guy. Maybe he should take some of his $700k to a lawyer instead of crying for public sympathy. It's about the scales. He may have a legal right to be upset. But with presumably a few millions in the bank he should have the dignity to know that he 's still on the bright side of life.
Actually, many people get those jobs by working hard in high school to get into a prestigious college, and then working hard in college to get into a prestigious banking or accounting firm. What many see as luck is actually 10+ years of hard work.
His reaction to life's failings -- not his position of success -- demonstrates a remarkably ill-developed sense of decorum and tact in light of his financial position, the failure of AIG, and subsequent taxpayer bail-out.
Really. How about a person who was promised payment for services served and than subsequently demonized and threatened with slander and public humiliation for claiming his just due?
I see your point. But assuming he had nothing to do with the derivative crisis, he is just basically cleaning up a mess made by someone else. And he has now effectively been paid nothing for his work.
Sure, he can afford it, and he was a senior vp at AIG, so I am sure there is a lot more he could have done. But he played an ancillary role in this crisis. And this is basically turning into a witch hunt. If he had been at some other bank, this wouldn't be happening to him.I would see some cases where I agree with him losing his bonuses, but not in this one.
It seems to me like the government is going after AIG only because of all the public outrage. I would like to see more signs criminal investigations starting, and system wide changes, I don't want the government to focus on just one company.
"Sure, he can afford it, and he was a senior vp at AIG, so I am sure there is a lot more he could have done."
Being a vice-president at a financial institution does not mean one has much executive power. For instance, a couple of years ago Goldman Sachs had over 300 vice-presidents. I don't know if AIG has the same hierarchy as Wall Street banks have (or had, since some have gone bust), but if such is the case, then a VP is not exactly a top dog, so to say.
"This is basically turning into a witch hunt"
It sure is! The politicians (mainly the democrats but also the republicans) have realized that the American people's sentiment is, all of a sudden, strongly against the financial institutions, and they're positioning themselves so they can profit politically from other people's misery. Politicians have no values, only re-election dreams.
No, you read it completely wrong. He did recieve his bonus, and feels injustice at being pressured to return it when the financial crisis is nothing to do with him. So he's giving it to charity rather than return it to AIG.
1. Buh bye.... don't let the door hit on your way out.
2. With the current job losses, I am sure there will be plenty of well qualified people that can replace him for a lower pay.
You got paid $740k for what? Does this guy realizes that his profession is a lot less valuable right now, and that he shouldn't/can't expect the same amount of money (taxpayer money), even during the bust.
"I know that because of hard work I have benefited more than most during the economic boom and have saved enough that my family is unlikely to suffer devastating losses during the current bust. Some might argue that members of myprofession have been overpaid, and I wouldn’t disagree. "
Well, maybe a little, if your claims about being tarred unfairly with the CDS debacle are true.
But stop whining. All over the USA, people who work hard, who get great reviews from bosses, customers and peers, who were promised bonuses and profit sharing, are seeing instead slashed pay and benefits. That is, if they are lucky, and not getting RIFed.
Your company is in the crapper, and being propped up by taxpayers both explicitly by government bailout, and implicitly by the Fed.
If you worked anywhere besides the financial industry at a company in AIG's shape, you wouldn't be getting a bonus, not because of politics, but because there wouldn't be any money to pay one.
Spare me the false charity as well. People in your line of work compensated themselves as if they were founders and early investors in F500 companies, while holding positions that would barely command six figure salaries in other industries. I'm sure most readers here on HN would like to be in the position to write a 750k check to charity in the face of a depression.
That $100 million a year in equity and commodity trading? How much of that was on the back of the tech and housing bubble, and exploding oil prices? Sans the games the guys down the hall were playing with CDS and CDOs, would your returns even have been so high?
Commodities and equities were leveraged as well at AIG. Leveraging that the CDS business provided capital to finance. It's all connected. I think this guy is choosing facts to put himself and his team in the best light. There are probably a lot of people over there dressing down the CDS guys for being incredibly irresponsible, and the CDS guys were, I'm not trying to deny that. That said, the other business lines were more than willing to leverage off of that irresponsibility when the bets were going the right way.
I think it is time for ALL of us to admit our complicity in the current disaster. Wall Street was incredibly irresponsible. Regulators didn't regulate. And WE the American people, bought a lot of stuff we could not afford, and didn't save nearly as much as we should. Consider this, do you work for a company that exists solely due to the presence of investment capital? If so, do you feel a burning need to leave your position and go to work for a company that actually sells real things, to real people or companies, for real money?
I am not denigrating anyone here. My only point is that the sooner everyone owns up to their part, the sooner we can do what we need to move on. We should stop trying to hang it all on Bush, or regulators, or bankers, or Republican Congressmen like Phil Gramm, or Democratic Congressmen like Chris Dodd. Or on the guy down the hall, as the guy in the article is trying to do. They all played a role, but it was a team effort.
We all contributed to this crisis. Now it is true that some contributed more than others. But for a guy who works at AIGFP to claim to be blameless, is fanciful if counter productive at best, and potentially divisive in the style of Marie Antoinette at worst. Probably somewhere in between like most of these things.
I take issue with this. I certainly didn't contribute to the crisis - I'm a student and have been since kindergarten. The vast majority of Americans didn't contribute to the crisis. I'd say that even the majority of people on Wall St. didn't contribute to the crisis. Those who are responsible should own up, but playing the "everyone say sorry" game is pointless if not disingenuous.
> But stop whining. All over the USA, people who work hard, who get great reviews from bosses, customers and peers, who were promised bonuses and profit sharing, are seeing instead slashed pay and benefits. That is, if they are lucky, and not getting RIFed.
Most of them are not the subject of congressional investigations.
> If you worked anywhere besides the financial industry at a company in AIG's shape, you wouldn't be getting a bonus, not because of politics, but because there wouldn't be any money to pay one.
No, but he'd get a salary. Which he did not at AIG (according to his account).
> People in your line of work compensated themselves as if they were founders and early investors in F500 companies, while holding positions that would barely command six figure salaries in other industries.
Yes, that's more or less what he said in the article.
> I'm sure most readers here on HN would like to be in the position to write a 750k check to charity in the face of a depression.
Yes, that's more or less what he said in the article.
> That $100 million a year in equity and commodity trading? How much of that was on the back of the tech and housing bubble, and exploding oil prices? Sans the games the guys down the hall were playing with CDS and CDOs, would your returns even have been so high?
Perhaps your job also depends on the bubble economy. We'll know by this time next year.
I strongly disagree. He didn't make those risky bets. He honored his end of his agreement, and so should be compensated accordingly.
Perhaps you'd feel differently if your boss asked you to work for the next year, promised you a big lump sum, but then at the end of the year said 'sorry, but the money we borrowed from the gov't means it's not politically expedient for us to honor our agreement'.
Emotions aside, it sounds like he's getting a raw deal (and it doesn't matter if he's already worth millions - his net worth should have no bearing on whether or not the contract should have been honored).
The company should have gone bankrupt (and certainly would have, without US government intervention), in which case none of these people would have seen any bonuses at all. he should be grateful for the $1 :-)
Do you realize what the consequences of letting AIG go bust could be? Do you realize that bailing out crippled financial institutions is entirely different from bailing out Motown's idiot car companies? Do you realize that AIG has various divisions and only one of them was trading the toxic financial products that destroyed the company?
The argument was NOT the one you cherry-picked. The argument was that bailing out financial institutions is NOT the same as bailing out non-financial institutions. Since you did not get the idea, I assume that Finance is not your forte. My mistake for not having made my point more explicitly.
What we are witnessing is collective schadenfreude. Most people are happy to see these giant institutions fall. Unfortunately, most people know zero of Economics and Finance and fail to realize that if some institutions collapse, we might end up in an even worse situation.
"The argument was NOT the one you cherry-picked. The argument was that bailing out financial institutions is NOT the same as bailing out non-financial institutions."
You asked a series of rhetorical questions of the form " Do you realize blah". That isn't "argument" or reasoning.
Do you expect people to automatically agree to anything you say just because you say "do you realize.."?
"Since you did not get the idea, I assume that Finance is not your forte."
A better assumption is that you didn't make your point well ;-)
True, I concede that I didn't make my point well. Also true is that my goal was to counter the OP's argument, not present a forceful one.
I don't know what you do in your professional life and I would be lying if I said I care. Before coming to grad school I worked at a hedge fund and I realized I know practically zero of Finance. I strongly believe that discussing the details is what matters, and no one on HN is qualified to discuss the details on the AIG debacle. Let's face it. These financial discussions here on HN are usually enormous displays of ignorance (there are rare exceptions). This community's forte is coding. No one around here knows what's on AIG's books. I bet no one around here is a great bankruptcy lawyer. Even those who know Finance only know a few instruments, and AIG was trading a lot of instruments. It would take decades for one to learn all it takes to REALLY understand what's going on in Wall Street.
Knowledge is not a matter of consensus. Some comments are written by clueless people. Many of these comments are upvoted by even more clueless people. I make no claims that I know what is going on, but I see a lot of pompous fools on HN who believe they know it all. I say, let us go back to coding because we all suck at Finance. I only happen to suck less than most because I worked in the field.
"I concede that I didn't make my point well. Also true is that my goal was to counter the OP's argument, not present a forceful one."
I fail to see the difference.I would have thought the best way to counter someone's argument is to make a logical, coherent counter point.
I am not questioning your background. I am sure you have many valuable points to make and I look forward to hearing them. My background is irrelevant as regards how well you are expressing yourself.
Our disagreement (such as it is) revolves around your use of such terms as "pompous fools on HN who believe they know it all".
I'd much rather assume that someone on this board is intelligent (taking out the "fools" part) and has put some thought into what he/ she is saying (removing the "pompous" part). He could still be mistaken though. That doesn't make him a "fool" or "pompous".
It is very possible that you have more knowledge of finance and what happened at AIG than the hacking centric folks on this board. This is a good thing.
What I find less than optimal is your hurried/ill thought out arguments (" do you realize .. ") and your constant "attack the person vs the argument" style.
If you would use your knowledge of finance to illuminate the errors made by others (vs calling them names) with solid reasoning and argument that would be very valuable. That kind of high quality conversation is what HN was set up for.
I'm done with this thread and will let you have the last word if you so wish it. :-)
I am not a United States taxpayer and have no stake in the whole AIG debacle at all. Peace.
Dude, I have no problems with you. You pointed out some flaws in my arguments. You didn't act as if you were an expert. You didn't act as a pompous fool. My problem is with the collective belief here on HN that just because most of us are good at coding, then we are soooooooo smart that we can understand any topic without any study. That is naive and offensive. People in other fields who take decades to become proficient are not stupid. It takes a long time and a lot of effort to become an expert in any field. Period.
"I would have thought the best way to counter someone's argument is to make a logical, coherent counter point."
True. The problem, you see, is that I don't know what is happening at AIG! What I do know is that I know close to zero on that topic. What I do know is that many people try to paint things with a very broad brush and go for simplistic and superficial analyses.
You are right that my writing style is a bit too aggressive. I get downvoted all the time because of that. I should remind myself that I am no longer in the jungle-like financial world. And though I am not a U.S. citizen, unfortunately I am a U.S. tax-payer :-( Peace.
I do think there is a legitimate debate as to whether or not we should have bailed out AIG. To address your later points, there are plenty of respectable people who argue we should have let AIG go bankrupt. "Financial experts", if it makes you feel better, for example Jim Rogers, whom I mention since you seem hung up on this point.
Knowing that Jim Rogers argues that we should have let AIG gone bankrupt does not affect me. What I am interested in is knowing WHY Jim Rogers believes that AIG should have gone bankrupt. I would like to know on what ground he argues that. Do you have any URLs on that? I am intrigued.
Unprofitable firms and crippled fianancial insitituions are a libability to the economy. Proping them up with stolen taxpayer money is not a sound way to run an economy.
Profit and loss exists for a reason, they finetune the allocation of resource to ones we find most efficent. If we don't allow the bust to run the course, than we will be less prosperous in the long run.
Beside, this is not the end of the world. We suffered worser recession like the recession of 1921.(Yes, worser than the Great Depression) Then the 1920s became the roaring 20s.
I am also a fan of "Darwinian Capitalism", but AIG and other huge financial institutions aren't called "too big to fail" without a reason. I advocate pragmatism over blind ideology. As much as I would like to see AIG implode, I think one should be careful and take into account what that would imply, and how the shockwave of destruction would affect the rest of the economy. All in all, all I am saying is: analyze the problem, make decisions based on data, not based on gut feelings or dogma.
Last but not least: the financial world in the 1920s was completely different than what it is today. Unfortunately, in Economics experiments are not exactly reproducible. For one reason they call it the dismal science, right?
Going into bankruptcy does not mean going out of business, at least not immediately. It basically just lets you put your debts "on hold" while you either reorganize or wind down under court supervision. Gives everyone time to take a breath and think rationally. Sounds pretty good in comparison to what happened?
I have read articles written by so-called "experts" explaining clearly and forcefully why we should let AIG go bankrupt. Then I have read articles written by other "experts" who claim the opposite, also in a convincing manner. When experts look at the same problem and draw entirely different conclusions, then:
i) their own interests are clouding their judgement.
ii) they don't all have the same data.
iii) their "expertise" is greatly overrated.
In the last few months there has been so much irrationality and lack of transparency, that I now truly find it hard to believe anything I read on this topic.
So it's his fault the government intervened, then? Imagine for a moment that logic crept into this train-wreck of a thread:
All I see is
some guy
who
took no salary for a year
on the promise that
he'd get a bonus at the end
The situation became politicized, so his bonus was rescinded. For all those people accusing him of whining, I hope you never complain about politics at your workplace.
Is there any way to find out what the original URL was on "dead" items? There really should be a way, even if it's some crazy tiny nofollow link someplace ;-) (I can Google in this case, but that's not always true.)
I really respect his decision to donate all the bonus payment to charity. I really think that the a lot of employees at AIG are ethical, and did not have much to do with the collapse.
I was very surprised to learn that some of the senior management is only taking a salary of one dollar. Bonuses are probably warranted in this case.
I am not quite sure why Mr. Libby thought he could definitely honor those bonuses though, especially since AIG had said it wouldn't pay performance bonuses to senior executives in 2008. He promised the employees three times in October that their bonuses would be honored. The bailout of AIG was starting to turn into a witch hunt by then.
If the e-mail author earned an income remotely commensurate with individual value produced rather than taking gross advantage of market inefficiencies while attempting to sidle all culpability when the market (somewhat) corrected, the implication's point would be valid.
To commiserate is to share misery, the word you are looking for is commensurate.
Your comment seems somewhat tangential to the argument. Are you saying that the financial crisis was in no way caused by consumer attitudes towards real estate?
I have a hard time understanding why on a board that purports to attract entrepreneurs, we have so many people on this thread who are bashing the guy because he made more money than you might judge reasonable.
"we have so many people on this thread who are bashing the guy because he made more money than you might judge reasonable."
attributing (bad) motives to others does not help make a strong argument, and you are probably wrong anyway. No one here has said they were "bashing" anyone because he made a tonne of money. When taxpayer dollars are put into a company that crashed and burned , there is a valid argument that they have some say on how their money is(or is not) spent. You think if a professional investor (say Warren Buffet) put his money into AIG, he would have no strings attached? (There are valid counter arguments to all these points but implying objectors are jealous/envious/evil is counterproductive).
"On a board that purports to attract entrepreneurs"
Entrepreneurs are fine with the idea that if their company crashes and burns they get nothing, so your juxtaposition is invalid.
Plenty of people on this thread have commented on how much the guy makes and used it to undermine his argument. Given this, I'm not sure why you think the 'juxtaposition was invalid'.
I didn't say that tax payers shouldn't have a say on how the money is spent. But that doesn't excuse Libby from breaking his promise to his senior staff.
I think the whole point is that Libby now can't keep his promises because he ruined his company, in part, by making such promises.
I could promise you a gold plated Mercedes for making me a sandwich. The difference is that I haven't got one, and once I've eaten the sandwich, I can't just show up and ask Congress to spot me one to give you.
Completing your analogy, I assume the entity responsible for hiring the homeowners has failed due to their own market failure, and government intervention has occurred solely (supposedly) for the purpose of preventing collapse of the world's financial markets?
My exact point is - why would it matter? A contract is a contract. AIG isn't in bankruptcy, so shouldn't they honor commitments to their employees? Of course they can change compensation agreements going forward, but changing the rules for work that has been done is not right.
Not sure why this straw man is getting so many up votes. He's not saying he had minimal impact. He's saying it was nothing to do with him and he never profited from it at all.
Wow. I kind of meant that as a "shoulder shrug" comment. Didn't think it'd start a huge debate and have its karma shoot up and down like a hot air balloon on a windy day! Cool.
The point was more along the line of being an answer to the implied question "why should my huge bonus be effected when it was just my employer that was acting nutty". He got more than 700k after taxes. Would this have been possible without the other bogiosity that was going on at AIG? Should he still just be paid this even though his company has entered a type of receivership to the US taxpayer because it basically completely failed? Was the very idea of a > $1M bonus for what he did there part of the flood? I was thinking yes.
If the government had not bailed out AIG, it would have declared bankruptcy. In such a case, he would have been effectively jobless. Also, a bankrupt company cannot award bonus. So even as he keeps his job, he dares to complain about bonus. Hypocrisy at its best!!
But also in a bankruptcy, care is taken to separate out profitable divisions (often for sale to other entities), and those divisions are only valuable if the staff stick around. So one of the first things arranged post-bankruptcy are retention contracts much like the ones in question here.
It's hard to manage a giant company with some runaway losses/liabilities and other profits/assets. It can't be done by op-ed, radio call-in show, or congressional hearing.
I wonder what his salary was during the boom years. My guess it was probably in the millions. He may not have been directly involved in selling credit default swaps, but profit from that division probably helped pay his salary.
Let's not throw around speculation but analyze it for what it is. It's just some insight into his perspective and his current situation. He is forfeiting it all. The real problem I see is that this demonstrates that there is no way AIG can recover if the people that can bring it back together all leave.
Money is fungible, sure. But if his division was profitable even after paying his salary, you can't fairly say "profit from [Credit Default Swaps] probably helped pay his salary".
Thank you. A noble and risky thing to do, giving the money to the charity of your own choice rather than give in to the witchhunters and blackmailers. I hope you're hired into a position of real influence in your next financial institution soon.
One point: Jake is clearly trying to portray himself as the self-made, hard-working, humble American. In my opinion, he would've been better off not publishing this article in the NY Times. From my point of view, it seems he is searching for the spotlight by providing his letter of resignation to the Times. A good read for sure, but I am forced to consider this when I dig deep down in my stomach to find pity for him.
AIG is a large company; the set of people with personal responsibility for the credit-default swaps is much, much smaller. That said, it seems like a massive failure of risk management for the senior management to have allowed this situation to develop as it did.
He seems to think that making obscene profits == doing nothing wrong. Not always true.
The loopholes found and exploited by these guys, for the institutionalized purpose of making a killing, sometimes have nasty side effects like destroying good companies and draining the pension funds of average workers.
All in the name of profit, which is great by the AIG yardstick, but not so great for the rest of us.
My company still made a very good profit last quarter, and the last two quarters have been the best ever for my division. And yet my company has still told us there won't be any merit increases due to the economy. So, for this guy to whine about the pressure to give back the bonus when his company lost $60 billion is pretty outrageous.
76 comments
[ 2.4 ms ] story [ 119 ms ] threadI don't know what he was trying to achieve with that letter - for me it's just a disgusting testament to how money can detach people from reality.
I already knew that ridiculously overpaid jobs exist and that you usually get them by being born into the right family - or with an unusual amount of luck. I don't like that part of reality but I can't change it.
So, this guy has one of these jobs. Fine, someone has to do the dirty work after all!
But is there really a need to whine in public about his bonus troubles?
Especially in the current situation where many people reading his drivel have slightly bigger problems than figuring out whether to invest or donate their next million?
Sure, he can afford it, and he was a senior vp at AIG, so I am sure there is a lot more he could have done. But he played an ancillary role in this crisis. And this is basically turning into a witch hunt. If he had been at some other bank, this wouldn't be happening to him.I would see some cases where I agree with him losing his bonuses, but not in this one.
It seems to me like the government is going after AIG only because of all the public outrage. I would like to see more signs criminal investigations starting, and system wide changes, I don't want the government to focus on just one company.
Being a vice-president at a financial institution does not mean one has much executive power. For instance, a couple of years ago Goldman Sachs had over 300 vice-presidents. I don't know if AIG has the same hierarchy as Wall Street banks have (or had, since some have gone bust), but if such is the case, then a VP is not exactly a top dog, so to say.
"This is basically turning into a witch hunt"
It sure is! The politicians (mainly the democrats but also the republicans) have realized that the American people's sentiment is, all of a sudden, strongly against the financial institutions, and they're positioning themselves so they can profit politically from other people's misery. Politicians have no values, only re-election dreams.
This is very true. Honestly, I'd go so far as to call it a lack of leadership by Obama.
You got paid $740k for what? Does this guy realizes that his profession is a lot less valuable right now, and that he shouldn't/can't expect the same amount of money (taxpayer money), even during the bust.
"I know that because of hard work I have benefited more than most during the economic boom and have saved enough that my family is unlikely to suffer devastating losses during the current bust. Some might argue that members of myprofession have been overpaid, and I wouldn’t disagree. "
Well, maybe a little, if your claims about being tarred unfairly with the CDS debacle are true.
But stop whining. All over the USA, people who work hard, who get great reviews from bosses, customers and peers, who were promised bonuses and profit sharing, are seeing instead slashed pay and benefits. That is, if they are lucky, and not getting RIFed.
Your company is in the crapper, and being propped up by taxpayers both explicitly by government bailout, and implicitly by the Fed.
If you worked anywhere besides the financial industry at a company in AIG's shape, you wouldn't be getting a bonus, not because of politics, but because there wouldn't be any money to pay one.
Spare me the false charity as well. People in your line of work compensated themselves as if they were founders and early investors in F500 companies, while holding positions that would barely command six figure salaries in other industries. I'm sure most readers here on HN would like to be in the position to write a 750k check to charity in the face of a depression.
That $100 million a year in equity and commodity trading? How much of that was on the back of the tech and housing bubble, and exploding oil prices? Sans the games the guys down the hall were playing with CDS and CDOs, would your returns even have been so high?
Commodities and equities were leveraged as well at AIG. Leveraging that the CDS business provided capital to finance. It's all connected. I think this guy is choosing facts to put himself and his team in the best light. There are probably a lot of people over there dressing down the CDS guys for being incredibly irresponsible, and the CDS guys were, I'm not trying to deny that. That said, the other business lines were more than willing to leverage off of that irresponsibility when the bets were going the right way.
I think it is time for ALL of us to admit our complicity in the current disaster. Wall Street was incredibly irresponsible. Regulators didn't regulate. And WE the American people, bought a lot of stuff we could not afford, and didn't save nearly as much as we should. Consider this, do you work for a company that exists solely due to the presence of investment capital? If so, do you feel a burning need to leave your position and go to work for a company that actually sells real things, to real people or companies, for real money?
I am not denigrating anyone here. My only point is that the sooner everyone owns up to their part, the sooner we can do what we need to move on. We should stop trying to hang it all on Bush, or regulators, or bankers, or Republican Congressmen like Phil Gramm, or Democratic Congressmen like Chris Dodd. Or on the guy down the hall, as the guy in the article is trying to do. They all played a role, but it was a team effort.
We all contributed to this crisis. Now it is true that some contributed more than others. But for a guy who works at AIGFP to claim to be blameless, is fanciful if counter productive at best, and potentially divisive in the style of Marie Antoinette at worst. Probably somewhere in between like most of these things.
I take issue with this. I certainly didn't contribute to the crisis - I'm a student and have been since kindergarten. The vast majority of Americans didn't contribute to the crisis. I'd say that even the majority of people on Wall St. didn't contribute to the crisis. Those who are responsible should own up, but playing the "everyone say sorry" game is pointless if not disingenuous.
What percentage of Americans bought greatly over valued homes and have excessive credit card debt? The net savings rate has been 0 in the recent past.
I will take at face value that you, personally, have not contributed to this crisis. But a large number of Americans have.
Most of them are not the subject of congressional investigations. > If you worked anywhere besides the financial industry at a company in AIG's shape, you wouldn't be getting a bonus, not because of politics, but because there wouldn't be any money to pay one.
No, but he'd get a salary. Which he did not at AIG (according to his account).
> People in your line of work compensated themselves as if they were founders and early investors in F500 companies, while holding positions that would barely command six figure salaries in other industries.
Yes, that's more or less what he said in the article.
> I'm sure most readers here on HN would like to be in the position to write a 750k check to charity in the face of a depression.
Yes, that's more or less what he said in the article.
> That $100 million a year in equity and commodity trading? How much of that was on the back of the tech and housing bubble, and exploding oil prices? Sans the games the guys down the hall were playing with CDS and CDOs, would your returns even have been so high?
Perhaps your job also depends on the bubble economy. We'll know by this time next year.
Perhaps you'd feel differently if your boss asked you to work for the next year, promised you a big lump sum, but then at the end of the year said 'sorry, but the money we borrowed from the gov't means it's not politically expedient for us to honor our agreement'.
Emotions aside, it sounds like he's getting a raw deal (and it doesn't matter if he's already worth millions - his net worth should have no bearing on whether or not the contract should have been honored).
Your comment sounds like demagogy.
Most companies that go bankrupt do have some divisions that performed well and didn't "destroy the company". Weak argument.
What we are witnessing is collective schadenfreude. Most people are happy to see these giant institutions fall. Unfortunately, most people know zero of Economics and Finance and fail to realize that if some institutions collapse, we might end up in an even worse situation.
You asked a series of rhetorical questions of the form " Do you realize blah". That isn't "argument" or reasoning. Do you expect people to automatically agree to anything you say just because you say "do you realize.."?
"Since you did not get the idea, I assume that Finance is not your forte."
A better assumption is that you didn't make your point well ;-)
I don't know what you do in your professional life and I would be lying if I said I care. Before coming to grad school I worked at a hedge fund and I realized I know practically zero of Finance. I strongly believe that discussing the details is what matters, and no one on HN is qualified to discuss the details on the AIG debacle. Let's face it. These financial discussions here on HN are usually enormous displays of ignorance (there are rare exceptions). This community's forte is coding. No one around here knows what's on AIG's books. I bet no one around here is a great bankruptcy lawyer. Even those who know Finance only know a few instruments, and AIG was trading a lot of instruments. It would take decades for one to learn all it takes to REALLY understand what's going on in Wall Street.
Knowledge is not a matter of consensus. Some comments are written by clueless people. Many of these comments are upvoted by even more clueless people. I make no claims that I know what is going on, but I see a lot of pompous fools on HN who believe they know it all. I say, let us go back to coding because we all suck at Finance. I only happen to suck less than most because I worked in the field.
I fail to see the difference.I would have thought the best way to counter someone's argument is to make a logical, coherent counter point.
I am not questioning your background. I am sure you have many valuable points to make and I look forward to hearing them. My background is irrelevant as regards how well you are expressing yourself.
Our disagreement (such as it is) revolves around your use of such terms as "pompous fools on HN who believe they know it all".
I'd much rather assume that someone on this board is intelligent (taking out the "fools" part) and has put some thought into what he/ she is saying (removing the "pompous" part). He could still be mistaken though. That doesn't make him a "fool" or "pompous".
It is very possible that you have more knowledge of finance and what happened at AIG than the hacking centric folks on this board. This is a good thing.
What I find less than optimal is your hurried/ill thought out arguments (" do you realize .. ") and your constant "attack the person vs the argument" style.
If you would use your knowledge of finance to illuminate the errors made by others (vs calling them names) with solid reasoning and argument that would be very valuable. That kind of high quality conversation is what HN was set up for.
I'm done with this thread and will let you have the last word if you so wish it. :-)
I am not a United States taxpayer and have no stake in the whole AIG debacle at all. Peace.
"I would have thought the best way to counter someone's argument is to make a logical, coherent counter point."
True. The problem, you see, is that I don't know what is happening at AIG! What I do know is that I know close to zero on that topic. What I do know is that many people try to paint things with a very broad brush and go for simplistic and superficial analyses.
You are right that my writing style is a bit too aggressive. I get downvoted all the time because of that. I should remind myself that I am no longer in the jungle-like financial world. And though I am not a U.S. citizen, unfortunately I am a U.S. tax-payer :-( Peace.
Profit and loss exists for a reason, they finetune the allocation of resource to ones we find most efficent. If we don't allow the bust to run the course, than we will be less prosperous in the long run.
Beside, this is not the end of the world. We suffered worser recession like the recession of 1921.(Yes, worser than the Great Depression) Then the 1920s became the roaring 20s.
Last but not least: the financial world in the 1920s was completely different than what it is today. Unfortunately, in Economics experiments are not exactly reproducible. For one reason they call it the dismal science, right?
i) their own interests are clouding their judgement.
ii) they don't all have the same data.
iii) their "expertise" is greatly overrated.
In the last few months there has been so much irrationality and lack of transparency, that I now truly find it hard to believe anything I read on this topic.
All I see is some guy who took no salary for a year on the promise that he'd get a bonus at the end
The situation became politicized, so his bonus was rescinded. For all those people accusing him of whining, I hope you never complain about politics at your workplace.
I was very surprised to learn that some of the senior management is only taking a salary of one dollar. Bonuses are probably warranted in this case.
I am not quite sure why Mr. Libby thought he could definitely honor those bonuses though, especially since AIG had said it wouldn't pay performance bonuses to senior executives in 2008. He promised the employees three times in October that their bonuses would be honored. The bailout of AIG was starting to turn into a witch hunt by then.
Your comment seems somewhat tangential to the argument. Are you saying that the financial crisis was in no way caused by consumer attitudes towards real estate?
(ps - I think you mean commensurate?)
attributing (bad) motives to others does not help make a strong argument, and you are probably wrong anyway. No one here has said they were "bashing" anyone because he made a tonne of money. When taxpayer dollars are put into a company that crashed and burned , there is a valid argument that they have some say on how their money is(or is not) spent. You think if a professional investor (say Warren Buffet) put his money into AIG, he would have no strings attached? (There are valid counter arguments to all these points but implying objectors are jealous/envious/evil is counterproductive).
"On a board that purports to attract entrepreneurs"
Entrepreneurs are fine with the idea that if their company crashes and burns they get nothing, so your juxtaposition is invalid.
I didn't say that tax payers shouldn't have a say on how the money is spent. But that doesn't excuse Libby from breaking his promise to his senior staff.
I could promise you a gold plated Mercedes for making me a sandwich. The difference is that I haven't got one, and once I've eaten the sandwich, I can't just show up and ask Congress to spot me one to give you.
The point was more along the line of being an answer to the implied question "why should my huge bonus be effected when it was just my employer that was acting nutty". He got more than 700k after taxes. Would this have been possible without the other bogiosity that was going on at AIG? Should he still just be paid this even though his company has entered a type of receivership to the US taxpayer because it basically completely failed? Was the very idea of a > $1M bonus for what he did there part of the flood? I was thinking yes.
I have no idea why they would have structured the compensation that way though...the result is kind of predictable.
He obviously made a poor decision.
It's hard to manage a giant company with some runaway losses/liabilities and other profits/assets. It can't be done by op-ed, radio call-in show, or congressional hearing.
The loopholes found and exploited by these guys, for the institutionalized purpose of making a killing, sometimes have nasty side effects like destroying good companies and draining the pension funds of average workers.
All in the name of profit, which is great by the AIG yardstick, but not so great for the rest of us.