Rewarding failure

[kevbone]

http://www.huffingtonpost.com/robert-creamer/bailed-out-wall-street-fi_b_323480.html'>http://www.huffingtonpost.com/robert-creamer/bailed-out-wall-street-fi_b_323480.html

 

 

Prepare for a new firestorm of completely justified populist outrage. Some of the country's largest Wall Street firms have set aside billions of dollars for bonuses to executives and traders -- many of whom are the same people whose reckless risk-taking led to the current recession.

 

Amazingly, giant insurance conglomerate AIG is currently scheduled to pay another $198 million in bonuses next March.

 

Remember that AIG's sale of unregulated "credit default swaps" helped trigger the financial collapse that led to the recession. "Credit default swaps" were essentially insurance policies that, if the underlying financial instrument fell below a certain price, AIG would insure the loss. Only problem was, that since the "credit default" business was completely unregulated, AIG had no capital requirements to guarantee that they could pay off.

 

To prevent what they thought might be a world-wide systemic meltdown, the Government was ultimately forced to invest $180 billion of taxpayer money, and now owns 80% of the company.

 

But earlier this year AIG actually paid $168 million in bonuses to executives and traders in the company's Financial Products Division that had run the "credit default swap" program, causing universal outrage.

 

 

 

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