more AIG

[mattycub]

In response to my post yesterday, Greg mondragon brought up a reasonable point. Since my response to it is as long as a normal post, I thought I'd repurpose it as a post. Double content generation points! Greg's comment:

I appreciate you taking the time to write this, but one question pops out at me: there are two assumptions here - one is that there are

Comments

[mattycub]

The CDS group was but one subdivision of the Financial Products division at AIG. From what I can tell, even though it's the group that caused the company all the problems, it was a fairly small group. And like I said in my post yesterday, those people are gone. That subdivision has pretty much been wound down, as most of the billions we've poured into the company have gone to pay out on those CDS contracts. What we're talking about is the rest of the FP division, which still has a $1.6T derivatives portfolio to manage. Which is now our $1.6T derivatives portfolio, and I'd like it managed well.

Wether or not someone should be making millions of dollars a year or deserves it or not is, in my view, entirely beside the point. The reality of the situation is that people in the financial industry make a lot of money. And we now own a company in that industry, a company that still has a lot of risk inside of it and if not managed well could cost us even more money. Someone has got to do that work, and for the reasons I outlined in my post I'm not convinced we could quickly or easily get other people to do it.

Put another way, if we get rid of the people who are qualified to do the work that we need done because we're concerned about paying them millions of dollars, and that leads to a chain of events that costs us billions in the process and causes a further drag on the economy - what good does that do us, exactly? Isn't it kind of short sighted?

Ultimately, I'm a pragmatist. I want to maximize the opportunity to get the billions we've spent on the company so far back. I'm not convinced the way we're going about things now does that.