AIG Outrage

by Larry Levin

Executives at AIG are tone-deaf, or stupid, or arrogant, or (insert your thought here). Even though AIG has received $173 BILLION of taxpayer bailouts to save it from collapse due to its colossally bad financial decisions, AIG is set to pay $450 million of bonuses to the very employees that were largely responsible for the insurer's near collapse last fall. Outrageous!

CEO Edward Liddy sent a letter to Treasury dated Saturday, claiming AIG had committed to paying the bonuses to employees of the financial-products unit and that they were "binding obligations" the company cannot legally rescind. The first payments are due March 15.

To that I would respond, "Bull$#*t; without taxpayer bailouts there wouldn't be money for anything, let alone bonuses!"

The payments to 400 employees of the financial-services unit -- some of whom no longer work at the insurer -- were promised last year before the federal government bailout. Bonuses range from as little as $1,000 to as much as $6.5 million.

Larry Summers, one of the President's top economic advisers said in an interview on This Week, "We are a country of law. There are contracts. The government cannot just abrogate contracts."

Really? Hmm, that's odd because over the last several weeks the President has recommended breaking contracts between banks and homeowners to cram down the mortgage balance. So which is it - are we a country of law and contracts or not? If the government is not going to break the AIG contract with its employees, then it shouldn't force banks to cram down mortgages. If it does, however, then it should also not allow AIG to pay these ridiculous bonuses.


Previous Day's Trading Room Results:

Trade Date: 3/13/09

E-Mini S&P Trades*
(before fees and commissions):

1) VA sell @ 9:20am at 746.00 = b/e (1-lot)

2) Engf buy @ 10:25am at 744.00 = b/e (1-lot)

3) VA sell @ 11:40am at 746.00 = +1.50 (1-lot)

4) IDVA sell @ 1:45pm at 751.50 = -1.25 (1-lot)

5) Algorithm positions (7)...combined SofT and Algo total...+5.75


Electronic (YM) Mini-Dow:


1) Sell @ 9:40am at 7,147 = b/e & -16

2) Buy @ 11:50am at 7,081 = +10 & +28...+$110.00 net



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