Over the weekend, the Connecticut attorney general indicated the bonuses paid to AIG was closer to USD 218 million. I’m a bit enraged the bonuses were paid out, but you have to put the amount in perspective. Over the past 6 months AIG received over USD 160 billion in bailout money with more to come. The bonus amount is less than two tenths of one percent of the current AIG bailout money. So why is their such little outrage at the other 99.80% of the money? I assume because it’s tough to put a human face to a counterparty like Goldman but if a single person like Douglas Poling receives USD 6.4 million it’s a different story. But even the USD 160 billion for AIG is chump change compared to what the Federal Reserve announced this week: to spend up to $300 billion to buy long-term government bonds and an additional $750 billion in mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac. It’s official the US Government used their last weapon and early – the printing of money. As a data point, last year the Bureau of Engraving and Printing (BEP) printed USD 154 billion in real currency notes based on yearly data provided by BEP.
Back to AIG, although the media talks about AIG to be precise there was a division within AIG that caused all the pain – AIG Financial Products (AIGFP). You can think of AIGFP as the bad insurer. Towards the end of last year the WaPo had a great three part story on the history of AIGFP: Part 1 | Part 2 | Part 3
Another article I found has a quick timeline of the Rise and Fall of AIGFP
Finally, Rolling Stone Magazine (yes, of all publications) has a good story on AIGFP
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