Bonus backlash drives AIG staff out of jobs
Public outrage against bonus payments of $165m (£112m) at the troubled insurer AIG last month prompted 20 staff to quit the company's financial products division, roughly a third of whom were based at its Mayfair office in London.
The employees left the 370-strong division because they were fed up with being the target of popular anger. In some cases, children were harassed and clubs asked AIG staff to leave, according to the boss of the financial products arm, Gerry Pasciucco. "It doesn't surprise me that some senior people said 'you know what, I've had enough'," said Pasciucco in an interview with the Wall Street Journal.
The spectre of seven-figure rewards at AIG prompted a political storm as Congress moved to impose an 85% tax on the payouts. Critics, including President Obama, derided the company for distributing generous "retention" payments while relying on more than $150bn of emergency funds from taxpayers to avert bankruptcy.
Those receiving the bonuses are untangling credit default swaps and other complex financial insurance arrangements which caused AIG's difficulties. The contracts largely originated in London where staff specialised in high-risk policies insuring banks against default on loans.
Pasciucco said the row hurt morale and "stunned people such that our wind-down has slowed down". He suggested the impact on the division's work would ultimately cost the public money, with 85% of AIG in taxpayers' hands: "Taxpayers probably have been damaged."
New York's attorney general, Andrew Cuomo, is investigating the legality of the payouts. Faced with widespread condemnation and the possibility of being publicly named, 15 of the top 20 recipients agreed to return their money. At one point, a union-backed protest group organised a bus tour taking demonstrators to the homes of AIG executives in Connecticut.Scores of death threats were received by AIG.
AIG's chief executive, Ed Liddy, is slimming down the company to a core, with efforts under way to offload many of the group's viable underwriting businesses.
"AIG will continue to get smaller and smaller and smaller until it doesn't register on anyone's Richter scale," Liddy told the Chicago Tribune.
He blames the insurer's demise on a self-serving culture built under a succession of previous bosses including veteran chief executive Hank Greenberg, who ran the company between 1968 and 2005.
"There's plenty of shame to go around," said Liddy. "The establishment of [the financial products unit] was done by Hank Greenberg. That culture was one of 'what's in it for me?' They got 38% of profits."
Sympathy for AIG has come from unexpected quarters. The company received a batch of letters from a class of nine-year-olds at a Texas elementary school who told employees to keep working hard. The messages, which adorn the walls at the firm's offices in London and Connecticut, include one saying: "Hi AIG. Not all of USA hates you."
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It's funny, why is it capitalist America is going to impose 85% on those bonuses where as socialist Labour Party is quiet even though it's in their own front yard those things took place?
Public outrage against bonus payments of $165m (£112m) at the troubled insurer AIG last month prompted 20 staff to quit the company's financial products division, roughly a third of whom were based at its Mayfair office in London.
The employees left the 370-strong division because they were fed up with being the target of popular anger. In some cases, children were harassed and clubs asked AIG staff to leave, according to the boss of the financial products arm, Gerry Pasciucco. "It doesn't surprise me that some senior people said 'you know what, I've had enough'," said Pasciucco in an interview with the Wall Street Journal.
The spectre of seven-figure rewards at AIG prompted a political storm as Congress moved to impose an 85% tax on the payouts. Critics, including President Obama, derided the company for distributing generous "retention" payments while relying on more than $150bn of emergency funds from taxpayers to avert bankruptcy.
Those receiving the bonuses are untangling credit default swaps and other complex financial insurance arrangements which caused AIG's difficulties. The contracts largely originated in London where staff specialised in high-risk policies insuring banks against default on loans.
Pasciucco said the row hurt morale and "stunned people such that our wind-down has slowed down". He suggested the impact on the division's work would ultimately cost the public money, with 85% of AIG in taxpayers' hands: "Taxpayers probably have been damaged."
New York's attorney general, Andrew Cuomo, is investigating the legality of the payouts. Faced with widespread condemnation and the possibility of being publicly named, 15 of the top 20 recipients agreed to return their money. At one point, a union-backed protest group organised a bus tour taking demonstrators to the homes of AIG executives in Connecticut.Scores of death threats were received by AIG.
AIG's chief executive, Ed Liddy, is slimming down the company to a core, with efforts under way to offload many of the group's viable underwriting businesses.
"AIG will continue to get smaller and smaller and smaller until it doesn't register on anyone's Richter scale," Liddy told the Chicago Tribune.
He blames the insurer's demise on a self-serving culture built under a succession of previous bosses including veteran chief executive Hank Greenberg, who ran the company between 1968 and 2005.
"There's plenty of shame to go around," said Liddy. "The establishment of [the financial products unit] was done by Hank Greenberg. That culture was one of 'what's in it for me?' They got 38% of profits."
Sympathy for AIG has come from unexpected quarters. The company received a batch of letters from a class of nine-year-olds at a Texas elementary school who told employees to keep working hard. The messages, which adorn the walls at the firm's offices in London and Connecticut, include one saying: "Hi AIG. Not all of USA hates you."
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It's funny, why is it capitalist America is going to impose 85% on those bonuses where as socialist Labour Party is quiet even though it's in their own front yard those things took place?
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