NYT's Sorkin Is Wrong: We Must Not Let the AIG Thieves Blackmail Us
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We'll be delivering our petition to Congress when Barney Frank's House Financial Services Committee holds a hearing on AIG at 10am tomorrow. You can sign it here and leave your comments.
Andrew Sorkin writes a completely incoherent defense of paying out bonuses to AIG in the New York Times. It would hardly be worth consideration were it not for the fact that it may very well be what Timothy Geithner was thinking when he negotiated the deal to pay the bonuses out in the first place:
A.I.G. built this bomb, and it may be the only outfit that really knows how to defuse it.
A.I.G. employees concocted complex derivatives that then wormed their way through the global financial system. If they leave — the buzz on Wall Street is that some have, and more are ready to — they might simply turn around and trade against A.I.G.’s book. Why not? They know how bad it is. They built it.
So as unpalatable as it seems, taxpayers need to keep some of these brainiacs in their seats, if only to prevent them from turning against the company. In the end, we may actually be better off if they can figure out how to unwind these tricky investments.
It certainly explains the white paper obtained by FDL on Sunday which AIG wrote to explain its legal rational for paying the bonuses. Marcy Wheeler interprets it (rightly I believe) as a ransom note: Pay us or we blow the whole thing up.