US Lawmakers vote in 90% Tax levy on bonuses

[fido]

bluetone said:

The majority of the $165m in bonuses that AIG are paying out are for the UK based investment bankers (the ones largely responsible for getting AIG into hock with these Credit Default Swaps and so on).

Think you got it the wrong way round - AIG is an insurance company - they offered insurance against entities defaulting for which the investment banks (and other institutions) paid a premium .. well AIG now have to pay up. You can hardly blame the banks for that!

Edited by fido on Friday 20th March 23:22

[bluetone]

fido said:

bluetone said:

The majority of the $165m in bonuses that AIG are paying out are for the UK based investment bankers (the ones largely responsible for getting AIG into hock with these Credit Default Swaps and so on).

Think you got it the wrong way round - AIG is an insurance company - they offered insurance against entities defaulting for which the investment banks (and other institutions) paid a premium .. well AIG now have to pay up. You can hardly blame the banks for that!

Edited by fido on Friday 20th March 23:22

No. The whole problem with AIG is that got into Business nothing to do with insurance; the sort of business usually done by IBs. The Credit Default Swaps they got very heavily into are a derivative closely related to insurance (ie. insuring against a creditor defaulting on their debt) but became tradeable products.

Admittedly my post was poorly worded!

Anyway, the point is the $165m is mostly being paid to UK taxpayers, not US ones..

Edited by bluetone on Saturday 21st March 00:13

[Fittster]

fido said:

bluetone said:

The majority of the $165m in bonuses that AIG are paying out are for the UK based investment bankers (the ones largely responsible for getting AIG into hock with these Credit Default Swaps and so on).

Think you got it the wrong way round - AIG is an insurance company - they offered insurance against entities defaulting for which the investment banks (and other institutions) paid a premium .. well AIG now have to pay up. You can hardly blame the banks for that!

Edited by fido on Friday 20th March 23:22

Is AIG paying up or is it in effect the US taxpayer?

[bluetone]

US taxpayer owns 80% of AIG. Understandably they want their money back; the funds they bailed AIG out with. Think they are getting used to the fact it's gone but of course the politicians are trying to put a spin on it. The bigger problem is that Joe Public is likely to tell any other financial institutions where to go as a result...

[just me]

Why is that a problem. That is exactly how it should be. You don't like the way someone does business, or you lose money with them, you tell them to go take a hike, not give them more of your hard-earned money.

[bluetone]

just me said:

Why is that a problem. That is exactly how it should be. You don't like the way someone does business, or you lose money with them, you tell them to go take a hike, not give them more of your hard-earned money.

Yup, couldn't agree more. The problem though is pretty huge when it's a company as big and important (to the US) as AIG..

[thehawk]

Fittster said:

RobDickinson said:

Fittster said:

Companies should be able to pay their employees however much they please. They should be able to go broke too.

That’s how capitalism is supposed to work.

AFIK the US government is the major shareholder in these companies now isnt it? Shouldnt it be down to them who gets paid what.

Prehaps they should take some of these $trillions and pay someone with a decent legal and financial mind to sort it all out...

The government should never have been involved, a free market would quickly correct mistakes.

I almost agree, but I think the magnitude of the failures would have presented an extreme risk that civil unrest would have occurred.

[thehawk]

Fittster said:

el stovey said:

Fittster said:

Let them be wiped out and everything would have returned to normal. Government invention in Japan has lead to 15 years worth of misery.

Without government intervention there would be a complete collapse of the banking industry.

And new banking organisation couldn't have been set-up to fill the void?

How many days can you go without access to cash?

[ZondaMan]

bluetone said:

fido said:

bluetone said:

The majority of the $165m in bonuses that AIG are paying out are for the UK based investment bankers (the ones largely responsible for getting AIG into hock with these Credit Default Swaps and so on).

Think you got it the wrong way round - AIG is an insurance company - they offered insurance against entities defaulting for which the investment banks (and other institutions) paid a premium .. well AIG now have to pay up. You can hardly blame the banks for that!

Edited by fido on Friday 20th March 23:22

No. The whole problem with AIG is that got into Business nothing to do with insurance; the sort of business usually done by IBs. The Credit Default Swaps they got very heavily into are a derivative closely related to insurance (ie. insuring against a creditor defaulting on their debt) but became tradeable products.

Admittedly my post was poorly worded!

Anyway, the point is the $165m is mostly being paid to UK taxpayers, not US ones..

Edited by bluetone on Saturday 21st March 00:13

Not quite. Its problem was that it was acting like the insurance provider that it is in the CDS market, i.e. not hedging exposure, and thus absorbing all the risk it guaranteed under the contracts. Had it acted as a dealer, it wouldn't be in the mess it is. The CDS themselves weren't and aren't a problem.