Liddy: it's too risky not to pay AIG bonuses

Here's the important part of AIG CEO Edward Liddy's op-ed in this morning's Washington Post:

AIG has made a set of retention payments to employees based on a compensation system that prior management put in place. As has been reported, payments were made to employees in the Financial Products unit. Make no mistake, had I been chief executive at the time, I would never have approved the retention contracts that were put in place more than a year ago. It was distasteful to have to make these payments. But we concluded that the risks to the company, and therefore the financial system and the economy, were unacceptably high.

But doesn't it seem like there's a clause missing from that last sentence? You know, like: The risks .... of what? The clear implication is that Liddy is referring to risks that would attend to not making the payments. He made that argument in AIG's white paper on retention payments. And I guess Liddy no longer feels comfortable making the argument outright, and needs to do a little linguistic dance around it. But I don't see what other meaning you can apply to that last sentence: Liddy still thinks it would be too risky for AIG not to pay bonuses to its financial services unit.

Again, here's how it's put in the white paper:

AIGFP's books also contain a significant number of complex -- so-called bespoke -- transactions that are difficult to understand and manage.  This is one reason replacing key traders and risk managers would not be practical on a large scale.  Personal knowledge of the trades and the unique systems at AIGFP will be critical to an effective unwind of AIGFP's businesses and portfolios. 
Presented by

Conor Clarke is the editor, with Michael Kinsley, of Creative Capitalism. He was previously a fellow at The Atlantic and an editor at The Guardian. More

Conor Clarke is the editor, with Michael Kinsley, of Creative Capitalism, an economics blog that was recently published in book form by Simon and Schuster. He was previously a fellow at The Atlantic and an editor at The Guardian. He is also on Twitter.

A New York City Minute, Frozen in Time

This wildly inventive short film takes you on a whirling, spinning tour of the Big Apple

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register with Disqus.

Please note that The Atlantic's account system is separate from our commenting system. To log in or register with The Atlantic, use the Sign In button at the top of every page.

blog comments powered by Disqus

Video

A New York City Minute, Frozen in Time

This short film takes you on a whirling tour of the Big Apple

Video

What Happened to the Milky Way?

Light pollution has taken away our ability to see the stars. Can we save the night sky?

Video

The Faces of #BlackLivesMatter

Scenes from a recent protest in New York City

Video

Ruth Bader Ginsburg on Life

The Supreme Court justice talks gender equality and marriage.

Video

The Pentagon's $1.5 Trillion Mistake

The F-35 fighter jet was supposed to do everything. Instead, it can barely do anything.

More in Politics

Just In