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...and if you commit fraud or take risks that hurt your company, do they still have to pay your bonus?
by jhancock 18y ago
...and if you commit fraud or take risks that hurt your company, do they still have to pay your bonus?
- CWuestefeld 18y agoI would imagine that any employment contract worth its salt would subject to immediate termination any committing fraud. But you and I have no idea about these particular contracts, do we? But that's really academic, because the AIG employees did not commit fraud. And we're talking about investment bankers. Their job is to take calculated risks. These are very finely calculated. In the case of AIG, the problem isn't that their gambles went south. The problem is that somebody changed the rules on them, so the paper value of the investments (said values not having been realized yet) was changed, changing the calculations going into AIG's credit rating and thus making lenders wary. As was noted elsewhere in this thread (http://news.ycombinator.com/item?id=522777 http://news.ycombinator.com/item?id=522777 ), these executives weren't committing fraud, nor were they even losing actual money.
- jhancock 18y agoyou are correct that I know nothing of what's in their contracts. and you know nothing of if they committed fraud...or do you? The real problem is AIG is an INSURANCE COMPANY, not an INVESTMENT BANK. At least the part that the gov is bailing out is about its insurances. An insurance company is only supposed to invest its moneys in very low risk investments. The reason is they are supposed to constantly monitor the costs of covering their underwriting and keep enough funds on hand to cover their bets. They have not done so. This is the root of the problem. Is it fraud for an insurance company to not have enough to cover its underwritings and to continue to take on more? I think so...and that's the core of this problem.