Tuesday, 27 October 2009

Obnostrodamus is wrong shocker!

Ah, well:

I agree entirely, if you're sucking at the taxpayer teat, then flamboyant bonuses are not appropriate. This will have some rapid consequences: the brightest and best of the bankers won't go anywhere near state-owned banks and thus they will either wither and die or they will move heaven and earth to get away from government support so that they can continue as before.

I didn't think that one through very well, did I?

Even as he has been lambasting the government for its handling of A.I.G. after its near collapse, Mr. Greenberg has been quietly building up a family of insurance companies that could compete with A.I.G. To fill the ranks of his venture, C.V. Starr & Company, he has been hiring some people he once employed.

Now, Mr. Greenberg may have received some unintended assistance from the United States Treasury. Just last week, the Treasury severely limited pay at A.I.G. and other companies that were bailed out by taxpayers. That may hasten the exodus of A.I.G.’s talent, sending more refugees into Mr. Greenberg’s arms, since C. V. Starr is free to pay whatever it wants.

“Basically, he’s just starting ‘A.I.G. Two’ and raiding people out of ‘A.I.G. One,’ ” said Douglas A. Love, an insurance executive who has also hired A.I.G. talent for his company, Investors Guaranty Fund of Pembroke, Bermuda.

While America generally loves stories of entrepreneurs making a comeback, Mr. Greenberg’s success may be at the expense of taxpayers. People who work in the industry say that if he is already luring A.I.G.’s people, he may soon be siphoning off its business and, therefore, its means to repay its debt to the government.

So what if there really is a market for “executive talent”? Deliberately limiting pay at those companies (part) owned by the taxpayers ain’t gonna do all that much good, is it?

Via Timmy.


Constantly Furious said...

Speaking as someone who has worked in Financial Services for my entire career, I can only say....well, fucking yeah.

If only we could explain this to the public, to the media and to the government.

Nick39 said...

Um, isn't Greenberg effectively doing a good bank (his) / bad bank (AIG) split? He's taking the talent and leaving behind the balance sheet garbage barge.

Obnoxio The Clown said...

Greenberg is making a good bank, a consequence of which is to leave AIG as a bad bank. But I don't think that split is his objective, it's just a consequence.

Nick said...

What are the lotto numbers this weekend oh predictor of shit?