The Treasury Department found out last week that there would be another bonus payment to the traders in AIG’s financial products division, according to the White House. But the existence of the contracts that led to those bonuses should not have caught the Treasury, the White House or the American public by surprise. Back in January, Bloomberg News reported that the payouts were in the pipeline:
American International Group Inc., the insurer saved from collapse by government money after losses on credit-default swaps, offered about $450 million in retention pay to employees of the unit that sold the derivatives, according to two people familiar with the situation.
About 400 workers at the financial products unit may get the money in two installments, said the people, who declined to be named because details of the payments were confidential. The business was responsible for about $34 billion in writedowns since 2007 as the market value of swaps AIG sold to banks plunged amid the subprime mortgage market collapse.
It is a fine piece of journalism, well worth the read.