Now here’s an interesting twist on the AIG bonus scandal. The Wall Street Journal reports that James Shephard had decided to remain at Banque AIG, a part of AIGFP involved in many of the dangerous derivatives that have shackled the insurance giant. These are the contracts European banks bought to hedge other assets they owned, and limiting the capital they would need to hold.
Shephard’s staying is good because if he left, the company could have defaulted on $234 billion of derivatives. (Oh and he’s getting a promotion. Because the very top guy Mauro Gabriele, really is quitting and apparently won’t be talked out of it.)
The tortuous reason: if the top managers of Banque AIG were to leave, the company would have to find replacements that passed muster with French banking authorities. Otherwise the regulators could put their own guy in, and defaults would ensue.
There must be an incredibly small pool of derivative experts for AIG to be that worried about finding another one.
Sadly this does not seem to be a model of job security easily exportable to other fields. Unless we can all manage to figure out how to structure things so if we get the boot, government regulators step in.
I’m racking my brain for other examples. Any ideas?
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