Do you really need these hot-shot traders to unwing a multi-trillion dollar CDS portfolio? New York AG Andrew Cuomo wants to know. According to the WSJ, Cuomo has subpoenad:
He is subpoenaing the information as he tries to assess AIG’s claims that it needed the expertise of its employees to unwind certain contracts, these people say. He is concerned that in some cases AIG essentially made some investors whole, raising questions about what the staffers who got bonuses did.
AIG made whole investors who held battered securities that were insured by AIG. However, this payout was orchestrated by the Federal Reserve. The credit default swaps that caused much of AIG’s problems represent only part of what the group does.
We’re not exactly sure what the bolded part (our emphasis) means. The whole bailout of AIG was about making AIG counterparties whole, though perhaps the assumption was that it should be the job of AIG execs to minimize these payments to whatever extent possible. And if they didn’t do this, then arguably they don’t deserve much of a reward.