AIG is a HUGE company with tendrils extending into many countries, including Canada. It is a cornerstone of the mortgage market because it insures high-ratio mortgages. In other words, if you didn’t put down 20-25% when you bought your house, you probably had to pay some kind of insurance premium to cover the lender in case you default. In Canada, it is primarily CMHC that does this with a little additional coverage from AIG. In the USA, AIG covers a substantial percentage of the market.

If AIG had failed, it could have taken down a substantial portion of the banking system with it. The reason AIG is having so much trouble is because of a very small number of its own employees and a SUBSTANTIAL number of corrupt mortgage brokers who deceived them. When the U.S. housing market began to flail around like a steerage passenger on Titanic, it was not the banks who took the first ballshots – it was the companies that insured the mortgages like AIG.

Anyone who knows me knows I am NOT a fan of corporations or financial institutions… especially insurers. But for some, companies like AIG are the only way they can get started in the housing market. These are not people who cannot AFFORD a house or to keep one, these are simply people who cannot come up with a lump sum like $25K to $100K in cash to put down when buying a home. If you are a part of the middle class, I’ll bet you did not put $100K down when you bought your first home. In this day and age, with just average houses running in the half-a-million-dollar range in many areas, this is the amount of cash you would have to have in hand as a down payment to buy a home without coverage from AIG or another similar entity.

No, they don’t do it out of the goodness of their hearts – under normal circumstances the failure rate in mortgages is VERY low, and these companies realize a SUBSTANTIAL profit because the premiums they collect more than offset the payouts they used to have to make.

Greed changed all that – and it was not the greed of AIG – it was the greed of a relatively small number of morally bankrupt, corrupt, or stupid brokers and bankers trying to squeeze more profits out of a mortgage market that had become saturated by the fact that everyone who could afford a mortgage pretty much already had one, and the ageing population of boomers who were moving OUT of the mortgage market as they sold their large homes and began living off the proceeds from their equity. Those people who took that money are long gone, like the con man who flimflams you and disappears with your cash never to be seen again before you realize what has happened.

In 2008, AIG had something like 116,000 employees. The bonus figure paid out by AIG has been revised today to come to a total of $218 million dollars. They received something like $180 billion dollars in bailout funds. Those sound like HUGE numbers but let’s put this in perspective:

• $218,000,000 out of $180,000,000,000 is 0.12% of the total of bailout funds they received. That’s POINT ONE TWO – barely over a 10th of a percent
• the bonuses, divided over all the employees of the company, amount to $1879.31 per employee.
• The billions of dollars of aid money went to pay off the mortgage insurance claims of THOUSANDS of financial institutions, NOT AIG employees
• When I was 19, I worked as a salaried manager at McDonalds. This was in the 1980s. My bonus for HALF that year would have been about $2200 (if I had not left the company)

Large corporations that handle substantial sums of money give their employees bonuses for a VERY good reason: if you spent all day, every day at work handling huge sums of money in transactions while you struggled to keep your 1982 Dodge Omni on the road and feed your kids, you’d be quite tempted to find a way to skim a little something-something for yourself out of the till so you weren’t quite so destitute. Bonuses are a way to motivate employees and keep them from resenting all that money passing them by. By all accounts, 2/3 of the bonus money is not, in fact, going to the richest, highest-paid employees of AIG who would have had a part in making decisions contributing to the financial meltdown – they are being paid to those regular, average employees who are in the EXACT same boat as everyone else in these recessionary times.

Today, I am reading about protesters going to the homes – THE HOMES – of AIG executives to protest the bonuses. I am reading stories of AIG employees living in fear because of the reactions of the masses to all this half-baked sensationalist reporting. People who helped people get homes now live in fear because all they did was DO THEIR JOBS!

So, before you pull some FUCKNUT move and beat up your neighbour because he works for AIG, or go attack someone’s house because you are envious of the fact that they make more money than you, or tweet your outrage and get involved in the great debate on Twitter, consider this:

Assuming that you don’t operate the deep fryer or flip burgers or dig ditches, you probably received some kind of bonus last year. Call it a Christmas bonus, call it an incentive, call it a perquisite (“perk”) of whatever job you do. How much was it? More than $1000? Did you need it? Have you EVER received a “little extra” financial benefit because YOU did your job properly?

Are you now going to give it back to prove you aren’t a fucking hypocrite?