I can no longer be surprised by the losses generated by the brains in AIG's financial products unit which proves that there is positively no connection between compensation and the true abilities of Wall Street "talent". I have previously discussed how a small AIG unit in London raked in hundreds of millions for themselves by writing credit default insurance which exposed AIG to tens of billions in losses.
The WSJ is reporting now that the financial products unit has bet that the value of mortgage pools would increase in value and those bets, and they are bets in a gambling use of the term, have turned sour by about ten billion. The bet was apparently placed with Paulson's old firm Goldman Sachs according to an article in the WSJ WSJ.com While the taxpayers are bailing out AIG on the bad credit default swap deals that enriched a few individuals in AIG'S financial product unit, and allegedly protected other investment firms from losses at taxpayer expense including Paulson's old firm Goldman Sachs, the WSJ claims that the 150 billion sunk into this "insurance" company does not cover the most recently disclosed losses generated by the AIG black hole. How much money did the talent make at AIG who lost 10 billion betting on a positive increase in mortgage security pools? Goldman denied that it had anything other than minimal exposure to AIG. (But see the earlier story in the NYT: NYTimes.com and an article in our local paper www.tennessean.com | The Tennessean)