AIG was a very successful company

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AIG was a very successful company and made billions of dollars on new investment instruments, which were so unique that didn’t even fall under any of the securities regulations. For two decades AIG was riding this wave of huge revenues, which did not require much in return. The earth under AIG started crashing down, once mortgage bubble burst happened. Significant decline in the mortgage prices caused AIG to lose over 62 billion of dollars at the very early stage of the financial crisis. The only reason that AIG is still exist is that US government came to bail it out and funded 84 billions of dollars at the first wave of the financial crisis, which then was followed by the amount of 34 billions of taxpayers’ money. How could such a successful institution have such a sudden decline and suffer huge loses? This question was asked by the multiple groups of people at that time. It was made evident that during such a rough times for the company, executives kept on living their lavish life style sponsored by the company. That alone created a lot of tension within the groups. Many concluded that greed was the reason for the failure of the company. I would like to concentrate on that factor in this paper today. Every successful company has a way to reward their employees for the amount of contribution they’ve done for the company. It is a very common practice to have it in forms of annual or semi-annual bonuses. Financial industry is a well-known for its bonus program. It is the way to attract the best professionals in the field. I believe that reward system was definitely the reason for the creation of the unique investments tool driven by the financial results. The main measure for the bonus evaluation is the performance. Well in the rise of the CDS market bonus program created even greater motivation for the higher revenues. Was AIG successful due to the reward program? Of course it was, it has created it success based on CDS and the only guaranty for this

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