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“The business model that has been propagated over the last decades shows its true face: management failure paired with unchecked greed,” says Oliver Roethig, Head of UNI Finance. “We need a return to responsible management and a proper regulatory framework that stops managers running havoc.”



The bonus payments are part of a $450m programme for senior management in AIG Financial Products. Their reckless trading led to the downfall of AIG and was a major cause for the financial crisis.



The bonuses are based on contractual obligations. Moreover, AIG maintains that these “experts” are needed, since they are the only ones who know how to get out of the mess they caused.



The US Government is outraged and denounces this practice. It promises to look at way to recover these payments.



For UNI Finance, a key conditions for providing state aid to banks and insurance companies is that they are not be used for remuneration of managers, dividends to shareholders or payments to investors.



“Regrettably in too many bailout programmes, such a prohibition is not included,” says Roethig. “Indeed, one gets the impression that many managers believe that they have an entitlement to get paid by the public if their company is not able to do so.”



For the future, remuneration and incentive systems for management and traders in the finance industry must be reformed. In particular, variable pay schemes should be kept at reasonable levels, depend on results of companies over several years and include claw-back provisions.



“The underlying principle should be to encourage prudent and risk-conscious behaviour rather than short-term revenue generation and excessive risk taking”, says Roethig.



“The current discussions by regulators and governments go in the right direction, but we need concrete action now. – The US Government as other ones around the world must stop the very same managers who caused the worst economic crisis in generations from sabotaging the recovery with their greed.”