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AIG Employees Left To Clean Up Mess

While AIG's CEO Edward Liddy was before Congress, defending his clean up of the financial industry's Chernobal, the real culprit was keeping a low profile in London.
(AP / CBS)
Joe Cassano headed up AIG's Financial Products division in London, which made the now infamous credit-default swap bets that led to company's downfall. He exited the company in early 2008, leaving a trail of billions in losses and more than $300 million in his own pocket, as well as a $1 million per month consulting contract that has subsequently been torn up.

But the anger of the American people and lawmakers has been directed at 418 current and former employees from AIG's Financial Products division employees who received a portion of $165 million in bonus payments.

In a Dennis wrote that the most of the people responsible for the bad credit-default swaps have left the company and those working to stabilize the company feel that their government has sold them out.He quotes an unnamed AIG Financial Products executive: "They've chosen to throw us under the bus. They have vilified us." As Liddy tried to explain during his Congressional testimony, the so-called "retention" bonuses were a matter of practicality. Losing people who have an understanding of the business would significantly delay getting the company's books in order. And, finding people to work in such a toxic environment would be a serious challenge without financial incentives that appear extreme under other circumstances.Liddy said that some AIG employees are willing to give their bonuses, but would not be inclined to stay in their jobs. He also noted that some employees have received death threats. His testimony didn't elicit much sympathy from the lawmakers. A huge amount of energy, righteous indignation and enmity is going toward AIG and other financial institutions.

An enormous number of brain cycles are being applied to who knew what, when about the AIG bonuses. It turns out that Sen. Christopher Dodd, D-Conn., knew more than he thought he knew. Treasury Secretary Timothy Geithner's head is on a platter, while President Obama defends him and is trying to bring the conversation back to the budget and major regulatory changes.

As Mr. Obama and others have said, the bonuses at AIG are a symptom of a larger problem. It's not merely a matter of excess and greed by those working at AIG, as Dennis' story pointed out.

When Treasury Secretary Geithner came out from behind the curtain in early February to introduce his plan to have a plan to fix the economy, he said, "This is enormously complicated. There are a million ideas out there about how to do this, but what we need to do is try to make sure we are being exceptionally careful... that the taxpayer is being protected, we are taking risks we understand and that we are using these resources in a way that is going give the maximum benefit in getting these markets going again."

It is still complicated, and more complicated with the AIG bonuses sucking oxygen out of the air. The AIG bonus issue is easy for taxpayers to understand — people should not be paid for poor performance.

But it's not that simple. The Obama team has an uphill battle in getting their economic train back on the tracks.

Daniel Farber is editor-in-chief of CBSNews.com.