High-flying AIG unit stayed off the radar
WILTON, CONN. — About an hour’s drive from the New York skyscrapers that symbolize global commerce, a colossal financial disaster sprouted in a two-story, red-brick office building beside a Mobil gas station in suburban Connecticut.
The AIG Financial Products Corp. headquarters here is the focus of public outrage over its payment of tens of millions of dollars in executive bonuses -- largely to employees of this once-obscure but well-fed unit, known internally as FP.
FP’s share of the AIG bonuses -- combined with its central role in last year’s financial meltdown that led to the federal government giving the company $170 billion in taxpayer-funded bailout money -- has incited politicians of every stripe to decry American International Group Inc. and its FP unit as the villains of this recession.
AIG Financial Products, now being dismantled, was filled with some of the industry’s brightest and best-paid employees. Before the collapse, they enjoyed catered meals -- sometimes even gourmet -- in exchange for brutal hours in a high-pressure environment.
For an enterprise that wrought crippling damage on the U.S. financial system, AIG’s FP unit kept a low profile in a town of 18,000 residents dominated by mom-and-pop businesses.
Even after the prominence of AIG’s name in the news, many locals were only dimly aware that an AIG office was in their town -- and those who knew of it had no idea what went on there.
“I’m sure if you went downtown and polled 10 people, nine would have no idea,†said Stacy Robertson, owner of South Wilton Veterinary Group, in direct view of the Wilton Corporate Park building, where FP is housed.
The unit created some of the densest, most obscure market transactions in history -- knotting AIG’s finances with dozens of major financial houses with so-called credit default swaps and other instruments. Financial Products has reduced its worldwide workforce from 450 employees in early 2008 to about 370 employees today. The unit also has offices in London and other cities.
Inside the building, the office was designed like “one huge trading floor,†giving workers little privacy, former employees said. A former administrative worker who left in 2007 described the walls as “almost hospital-like, as bare and as plain as you can make it.†She said she found the “deathly quiet†and open office to be suffocating.
In AIG circles, Financial Products was known as the pampered subsidiary, off on its own, former employees said.
One administrative worker who was transferred to FP from another AIG unit said it had the reputation of “paying out huge bonuses.†In her first year there, the woman’s annual bonus jumped from $12,000 to $40,000.
The company daily served breakfast, lunch and, for those who stayed after 7 p.m., dinner.
“Have you ever worked at a place that served lamb chops for lunch?†asked one former employee. “There was hot food every day and soup and sandwiches. There was always a fish dish -- sometimes we’d have sushi. There were days when they would set up a whole carving station with ham, turkey, flank steak. I had never eaten food like this.â€
Employees and their spouses also had access to a sauna and a gym.
Despite the free meals, the hefty bonuses and other perks, former employees said they sympathized with those still putting in long hours at FP and were saddened by the hostility that employees faced.
One former worker said that the people at Financial Products were not like financier Bernard L. Madoff, who pleaded guilty last Thursday to running a $65-billion Ponzi scheme.
“These people were not like Madoff, who took people’s money knowing he wasn’t going to do anything with it,†one former worker said. “These are people who had models, complicated models that they relied on. They had the best intentions.â€
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