Aig Snc Essay

438 Words2 Pages
“The AIG corporate culture was focused on a reward system that placed little responsibility on executives who made very poor decisions.” AIG offered executives a huge amount of bonuses, cash reward and other perks, although they produced nearly $40 billion loss in 2008. This is not the exclusive case. The employees also benefited from the incentive policy. This kind of corporate culture was just like permission and tolerating to executives and employees, who made very poor decisions and lead profit loss of the company. It would encourage their regardless of the profit of the company and inevitably bring AIG into downfall. The ethical implications of the federal government bailing out companies such as AIG is not to keep it from bankruptcy, but to prevent the bankruptcies of many other global financial institutions that depended on AIG as counterparty on collateralized debt obligations. If AIG had been allowed to fail, it is possible that the financial meltdown which occurred during 2008 to 2009 would have been worse. It was a global rescue consciousness. Good corporate culture should have the ability to increase cohesion within the company, make executives and employees form the unified goal to promote development of the company. The case is begin with the events that lead to AIG’s downfall, stating the influence of AIG’s corporate culture. Then it illustrates AIG’s affairs happened before downfall, bringing out its ethical issues. And the end of the case, it states how the government help AIG to avoid bankruptcy. The company involved itself in bad mortgage lending by financial institutions that did not have sufficient capital to cover the loans, which in turn had bought this type of insurance from AIG that created an unstable financial environment. AIG should have taken another approach, buying mortgages of CDOs and then having some other party package them

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