Business Ethics Now 3rd Edition by Andrew Ghillyer

Exercise 37

Your employer, American International Group (AIG), received almost $180 billion in federal bailout dollars in the belief that the collapse of AIG would have a catastrophic effect on the U.S. financial markets-the company was "too big to fail." Poor management choices had led the company to depend heavily on revenue from insuring investors against defaults on financial bonds backed by risky subprime mortgages (up to trillions of dollars of policy coverage). With the collapse of the housing market, investors filed claims on those insurance policies with AIG, and the company quickly discovered that it had insufficient financial resources to meet all those claims.

The AIG collapse was blamed on one division of the company-the credit default swap department. Executives in the other departments that contributed positive revenue to AIG's bottom line feel strongly that they have earned their bonuses. Do they have a case