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AIG's new chief
His name is Bob Benmosche. He's been CEO of AIG for about two months now. And so far, he isn't making many friends, let me tell ya.
It started as soon as Benmosche was hired. His first action as head of AIG was to take a two-week vacation in Croatia. There, he told reporters he wasn't in any hurry to repay the TARP loan by selling off assets too quickly. This didn't go over too well with some members of Congress.
Then, he was quoted as saying that New York Attorney General Andrew Cuomo "doesn't deserve to be in government." Cuomo is investigating AIG's bonus payments. Benmosche apologized.
This is all chronicled in a CNN Money story. More:
... Benmosche followed up his criticism of Cuomo, calling Congress a bunch of "crazies." He also said that if he had been grilled by lawmakers like his predecessor, Ed Liddy, he would have reacted differently. "I would have told them what to do with this job, and I would have said it on TV: You can stick it where the sun don't shine," he said.
In the aftermath, unidentified board members spoke to Wall Street Journal reporters early last month, saying that Benmosche had overstepped his bounds and AIG Chairman Harvey Golub would have to rein him in.
Then in late September, AIG's board declined Benmosche's request to use corporate jets for his personal travel, according to AIG spokesman Mark Herr.
Okay, so he has your typical CEO hubris. Big deal, right? As long as he does his job for the shareholders -- 79.9% of whom are the taxpayers. On why he was picked for the job:
"Benmosche was successful in (Met Life's) transfer from a private to a public company and changing the corporate culture, which was a big part of Met's success," said Stewart Johnson, portfolio manager at Philo Smith & Co., an investment banking firm that specializes in insurance companies. "He's a leader, and there are a lot of people that respect him from a business perspective."
For his skill and hard work, Benmosche will be paid $10.5 million a year, a compensation package just approved by the administration. It was reported that Benmosche threatened to quit if he didn't get that deal approved.
"AIG has the cheapest source of capital of any publicly held company in the country: the government," added (insurance consultant Andrew) Barile. "He should be schmoozing them. Instead, if he keeps mouthing off like this, he may lose his support, and the government may stop bailing him out."
Hallelujah? Oh wait...
That won't likely happen, since Treasury and the Federal Reserve have made the loans to AIG -- not Congress. But he's certainly caught lawmakers' attention.
"He called us idiots, he called us corrupt," said (Brad) Sherman, the California lawmaker. "I do have to thank this guy for his insults. He caused us to wake up from being completely asleep."
Good. Grief.
Your thoughts?
Truly...what am I missing? What could possibly be the downside of letting this guy walk? How could he possibly justify that salary? How can any of them? And how is it possible that our government is letting it happen? Oh...right...many of those guys come from the Goldman Sachs world. How did our values get so upsidedown? It feels hopeless that any of it will change.Is there something practical that any of us can do? If so, I really want to know what it is.
Well, Jane, probably the only recourse any of us has is voting. There's no way to break up the connections between government and Wall Street without getting some of these people out of power. Unfortunately, the system makes that difficult to do. Reforming campaign finance laws would help. But voters have to put people in Congress who will tackle that issue.
As for Benmosche, I know it's hard to tolerate his salary, but if you let him walk, the next guy or gal will demand similar compensation. That's the going rate for a CEO. And killing AIG at this point probably doesn't make much sense, considering how much money we've sunk into it.
The Golden Rule:
He who has the gold makes the rules.
This is life in our system. End of story. It is hopeless. The only practical thing you can do is get out of debt, build up some cash at your local credit union, pay cash for things and be thankful you have food. That's it. There is no way to control those with the real power (ie cash). Voting is an illusion that makes us common folk believe we have a hand in our government.
“ 'He called us idiots, he called us corrupt,' said (Brad) Sherman, the California lawmaker. "
I believe the politicians in Washington DC are idiots and they are corrupt.
As for Mr. Benmosche, I believe his obnoxious behavior embodies what is so thoroughly rotten and wrong with Wall Street.
