Marketplace Scratch Pad

AIG’s new chief

Scott Jagow Oct 7, 2009

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.

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