As featured on p. 218 of "Bloggers on the Bus," under the name "a MyDD blogger."

Friday, August 21, 2009

Whaddya Know, They Found An Asshole To Run AIG

You'd think we weren't paying this guy $7 million dollars to do his job.

(Robert) Benmosche told employees that he “had the luxury to say to the government, I’m not going to rush to do this. I’m appalled at how much pressure has been put on all of you to just sell it no matter what, because the Fed wants out, or the Treasury wants out. If they want out in a hurry, they shouldn’t have come in in the first place.”

He's not being rushed at all, actually. He's starting his tenure with a two-week vacation to his Croatian villa.

Also, the government "came in" because AIG was hundreds of billions in the hole and begging for a rescue. These Masters of the Universe have still deluded themselves into thinking that the big bad government intruded on their party, and everything was going just fine until the crippling weight of socialism came to bear. In fact, we have socialism for the rich, and scraps for everyone else. And guys like Benmosche aren't even satisfied with that.

Yves says:

The government owns 79.9% of AIG. Any private sector owner who had an overwhelming majority interest and got that kind of attitude from a CEO would fire him immediately. But no, we live in a world where arrogant members of the financial services industry engage in looting, dictate terms to the government, and try to rewrite history to make baldfaced lies seem plausible. Why shoudn't the government pressure AIG? The idea that owners don't pressure companies (the subtext of this remark) is an absurd misrepresentation. Go talk to the management of any underperforming company owned by a PE or venture capital firm. For the most part, they do not play nice, and would never tolerate Benmoshe's posturing, and he knows that. He is simply playing the media and the public for fools.

Matt Taibbi details the web of lies that Benmosche has thus far subscribed to in his public statements. It's absolutely stunning that anyone would try to peddle a fiction that AIG was a super-awesome business and their only problem was that their regulator failed to rein them in. That's actually what the argument is.

One, let’s not forget that AIG went out of its way to cherry-pick the weak and understaffed OTS as its primary regulator by chartering an S&L called the AIG Federal Savings Bank in Wilmington, Delaware back in 1999. By this little maneuver AIG got itself declared a thrift holding company, which made the OTS, which only had one insurance expert on its staff, the primary regulator for the world’s largest insurance company.

Two, the notion that AIGFP was AIG’s only problem is bananas. It may not even have been AIG’s biggest problem. This legend obscures the fact that playing a nearly equal role in the demise of AIG was AIG’s securities-lending business, headed by yet another bombastic narcissist (AIG must lead the world in the hiring of these to senior management) named Win Neuger. Neuger back in the earlier part of this decade issued a clarion call to his subordinates, announcing a plan he called “10 cubed” — securing 1000 million (i.e. $1 billion) dollars a year in profits. Back in 2005 he told his staff that anyone who wasn’t on board with the plan to make a billion in profits a year could hit the road, literally, saying, “If you do not want to be on this bus, it’s a good time to step off.” [...]

This was a company that was tired of the boring, safe insurance business and decided not only to take its assets and bet them on the residential housing market, but to borrow massively and double and triple down on those bets. This was a systemic, company-wide insanity. So for Benmosche to blame all of this on the OTS is… well, it’s characteristic of what these people are like. On some level they really believe that if the government is not kicking their doors in and wrapping them all up in hoods and zip-ties, then whatever they are doing is not only okay but good business.

And we, the taxpayer, just hired this guy. Unbelievable.

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