Monday, March 16, 2009

Liddy on AIG compensation

Seriously, how many times have we heard this same song and dance about attracting the best and the brightest? A letter from AIG Chairman and CEO Edward Liddy to Secretary Geithner:
I would not be doing my job if I did not directly advise you of my grave concern about the long-term consequences of the actions we are taking today. On the one hand, all of us at AIG recognize the environment in which we operate and the remonstration of our President for a more restrained system of compensation for executives. On the other hand, we cannot attract and retain the best and brightest talent to lead and staff the AIG businesses – which are now being operated principally on behalf of the American taxpayers – if employees believe that their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury.
RW: Whatever. Liddy doesn't care about the American taxpayer. He should be focusing on the near-term health of AIG (whatever that may mean) before he starts thinking longer term and maintaining the best "talent". It seems to me that AIG is not only too big to fail, but too big to control. That's a problem...a big problem.

Rebecca Wilder


  1. There's so many hilarious assertions by AIG.

    That they employ the best and brightest. Smart enough to not only destroy the company utterly, but threaten the entire world financial system with their entanglements. But then again, if all you need is a "bigger sucker" to shield you from responsibility for your actions, then maybe they really are smart- just pass the bag off to the taxpayers.

    That their employees are not subject to the labor market, which justifies huge bonuses even as large chunks of the financial sector are being utterly vaporized.

    If there was any way to convey this to the average person- exactly the nature of this behavior- the public would storm the Bastille.

    The best description I saw was at one of the blogs- AIG goes in to a pawn shop and pawns his watch for $20. Then he comes back next week with a gun, and threatens to blow his brains out if he doesn't get another $20 for his watch. AIG knows the cleanup costs for the pawn shop owner is more than $20 so just keeps going back for more.

    The government has painted themselves into a corner here. They keep paying this ransom to prevent systemic collapse. I guarantee AIG has so many poison pills ready to go, even if the government fired the management and took 100% control of daily operations, they couldn't unwind this mess without collapsing the system in the process.

  2. These firms had their chance. If they got into this mess with their "best and brightest" already on staff, then maybe we should encourage a shake up of talent. As Doomsday said, we shouldn't be afraid of these threats...there will just be another one come tomorrow or the next day.

    Rebecca, my blog agrees: these firms that were once considered too big to fail, are now considered too big to manage.

  3. The bonus payout excesses at AIG are just the tip of the iceberg of what is happening with the other Wall Street bailouts including Bank of America. Working productive Americans are bailing out the same crooks that destroyed our economy along with 45% of the wealth in the world and now the American taxpayers and our children will be forced to live a far lower standard of living with reduced prosperity and opportunities due to this but only we pay the price.

    Washington has bailed out the banks, Wall Street & their Washington special interests and much of the cost is added to the national debt to by paid by this and future generations while real estate and investments continue to fall. Find out what a growing repudiate the debt movement could mean for treasuries, the dollar, gold and the stock market and how this is a better alternative than Washington’s plans to monetize the debt in future years and tax and destroy our remaining wealth by depreciating the dollar.

    The Campaign to Cancel the Washington National Debt By 12/21/2012 Constitutional Amendment is starting now in the U.S. See:

  4. You three are saying it just like it is!! "Best and brightest" my Aunt Sally!!! Fire them all and get some of the really good people who are out on the street because of them (think I said that before - sorry to repeat myself).

  5. ... I would REALLY like to see the incentive package these folks were playing under... does anyone hae that info??

  6. The buffoons in Congress who have spent trillions of dollars have a lot more to answer for than this guy Liddy. Dodd and Obama who didn't mind taking AIG money in campaign mode now seek to exploit them as the incompetence factor of the gov't running the private economy becomes clear.

    The outrage is phony. Average Americans are bothered buy attach it to the larger picture. This is Obama's decision. The stupidity of bonuses to failure is his call. This is what happens when you nationalize business.

    Obama has already spent in toto 9 trillion dollars, nearly 90,000 for each household in the country.

    We will be paying for Obama's deficit for generations. It is his Mt. Rushmore.