Robert Benmosche should not be given the opportunity to step down as the chief executive of AIG. He should be fired immediately.
The scope and scale of the arrogance of Benmosche is almost stunning. Except that we’ve become so accustomed to financial big shots acting like they were divinely anointed that we hardly notice.
But the news that Benmosche threatened to quit recently because he is upset at government constraints on AIG should shake us from complacency. This man has to go.
Keep in mind that AIG is the worst company in the world. It stands for everything that went wrong with the financial sector: too big to fail, reckless of risk, run by dopes who allowed envious idiots to ruin the company. It is a black hole of liability for the US taxpayer, with seemingly endless liabilities that children not yet born in the US will be required to fund.
Benmosche, of course, didn’t cause this. But he doesn’t understand the key point about AIG: it needs to be destroyed. Every single day that it persists is a threat to markets. It is creating moral hazard, destroying risk management and warping the economy. The company needs to be wound down as quickly as possible, with its healthy units sold off or just set loose and its broken segments put down to die.
The very idea of Benmosche “chafing” under constraints imposed by AIG’s government overseers is ridiculous. He is supposed to be an undertaker for a dead company. The idea that it was the compensation review by pay czar Kenneth Feinberg that really angered Benmosche is just a testament to his incredible obtuseness.
Look, Bobby, we know that you cannot keep your company competitive if you cannot pay employees top dollar. We understand that the aggressive push to sell business units may result in sales that don’t produce the best returns. There is a tremendous amount of waste involved. But we’re OK with that. You are running a company that we, the American people who own 80% of AIG, are shutting down.
This was the deal from day one. Or, rather, from September 16th. The bailout was not meant to keep AIG alive or restore it to past glory. It wasn’t meant to reward the thousands of wonderful and productive people who still work at the company. It wasn’t even meant to earn a decent return for the US taxpayers, which is impossible in any case. The purpose of the bailout of AIG was singular: to provide for an orderly dissolution of AIG in a way that wouldn’t overly disrupt the financial system.
Benmosche doesn’t understand this. So he needs to go.
Yves Smith at Naked Capitalism points out the Benmosche has been a problem ever since he first started in the job.
- Benmosche never seemed to acknowledge that the US government was his boss. Can you imagine any executive in a company 80% owned by Berkshire-Hathaway treating Warren Buffett the the contempt Benmosche has shown for the US taxpayer?
- “Benmosche started work….with a two week vacation,” Smith writes.
- Benmosche not only failed to be contrite about AIG’s abusive retention bonus practice, which went far beyond anything required to keep essential employees on board, he actually attacked New York Attorney General Andrew Cuomo for drawing attention to the problem.
“I cannot believe the intransigence here,” Smith writes. “If this had occurred in, say, the Johnson or Nixon administrations, someone from the officialdom would have read Benmosche the riot act a long time ago, pointing out he knew exactly what he was getting into and how it was far from prudent to cross someone much bigger than you are. But no one in Team Obama has any balls, Benmosche knows it, and is playing this for all it is worth.”
That is exactly right. Every day Benmosche remains in office is a rebuke to the American people and a signal of the impotence of Tim Geithner and the Obama administration.