New CEO to AIG: "It's Not Your Fault, It's Their Fault."
Benmosche told staff he was working to get Kenneth Feinberg, the Obama administration's so-called special master for executive pay, to "buy into" a new compensation plan for all employees expected within months. Benmosche will get $7 million in salary and as much as $3.5 million a year in long-term incentive awards, AIG said.
"I want to make sure we all get paid competitively," he said. "If you shoot the lights out in a given year, we should have enough flexibility to give you a big increase."
This is via friend Eric Salzman over at Monkey Business Blog, who sent it to me under the subject line, "Low hanging fruit."
The recently-crowned head of international financial embarrassment AIG, Robert Benmosche, has launched a campaign to "restore morale" to his beleaguered employees, who are apparently a) cracking under the strain of public anger and b) having performance anxiety that may be linked to a fear that they will never again be allowed to make obscene and undeserved bonuses, so long as the taxpayer is writing their checks.
This is very sad, no doubt, and must be a terrible burden for anyone working on Wall Street to have to bear. So into the breach steps Benmosche, who became CEO of the firm last month. His new public mantra is that what happened to AIG isn't the fault of AIG, but rather the fault of the government regulators who allowed AIG to destroy itself and iceberg the hull of the American economy. This is how he put it:
"It's time the people in Congress stopped talking about you as the problem, because you're the solution,” he said. "It's not your fault, it's their fault, it's the regulators’ fault."
In reporting this story Bloomberg, following this quote, did not immediately add a phrase like, "Benmosche after uttering this appalling horseshit quickly stepped sideways so as to avoid the lightning bolt that rained down from the heavens, frying to a crisp two senior executives and the company's communications chief, Christine Pretto.” Instead, Bloomberg saw fit to bolster Benmosche's insane argument by writing this:
The Office of Thrift Supervision "fell short" in its oversight of AIG's credit-default swaps, Scott Polakoff, a former acting director of the regulator told lawmakers at a hearing in March.
This is all part of a kind of new legend AIG is trying to sell to the public, which is that AIG was actually a very good, sound company that happened to be undone by a lone madman named Joe Cassano, whose tiny AIG Financial Products division destroyed the firm with its toxic CDS portfolio. According to this legend, the OTS should have caught wind of what Cassano was doing and put a stop to it, since it is clearly the job of the regulators, not senior management, to prevent the mismanagement of hundred-billion-dollar portfolios by corporate underlings. Because the government shirked those responsibilities, the more than 100,000 good employees of AIG ended up suffering when in fact they and AIG senior management was innocent of all wrongdoing.
Two things about this. 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."