AIG: Poster Child for Leadership Bailout

For weeks, we’ve listened to politicians and business tycoons tell us why the historic bailout of banks, investment banks, insurance companies, and other businesses was necessary. Without it, doom awaited — for Wall Street and Main Street. So, the bailout occurred. What happened first, however, was that financial and business leaders recklessly bailed out on their responsibility.

As reported by the New York Times and the Washington Post, the recklessness of the so-called leaders of AIG, one of the primary beneficiaries of the bailout, was so brazen as to give new meaning to hubris. Shortly before the bailout but after the government had already extended to AIG an $85 billion loan to help the company weather its hard times, a handful of AIG executives flew to England on a private jet for a partridge hunt that cost the company over $100,000. Within days of Congress’ approval of the $700 billion bailout package, AIG spent almost $450,000 on a weeklong resort retreat for its sales staff.

Who are these people? Don’t they have mirrors at home? Didn’t their mothers teach them about shame? But wait. We’ve only touched the tip of the iceberg.

As AIG losses were mounting, the AIG board gave its CEO a bonus of $5 million and a golden parachute worth $15 million in case the mounting losses caused him to lose his job. Another top-ranking executive, directly linked to the causes of AIG’s collapse, was terminated after he’d been paid $34 million in bonuses. What’s more, this same executive was thereafter paid $1 million a month as a consultant.

How long does it take most employees to earn the amount spent on the partridge hunt ($100,000) or the resort retreat ($450,000)? How many employees can even fathom getting paid $5 million or $15 million or $34 million or $1 million a month? What they can fathom is being laid off or losing their jobs when their employer goes bankrupt.

Many business leaders are out of touch. They bailed out on their leadership accountability long ago. It’s finally caught up with them, but they’ve become remarkably wealthy in the meantime.

The Attorney General of New York, Andrew Cuomo, is trying to get some of the money back from A.I.G. and its executives. He claims they violated a New York law prohibiting corporate insiders from enriching themselves and endangering creditors when their firm is on the verge of insolvency. (AIG has agreed to suspend — not stop, not recover —  but suspend payments of millions to its executives.) 

One would think that an honorable person, a leader, would voluntarily give the money back under the circustances that have unfolded. But I guess not, particularly if you bailed out as person of honor, a leader, many millions ago.

I’m still surprised when company representatives are puzzled that employees get upset or unionize or file lawsuits. What’s puzzling is that there aren’t riots in the streets. But that sort of thing doesn’t happen in America, at least not over financial stuff. Not yet.