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Time to get tough with AIG
It’s time for someone in the Obama administration to read the riot act to Robert Benmosche, American International Group’s new $7 million chief executive.
Since getting the job, Benmosche has spent more time at his lavish Croatian villa on the Adriatic coast than at the troubled insurer’s corporate offices in New York.
And in the short term, Benmosche’s vacation strategy appears to be paying dividends.
This week, AIG’s shares surged 44 percent, to nearly $50, after Benmosche said that he intended to move slower than his predecessor in selling off AIG’s still viable divisions.
Maybe Benmosche should consider relocating AIG’s headquarters to Dubrovnik.
But the big run-up in AIG shares is merely a sideshow for momentum players, speculators and Hank Greenberg, the former AIG chieftain who controls about 11 percent of the company’s outstanding shares.
The reality is that AIG exists today only because of the $180 billion lifeline the insurer has received from the federal government. Even Benmosche acknowledges that, telling The Wall Street Journal: “If the U.S. government doesn’t continue to support AIG, we will fail.”
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The Wall
Yankee Doodle had a car,
Bought with US bank debt.
He hit a bear and lost a wheel,
And drove down an embankment.
Spun the wheels and now he’s stuck,
In bad sub prime molasses,
Shame that Fred and Frank are sunk,
They might have lent a hand.
Along the road came Goldman Sachs,
Who heard poor Yankee holler,
“I might just help” wise Goldman said,
“If you could lend a dollar”.
He took his wand and waved it round,
His biro made a clicking sound,
“Just call your car a house” he said,
“And then there’ll be no problem”
So Yankee set out on the road,
To get federal assistance,
But help from nearby Bernanke
Would take a bit of distance.
On coming back, the sun beat down
Upon poor Yankee’s beaten brow
And so he stopped along the way,
To drink at Wall Street Bar.
“Get out, you swine” The owner cried,
“You have not learned your lesson”
For Yankee’s tab was well and spent,
And he was in recession.
The moral of the tale was lost,
And Yankee’s car, alas, the cost.
He focused too much on his speed,
And not where he was headed.