The father of AIG and head of the firm for nearly four decades, Hank "this insurer would’ve been kickin butt if I was still here" Greenberg, scribed that what brought the AIG house down was the lightening up of risk controls upon his departure. God bless ‘em: even after AIG was forced to restate $3.4 billion in profits and settle claims of $1.6 billion under his watch (not to mention another suit or two still outstanding from his heyday), Hank still insists things would be smelling like roses if he were leading the charge. In his defense, Hank can't be too happy with those who took over for him since he lost about $5 billion in AIG’s demise (funny that that’s nearly the exact amount AIG was forced to restate and settle while he was chief). Meanwhile, Greenberg’s successors Marty Sullivan and Bob Willumstad told the committee (with straight faces) that accounting rules were the culprit for AIG's fall.
Members of Congress weren’t impressed, to say the least, with the chiefs’ attempts to duck blame and, similar to their response to Fuld’s multimillion dollar comp packages during yesterday’s session, were enraged with some compensation findings in its investigation of AIG, especially with a monthly million-dollar consulting fee still being paid by AIG to the man who used to lead its London unit (yep, the same unit largely responsible for bringing the company down). Congress was also not too pleased to hear that AIG paid about a half of million dollars to take some of its sales folks on a spa retreat after the government bailout gave the firm to U.S. taxpayers (I hope we paid for Thai massages rather than Swedish ones; sometime the Swedes aren't rough enough, you know?).
Indeed, day two of the hearings again seemed to focus on the exce$$es some the firms at the center of the financial/credit crisis have taken, even after it was clear they were about to crumble, and although it’s understandable why Congress is so upset and outraged at the huge comp packages and pampering practices of these firms, it’s a little disconcerting that Congress is that out of touch. Practices like this have been going on since the dawn of the pin-striped suit and cufflink. Everyone and their mother's car service driver knew it. Sure, once a firm supposedly goes bankrupt or is in the hands of U.S. taxpayers, it becomes more troubling, but it seems naive of Congress to be this surprised. What’s next? Will Congress get their Fruit of the Looms in a bunch when they learn that even mid-level executives run everything but their morning coffee through their company expense accounts?
At least Congress know this: that a pony tailed dude could decide who becomes their next chief executive.
A day after Lehman Brothers CEO Dick Fuld blamed the Feds for not saving his firm’s assets from dwindling to zero, two former AIG chief executives testified in front of the House Committee on Oversight and Government Reform, giving their account of why the insurance giant went bust, while another former chief submitted his account on a few pieces of paper. All three must’ve been watching Fuld’s performance yesterday: like Dick, they blamed a variety of sources, conspicuously excluding themselves.