AIG CEO Says Bonus Backlash Was 'Just as Wrong' as Lynchings
The current American International Group CEO Robert Benmosche should maybe choose his smilies better the next time he's speaking to the Wall Street Journal. What they don't include in the initial interview, no matter how outlandish, won't be left on the cutting room floor.
Some very dumb things have been said about 2009's financial collapse, but we may have a new winner. In a recent interview with The Wall Street Journal, AIG CEO Robert Benmosche — who joined the company in 2009 after the firm's aggressive business of selling credit default swaps on mortgages contributed to the financial collapse — likened the public outrage over its plan, after it received an $85 billion loan from the Federal Reserve, to award bonuses to some of its executives to lynch mobs. Not in an off-hand manner, but in a really horribly detailed way according to edited excerpts posted by the Journal Monday afternoon:
The uproar over bonuses “was intended to stir public anger, to get everybody out there with their pitch forks and their hangman nooses, and all that–sort of like what we did in the Deep South [decades ago]. And I think it was just as bad and just as wrong."
This quote did not make the glowing profile which was posted on Saturday, as the Columbia Journalism Review points out. Benmosche, who has a reputation of being "one of the most outspoken executives on Wall Street," as The Journal put it, has a habit of speaking freely with reporters. Last year, he told New York that AIG deserved a thank you from the government for surviving the bailout. Benmosche argued that only "10 percent" of AIG employees were responsible for the bad bets that led to the financial collapse, so the others who did not contribute largely to the economy's ruin should not have been punished. Here's he what he said:
“Now you have these bright young people [in the financial-products unit] who had nothing to do with [the bad bets that hurt the company.] … They understand the derivatives very well; they understand the complexity. … They’re all scared. They [had made] good livings. They probably lived beyond their means. …They aren’t going to stay there for nothing.
The uproar over bonuses “was intended to stir public anger, to get everybody out there with their pitch forks and their hangman nooses, and all that–sort of like what we did in the Deep South [decades ago]. And I think it was just as bad and just as wrong.
“We wouldn’t be here today had they not stayed and accepted … dramatically reduced pay. … They really contributed an enormous amount [to AIG’s survival] and proved to the world they are good people. It is a shame we put them through that.”
Gosh, when you put it that way, subjecting people through some public criticism after the economy collapsed because their industry's reckless greed literally broke the world's economy to a such a degree that we still haven't fully recovered five years later is tough doesn't sound comparable to the hunting and killing of hundreds of black men. Nothing that happened on Wall Street should be compared to what happened to Emmett Till.
As the Washington Post's Ezra Klein points out, this kind of defense from Wall Street's one percent was fairly common at the time. "I was in an off-the-record meeting with top Wall Street folks where similar comparisons to Nazi Germany were tossed around," Klein says. Former New York mayoral candidate and supermarket mogul John Catsimatidis:
“Taxes are going to go up regardless. What I’m afraid of is, we shouldn’t punish any one group. Whether we’re punishing people who are wealthy,” he said. “New York is for everybody; it’s for the poor, it’s for the middle-class, it’s for the wealthy. We can’t punish any one group and chase them away. We – I mean, Hitler punished the Jews. We can’t have punishing the ‘2 percent group’ right now.”
There was also Blackstone chairman Steven Schwarzman, who compared the drive to raise taxes on private equity firms to "when Hitler invaded Poland in 1939." An exaggerated sense of insecurity seems to be the price of great wealth.