AIG CEO Edward Liddy received a brutal lashing by a Congressional Committee last week. It was sheer torture to watch. Every Congressman on that committee decided to express his or her utter outrage for the camera and create sound bites to be used for the reelection campaign.
Watching this spectacle unfold, we began imagining a forceful Mr. Liddy saying to the Chairman of the Congressional Committee:
- “Mr. Chairman, Thank you for pointing out to the Committee and the nation that the abuses at AIG took place before I was brought in to clean up the mess. Thank you for pointing out that I am doing this complex, thankless job as a public service for a whopping annual salary of one dollar; that I do not have any stock or stock options. So even if I do a wonderful job and recover all of the $170 billion put into AIG by the taxpayers, I would not receive a single penny more than my salary of one dollar.”
- “Mr. Chairman, you and your congressional colleagues are heaping abuse on me for simply doing my job; for following the advice of lawyers who told me that my choices are either to pay the $165 million in bonuses under the contracts now or risk paying twice as much later and incur huge legal costs for that effort.”
- “Mr. Chairman, I am not a Congressman. My Math is simple. It tells me that it is cheaper to pay $165 million now than pay $330 million later plus tens of millions for legal fees. But, I am beginning to get that the Congressional Math is different. May be that is why Congress is able to spend the money our nation does not have and run up huge budget deficits.”
- “Mr. Chairman, I informed the Fed and the Treasury Department of the bonus situation at AIG in December 2008. They understood the decision and did not object to it. Today, after a huge public storm, I alone am being blamed while you are letting them off.”
- “Mr. Chairman, you yourself were actively involved in the negotiations of the TARP bill. You could have put in a provision in that bill that could have eliminated this bonus situation at AIG. But, you did not. Now you find it convenient to put the entire blame on me.”
- “Mr. Chairman, I notice that while I am working for a salary of one dollar per year, you and your congressional colleagues keep receiving your full salaries and all your benefits. I notice that your colleague, Nancy Pelosi, the Speaker of the House, continues to use a private plane to travel to San Francisco at taxpayer expense. I notice that everyone at the Treasury Department continues to receive their full salaries.”
- “Mr. Chairman, I just realized that I am an idiot and a moron to do this job for one dollar a year and take this abuse. So, Mr. Chairman, I quit. I know that AIG’s Board of Directors are watching this testimony and to them I announce my resignation from my job as the CEO of AIG.”
- “Mr. Chairman, you have stated that you are the majority owners of AIG and so I hope you will act expeditiously with the Secretary of the Treasury Tim Geithner, to appoint a new CEO of AIG. I wish that new CEO the best of luck and I request you to treat the new CEO with at least a modicum of courtesy and respect.”
- “Mr. Chairman and Honorable Members of this Congressional Committee, you have lectured me so far about the outrage felt by the American people. Now that I am no longer the CEO of AIG and only a loyal, patriotic American, I shall take the opportunity, during the rest of this testimony, to express my own outrage about the AIG mess and how Congress is making it worse.”
- “Thank you Mr. Chairman. I shall be pleased to answer any further questions you or your colleagues have.”
Had Mr. Liddy said these words and quit, we wonder how Chairman Frank and his committee might have reacted. We believe it would have shocked them to the core. They would have been frightened at the prospect of choosing another CEO of AIG, a choice that would be like a millstone around their necks.
Had Mr. Liddy said these words and quit, we wonder how the Treasury Secretary Tim Geithner might have reacted. We believe it would have shocked him into real action. He might have even chosen to become visible again to the American people and actually take a decision.
Now imagine if the Board of AIG had accepted the resignation of Mr. Liddy and, immediately thereafter, resigned as Board Members of AIG by faxing a letter to that effect to Mr. Tim Geithner’s office.
Such an act by the AIG CEO and the AIG Board might have created enough shock and awe to make the Obama Administration and the Congress come to grips with the seriousness of the mess at AIG and its consequences.
In our opinion, the mess at AIG is a nuclear bomb under the American (& global) Financial System and the process of defusing this bomb is going to be painstakingly long and frustrating. Usually, the best people to defuse a bomb, to fix any complex system, are the people who designed the bomb or the system in the first place. Paying them what they were promised contractually is much much safer than bringing in new people who would have no clue about the design of the bomb or the system.
It is time for the adults in the Obama Administration and the Congress to step up, to cool the rhetoric and to act in the best long term interests of the American people. It is time for President Obama to stand firm in front of the lynch mob as Wyatt Earp once did.
But we do wonder, why Mr. Liddy continues to take the abuse and the threats to his family to work at a job that pays him nothing.
Is there something else to the story that we do not know?
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