CEO: Anger Over AIG Bonuses Was ‘Just As Bad’ As Lynchings

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I don’t want to put words in the guy’s mouth, so here’s the quote from The Wall Street Journal‘s edited interview. This is AIG CEO Robert Benmosche on the reaction in 2009 to bonuses paid to employees of the bailed-out company. To be clear, the words in quote marks are his:

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’re trying to find the villains [for the financial crisis]. There’s got to be a villain somewhere. The problem is that there isn’t a villain. There are villains. And they are everybody. They are the speculators in real estate. The people who flipped houses. People who lied and cheated [on mortgage applications]. Nobody did the income appraisals. … I include myself in there. I knew stuff was wrong” in the mortgage-underwriting system years before the real estate bubble burst.

You may recall that AIG helped cause the financial crisis through its derivatives trading, betting enormous gobs of cash on whether our mortgages were going to default or not. You might also recall that taxpayers saved AIG from its own stupidity with a $150 billion bailout. And you might know that AIG gradually bought itself back from the federal government and later threatened to sue its rescuer for having the audacity to help. (In the end, it wisely decided not to.)

Benmosche took the job after the initial mess, becoming CEO in 2009. That year, he called Congress a bunch of “crazies” and said he would tell them to “stick it where the sun don’t shine” if he was asked to testify, according to CNN.

Here’s a sampling of how people responded to the lynching quote. The Washington Post’s Ezra Klein ridiculed the remarks, calling them “insane and offensive.”

Yes, enduring some public criticism for receiving multimillion-dollar bonuses after helping crash the global economy is a lot like being hanged from a tree by your neck until you die.

These kinds of sentiments don’t emerge in a vacuum. Benmosche is expressing a view that was pretty common back in 2010 and 2011, when it was kind of a thing for members of the besieged 1 percent to compare public anger over their compensation to the way Nazi Germany treated the weak.

U.S. Rep. Elijah Cummings, D-Md., the ranking member of the House Committee on Oversight and Government Reform:

I believe he has demonstrated a fundamental inability to lead this modern global company in a responsible manner — a company that exists today only because it was rescued by the American taxpayers — and that he should resign his position as CEO immediately.

Benmosche has since apologized. “It was a poor choice of words. I never meant to offend anyone by it,” he said in a statement. U.S. News’ Susan Milligan opined:

The “sorry” is so lame it’s worse than saying nothing at all. That’s not an apology for the outrageous statement. It’s just regret that his sense of entitlement was exposed and made him look bad.

The Baltimore Sun editorial board wrote:

Here’s what AIG’s CEO and others in his industry are lacking — humility. As Tom Wolfe observed, they regard themselves as masters of the universe. Only such extreme egotism could possibly explain how anyone could equate what AIG went through a few years back under congressional oversight to the kind of racist terrorism that was perpetrated against African-Americans. That’s not some modest slip of the tongue.

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This article was originally published on MoneyTalksNews.com as 'CEO: Anger Over AIG Bonuses Was ‘Just As Bad’ As Lynchings'.

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