AIG Chief Executive Officer Robert Benmosche, who took over the bailed-out insurer in the summer of 2009, told The Wall Street Journal that the widespread public outrage over bonuses given to AIG employees immediately following the company's $182 billion bailout in 2008 and 2009 "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]," he said. "And I think it was just as bad and just as wrong."
The comments did not appear in an article the Journal ran on Saturday in its print edition. Instead, the quotes were included in a blog post yesterday.
This isn't the first time Benmosche has compared the uproar over AIG bonuses to lynch mobs. In March, 2009, then-New York Attorney General Andrew Cuomo disclosed that some 73 AIG employees received at least $1 million each in bonuses, totaling $165 million following the government's massive bailout of the company. In a subsequent town hall meeting with AIG employees in Houston, Bloomberg News reported that Benmosche said Cuomo "doesn't deserve to be in government, and he surely shouldn't be the attorney general of the state of New York. What he did is criminal. You don't create lynch mobs to go out to people's homes and do the things he did."
The largest bonus, according to Cuomo, was $6.4 million for one employee. In response, multiple bills were proposed in Congress to recoup the money and some even called for then-Treasury Secretary Tim Geithner's resignation.
At the time, the federal government owned 80% of the insurance giant after pumping in $170 billion to save it. Following the collapse of Lehman Brothers in September 2008, AIG was on the verge of bankruptcy because of a massive cash crunch due to billions worth of bad insurance-like contracts on securities tied to home mortgages.
Eventually, nine executives were persuaded by Cuomo to pay back $50 million in bonuses, and Congress never passed legislation compelling repayment.
Following the revelation of the payouts, some activists protested outside the homes of AIG employees in Connecticut. At the time, one anonymous AIG executive told USA Today, "It's scary, people are very, very nervous for their security."
In December of last year, the Treasury sold the last of its AIG stock, netting over $22 billion in profit from its rescue of the company.
Matthew Zeitlin is a business reporter for BuzzFeed News and is based in New York. Zeitlin reports on Wall Street and big banks.
Contact Matthew Zeitlin at email@example.com.
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