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Credibility is something hard to regain when you lose it. And lose it repeatedly. Now AIG’s credibility is crumbling faster than the proverbial stale cookie in the wake of new revelations from New York Attorney General Andrew Cuomo:
AIG’s assertion that it had no choice but to make multi-million dollar bonus payments was undercut this afternoon by New York Attorney General Andrew Cuomo, who revealed new details about the now-infamous pay packages.
Cuomo reveals that 73 individuals received bonuses of $1 million or more, with one recipient getting a bonus of more than $6.4 million.
That would be bad enough at a time when both Democrats and Republicans — bigwigs in Congress and at the White House — are all scrambling to demand AIG’s bailed out scalp.
But it gets WORSE:
In particular, Cuomo takes aim at AIG’s rationale for distributing more than $160 million in retention payments to members of its Financial Products subsidiary, “the unit of AIG that was principally responsible for the firm’s meltdown,” according to a letter sent by Cuomo to Barney Frank, chairman of the House Committee on Financial Services.
Though AIG has stressed that payments were essential to retain individuals at Financial Products vital to unwinding the subsidiary business, Cuomo notes that “numerous individuals who received large ‘retention’ bonuses are no longer at the firm.”
Writes Andrew Sullivan: “My own frontal cortex remains flooded with anger right now as well. But when politics and economics are this out of whack, something unwise is usually about to happen.”
The bottom line, emerging perception is that AIG is like a child who couldn’t care less about his parents, teachers, the threat of juvenile hall — but is totally out of control. This means some will seek to prove they can control it and to prove others either don’t have the ideas to control it or can’t control it. Still others will try and use AIG’s (mis)behavior as a reason why other sagging companies and banks shouldn’t be helped. Which means there’s a lot of room for overstepping, overreaching and hubris on all sides — at a time when our economy can’t afford any of that.
Cartoon by Aislin, The Montreal Gazette. Cartoon is copyrighted and licensed to run on TMV.
Joe Gandelman is a former fulltime journalist who freelanced in India, Spain, Bangladesh and Cypress writing for publications such as the Christian Science Monitor and Newsweek. He also did radio reports from Madrid for NPR’s All Things Considered. He has worked on two U.S. newspapers and quit the news biz in 1990 to go into entertainment. He also has written for The Week and several online publications, did a column for Cagle Cartoons Syndicate and has appeared on CNN.