American International Group’s chief executive said in an interview published Monday that the insurance company, which was aided by an extensive taxpayer bailout in the aftermath of the 2008 recession, was wrongly targeted for awarding its employees bonuses after the crisis — comparing the outrage in Washington to lynchings that occurred in the Deep South a half a century ago.
Robert Benmosche told the Wall Street Journal that “less than 10” employees were behind bad trades that led to a massive collapse of the market, and that lawmakers suffering of “ignorance” were wrong to demand accountability of AIG across-the-board:
“That was ignorance … of the public at large, the government and other constituencies. I’ll tell you why. [Critics referred] to bonuses as above and beyond [basic compensation]. In financial markets that’s not the case. … It is core compensation.
“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.
In the wake of the crisis, the Obama administration pledged $85 billion to rescue AIG, in addition to the $250 billion TARP program.
