American International Group (AIG) president and CEO Robert Benmosche is under heavy fire from a senior Maryland Democratic congressman because he compared the intense criticism of bonus payments made in 2009 to AIG Financial Products (AIGFP) executives to the lynching of blacks during the civil rights battles of several decades ago.
Benmosche issued a summary apology this afternoon. "It was a poor choice of words. I never meant to offend anyone by it," Benmosche said through a spokesman in response to a call for his resignation by Rep. Elijah E. Cummings, ranking member of the House Committee on Oversight and Government Reform.
In an interview last Tuesday with the Wall Street Journal dealing with the five-year anniversary of the government bailout of AIG, Benmosche strongly criticized the intense public response to the disclosure that the government had approved the payout of $165 million in contractual retention payments to AIGFP officials.
Benmosche said the uproar "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 his comments, Benmosche said that there were "less than ten" AIG employees who were responsible for the bad trades that led to huge losses and a federal rescue of the company. Most of the employees who were receiving bonuses would have left the company had the bonuses been slashed, he said.
"We wouldn't be here today had they not stayed and accepted … dramatically reduced pay," he said in the Wall Street Journal interview. "They really contributed an enormous amount [to AIG's survival] and proved to the world they are good people. It is a shame we put them through that."
Cummings, who lead the congressional probe into the payments, said in a statement that, "As the leading critic of AIG's lavish spending before and after its taxpayer funded bailout — and as the son of sharecroppers who actually experienced lynchings in their communities — I find it unbelievably appalling that Mr. Benmosche equates the violent repression of the African American people with congressional efforts to prevent the waste of taxpayer dollars."
Cummings added, "If these statements are true, 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."
Cummings and Rep. Henry Waxman, D-Calif., another member of the Oversight panel, led the probe of the bonuses.
