In an interview with the Wall Street Journal, AIG CEO Bob Benmosche came out with the worst analogy for the 2009 financial crisis. Benmosche compared public outrage over AIG’s bonuses to the Deep South lynching African-Americans. “It was just as bad and just as wrong,” he said, because employees were used to a certain way of living:
“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.
It’s been five years since AIG was rescued with a $85 billion loan from the government after the mega-insurer mismanaged itself to near collapse, and it’s hard to see how they were victimized, let alone “lynched.” Since then, AIG has expressed its gratitude by paying executives $165 million in bonuses, briefly considering suing the government for more, and expressing disappointment AIG never received a “thank you” from government officials.
And it’s not the first arrogant remark AIG’s defenders have made regarding criticism over outlandish bonuses. Wall Street and its allies have likened similar criticism to sexual abuse and Nazi Germany.
Meanwhile, pay and profits for Wall Street have come roaring back, with its bonus pool quintupling since 1985 to more than $20 billion. Employment and income have not matched pace. This explosion of bonuses, and its mismatch to performance, has even led industry insiders to deride the practice. Yet the changes to the broken system of setting executive compensation that the Dodd-Frank Wall Street reforms were supposed to bring have thus far not materialized.
Rep. Elijah Cummings (D-MD), the ranking Democrat on the House Committee on Oversight and Government Reform, released a statement Tuesday afternoon calling for Benmosche to resign from AIG, saying, “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. 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.”
Benmosche emailed the following statement to the Huffington Post after their article on the comments was published: “It was a poor choice of words. I never meant to offend anyone by it.”