No World Borders editorial comment: We should remember what got us to the point of having Wall Street executives being micromanged – a lack of financial transparency required the ARRA and the TARP. And when the government ended up with the majority ownership in AIG it became the shareholder to which the board and CEO are accountable. That means that even an outspoken, opinionated CEO like Mr. Benmosche is accountable to the American people. Granted, financial incentives to top talent must be considered.
However, the Fed is having to do more cleanup: it will be buying AIG Mortgage Backed Securities (MBS). See related Seeking Alpha post here.
We submit for your review a link to three past No World Borders blog posts on the topic of transparency and approaches to improving it.
From Market Talk’s blog: AIG chief Robert Benmosche threatening to step down only three months after taking the job shouldn’t come as a surprise considering his personality and all the restrictions hindering his ability to lead the government-controlled insurer.
The executive is chafing under constraints imposed by AIG’s government overseers, particularly a recent compensation review by the Obama administration’s pay czar, Kenneth Feinberg, according to the people. AIG, 80% government owned since a rescue last year, is one of the companies under Mr. Feinberg’s purview.
Last week, Mr. Benmosche and other AIG board members met with Mr. Feinberg in New York. During the three-hour meeting, board members discussed difficulties of complying with pay policies and retaining talent at the company. Mr. Benmosche’s frustrations “hit a crescendo,” said a person familiar with the matter. “Bob feels he is in an impossible situation,” the person added.