• A.I.G. – A National Embarrassment

America expected, or hoped for, a new administration that would set new standards in leadership, ethics, and diligence over the government of the country. Instead there is growing unease as the nation increasingly realizes that the lack of competence demonstrated by its new leadership regrettably appears to be simply more of the same.

As Obama jumps on the public’s reaction-to-A.I.G.-bonus-bandwagon with requisite teleprompter escorted acrimony, the reality of his administration’s failure to effectively manage taxpayer money is surfacing. What happened to promises of controls over executive pay for bailout recipients? Before signing the checks, shouldn’t agreements have been struck regarding the “use of funds?” This is basic sound business practice, so where is the common sense in the continuing delivery of money with no strings?

Even if, as A.I.G.’s chief executive Edward Liddy suggests, the company has no choice but to honor the bonus commitments made to its employees, it was the Administration’s responsibility to establish parameters for the application of the money. The problem here is not so much that a minor percentage is going to “bonus” money, but that the administration had no idea where the big money is really heading. This, after A.I.G. had already embarrassed its benefactors with a California resort conference, and an English country manor partridge hunt, following the initial protection from bankruptcy with US$85-billion in taxpayer money. Have we forgotten that Geithner was the brilliance behind that original A.I.G. bailout? Is this not evidence of his inability to conduct basic and sound business methodology?

If Geithner was aware that A.I.G. planned to pay bonuses ahead of time, which is apparently the case, why is Obama now seemingly indignant? Is this parade presenting an opportunity that looks too tantalizing to ignore? Perhaps Geithner should now remain well clear of buses.

Barney Frank, the Chairman of the House Financial Services Committee also jumped on the hysteria fuelled opportunity with, “These bonuses are going to people who screwed this thing up enormously, who made terrible decisions." Really? How does he know who they are? Liddy seems to have confidence in them, and he’s only being paid $1 per year to clean up the A.I.G. mess. It seems that Barney Frank’s failure in the whole A.I.G. disintegration is escaping both himself and the MSM.

There are many questions swirling around the A.I.G. fiasco that should be answered if any change is going to be brought to the banking community, including:

- Should Frank’s responsibility in the creation of this mess not be analyzed with more objectivity, and much more scrutiny?

- Is anyone asking how it was that Maurice R. "Hank" Greenberg, former A.I.G. Chairman and CEO, was able to transfer $2.2 billion worth of A.I.G. stock to his wife less than four years ago while this disaster was being cooked? What employee is worth that much over and above the millions he received in cash? Are any CEOs worth these tens or hundreds of millions?

- Where was Congressional oversight through the past fifteen years of abuse by the company’s executives? Should it not assign a special prosecutor? Shouldn't former employees like Joe Cassano and his dangerous actions be grilled and dissected so that the country can receive a better understanding of the process that produced the mess? Should there not be investigation into the hundreds of millions of dollars that Cassano and his colleagues took each year, draining the coffers that American taxpayers are now being forced to refill?

- Was the A.I.G. Board of Directors actually awake and functioning, and should it now be charged with fraud? Shouldn't all public company Boards of Directors not be restructured and made more accountable?

- Eliot Spitzer was on the hunt, prior to being felled, probing into questionable reinsurance transactions and improper accounting practices of the giant insurer. Spitzer filed a civil suit against the company and its top two executives charging fraud and misrepresentation of reserves, but eventually all investigations and charges were called off. Who really made the rain stop and why? Does Congress care? It didn’t appear to at the time the sheriff was called off the trail. Shouldn't the investigation be re-launched?

- Hank Greenberg and his lieutenants also settled a shareholder suit charging that he and three other executives used a brokerage named C.V.Starr which was under their control, and through which they siphoned commissions and fees from A.I.G., the very company they managed. Why is Congress not calling for an investigation? Taxpayers are heading for complete ownership of this company, they deserve answers?

- Last summer, A.I.G. CEO Martin J. Sullivan received a severance package valued at $47 million when he resigned following $20 billion in write downs. Why is no-one asking for that money back? Why did Congress not cry wolf?

- Is the credit default swap game played by A.I.G. too complicated for any investigation to unravel the decision making line of command? It shouldn’t be. The collateral and guarantees were provided to recipients that are on its books and all transactions can be, or should be, verified. The risks were taken, perhaps with abandon, but still someone made those decisions. Someone, actually many, should be brought to the fore and become accountable for the decisions. The A.I.G. Board and its senior staff at the time should be placed in the sights of a special prosecutor.

- Why is there no investigation of the supposedly venerable J.P. Morgan and its role in launching the A.I.G. explosion into writing insurance on packages of Collateralized Debt Obligations? It seduced A.I.G., a U.S. government backed fish, into the game, by conning its enthralled employees to bite on a risky business concept Morgan and other investment bankers like Goldman Sachs could sell to funds and banks around the world. Citigroup Inc. did Iceland taxpayers a particular favor when it suckered that country into bankruptcy by convincing it to purchase more than its share of these worthless derivatives.

A.I.G. has been used as a personal piggy bank by a long list of senior people, inside and outside the business, and yet here America sits, suffering from the denouement of this abused tragedy of a company. Worse, the taxpayer is having to incur massive debt for the failures of senior executives who are not being punished for crimes that obviously had to have been committed. This company’s central role in the financial meltdown that is affecting the whole world deserves more scrutiny than it is getting from either Congress or the White House. America and its taxpayers deserve better.

Obama’s constant blame of the Bush White House for having created the mess is becoming a tired refrain, and is a misdirection of the real responsibility. The implosion of the financial community was caused by actions stimulated by bi-partisan incompetence. Congress and the Obama Administration appear able to rapidly impose tremendous burdens on current and future taxpayers, but are completely incapable of bringing forth any plan that will clean up the mess, or taking any actions that will reduce the likelihood that such a financial disaster will reoccur. Such is the price of having people in charge who are simply out of their depth while confronting one of the greatest challenges to have faced the country for the past fifty plus years.