My short memoir on life at AIG named runner-up in the Manhattan Media Contest. Read it here:
Elegy for an Organization
“In the federal trial, AIG alleges that ousted CEO Maurice ‘Hank’ Greenberg left AIG in 2005 with 290 million shares of illegally seized stock, since sold for an estimated $4.3 billion …”
I could tell you about AIG.
That I was one of the no-name people, not the elites who screwed up.
That I made $20,000 a year.
That my office was on the narrow crooked end of Wall Street.
Where on the most glorious sunny day, it was dusk out my manager’s window.
That my own office was three mustard-colored walls and one grey, free-standing partition.
I could tell you that I was terrified.
Of the big buildings, the air of mystery, the sub-CIA cowboy culture.
Of the numbers I didn’t understand.
I could tell you that our P.R. policy was Don’t Talk to the Press.
That the building foundations shook when USA Today named our chief, Hank, the seventh highest-paid CEO in the nation, or was it world?
I could tell you that not only in the company, but all over Wall Street, everyone knew that A.I.G. meant All Is Greenberg.
I could tell you that if Spitzer hadn’t forced Hank out, we wouldn’t be in this mess.
That AIG’s been brain-dead ever since.
I could tell you I have a soft-spot for Hank.
I could tell you that this company was a family when I had none.
The year people died, went mad, out of business, into rehab, into nursing homes.
I could tell you that for years I ignored the half page ads in the Help Wanteds
With the tall letters that said WALL STREET.
That I only answered AIG’s because it didn’t.
That when I learned it was Wall Street and didn’t answer their calls.
That they kept calling.
That my boss at AIG was the first man I worked for who didn’t harass me.
That he was a blue collar New Jersey newsman.
That his staff called him Bambi behind his back.
I could tell you that this was the year the stock market dropped.
That a rising tide lifts all boats, but hurricanes stir up gold.
I could tell you I made the best friends of my life there.
That we drank vodka in the morning but worked through the night.
That AIG’s unofficial motto was “We shall pay no claim before its time.”
That it didn’t need a diversity program, its workers came from over the world.
Its interns from housing projects.
I could tell you we were proud of the sub-CIA cowboy culture.
That I came to have more respect for financial people than writers.
That the Ivy arts grads I roomed with after college couldn’t hack the real world.
That they left their jobs and lived off their parents.
I could tell you that people on Wall Street don’t take money from their families.
They support them.
That AIG didn’t care about pedigrees.
Just work.
I could tell you that on my floor Jews and Arabs were friends.
That there was a transsexual, a platinum punk rocker, and a girl with purple hair, (me.)
I could tell you all about the married closet queen and his 400-pound secretary.
I could tell you how I learned to use a personal computer there.
That on the computer cube wall hung the Leviathan company chart.
For internal use only.
A complex web of holding companies, limited partnerships, and wholly-owned subsidiaries.
Chilean pension funds, Indonesian customs bonds anyone?
Four hundred boxes, cross-linked, to outsmart the auditors.
I could tell you that when Hank made a joke people were afraid to laugh.
That his oldest son Jeffrey was overworked.
That his second son Evan looked like a movie star.
That he fired both sons, or they left of their own volition.
And became CEOs elsewhere.
I could tell you that when Hank entered a party, he scattered crowds like a smoke bomb.
That he was five foot six, or looked it.
That he was 60 and looked 40.
That the one time my work brought me within feet of him, he winked.
I could tell you that I remember what I wore that day and what it cost.
That I walked home over the Brooklyn Bridge.
I could tell you that my whole life flowed from that building.
That it split me in two and broke up my home.
That when I worked there, I moved to a seedy hotel.
That AIG was more home than hotel.
That it was both prison and refuge.
I could tell you that I couldn’t afford to leave the hotel till I got a better job.
That I left AIG after 18 months for a $10,000 raise.
That I’d have stayed for $5,000.
I could tell you that I understood why AIG was cheap.
That by the time I left I understood numbers.
About shareholder value.
About managing risk.
I could tell you that AIG wasn’t like other Wall Street Casinos.
I could tell you that once a week Hank went through his rolodex to call someone in.
And rip his face off.
That I wasn’t important enough for this to ever happen to me.
That the old Chinese waiters were equity millionaires.
That the upper echelons lived in a culture of fear.
That they worked with Golden Handcuffs.
AKA Deferred Compensation.
AKA Holding on for the Retirement Bonus.
Now the disintegrating company’s news Googles into my inbox, like jagged rocks down an avalanche.
I could tell you that when Spitzer kicked Greenberg out, he parted the golden pot from the people who’d earned it.
Or were promised it.
That none of this was on paper.
All on trust.
I could tell you that most likely the company chart, with its 400 cross-linked boxes, made this perfectly legal.
Is life ever fair?
I could tell you more.
I could tell you all policemen are pigs, all soldiers murderers, all men are rapists and all Wall Street workers evil.
Or I could tell you that Hank Greenberg gave me a job when no one else would.
That the company saved my life.
Or I could tell you I left my soul back there, locked up in a grey metal desk drawer.
http://www.nypress.com/article-20328-non-fiction-contest-runner-up-elegy-for-an-organization.html
Was It All a Lie?
The disintegrating company’s news Googles into my inbox like jagged rocks tumbling down an avalanche. The plunging stock price, the sell-offs of prized divisions and landmark buildings. Witnessing the end of my old employer is like attending the funeral of a highly dysfunctional, but much beloved family member.
Reading the outrage of the press lynch-mob, however justified, is like watching distant relatives and far-removed acquaintances — who didn’t even know the deceased yet lived off his largess — spit on his coffin.
The quickest way to isolate yourself socially is to say that you worked for AIG and that it was a great company. “This never would have happened,” I told people with conviction last fall, “If Spitzer hadn’t forced Hank Greenberg out. It’s been brain-dead ever since, it was a one-man company.”
In ousting the CEO of nearly four decades in 2006,, Eliot Spitzer did exactly what George W. Bush did in Iraq. Launched an attack against a regime that had long played by its own rules, decided to knock out a leader without investigating what the consequences might be. Without knowing enough about how the financial world works to foresee the disastrous outcome. You can’t take out a leader without a secession plan. In acting prematurely and without foresight, Spitzer made things infinitely worse for the entire world.
All Is Greenberg
“You’ve got a company, AIG, which used to be just a regular old insurance company,” President Obama explained on his famous Tonight Show appearance. “Then they decided–some smart person decided–let’s put a hedge fund on top of the insurance company and let’s sell these derivative products to banks all around the world.”
But the President was wrong. AIG has never been an ordinary insurance company. As Ron Shelp wrote in Fallen Giant: The Amazing Story of Hank Greenberg and the History of AIG, within the company and among Wall Street analysts, A.I.G. has always been an acronym for All Is Greenberg. John Wiley put out the book in late 2006, soon after Mr. Greenberg was forced from the helm. I recommend the just-released updated version as a backgrounder for anyone wondering how a company they may not have heard of until last fall came to be so powerful.
AIG was an invisible country, with its own rules. I’m not saying that was t a right or good thing, but it was the reality that the average person didn’t know, not because the information was hidden, but because they didn’t want to.
http://www.amazon.com/Fallen-Giant-Amazing-Greenberg-History/dp/047191696X
P.S. — To those working in the business, the blow-up wasn’t completely unanticipated. In 2002 I was writing of the threat of a Hedge Fund blow-up in the London Review of Books. In a piece titled, “Everybody Knows” speaking of the Long Term Capital Management bail-out of 1998, “It will happen again, and there will be pain.”
http://www.christinagombar.com/pdf/everyone-knows.pdf
Related links: http://www.christinagombar.com/doc.php?doc=war-zone&p=1
http://www.christinagombar.com/doc.php?doc=the-pink-dress&p=1
So how are we feeling today? Mad – not just at the obvious – a free market economy and political majority that professes to hate Big Government, except when, like a drug-addict prodigal son, it needs cash for its next fix. Then he riffles through Dad’s wallet to fund another Middle East plunder, another Wall Street run up. And the well behaved siblings, those of us who did our homework, tried to play by the rules – we have to do without, can only hope to benefit through some vague future trickle-down, once this crisis is over.
But I’m also mad at us – the investing public, for aiding and abetting this mess. Because we all own a part of it. We don’t complain in those quarters or years when our portfolios are going up 20%. We don’t ask where those gains are coming from. We are willing accomplices, when we know every minutae of the Chicago Cubs or the Red Sox, but not the difference between a savings account and a mutual fund. When we don’t ask our broker or employer’s retirement plan manager – So tell me about this Hedge Fund thing, does this mutual fund invest in them? Does it own any securities tied to those lousy sub-prime mortgages?
We can only vote for a president once every four years, but as investing consumers, we can ask questions every day, we can fill out those proxy forms we get in the mail, we can make a toll-free call and we can show up at shareholders meetings.
The willful ignorance of the average American investor frustrates me, because when I worked in the financial sector, I toiled so, so hard to follow the rules and make it clear to potential investors the risks they were in for. I wore my eyes out reading the financial press, then boiling it down and making it easy for people to understand, and wherever I worked, we had to follow very stringent compliance rules, so we were never promising anyone anything.
After my first Dummies piece last week I got more than a few letters from readers asking me how investments work. What? You mean my 401K isn’t insured by the government? Not even my money market account? “I don’t have any money in the market, so I don’t really care.” Oh yes you do, or should. Everyone has a stake in this crisis. If you have a dime in a savings bank, a car loan, a job in the consumer products sector, an elder or disabled person in your family involved in the Social Security system. We’re all one big intertwined dysfunctional family – that’s one thing Treasury Secretary Hank Paulson got right, and it’s too late to do nothing.
Big business has always looked to government as bailer-out, Big Daddy of last resort. And if Big Daddy bails out Wall Street, you can bet someone else is going to get the short-end of the Government stick – the well-behaved siblings who paid their bills and mortgages, the most vulnerable and helpless. Here in Rhode Island, the state government is already balancing its budget by sending seniors home from Medicaid-funded nursing homes and cutting medical coverage for poor kids.
I applaud Congress and the American people for waking up and smelling the coffee, saying Not So Fast this time. We were scared into a costly Big Government-funded war with threats of Weapons of Mass Destruction. President Bush looks like the Boy Who Cried Wolf now. Problem is, there really is a wolf at the door this time. At the beginning of last week, when Big Daddy Government refused to bail out Lehman Brothers, it froze up money flows in European Markets, and that froze up money flows here. So Big Daddy reversed course.
Whoever voted for President Bush and free market evangelism owns the greater responsibility for this melt-down. Mr. McCain — who, let us not foget, owns hundreds of millions of dollars in Wall Street securities — hates regulation but denounced Wall Street greed.
Congress is trying to enforce a policy of Tough Love on its prodigal son. But the rest of us siblings, whose needs are being brushed aside are going to have to start speaking up for ourselves. Are we going to start asking questions, not just of our politicians, but of the financial industry we pay to handle our money? Or are we just going to turn our attention to the Red Sox after the worst of this crisis is over?
***This post was an Editor’s Pick on Open Salon, read the conversation
at: http://open.salon.com/content.php?cid=20088
“So how are you today?” my neighbor Mel asks.
“To tell you the truth,” I reply. “Pretty freaked-out about this AIG thing.”
“Oh, don’t worry! It’s all covered! You’re completely protected!”
Mel then proceeded to relate a long series of misconceptions – starting with the idea that all of our retirement money was insured by the U.S. government, and that AIG was part of American Funds, where she had all her dough. ”Safe as houses, all taken care of!”
I started to tell her that I used to work for AIG, that it had nothing to do with American Funds, that it was a whole different kettle of fish from Merrill, or Lehman, or WaMu, which were or will all be bought or allowed to fail. Then I stopped.
If world markets failed, and I knew they would if AIG went belly-up, she’d find out soon enough. And I didn’t have the heart to tell Mel that the value of her mutual funds was not guaranteed by the U.S. government or anyone else, that the whole pot of gold she’d stowed away for 30 years could liquidate overnight, thanks to one small division of the giant insurer AIG going under.
This was 911 week on Wall Street, and I haven’t felt so bad about the place since 9/11/2001. I’ve worked for most of the key parties concerned in this past week’s blood bath. AIG, the financial giant with a trillion dollars in assets, was my introduction to Wall Street in 1986. I worked there a scant 18 months, but the experience was formative. See War Zone, on my site: http://www.christinagombar.com/doc.php?doc=war-zone&p=1
I left AIG of my own accord, just after the crash of ’87, to work for brokerage firm E.F. Hutton. On on my very first day, it put itself on the auction block. For a few weeks my paycheck was stamped by the investment bank Shearson Lehman – since split off into separate entities, one of which went bankrupt this week. At the end of that six week takeover, I landed at S&P, the ratings agency that failed for years to downgrade AIG and many other financial entities to accurately reflect their perilous balance sheets. Failed, along with two or three other agencies, to warn in a timely fashion, company management and the investing public that the companies needed to clean up their acts or they’d blow up.
At 9:15 last night, the Federal Reserve stepped in and basically bought AIG, to keep it from going bankrupt and bringing global markets — even those burgeoning Asian ones — down with it. It kind of had no choice, once the situation was explained to them. For a quick and clear summary of what happened, and what might happen, read Floyd Norris’s blog in the NY Times :
http://norris.blogs.nytimes.com/2008/09/16/socialism-21st-century-style/
Later this week I’ll explain how Credit Ratings are the opposite of bra sizes, how the financial markets are like a strip club, and how the relationship between the federal government and the financial world is like one of those families where everyone winds up in a 12-step program.
