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 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.
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.”
Related links: http://www.christinagombar.com/doc.php?doc=war-zone&p=1