Look, I'm the first guy to call out AIG for what was a really
misguided and poorly thought out plan to "conduct business as usual"
and to continue on with their sales recognition event for key agents
and producers of American General Life Insurance. Just go to my prior post on the topic
in which I lay out my thinking on it. Bad timing and crisis management
is their sin here and they are paying the price for it now.
However, as someone who watched every minute of the AIG testimony before Congress yesterday and then was treated to Obama at last nights debate stating that "those executives ought to be fired", I've got to say enough is enough. I also want to point out to those at AIG who feel they are being badly treated by the political types, that this is what happens when you go to the government to save you, your business or for anything else. AIG went to the US Treasury for a bail out instead of opting for chapter 11 as some were counseling and now they are seeing exactly what the price of that loan really is. Congressman and presidential candidates using unrelated events as a political football and scoring points for their campaigns at the expense of employees at AIG.
A few thoughts and observations on increasingly distorted coverage of this issue and company as facts continue to become known:
1. I've attached a few links to stories from CNN this morning in which they continue to characterize the event as "a corporate retreat" when it has been explained and reported else where as a long standing, previously booked sales recognition event for key AIG sales and independent marketing professionals. In short it was an incentive trip for key producers and sales people who send American General a lot of business. As upsetting as this might be in concept to the uninitiated, this goes on all the time, every day, in every business, not just insurance sales. We can argue that the life insurance business should follow the lead of the NASD and eliminate these trips as potentially harmful to clients, but the facts are this is standard operating procedure in the business and companies that DON"T do it are at a competitive disadvantage. To call this a corporate retreat because 10 AIG employees and staff were there to socialize with the sales people and their guests is a distortion and inflammatory. I have a full explanation from AIG staff posted as a follow up to my story on this over at The Settlement Channel.
2. The grandstanding by the congressman and women about this event is disgusting. You can view a heavily edited and I feel distorted video by CNN on the entire hearing. Of course as these congressmen sit there in $1500 suits and profess to be shocked that people played golf or drank at this event "on the taxpayers dime" you can only laugh at the hypocrisy. I can only imagine the junkets, parties, fund raising events and other lavish events these "public servants" who have presided over the collapse of the financial regulatory system. I don't see any footage of the commentary where they said that Congress had badly underfunded the SEC office that monitored the credit default markets to the point where there was ONE employee watching the ENTIRE market and was supposed to warn the SEC and Congress. How about some hearings on Fannie Mae, Freddie Mac and the gross under funding of the regulatory system over the last 10 years or do the millions in lobbying dollars from those quasi governmental entities not look sexy enough to the congressman who delight in distorting this AIG event as some evil, taxpayer funded retreat? Watch the entire video here to get the real context.
AIG unfortunately does not have a deep well of support due to its
legacy of often heavy handed tactics toward plaintiff lawyers, funding
tort reform or in my particular business of structured settlements.
They were the ultimate hard charging, hardball firm and there is no
question they stepped on a few toes and fingers over the years.
However, I have to ask where the congressional delegations of Texas,
where American General is based, or NY, where AIG is based, are at this
time where a company that employs 100,000 plus citizens is being
clubbed publicly in front of Congress? It reminds me of a comment from
a friend of mine who is a long time Washington insider when he said "
Mark, this is one tough, tough town. There is no mercy when someone is
wounded and a lot of scores get settled just to send a message. "Well,
message sent here, that's for sure.
4. This is what happens when the government is allowed to influence private business. If you go to the House video of the entire hearing, which I encourage you to do, you will see Congressman and women saying, " We now own AIG." As one of my friends in the settlement business pointed out, that's not correct, "the government just has warrants." Well, of course that's the case, but the media and political powers have now have stated that AIG is effectively "owned" by the US government. Well, get ready for a trip to bizzaro world AIG because you have apparently been designated at the poster boy of what is wrong with the government bail out and the Pol's who need political cover are going to use you as the example of "what went wrong with regulation." The fact is that Commissioner Dinallo's testimony, which was excellent by the way, made it abundantly clear that the state regulatory system worked exceptionally well, the policyholders are safe and that what appears to have occurred is one rogue division of AIG has blown up what is arguably the greatest insurance company on the planet, if you measure greatness by size, earnings, scope and market share.
In summary, while I have certainly called AIG to task for the horrendous PR move of continuing "business as usual" after taking $85 billion from the taxpayers, I am equally sickened by the spectacle of congressman twisting what this event was, pretending they don't know what it really was about and ignoring the fact that Fannie Mae and Freddie Mac sit squarely on THEIR shoulders. Enough with using AIG as a diversion for their own inept and corrupt stewardship.We will be releasing our interview with Congressman Ron Paul on this whole bail out later today and tomorrow and LB Network will continue to follow this story. I think our viewers and readers of all political stripes will enjoy this 15 minute conversation with the former Presidential candidate.