If he quit today, nobody would wonder why.
Since taking over the notorious American International Group, Edward Liddy has gotten hammered by Congress and threatened by an angry public.
His company has tied up a jaw-dropping $170 billion in federal bailout funds, and infuriated a nation by paying bonuses at the unit responsible for its biggest losses.
Liddy went from a comfortable semi-retirement to the hot seat overnight, after then-Treasury Secretary Henry Paulson phoned his North Shore home in September and told him his country needed him. Since accepting the AIG job at $1 a year, with no further payday in sight, the affable former Allstate Corp. chief has become the public face of Wall Street greed.
Must be a great feeling, right?
“Not good,” Liddy told the baiduhai in an interview this week. “People forget that I’ve been here six months now.” He is not, as he put it, “the one that caused the problem.”
To hear Liddy tell it, AIG has made “enormous” progress during his tenure, in which Uncle Sam ultimately seized an 80 percent ownership stake after repeated financial rescues.
Though still not entirely out of danger, “We are clearly stabilized,” Liddy said.
He has a plan in place to sell the New York-based company’s smaller units, while spinning off its bigger ones to the government as stand-alones. That should enable him to pay back most if not all of the $80 billion in taxpayer funding that AIG has burned through so far, Liddy said. “We are executing on this plan. We can provide a victory for America.”
Is it time to go home yet?
Clearly, Liddy can’t wait.
“I retired from Allstate for a reason,” he said. “I wanted to enjoy life and enjoy my family. I’d like to come back to Chicago.”
Liddy said he made no commitment to stay on for a certain length of time when he took the job. “I don’t need to be here until the bitter end,” he said. “But I would like to make certain that things are teed up, that it’s in a glide path and headed in the right direction. Then somebody can take it home.”
No question, the problems at AIG were worse than Liddy bargained for. The financial crisis exposed it as an ungovernable array of disparate businesses spread around the world — “built for a different era,” Liddy said.
At heart, its problem is simple, he said: “This is a collection of very solid insurance companies to which was attached a somewhat undisciplined hedge fund.” For years, he said, the hedge fund made so many high-risk trades that by the time he took over, allowing AIG to fail would have touched off a “great catastrophe” for the global economy.
To put it mildly, not everyone sees it Liddy’s way.
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Former AIG Chief Executive Hank Greenberg told Congress this month that the company was fine when he left in 2005, then mismanaged into disaster afterward, presumably by Liddy and the two other executives who have run AIG since he left.
Some lawmakers concerned about the use of taxpayer funds have blunt doubts about Liddy’s explanations. He’s “inconsistent at best,” according to U.S. Rep. Elijah Cummings (D-Md.), who started calling for Liddy’s resignation from AIG not long after the former Allstate chief took over. Cummings complained that Liddy “has been less than forthcoming in his responses to inquiries from my office.”
During a circuslike hearing on Capitol Hill in March, Liddy protested about taking the heat for mistakes made before his arrival, and for controversial bonuses paid to his traders. “I really do take offense, sir,” Liddy told one of his inquisitors.
“Well, offense was intended,” said Rep. Stephen Lynch (D-Mass.). “So you take it rightfully, sir.”
Pressed for the names of the bonus recipients, Liddy detailed death threats against AIG employees.
Although nothing else he has done has triggered a greater outpouring of rage, Liddy said paying those bonuses reflects the fact that he can’t wind down AIG without financiers who understand its volatile derivatives portfolio: “We need that expertise. We very much need to have those people there.”
He’s frustrated with lawmakers who are demanding additional disclosures about his months at AIG. Regarding the recent controversy over a decision to pay off debts to certain banks at 100 cents on the dollar last fall, Liddy said, “That was not our call.”
Congress should protect its investment, he advised: “When you trash the company, it makes it harder for people to come to work here in the morning. It decreases the value of the franchises we’re trying to sell.”
Asked whether Greenberg or other leading figures in AIG’s past bear the most responsibility for its catastrophic losses, he picks all of the above: “There’s plenty of shame to go around.”
So when does that flight leave for Chicago?
Liddy credits his wife with being “very supportive” as AIG sidetracked their personal lives. “On the weekends when I’m able to get home, my wife will, in her very loving way, say, ‘Now where is this in our retirement plan?'” Liddy said. “Nobody put a gun to my head to do this. It was my desire to help my country. She understands this won’t go on forever.”
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Edward Liddy
Education: Catholic University of America, BA; George Washington University, MBA.
Employment: Retired CEO of Allstate Corp., where he cut risks by exiting markets prone to natural disasters. Forbes dubbed his reign, “Good Hands, Iron Fist.” Also worked at Sears, Roebuck and Co. and G.D. Searle & Co.
Track record: Allstate agents rebelled when he cut their benefits and started selling through call centers and the Internet.
Source: baiduhai
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