AIG CEO Edward Liddy: the man America loves to hate

19 March 2009

When you are surviving on handouts from the government - rather the tax payer's money - you don't reward incompetence through bonuses. But is AIG CEO Edward Liddy to blame for the mess? By Sourya Biswas

The AIG bonus issue is a sordid saga that has shown corporate American greed in its most shameless light. When you are surviving on handouts from the government - rather the tax payer's money - you don't reward incompetence in the form of bonuses, say irate US commentators and citizens at large.

Propelled by widespread public anger, American lawmakers have taken the AIG management to task, especially its current CEO Edward Liddy. (See: Failed AIG's bonuses to employees draw flak)

Unfortunately for him, not only isLiddy working on a pittance (he's taking a salary of $1 this year), he has also become the most vilified executive in the country.

Fittingly, one analyst has called his position as ''the worst job in the world.'' This public humiliation escalated yesterday when Liddy was grilled in the Congress for the recent $165-million bonus payout. But, from an objective viewpoint, how much is Liddy to blame?

After being accused by Congressman Stephen Lynch of ''malfeasance'', Liddy responded that he took offence at the word. His defence: the contracts had been drawn up before his tenure, and he was legally bound to honour them.

Liddy was CEO at home and auto insurer Allstate Corp. for eight years through 2006, Last year, the then-treasury secretary Henry Paulson chose him to run AIG. Paulson knew Liddy from the executive's service on the board of Goldman Sachs Group Inc., where Paulson was CEO. Liddy has vowed AIG will repay ''every penny'' of its bailout package to the US.

''Six months ago, I came out of retirement to help my country,'' Liddy said at yesterday's 'house financial services' subcommittee hearing in Washington. ''As a businessman of some 37 years, I have seen the good side of capitalism. Over the last few months, in reviewing how AIG had been run in prior years, I have also seen evidence of its bad side.''