Robert Benmosche, American International Group president and CEO, today apologized in person to a senior Maryland congressman for his remarks comparing the uproar over AIG Financial Products bonuses to the lynching of blacks during the civil rights battles.
"I was very pleased to meet with Rep. Elijah Cummings earlier today. In our meeting, I apologized for my reference to the South and the impact that it had on him and others," Benmosche said in a statement.
Benmosche met with Cummings in his Washington congressional office, an AIG spokesman said.
The CEO came under heavy fire from Cummings for his remarks during a late September interview with the Wall Street Journal that involved reminiscing over the AIG problems of five years ago and how the company has paid off the money borrowed from the federal government and is competing in the marketplace.
"I look forward to continued dialogue," Benmosche said. He noted "AIG repaid America every dollar plus a profit of $22.9 billion – a total of $205 billion – and every one of our employees is committed to making sure AIG stands for what's right about this great country."
During their meeting, Benmosche explained to Cummings that his comment was in "response to a reporter's question about certain actions I felt were wrong at the time of the financial crisis."
"What stood out to me was the enormous fear AIG employees felt about their safety and the safety of their families because people in positions of public responsibility were actively encouraging the vilification of our people," Benmosche said.
Benmosche said that during his talk with Cummings he expressed his belief "that people should never encourage public anger against any group – for any reason – and that the vilification of a person or a group of people is not right."
Benmosche added, "It's never right, and when it happens it should not be trivialized or dismissed lightly, as it too often was in the context of AIG."
Moreover, Benmosche said, "And when I referred to the South, I unintentionally trivialized a horrible legacy of our country. That was the opposite of my intent."
Cummings, a ranking member the House Committee on Oversight and Government Reform, had demanded Benmosche resign.
It was during an Oversight panel hearing in 2009 on the bonus issue that congressional frustration boiled over once it was learned the Treasury and Federal Reserve had approved the payout of $165 million in contractual retention payments to AIGFP officials shortly after AIG was bailed out by the federal governemnt.
In his interview with the WSJ, Benmosche said that there were "less than ten" AIG employees who were responsible for the bad trades that led to huge losses and a federal rescue of the company. Most of the employees who were receiving bonuses would have left the company had the bonuses been slashed, he said.
"We wouldn't be here today had they not stayed and accepted … dramatically reduced pay," he said in the WSJ interview. "They really contributed an enormous amount [to AIG's survival] and proved to the world they are good people. It is a shame we put them through that."
Cummings and Rep. Henry Waxman, D-Calif., another member of the Oversight panel, led the probe of the bonuses.
The Cummings/Waxman criticism was over payment of $165 million in bonuses in the spring of 2009 to AIGFP employees. Most of the problems at AIG stemmed from purchases of speculative mortgage-backed securities collateralized by the reserves of AIG's life subsidiaries, and through sale of credit default swaps that guaranteed at its peak $2.77 billion worth of securities backed by mortgages of various grades acquired by various banks and other institutions.
AIG's need to provide collateral on the CDS to the counterparties was what triggered the immediate need for a federal bailout.
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