Edward Liddy, chairman and CEO of AIG, at a press conference Wednesday, Mar. 18, 2009 unveiling a radical, new investment strategy. (AP Photo/Kin Cheung)
Financial giant American International Group, Inc (AIG), currently at the center of the largest government bailouts in history, is being subpoenaed by the New York State’s attorney general, Andrew Cuomo, for paying $165 million in performance bonuses. Amidst a flurry of public criticism and nationwide outrage including the top Republican on the Senate Finance Committee, Senator Chares Grassley’s comments that AIG executives should either resign or commit suicide following the ancient samurai tradition, President Barack Obama has vowed that the government will pursue all legal avenues to block these bonuses from being paid out.
In response to the mounting public pressure AIG has announced in a press release that they will be rescinding the bonus contracts and will instead be using the money to play the New York State Lottery. When questioned about the fiscal soundness of this investment, AIG’s chair and chief executive officer, Edward Liddy, responded, “Now that we’re nationalized, we can buy 165 million tickets for New York’s Mega Millions when the jackpot reaches $165 million. That way we have a 50:50 shot at a 100% ROI, and in the event that we lose, the tax on the winnings goes directly back to us and allows us to break even. There’s no losing scenario here.”
When questioned further on the morality of this flagrant abuse of the government’s stake in the company and on why AIG has not learned its lesson on risky investments Liddy replied, “Here at AIG we like to think of ourselves more as ninjas than samurai as Senator Grassley implied. We will try anything to turn a profit. I think I speak on the behalf of the executive board when I say that in retrospect blindly accumulating CDOs comprised of mezzanine tranches of subprime mortgage backed securities was not only a safe bet, but also a responsible investment.”
Responding to questions on how it feels to have run a company that was once the world’s largest insurer straight into the ground Liddy replied, “Ever since I was a child, I have always dreamed that I would someday head a large corporation that would make history. Now with AIG’s $61.7 billion fourth quarter loss, I’ve managed to accomplish my dreams. It’s really a very moving time for me-for all of us on the executive board. We’re just really proud of this achievement.”
