Leadership Lessons from AIG
What are the leadership lessons here, not only for AIG leaders, but also for other
corporate finance leaders, congressional leaders and the Obama administration?
POSTED BY BEN BRADLEE AND STEVE PEARLSTEIN
MARCH 18, 2009 1:58 PM
Dangerous Obfuscation of Facts
The furor over $165 million in bonus payments to 400 people in AIG's rogue Financial
Products Group threatens AIG CEO Edward Liddy, Secretary Treasury Timothy Geitner and
the administration's economic recovery plans.
The reason is simple: a near complete failure to explain (or even try to explain) the
inexplicable. Real leaders confront reality. Liddy and Geitner have tried to obfuscate it. In
doing so, they have fed popular sentiment against the financial system, which has risen from
dismay to anger to fury.
What possible reasons could there be to pay bonuses to the very people whose greed and
misjudgments created untold liabilities in AIG's credit default swap portfolio that brought
down the company---leading to 80 percent government ownership, an injection of $170
billion in taxpayer dollars and a recently announced $60 plus billion quarterly loss?
Liddy and the administration give two: the bonuses were required by law and the bonuses
were needed to retain people key to unwinding the mess they had made.
Both are counter-intuitive and thus not credible----a perilous condition made more so by as
inept an attempt to communicate as one could imagine.
The legal argument has no steam because we have not seen the contracts or been
enlightened about the nature of the negotiation. So, at a minimum, this building block of a
highly controversial action is nothing, at this point, but rhetorical mush. It will be Exhibit A in
terrible communication by leaders in a white hot public controversy. (What is the
administration's senior economic advisor doing on Sunday morning TV defending a legal
position he doesn't understand and can't explain?)
Moreover, countless legal experts hav