AIG just doesn’t give two sh*ts

When I first heard yesterday about how AIG had handed out $165 million in new bonuses, I thought it had to be a joke. Then, I knew it wasn’t, when I saw this article.

As a public relations practitioner, my first thought was – how could AIG have screwed up so badly again? Yet another body blow to a company that is hated, laughed at and is considered to be an almost unbelievable business case example of what is wrong today.

I mean… it’s CEO, Edward Liddy, concocted two reasons for the bonus hand outs that are simply implausible based on the situation our economy is in and based on who actually owns this insurance giant now.  They are:

Point #1 – AIG is contractually bound to pay these bonuses or the company will be sued.

Answer #1 – Ok, you are right Mr. CEO. AIG might be sued if these bonuses aren’t paid. But, who cares? We are living in unprecedented times. And, these times call for unprecedented actions. The fact is that if the government didn’t step in THREE times to pour billions of $$$ into AIG, the company would be bankrupt. Do you know what that means? There would be no money to pay bonuses anyway. Now, the public owns 80 percent of your company. So, much like the automakers did (can’t believe I’m saying something positive about this group,) all existing contracts/agreements and any other special considerations should have been considered null and void. Because the only thing that matters is the company’s survival. Not, whether it’s executives (many who helped AIG lose billions) continue to get rich. Bottom line – the bonuses were just plain wrong and are clearly a public relations tsunami.

Point #2 – AIG has to pay these bonuses to retain talent or they will leave for competitors.

Answer #2 – I have one question for you, Mr. Liddy. Where will they go? Last I checked, Wall Street has shredded over 400,000 jobs. Financial firms, insurance companies and everyone else in the industry are still laying off thousands. I’m really curious on this one– what other competitive jobs exist right now that will take in these high priced senior executives (many who have egg on their faces)? That’s right. It just doesn’t add up because there are no jobs to be had. And because of that, there is no credibility in this message.

Let’s get back to my original premise above. It took me a while (sorry, sometimes I am slow to see the obvious,) but now I get it. This really isn’t a public relations blunder for AIG, because AIG doesn’t care about its public image at all. That’s the only conclusion I can come to now. Over the last seven months, the company has continued to make mistake after mistake, with each one growing noticeably larger in the public’s eye. The most recent disaster was handled in such an amateurish way (the contents of the letter sent to our current Treasury Secretary,) that it’s almost inconceivable to me that AIG’s senior management  is even attempting to rebuild faith with the public or any of its key stakeholders (except those who received big bonuses, of course.)

Let’s keep our eyes wide open as to what comes next. With the President, Congress and the AG all swooping in, I think this might be the last mistake this now cartoonish looking company will be allowed to make.

Comments

[Ron]

I believe the bonus payout excesses at AIG are just the tip of the iceberg of what is happening with the other Wall Street bailouts including Bank of America. Working productive Americans are bailing out the same crooks that destroyed our economy along with 45% of the wealth in the world. Now the American taxpayers and our posterity will be forced to live a far lower standard of living with reduced prosperity and opportunities due to the accumulated national debt to fund the bailouts and once again we will pay the price.

Washington has bailed out the banks, Wall Street & their Washington special interests and much of the cost is added to the national debt to by paid by this and future generations while real estate and investments continue to fall. I believe Washington plans to monetize the debt in future years while they tax and destroy our remaining wealth by depreciating the dollar.

To stop this wealth attack, the Campaign to Cancel the Washington National Debt By 12/21/2012 Constitutional Amendment is beginning now in the U.S. See: http://www.facebook.com/group.php?gid=67594690498&ref=ts

[Steve]

Just to play devil's advocate a moment, egg...are AIG's actions actually *brillant* PR?

Public relations, a person's or company's image, etc. are all contextual. To take an over-the-top example, Himmler had a great image among his fellow Nazis, no matter what he looked like to the rest of the human race.

Who are AIGs customers and constituencies? Not Main Street and not the average American, that's for sure. Not Washington--Washington has proven it will hold its nose and swallow no matter what.

Wall Street--that's who AIG wants to impress. It wants financial firms to keep giving it business. It wants to be able to recruit whatever Wall Street, banking, and insurance professionals it thinks might help it in the future, especially deal/rainmakers. Its management team wants to make sure that if they are forced out or leave voluntarily, they'll be welcomed somewhere else. *And* it doesn't want anyone to turn state's evidence or sing.

"Keeping faith" with its staff shows Wall Street and Wall Street players that AIG is a stand-up guy. It shows them that it won't let public opinon or even the federal government push it around. It shows that AIG can flip off the entire country and still get what it wants. It shows that the top guys at AIG have big brass ones.

And it helps keep the guys on the inside, who probably know where some pretty nasty skeletons, or at least improper transactions, are buried on the same side as the company. Take away senior staff's money, some of them might look to be whisteblowers or be more amenable to cutting deals with Cuomo.

In short, if you posit that the ONLY people AIG gives a rodent's posterior about are Wall Street firms and guys, then maybe AIG is sending *exactly* the message it wants.

[ed]

Now that is as big of a stretch for a plausible reason as I've seen, Steve.

All I'll say is -- what was Himler's fate in the end?

Watch...the same may happen to AIG leaders or the company itself.

[jax]

FALLOUT GROWS: Those who voted for the stimulus supported the clause to protect the AIG's bonuses. Obama's Own Stimulus Bill Protects the AIG Bonuses He Now Condemns —

http://www.butasforme.com/2009/03/17/obamas-stimulus-bill-explicitly-grants-aig-the-legal-right-to-hand-out-bonuses/

[Steve]

I know it sounded odd, but I call 'em like I see 'em. Right now, seems to me that AIG has more in common with a criminal enterprise than it does with a legitimate business, which is what shaped my analysis.

Businesses make money by selling products and services.

Criminal enterprises typically make money either by--

fraud and deception: like selling insurance which it had to *know* it did not have the capital to ever pay off if it came due

extortion: such as saying "bail us out, or we'll wreck the economy," or "pay our bonuses, or we'll wreck the economy"

What AIGS' financial services division and top management have done, in terms of selling multi-billion dollars worth of financial swampland and threatening the nation with economic ruin if they don't get their money, seems like the sort of behavior you could have seen on pretty much any episode of the "Sopronos"--except that Tony and his boys made a heck of a lot less money than AIG.