Friday, May 22, 2009
Ed Liddy throws in the towel
A couple of months ago I wondered why Ed Liddy, an experienced and competent insurance executive of the first rank who had stepped in at the request of Hank Paulson to manage AIG, was tolerating the insults administered to him by his overlords in Congress and the White House.
Well, it turns out that he does not tolerate it.
Edward M. Liddy, the retired insurance executive drafted by the government to lead the American International Group after it nearly collapsed last fall, is stepping down after eight grueling months with virtually no pay.
Mr. Liddy took on the job of chairman and chief executive of the insurer as a form of public service, but he ended up being castigated by members of Congress who seemed unable to separate him from the financial turmoil he was brought in to calm.
Good job guys. Just when we need strong and ethical executives to help the government, you -- the Congress and, in fact, the weaker minds in the Obama administration -- have sent a strong signal that anybody with an actual choice would be insane to pitch in. Even FDR, who certainly did not shy away from bashing business, managed to reach out to Wendell Wilkie.
12 Comments:
By 
, at
Fri May 22, 12:54:00 PM:
By , at
Fri May 22, 12:58:00 PM:
TigerHawk, I think you're missing the ball here, big time.
Prior to taking the AIG job, Liddy sat on the board of Goldman Sachs. He owns about 30,000 shares of GS stock. The AIG bailout effectively established AIG as a pass-through entity to direct taxpayer dollars from the treasury to entities on the other side of Credit Default Swaps with AIG. Goldman Sachs was one of the major beneficiaries of this program, receiving at least $10-$15 billion in taxpayer dollars via AIG.
Goldman's stock has climbed from a low of $47 in December, 2008 to almost $140 today. Rounded to a gain of $90/share, Liddy takes home a cool $2.7 million in capital gains for his "service" to AIG and the nation.
Every now and again the conspiracy theorists are right. This is one of those times. Liddy should be sharing a cell with Paulson.
By 
Escort81, at
Fri May 22, 01:16:00 PM:
So, Anon 12:58, you think Liddy did what he did for net after-tax proceeds of $1.7 mil. on a short term capital gain? That he was at AIG to make sure GS was made whole and that GS as a company could fully recover and get back on its feet? And everyone involved in both the Bush and Obama administrations was on board with this "conspiracy?"
Maybe, but if I were Liddy, I would want a heckuva lot more than $1.7 mil. net to participate. Now that he's been outed, isn't his life at risk?
By D.E. Cloutier, at
Fri May 22, 02:02:00 PM:
Sorry, $1.7 million after-tax is peanuts. Some execs spend more than that on their mistresses over a period of a few years. The base price of the new Gulfstream G650 business jet is roughly $60 million. Welcome to the world of international business.
By Escort81, at
Fri May 22, 03:01:00 PM:
DEC, I always enjoy it when you make my point more directly.
By the way, what do the options run on the new G?
By TigerHawk, at
Fri May 22, 03:09:00 PM:
DEC and Escort81 are right. There is simply no way that Liddy did this to protect the value of his Goldman stock. The more likely reason was to help out a friend. Ed Liddy used to be the CFO of Sears before he became CEO of Allstate (when it spun from Sears). Goldman Sachs was Sears primary investment bank back then (late '80s, early '90s). Hank Paulson was head of Goldman's Chicago office and (I suspect) one of the chief caretakers of the Sears relationship. I do not know that Liddy and Paulson were friends from their Chicago days, but I strongly suspect they were. My guess is that Paulson called his old friend to help him and the country out in a jam on absolutely no notice, and Liddy agreed. His motivation was, probably, some combination of loyalty and the possible glory of saving a storied company. I'm sure he realized that there was no glory in the job in very short order.
That, I think, is by far the most likely explanation for Liddy having taken the job.
By Simon Kenton, at
Fri May 22, 03:24:00 PM:
Honor to him and his descendents. I wish he had quit during the congressional hearings, on TV, with a sentence or two of Cheneyesque bluntness, but still, he's making the point.
By D.E. Cloutier, at
Fri May 22, 03:25:00 PM:
To Escort81
Here's the link for Gulfstream:
http://www.gulfstream.com/
You'll have to ask them youself. I'm uncertain about the price of the G650 right now. The NY Times mentioned $60 million as the base price, but Forbes mentioned $65 million. Customer deliveries reportedly will start in 2012.
By , at
Fri May 22, 03:28:00 PM:
Anonymous: "Going Galt."Liddy is a calm, politic, temperate man, as you'd expect from an exec at the height of his powers.
Compensating for that rhetorical distortion, his remarks come surprisingly close to the "Fix it yourself" denunciation I dreamed of two months ago.
Slightly less satisfying than hurling his ID onto the table as the cameras roll -- but only slightly.
-Prospect
By , at
Fri May 22, 04:04:00 PM:
The real irony here is that Obama came to power promising a New Age of public service. Four months in, the reality is that over and over again he and his allies have utterly poisoned the well for public service.
Who, now, would step forward to protect America's interests, only to get hung out to dry like the CIA contractors or the OLC lawyers? To advise America's leaders? To rebuild or simply invest in America's businesses? Only a fool.
I'm sure Obama will still find plenty of starry-eyed 18-year-olds to pick up litter along the highway or such. But if we're talking about serious, experienced, professional people willing to step up and do Big Important Things In The Nation's Service, I think he's quickly losing access to a whole lotta human capital.
Seriously, TH and a lot of the folks here are pretty high-level professionals -- how would you reply if the administration asked you for high-level public service? I honestly don't know how I'd reply, but I would think long and hard about what I was getting into.
Call it "Going Galt," call it "Wising Up," the effect is the same. And the irony is remarkable.
-Prospect
By , at
Fri May 22, 05:51:00 PM:
Original Anon here.
I'll stand my ground on this one. Libby did a service, but it was to Goldman Sachs and the rest of the entities on the other side of AIG's credit default swaps. He certainly did NOT perform a service for the American taxpayer, who now has the distinct pleasure of picking up the tab to cover the bad bets of the millionaires and billionaires at Goldman Sachs.
I don't doubt that Libby acted out of loyalty to Paulson, who was his mentor. Paulson brought him onto the board of GS and requested him to step into the AIG job. In any event, his 30,000 shares in GS were a clear conflict of interest. He had a definite financial interest in covering the losses at GS.
Frankly I'm pretty shocked to see readers of this blog defending him. The whole AIG mess was crony capitalism at its worst. This is simply a refracted image of Obama handing Chrysler (and soon GM) to the UAW. In both instances the government robbed the rightful owners of assets to pay politically favored constituents. This is completely contrary to conservative principles.
If nothing else, you can always follow the money. Check out Goldman Sachs ticker versus the DJIA, S&P 500, or any banking index. There's no denying the numbers.
By davod, at
Fri May 22, 05:53:00 PM:
"The real irony here is that Obama came to power promising a New Age of public service. Four months in, the reality is that over and over again he and his allies have utterly poisoned the well for public service."
First you have to be of the right mind to be part of the new age of public service.
