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Financial Planning > Behavioral Finance

Rep: Vet New AIG Head

By Arthur D. Postal

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WASHINGTON BUREAU — A congressional critic of American Inernational Group Inc. wants any candidates for the AIG chairman and chief executive officer posts to release detailed financial information.

Rep. Elijah Cummings D-Md., a member of the House Oversight and Government Reform Committee, has asked the board of AIG, New York, to collect the same sorts of financial background information about candidates for the AIG chairman and CEO posts that the government collects when it fills top positions.

The information should be public, Cummings writes in a letter to the AIG board.

The AIG board is looking for successors for Edward Liddy, the current AIG chairman and CEO.

Liddy, who announced plans to resign May 21, accepted the AIG chairman and CEO posts in September 2008 at the request of former Treasury Secretary Henry Paulson, for a payment rate of just $1 per year.

He now says AIG should assign the chairman and CEO posts to two different individuals.

Cummings says candidates for the jobs should disclose their stock holdings, employment history and other information.

Cummings is seeking the information to avert a repeat of what he and others see as evidence that Liddy’s selection involved a conflict of interest, according to staffers in Cummings’ office.

Liddy had served on the board of Goldman Sachs Group Inc., New York. Goldman Sachs received $12.9 billion from AIG after the insurer was rescued.

Tough standards should apply to AIG’s top executives, because the interests of the “ultimate shareholders of AIG”–the U.S. taxpayers–”should be paramount” in the selection of those executives, Cummings writes in his letter.

The taxpayers have held a 79.9% interest in AIG since September 2008, when the Federal Reserve Bank of New York arranged $85 billion in financing to help keep the company afloat.

Besides providing detailed financial disclosures, candidates for the top AIG posts should “demonstrate ability to lead organizations that provide both insurance products and the complex financial instruments so prominent in AIG’s collapse,” Cummings writes.

AIG should consider only candidates “of the highest integrity who are committed to maintaining an open and honest dialogue with the U.S. Congress,” Cummings writes.

A new leader also should be provided with a “reasonable level of compensation,” Cummings says.

Cummings, a frequent critic of Liddy, says the reasons for the criteria he is proposing “should be self-evident.”

“We find ourselves in a position in which months of misstatements and deception have eroded the trust of Congress in AIG’s leadership to the point that the most basic constructs of corporate responsibility must be restated,” Cummings writes.

AIG did not immediately respond to a request for comment.

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