(Bloomberg) — Robert Benmosche, the former American International Group Inc. chief executive officer who repaid a U.S. bailout, left behind criticism for Wall Street after his death.
“The commissions being charged on the auctions were exorbitant,” as banks and law firms advised on deals to shrink AIG, Benmosche recounted in “Good for the Money: My Fight to Pay Back America,” a posthumous memoir written with Peter Marks and Valerie Hendy and released Tuesday. “I wanted the numbers slashed in half.”
Benmosche was known for colorful barbs at government officials and clashes with colleagues, including ex-AIG Chairman Harvey Golub over the best future for the company. While Benmosche was also a board member at Credit Suisse Group AG and spent years at PaineWebber Group and Chase Manhattan Bank, he was staunch in defending the insurer from Wall Street.
“Sharks were circling” for bargains as he reshaped the insurer, according to the book. AIG had to fend off a push to race into asset sales that would have been welcomed by bankers who stood to gain “additional hundreds of millions in commissions from a quick-and-dirty selloff of AIG,” he said.
Goldman’s bonus pool
AIG is only now exiting some of the businesses that Benmosche fought to keep in the financial crisis. That includes a mortgage insurer that billionaire investor Wilbur Ross offered to buy for less than $100 million, according to the book. The business generated pretax operating income of more than $500 million in each of the past two years.
Benmosche died last year at age 70 as he battled lung cancer. The former CEO of MetLife Inc., he came out of retirement in 2009, with the blessing of the U.S. Treasury Department, to repay a bailout that swelled to $182.3 billion. He sought right away to boost morale, telling employees that he was concerned they were being “taken by Wall Street” in transactions to unwind derivative contracts. They should hold out for better deals, rather than “feed Goldman Sachs’s bonus pool,” he told staff.
“He was never really concerned with opposition. He had to do what he thought was right as a leader,” his son Ari Benmosche said in an interview. The attributes “that made him such a polarizing figure in the media and elsewhere, were the exact qualities that made the turnaround possible.”
Robert Benmosche acknowledged in the book the public ire against both his firm and the banks that benefited when the government propped up AIG. The insurer, under pressure to disclose how it spent bailout funds, said more than $100 billion flowed to counterparties on financial contracts, such as Goldman Sachs Group Inc. and Société Générale SA. Banks that received funds after AIG’s bailout also got their own government rescues in the financial crisis after losses on reckless mortgage investments.
“With Main Street taking a hit, you couldn’t blame people for their lack of faith that Big Business would do the right thing,” wrote Benmosche.
His account is one of the “great comeback stories in business history,” Sarah Dahlgren, the former Federal Reserve official who oversaw the largest U.S. banks, wrote in the foreword. AIG repaid the taxpayers in 2012, along with a profit of $22.7 billion.