AIG chief: Lynching comment 'poor choice of words'

Sept. 25, 2013 at 1:00 AM
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NEW YORK, Sept. 25 (UPI) -- AIG's chief said he made a "poor choice of words" when he equated criticism of bonuses at the bailed-out U.S. insurer with the lynching of blacks in the South.

Rep. Elijah Cummings of Maryland, the top Democrat on the House Oversight and Government Reform Committee, called for Robert Benmosche, president and chief executive officer of American International Group Inc., to resign, saying he demonstrated a "fundamental inability to lead" the company.

"Simply outrageous," New York state Financial Services Superintendent Benjamin Lawsky wrote on Twitter.

Benmosche told The Wall Street Journal in a Saturday piece the uproar over 2009's $165 million in AIG bonuses, six months after the insurer received an $85 billion bailout to prevent its collapse, "was intended to stir public anger, to get everybody out there with their pitchforks and their hangman nooses, and all that -- sort of like what we did in the Deep South [decades ago]. And I think it was just as bad and just as wrong."

"Yes, enduring some public criticism for receiving multimillion-dollar bonuses after helping crash the global economy is a lot like being hanged from a tree by your neck until you die," Washington Post columnist Ezra Klein wrote.

As criticism mounted, Benmosche said in a statement: "It was a poor choice of words. I never meant to offend anyone by it."

AIG declined to comment further.

"As the leading critic of AIG's lavish spending before and after its taxpayer-funded bailout -- and as the son of sharecroppers who actually experienced lynchings in their communities -- I find it unbelievably appalling that Mr. Benmosche equates the violent repression of the African-American people with congressional efforts to prevent the waste of taxpayer dollars," Cummings said in a statement.

Cummings said Benmosche was irresponsible in his leadership of "a company that exists today only because it was rescued by the American taxpayers."

After posting his Twitter message, Lawsky told the Financial Times: "We thought it was a totally inappropriate comparison and an outrageous thing to say. He says apparently that it was a poor choice of words. I think that's certainly an understatement and we thought it would be appropriate for AIG to at least indicate that it wasn't the company's views."

Barney Frank, who was the House Financial Services Committee chairman at the time of the bailout and bonuses, told the Times, "To compare wealthy people who got large bonuses because of their work which had ultimately resulted in a financial meltdown to people who were murdered is a grosser stupidity [than I had imagined possible]."

He added, "The fact is, AIG was the recipient of extraordinary help from the federal government, and I believe the bonuses were not only excessive but hard to explain, given the people who got the bonuses were the people who were there when they screwed up so badly."

The bonuses went to employees of the AIG Financial Products division, which had loaded the insurance giant with credit derivatives that imploded after the Lehman Brothers Holdings Inc. Sept. 15, 2008, collapse. AIG got its bailout the following day.

The Columbia Journalism Review, which criticized the Journal for burying Benmosche's lynching quote in its story, said Benmosche's remark "enters the Stupidest Quotes of the Crisis charts at No. 1."

Lynching, the practice of killing people by extrajudicial mob action, occurred in the United States in the 1800s through the 1960s. It is associated with re-imposition of white supremacy in the South after the Civil War.

Alabama's Tuskegee Institute records 3,446 blacks and 1,297 whites were lynched between 1882 and 1968.

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