Robert Benmosche, former CEO Of American International Group (AIG)—one of the biggest corporate recipients of government bail-out (TARP) funds—likened the resistance by the American public and some government officials to partial bonuses being paid to hundreds of employees in the ill-fated financial products unit as akin to a racial lynching. Rather than debating the merits of the bonuses, I want to dissect Benmosche's statements for clues to his underlying mentality.
“That was ignorance … of the public at large, the government and other constituencies. I’ll tell you why. [Critics referred] to bonuses as above and beyond [basic compensation]. In financial markets that’s not the case. . . . It is core compensation.”
This statement is telling. For one thing, “core compensation” involves rhetoric intended to imply that the employees would somehow go hungry without the bonuses. I’m not convinced that such recklessness as piling on credit-default swaps as if there were no tomorrow (or no financial system tomorrow) is deserving of any compensation. Presumably AIG’s top management had not given the financial products unit instructions to create swaps without any regard to risk (i.e., without regard to the need for additional reserves). If the top management had indeed given such directives, basic compensation would be justified—but then that scenario would suggest that systemic risk has been higher than thought on account of bad management of at least one systemically-vital financial company. That is to say, the horrendous recklessness that led to the 2008 financial near-meltdown could not simply be consigned to Dick Fuld’s emotional immaturity.
Benmosche of AIG Image Source: content.time.com
Benmosche’s statement also contains something reflective of a rather sordid mentality. Did you catch the word constituencies? Following government, the obvious referent would be the American people (i.e., one of the constituencies of the U.S. Government—the States’ governments being the other, represented albeit only technically in the U.S. Senate). However, Benmosche is referring to AIG’s constituencies— essentially adding another electron to the stakeholder misnomer—to imply that the upper management at the insurance company not only considers the interests of groups that can affect or are affected by AIG, but also presumably acts on behalf of those groups (including the American people). The rhetoric involves two category mistakes: one in conflating stakeholder and constituency and the other in pretending that rights of ownership of property or wealth, such as control, also apply to non-owners (i.e., stakeholders or “constituents”). Moreover, the misfit itself is such a bad metaphor that certain inferences can be made concerning the mentality behind the “sleight of hand.” For one thing, it is a lie. Managers own fiduciary duty to the owners of the wealth and property being managed for the owners. At most, it can be said that a company’s stockholders are the constituents of corporate board members, who after all are elected by the stockholders. It makes no sense to say that unelected managers have constituents. The deliberate misuse of a term to manipulate is a kind of lie too.
As is typically the case in narcissistic personality, the orientation is to blame others rather than recognize and admit the plank in one’s own eye. One way to recognize the mentality is by the sheer exaggeration in the blame. True to form, Benmosche does not disappoint. The uproar over bonuses, he says, “was intended to stir public anger, to get everybody out there with their pitch forks 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.” Here we have evidence of a lack of judgment in the making an ethical equivalence between protests over bad work being even fully compensated and Caucasians killing Blacks in the South. Beyond his faulty judgment concerning right and wrong, the overly pessimistic projection of squalid motives onto people Benmosche views as a threat only confirms for us the true nature of his motives. Perhaps he made the statement to stir public anger for his own gain and that of his company—essentially creating demons reflective of those within that he has not the strength to overcome.
1. Leslie Scism, “AIG’s Benmosche and Miller on Villains, Turnarounds and Those Bonuses,” The Wall Street Journal, September 23, 2013.