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Archive for the ‘Hank’ Category

Hank Watch

It all started yesterday with the Undertaker, teddy liddy on CNBC and continued today when Hanky thought he should weigh in again. Both are interesting interviews and both were pretty wildly mischaracterized by the press.

Hank calls teddy a liquidator, which is probably a pretty good characterization of his role. Remember, teddy was asked by the guv to swoop in and get AIG to pay back its loan and earn a single clam for his troubles. He IS a liquidator; he doesn’t really know the business, as Hank points out, and he doesn’t need to. He’s basically a politician right now, playing politics with the people and with congress over AIG’s fate. I wonder what office he really wants as his reward for this job?

I can summarize the interviews thusly:

teddy: I was hired to destroy AIG, but in order to do so, I need to do some things that don’t look good politically. My job, then, is to sell the public on my actions so congress doesn’t freak out and I can run for the senate or get a plush job if the palinator wins in ’12.

Hank: I love AIG more than my family. I want to try to convince everyone that my baby deserves an assload of cash because if this system is about socializing losses then, doggonit, it just wouldn’t be fair if it misses out. I will do so by being a terrible interviewee and cranky old man.

My only problem with Hank is that he seems to think that AIG has some kind of platonic value in of itself and therefore should be saved at all costs. Unfortunately, nobody who didn’t work for AIG would ever feel that way – all we see is a spectacular failure that will destroy the company because that’s what the company deserves. If you bet the farm and lose, guess what. No more farm.

And I don’t buy his argument that AIG’s problems are isolated and we should just cut away the cancer and move on. AIG tried to wring every bit of value it could out of its AAA rating; its financial products division couldn’t exist without the diversifying support of the insurance business. The risk managers should have realized the farm was being bet and they didn’t. So no more farm.

Hank closed by citing his belief that there is a Goldman Sachs conspiracy out there and that GS counterparties are the first ones being saved. Could be true – I’ve never known anyone in financial services to not take any advantage they could find and GS alums DO populate a lot of the powerpoints in the US economy.

All in all, Hank did ok today.

It kills me to say it because I much prefer the image of a Willy Loman/Sauron lovechild raving about how everyone is getting it wrong while silently screaming that he did so much better. Instead I get the most successful insurance executive of all time at 80-something delivering basically sensible comments about his former company.

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Hank Watch

I started reading this article feeling vindicated, but then our old friend Hank dropped this bomb:

Greenberg, who left AIG in 2005 and now runs several private insurance and
investment firms, said there is little cross-over between his business and AIG,
but where there is, his staff say AIG is beating down the market.

(emphasis mine)

Huh?!

First of all AIG is in EVERY market. Second of all, what else would an egomaniac like this guy do except try to build AIG again?

Give me a break.

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Ego Defense

So sunlight is slapping AIG in the face a bit. We’re finally getting a bit of detail about where the money went.

Generally, there’s a pattern here which is pretty common and it has to do with ego defense. My belief is that there is no such thing as an “organization”, which we anthropomorphize. Instead we have a group of individuals at the top that react as people.

So, when AIG made a bunch of really big mistakes its leaders succumbed to ego defense mechanisms. Old man Greenberg would probably froth at the mouth with ‘projetion’, but the new guys wind up with some combination of ‘denial’ and ‘reaction formation’. As is the case with any web of lies, it inevitably falls apart.

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Hank Greenberg:

“That is an outrage,” Greenberg said of the plan by Reynolds, former CEO of auto insurer Safeco. “All that does is tell everyone working there to start looking for a job, and why would business hang around?

This is in response to Reynolds saying that they’d be willing to dismantle the whole company to pay back to the government.

I have two problems with Hank, here.

1. An insurance company can have only two competitive advantages: a) financial stability (AIG was AAA) and b) talented people. If you lose a), b) doesn’t mean jack.

2. A real plan for moving AIG forward requires a cold, hard look at what is, in fact, possible. Taking the main insurance businesses off the sales block is complete fantasy. An obviously lying executive does not inspire confidence, she destroys it.

Hank ran AIG for years and it meant more to him than anything, even, arguably, his family. It is killing him that his company is dying, which is understandable. But don’t for a second believe that this egomaniac cares about shareholders, taxpayers or employees of AIG.

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