Dear Mr. Greenberg: Please Stop Talking in Public

In "please stop talking you're embarrassing yourself" news, Maurice Greenberg is once again beating the drum of "everything was great at AIG when I was there." Apparently he wants us to pretend that he didn't create the divisions, policies and strategies that destroyed the company, and put all the blame on his successor.

This is not to say that his successors didn't make any mistakes, but to point out that he seems to be of the opinion that there was nothing inherently wrong with AIG's business model, his successor merely mismanaged it. The problem here is that it was AIG's approach to the CDS business that led them to ruin, and it was an approach that existed when Mr. Greenberg was at the helm. AIG's leadership in the post-Maurice Greenberg era may have made some mistakes, but they were still following the example of their former leader.

Mr. Greenberg should be a topic of a white paper titled: "Business Denial: Leaders who refuse to confront the reality around their mistakes."

The refusal to confront reality is one of the things that most worries me about the future. In particular, it appears that many business leaders want to cling to the ideas that created the crisis, and pretend that the whole thing just "happened" or was a once in a blue moon event. In truth the crisis is a function of the very ideas that they refuse to let go of. How can we move on when many of our top leaders refuse to acknowledge their own errors?

In any event I'm appalled that Mr. Greenberg has the audacity to feign innocence with respect to AIG's demise. While I understand that he doesn’t want his legacy tarnished, I think he needs to accept that it's too late for that. At this point the best thing he can do for himself is to stop talking in public, and/or take some accountability for his own actions.

Disclosure: at the time of publishing the author didn't own a position in any of the companies mentioned in this article; the ideas expressed are solely the opinions of the author and shouldn't be viewed as financial or investment advice.

Comments

[User 138444:]

Mr Greenberg"s just shut up let the people decide what they do.

Apr 03 07:28 AM

[User 85000:]

Whether or not you buy Hank's rationale for why he does not responsibility for this mess, the more important question is whether his solution to the problem makes sense. His arguments against the current plan and how to fix it seem pretty sound to me.

Apr 03 09:06 AM

[wakeup call:]

MRG's batting average in decision making was pretty effective. Make no mistake he made every single major decision as CEO. He had and AIG has some of the most effective management in the insurance industry. However; under Hank people only took actions when directed to by the man. It appears that no one has taken over the forceful leadership role. The CDS problem was directly caused by the drop in AIGs credit ratings which led to collateral calls which eventually turned a liquidity probelm into one of solvency . When MRG left the statement was that the ratings reduction was not due to credit impairment but concern about AIG's ability to retain management talent. Successive ratings reductions were due to deteriorating credit. No matter who is at fault the exosure to CDSs was unaccceptable this includes what was done under MRG's watch and Sullivan's

Apr 03 10:10 AM

[BerkeleyBob:]

I am persuaded on the evidence of "Hammerin" Hank" Greenberg's public comments and exercise of chutzpa in suing the feds for decreasing the value of his shares, that the man is seriously deluded. His attempt to re-write history has the virtue of audacity, but no element of veracity. I have previously described AIG as an unregulated off-shore bookie, aided and abetted in its financial fraud by the rating agencies. If you think that harsh, consider the collateral damage in destruction of value for pension funds and other institutional fiduciaries.

Apr 03 12:41 PM

[AIG Retired:]

Having retired from AIG a few years ago, I can attest to the strong arm managment of Mr. Greenberg. It was not the most HR friendly place to work, but everyone knew who was the boss and no one made a major decision without upper upper management approval. This was one of the reasons AIG consistantly made money. When he left, I can only assume there was a great vacuum in the Company and some may have taken this for a free ticket to act on their own. It would not surprise me that this may have occurred. I am sure if Mr. Greenberg were still there, the management of the program would have been different, maybe not risk free or without fault, but it would have been managed much more effectively.

Apr 03 12:43 PM

[Snark43:]

Greenberg demonstrated a great skill at managing and controlling high levels of risk for an extended period. This is not an easily acquired skill, if it can be acquired at all. Choosing to assume such risky vehicles was a decision he made based on his own abillities. It is no surprise, in retrospect, that the AIG juggernaut crashed, since the AIG business model was designed by Greenberg to reflect his own strengths as an individual. Upon his ouster, a complete reassessment of current practice would have been absolutely necessary. However, it seems that he was forced out primarily because of greed and jealousy. Like many businesses, core management was perceived as secondary to HR, and medocrity prevailed, to their own subsequent failure.

Apr 03 01:11 PM