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Overview
Legendary CEO Bob Benmosche's astonishing memoir Good for the Money details how he pulled AIG back from the brink of bankruptcy and engineered one of history's most astonishing corporate turnarounds.
In 2009, at the peak of the financial crisis, AIG - the American insurance behemoth - was sinking fast. It was the peg upon which the nation hung its ire and resentment during the financial crisis: the pinnacle of Wall Street arrogance and greed. When Bob Benmosche climbed aboard as CEO, it was widely assumed that he would go down with his ship. In mere months, he turned things around, pulling AIG from the brink of financial collapse and restoring its profitability. Before three years were up, AIG had fully repaid its staggering debt to the U.S. government - with interest.
Good for the Money is an unyielding leader's memoir of a career spent fixing companies through thoughtful, unconventional strategy. With his brash, no-holds-barred approach to the job, Benmosche restored AIG's employee morale and good name. His is a story of perseverance, told with refreshing irreverence in unpretentious terms.
Called "an American hero" by Andrew Ross Sorkin, author of Too Big to Fail, Benmosche was a self-made man who never forgot what life is like for the nation's 99-percent; again and again, he pushed back against obstinate colleagues to salvage American jobs and industry. Good for the Money affords you a front-row seat for Benmosche's heated battles with major players from Geithner to Obama to Cuomo, and offers incomparable lessons in leadership from the legendary CEO who changed the way Wall Street does business.
Product Details
| ISBN-13: | 9781466883574 |
|---|---|
| Publisher: | St. Martin's Publishing Group |
| Publication date: | 04/12/2016 |
| Sold by: | Macmillan |
| Format: | eBook |
| Pages: | 304 |
| File size: | 5 MB |
About the Author
BOB BENMOSCHE was President and CEO of AIG from 2009 to 2014 and pioneered policies that saved the company from bankruptcy, enabling it to repay its debts to the government within three years. He was instrumental in taking MetLife - where he worked for 11 years, as COO and CEO - public. Once a top executive at Paine Webber and at Chase Manhattan, Benmosche was also a U.S. army veteran.
Read an Excerpt
Good for the Money
My Fight to Pay Back America
By Bob Benmosche, Peter Marks, Valerie Hendy
St. Martin's Press
Copyright © 2016 Bob BenmoscheAll rights reserved.
ISBN: 978-1-4668-8357-4
CHAPTER 1
THE GOOD NEWS IS, YOU'RE NOT PARANOID
THE TRUTH WAS, I DIDN'T need the job.
I was content in retirement, living in the house of my dreams on Croatia's Adriatic coast, puttering around in my flip-flops, tending to the little side business we'd started, growing grapes for our own wine. But stepping back into the arena appealed to my sense of patriotic duty. Becoming CEO of American International Group — known by its universally reviled initials, AIG — would be an important service to the country. AIG had almost taken down the entire global economy as a result of the role of one of its divisions, AIG Financial Products, in the calamitous subprime mortgage market. Now, it was reeling under the weight of the astronomical $182 billion in bailout funds it owed the taxpayers. The company was in such disarray that it had burned through four CEOs in four years, the last one hounded out after a humiliating dressing down by Congress.
I would be CEO No. 5 in that line. Lucky me.
Sure, I knew that wading into this situation would be messy. I just hadn't fully calculated the magnitude of the mess. In fact, on Monday, August 3, 2009, my very first day in AIG's offices in Manhattan's Financial District, the groundwork was being laid for an attempt at neutering my leadership. I would soon find that a powerful faction within the company was opposed to the direction in which I planned to take it. Hanging in the balance was the fate of what was then the world's largest insurance company, a firm with a trillion dollars in assets and dealings in 130 nations.
Well, as the saying goes, no good deed goes unpunished. I didn't want to start the job until October. But officials at the U.S. Treasury Department — now owners of 79.9 percent of the company's stock — had other ideas. October? Impossible! The new CEO had to start when the man he was replacing, Edward Liddy, departed on August 10. So I agreed to their timetable. I arranged to start at AIG on August 3, a week before Liddy's departure, on an unofficial basis. That way, I would spend some time in the first half of August getting to know employees in the various units of AIG around the United States, take the end of August to honor my commitments in Croatia, where I had retired to start a vineyard, and then return full-time to AIG on September 8.
Not everyone was thrilled, me included. I still didn't even have a salary and compensation package nailed down. But I made it clear I wasn't going to alter this plan.
Little did I know my "vacation" in Croatia, which had the blessing of the government officials who urged me to take the job, would soon be fodder for an attack by my enemies on the board and elsewhere. Within days, news of the trip would be leaked to the media as evidence of more AIG profligacy, of the sense that the company — already on the defensive over its desire to pay contractually mandated executive bonuses — just didn't get it.
Oh, I got it, all right.
It was the first salvo in a campaign from within the company to try to smother my leadership in its infancy, and scuttle the plan I was formulating. My goal was simple: for AIG to defy the odds and pay back America, in full. I knew that AIG was still a tremendously valuable company that had been dragged down by a couple of divisions that made really bad bets on mortgage-backed derivatives. These toxic contracts had become, in Warren Buffett's colorful phraseology, the financial world's weapons of mass destruction. By no means, though, did they reflect on the worth of the rest of the company. I intended to clean up the derivatives mess so that AIG could re-establish itself as one of the world's premier insurance companies — and a mighty profitable one at that.
My ideas ran counter to those of some in the upper echelons of the firm. This faction wanted to unload huge portions of the company as fast as possible, at what I knew to be ridiculous, fire-sale prices. They had the backing of the Wall Street bankers who had made a fortune — $100 million at least — in consulting fees working for AIG and who were poised to make a lot more through commissions on the rapid sell-offs. Adding to the absurdity was that these were the very Wall Street vultures who had sold AIG the toxic derivatives to begin with! I have spent a veritable lifetime in the financial industry, so when I say that the buzzards were circling, ready to swoop in on AIG's highly prized insurance entities and real estate holdings, I know of what species I speak.
Not even the U.S. government seemed averse to selling AIG units at bargain prices. The prevailing philosophy in Washington was, let's recoup whatever we can as fast as we can. No less a figure than Treasury Secretary Timothy Geithner, one of the architects of the bailout, first as head of the New York Fed and then as a member of President Obama's cabinet, privately expressed his strong doubts over AIG ever paying back its debt.
My feeling was quite different. I believed AIG could pay the government back — I wouldn't have taken the job if I didn't. I also figured out quickly that those at AIG who didn't share that belief wanted me silenced, discredited, and shunted aside. Which reminds me of an old joke: A guy goes to his psychiatrist, and the doctor tells him: "I've got good news and bad news for you. The good news is, you're not paranoid. The bad news is, they're out to get you."
I hadn't pinpointed who specifically was out to get me. But by the time the story leaked in Bloomberg News the following week, with the headline "Benmosche Said to Start AIG Tenure With Croatian Trip," I'd begun to get an inkling.
Over the next five years, I would do battle on many fronts in my fight to make the American taxpayer whole after AIG's errors during the subprime debacle. Well before my tenure as CEO ended in September 2014, I'd made good on my vow: AIG had not only paid the country back, but also had settled the account with a $22.7 billion profit.
But there were bitter battles along the way. One pitted me against AIG's own board of directors, an entity that normally would be expected to support management's plans. They were led by their formidable, newly installed chairman, Harvey Golub, a former CEO of American Express Company, with whom I would lock horns over how to run AIG. I also had adversaries outside of AIG, namely some craven politicians who were making our jobs harder by publicly slinging mud at us and in the process putting the lives of AIG employees at risk. A battle, too, had to be waged in the public-relations arena, with some influential media types who thought us an easy target and found allies within the company who leaked inside information to them, further sowing anxieties about me and the company.
As tough as these struggles were, they didn't faze me. It wasn't even the worst corporate backstabbing I had experienced; that distinction went to my time in the 1980s and early '90s at the brokerage firm Paine Webber, where I was well schooled in Wall Street's cage-fight mentality. Even there, my foes had nothing on the cruelest and most intractable enemy I've ever had to face: the cancer with which I was diagnosed in October 2010, a year and two months after I got to AIG. The disease was supposed to end my life quickly. It didn't, thanks to some amazing medicine. But it's an adversary I continued to fight with every ounce of strength in my six-foot, four-inch body.
From those very first days at AIG, however, I was prepping for the fight, even if I was still only starting to get my bearings. First, though, I had to begin to deal with another insidious problem: morale throughout the company was dangerously low. The daily onslaught of bad news and negative commentary had taken its toll on a workforce that felt little compunction about staying; they weren't even sure if AIG would continue to exist. So I made it my first order of business to reach out directly to the employees, to let them know that the new sheriff in town was on their side. On my second morning, Tuesday, August 4, 2009, I called a "town hall" meeting at AIG's corporate headquarters at 70 Pine Street to lay out my philosophy, to say some things that AIG's workers had not been hearing from their leader, maybe ever.
"The fact is," I said, warming to the room packed with hundreds, "you are AIG, and it's time we stopped being embarrassed by it. And it's time that the people in Congress stop talking about you as the problem. Because you're the solution."
The attacks on AIG had gone beyond angry rhetoric to outright threats. The children of some workers in Connecticut were beaten up at school and some employees were being harassed online and confronted in person. I needed them to hear me loud and clear on the issue that is — let's face it — foremost in the mind of every worker, everywhere. "I just wanted to assure all of you that my first priority is getting your compensation right, making sure that from myself on down, all get paid competitively, so that you can come here every day and get fairly paid for what it is that you're doing."
I also referred to the divestiture plan that had been worked out by departing CEO Liddy and his restructuring expert, Paula Reynolds, a plan I had absolutely no intention of following. I did not say that outright, as Liddy was standing there and I had no details to present. I did offer a preview of my thoughts, though. "I am not a liquidator," I said. "I don't liquidate things. I build them." The relief in the room was palpable, especially as I sought to calm the audience's apparent nerves with some off-the-cuff humor. In the first minute of my first address before an AIG audience, I got a laugh when I explained, "I am not your dentist, and I am not going to ask you to open up wide and we're not going to start drilling, so we ought to relax just a little bit here."
It wouldn't be long before some of my words at that private gathering also made their way into the press: Bloomberg News quoted me (accurately) as having said that the government was creating "lynch mobs" — not the most sensitive phrase I could have come up with. The leaks bolstered my belief that a campaign was being mounted to pre-empt me by people with intimate knowledge of the company and the workings of the media. That those leaks may actually have served my purpose, by making me seem like someone politicians didn't want to mess with, was beside the point. The unauthorized disclosures were confirmation I was at the helm of a porous organization, some of whose more than 100,000 employees harbored hopes of my undoing.
As the doctor said: "The good news is, you're not paranoid ..."
The task that lay before me amounted to one of the most challenging of my career, a working life that had been tested before by high-stakes pressure and internal strife. Still, I could tell that this job was going to be a new kind of challenge, one that would call on every aspect of what I've learned about leadership.
In the course of telling this story, I'm going to impart as many of those leadership lessons as I can. They are not, though, lessons of the business-school variety. I've never been to one. Never, in fact, enrolled in a single business class, ever. These are ideas gleaned from a life in business — with an emphasis as much on the life part as the business.
You'll discover in these pages, too, that I'm a full-fledged believer in the amazing things this nation can do when you give people freedom to act. If they choose to act responsibly — and most people in this country do — it's incredible what can be achieved. My desire to join AIG at this juncture was tied up in this idea, in a faith in the talent of the workforce and in convincing them that they had the freedom to act. I wanted to draw on their initiative to help propel us forward. From the outset, I was convinced we could accomplish what would seem incredible things, in spite of the tough conditions, in spite of a corrosively negative environment.
I think, too, that I had given myself a larger purpose: to make the renewal of AIG an example of American resilience. To provide evidence to the world that America was still strong, that we were still a capable people. The company's return to health would reaffirm that. It would say that our identity as a can-do culture remained valid, that both collectively and individually, we could still make a difference.
Now, you may wonder why a guy who had been contentedly trudging around in shorts on a terrace on the Adriatic Sea would want to parachute into this particular minefield. The insurance business isn't the sexiest in the marketplace, but this insurance company had managed to land in the middle of the world's hottest financial story. And not for good reasons. The once widely admired firm was now perceived as so dysfunctional that when writing about it in his memoir, Henry Paulson, President George W. Bush's Treasury secretary, declared: "AIG's incompetence was stunning."
Looking back at the magnitude of the mess I agreed to take on, I do at times think I might have spent too much time in the midday Croatian sun. Because AIG at that moment looked to much of the world like a corporate ghost ship, navigating toward its doom. Providing financial security for millions of policyholders was the company's bedrock mission, but it was not at this point what it was best known for. As a result of the miscalculations before I was on the scene, and egged on by some political demonizing, AIG was now one of, if not the most, despised companies on the planet. Facing mounting obligations it couldn't meet as a result of its bad bets on the mortgage markets, and deemed by federal regulators too integral to the nation's financial health to be allowed to slide into bankruptcy, the company had received a massive, and massively unpopular, government bailout. To keep AIG going, the Federal Reserve loaned the company billions and the Department of the Treasury pumped in billions more throughout 2008 courtesy of a new vehicle created by Congress, the controversial Troubled Asset Relief Program, or TARP, as it came to be known.
Those loans, purchases of AIG assets, and other instruments amounted to an almost unfathomable figure, $182.3 billion. It was by far the most money any publicly held company received; more than Citigroup, Bank of America, or any other among the better-known corporations that contributed to the disaster. No wonder average Americans — many of them living in houses newly under water, or terrified about losing their jobs in a tanking economy — had dark thoughts when "AIG" was mentioned. Those initials, in fact, were all many people knew about the firm. It seemed to a lot of them that this New York–headquartered company with a not-very-clear identity — AIG, after all, was the name of a nebulous parent holding company for dozens of other insurance and financial entities — was being propped up just as their own household security was crumbling. I was angry myself, and not simply because as I watched the crisis unfold I developed serious misgivings about the way the government was treating the company. In a long business career, capped by my retirement in 2006 as CEO of another insurance giant, Metropolitan Life Insurance, or MetLife, I'd invested wisely and amassed some wealth. And that, too, was to some extent disappearing in the crisis.
I, like millions of other Americans, had been a mere spectator to these events up to the time my phone rang in my home in Dubrovnik in the spring of 2009. A search committee led by AIG board member Dennis Dammerman, who had worked alongside Jack Welch at General Electric, was looking for the fifth CEO since Hank Greenberg's 2005 departure.
"Take it!" was my son Ari's blunt reaction, when I told him that feelers were being sent about my interest in running AIG.
It was actually not the first time I'd been approached about the job. In September 2008, with the meltdown in its early stages, Christopher Cole, an emissary from Secretary Paulson, had asked me about it. At that chaotic moment, the Dow Jones Industrial Average was in free fall, losing 440 points on September 17 alone; the just-announced AIG bailout was not reassuring the markets. I knew Cole and Paulson from the days both worked at the investment house Goldman Sachs, although I didn't have fond memories of my prior contact with Paulson. (I recall having dressed him down once when I was CEO of MetLife, over the way Goldman was advising on a job for us.) I had no intention, by the way, of becoming CEO of AIG if they offered me a dollar a year, as Liddy would later agree to do. As I often said, "I'm easy but I'm not cheap."
And as I always do with big decisions, I consulted my closest advisers, namely, my family: my businessman son; my daughter Nehama, then finishing up her rabbinical studies; and my wife, Denise, from whom I have been legally separated since 1999, but with whom I maintain a warm and close relationship. I also consulted my longtime companion, Lisa Weber, an executive whom I'd known since our days together at Paine Webber.
(Continues...)
Excerpted from Good for the Money by Bob Benmosche, Peter Marks, Valerie Hendy. Copyright © 2016 Bob Benmosche. Excerpted by permission of St. Martin's Press.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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Table of Contents
Contents
Title Page,Copyright Notice,
Dedication,
Foreword by Sarah J. Dahlgren,
1. The Good News Is, You're Not Paranoid,
2. We're Not Dead, and You're Not Dead, or What He Did Is Criminal,
3. Always Take the Tip,
4. The GSD Guy,
5. The Hot Seat Was My Sweet Spot,
6. Taking Off the Collar,
7. Nothing Was Happening,
8. We're Not Doing Any of This,
9. Clawback,
10. Oil and Water,
11. "Only One of Us Can Be Here Tomorrow",
12. An Unfinished Symphony,
13. "I Have Given Up All Hope of a Better Past",
14. "You're Welcome, America",
Epilogue,
Photos,
Index,
Acknowledgments,
About the Authors,
Copyright,