AIG to slow sales of assets and delay repaying U.S. taxpayers
Robert Benmosche, the newly chosen Chief Executive for AIG (AIG), put the brakes on sales of AIG assets and reopened a working relationship with former Chief Executive Maurice "Hank" Greenberg as some of his first acts as the new CEO. Benmosche wants to totally reverse decisions of the most recently replaced Chief Executive Edward Liddy, especially in regards to rushing sales of assets.
Benmosche believes the company should first rebuild those assets before sale, even if it means the U.S. taxpayers will have to wait three years or more for a return of the money lent to AIG. He wants to wait for the right time to sell. The total AIG bailout was $182.5 billion, primarily to prop up the company after it made bad choices when betting on the subprime mortgage market.
Prior to Benmosche's appointment, Liddy had set in motion an IPO for its Asian unit American Insurance Co. for the first quarter of 2010, which was expected to raise $5 billion. Obviously, that IPO has been put on hold.
Benmosche also sent a message to bankers, lawyers and consultants to let them know they will soon be off the gravy train. Benmosche told the Wall Street Journal that there is a "feeding frenzy" and those days are over.
Investors definitely like his style and the company's stock is up more than 400 percent since July 9. Benmosche will be the fifth CEO of AIG in four years. He previously was CEO of MetLife. Liddy had been CEO of Allstate.
If Benmosche can truly turn AIG around and rebuild the company, maybe the taxpayers will be able to get their money back. But, that's a big if. We'll only know whether he's still singing that same tune in six months to a year after he gets his feet wet.
Lita Epstein has written more than 25 books including Trading for Dummies.