Charlie Rose talks to Robert Benmosche “To own 11,000 rail cars and lease them is not a business an insurance company should be in”

The CEO of AIG discusses the insurer’s $182 billion bailout, how it managed to pay taxpayers back — and why its culture has changed


What does it mean to you now that the government is not an AIG stakeholder?

What’s important for AIG is that there’s no longer a question about whether we could pay back America everything they gave — and do it with a profit. So this closes the chapter. That’s my simple view. It doesn’t mean that I think bailouts are a good thing or a bad thing or the way it was handled was right. It just says that an American corporation that’s made up of so many talented people, when asked to live up to a promise, showed they could. And that’s how I feel, excited about how we proved that in a capitalistic society, giving people enormous freedom to act, they will act responsibly.

Many people see the AIG bailout as one of the most despised events in recent American history.

I totally understand why the public feels the way it feels. It’s the way it was characterized. We forget about Bear Stearns. We forget about Lehman Brothers. We forget about the fact that we knew subprime lending was a serious problem, and we shouldn’t be guaranteeing those mortgages by an implied agency of the U.S. government in Fannie Mae. We knew a lot of other things, so it’s sad that AIG wound up being at the center of it. And that’s the way it goes. Yeah, [AIG] had some things they were doing that they shouldn’t have been doing. They were a victim of the crisis, but they were characterized as the ones that caused it.

How is AIG different today?

We run the risk of the company as a management team, so I’m chairman of the risk committee. We actually meet once a month on all the key risks of the organization and what the concerns are and where our focus should be. That did not happen before. We had too many different silos, too many different businesses. We’ve moved into traditional insurance, and we’re getting out of things that we don’t think we have an expertise to run. To own 11,000 rail cars and lease them is not a business an insurance company should be in. We shouldn’t own 940 airplanes. It’s too big for an insurance company to manage.

How long will you stay on as CEO?

Two more years is what I’ve told the board for now. I don’t know, quite frankly, how my health will hold up. I do have cancer. I know that it can be treated but not cured. Right now the treatments are going very well. So the doctors told me, “Be optimistic,” because there’s nothing else to be. And so I am. My doctors say it’s still negative, and I run almost 15 miles a week at 68½-years-old. I’m having a wonderful time.

When you paid back the government’s investment, you said critics of the bailout, namely Senator Elizabeth Warren, hadn’t called to say thank you.

Why did I say that? I’ll tell you. We could debate whether we should have been given the bailout. But the fact is that the government gave AIG $182 billion. If you were to just liquidate the company, you would not have had enough money to pay the government back. Then what happens to the bondholders? And who do you think the bondholders are? They’re pension plans. It’s nice to get before the cameras and talk about the bad people of AIG. Now it’s time to go before the cameras and say, “You know what? We made a profit. And you still employ 36,000 Americans.”

Does Dodd-Frank provide the regulation needed to stop disaster from striking again?

We need a clearly focused individual who’s secretary of all of it, whatever that means, and really pulls together all of the different agencies and begins to coordinate the activities, whether it’s the FDIC, the SEC, FASB. Somebody’s got to be able to sit above all this and think about all of the financial institutions.

What have you got to say to Hank Greenberg?

I understand his focus on the backdoor bailout. I understand that the shareholders may have paid a disproportionate cost of this bailout. What I said to Hank is, “AIG would not be here today if you didn’t leave behind a company of very strong, hardworking, caring people who work for their clients and take great pride in what they do.”

Are you optimistic about the future of AIG?

Very optimistic. It’s a company with great roots. And a great brand. I think people said, “Wow. Instead of being the bad AIG, it’s paid back all that money and did it in three years.”

Watch Charlie Rose on Bloomberg TV weeknights at 7 p.m. and 10 p.m. E.T.


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