Greenberg brings executive greed back to the fore

Maurice Greenberg

As Maurice Greenberg, ex-AIG chief, makes a return to Wall Street, the rescued insurer faces further turmoil as the Treasury looks set to limit bonuses and slash executive salaries.

American International Group Inc. has had one helluva ride throughout the economic crisis. According to reports the firm has already lost half of it's highest-paid executives in the last year. Now, as the bankers' bonus row gains momentum, the Treasury has warned that the worst could still be to come.

Kenneth Feinberg - the man responsible for overseeing the compensation of top executives at firms which have received bailout assistance - has already reduced the cash salary of 12 ofAIG's top executives by 91 percent.

The news comes at a critical time for AIG, as ex-chief Maurice Greenberg, currently being lambasted by the US government for its handling of AIG after its near collapse, returns to the financial services industry.

Greenberg, who despite current opinion is largely accredited with turning AIG into the insurance giant it once was, has reportedly been building up a family of insurance companies that could soon compete withAIG.

And now, as Feinberg recommends that bonuses for five managers in the Financial Products unit of AIG - responsible for terminating the derivatives trades that fueled much of the company’s 2008 losses - be withheld, Greenberg looks to lure more talent from his old firm.

Opportunity

For his new venture, CV Starr & Company, Greenberg has reportedly already been hiring some of the people he once employed at AIG; and is now looking to fill the ranks with more ex-AIG staff.

The concern is that, with Feinberg and the Treasury severely limiting pay at AIG, more and more staff might want to jump ship and go in-search of somewhere that can pay them a salary more akin to the levels of last year.

Step forward CV Starr - free to pay whatever it wants.

Greed

Greenberg's plan is something of a double edged sword. There are concerns that Greenberg won't stop at luring away AIG's workers, and will also tempt away much of the rescued insurer's business too: thereby stopping it from repaying its already colossal debt - at the expense of the taxpayer.

Concerns are made all the more potent as AIG, the recipient of the biggest taxpayer bailout in history, has now been ordered by the government to restructure, unwind its complex derivatives and pay back the taxpayer quicker than first anticipated.

The greed of Wall Street executives, then - noted as one of the biggest contributors to the current economic crisis - is still strong: relentlessly pushing on, at no matter what costs.

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